December 10, 2004
The reception of Hayek in Australia understands, and constructs him, to be a liberal. Hayek is seen to provide the intellectual fire power for the economic rationalism of the 1970s 1980s-1990s, sometimes known as the New Right. This economic liberalism endeavoured to roll back the regulation of, and constraints on, the free market, which had been put in place by collectivist social liberals during the 20th century. What was to be challenged and overthrown was the Australian settlement between capital and labour, to set the economy free.
Economic rationalism can be understood as a political movement advocating largely market mechanisms to improve economic growth rates in Australia; as trusting the self-regulating forces of the market to bring about the required adjustments to new conditions; the classical liberal belief that moral and religious values are not proper objects of coercion; limited government; and a market order as the basis of a free society.
Presumably this reception of Hayek is based on The Road to Serfdom (text also here) and Why I am not a Conservative. It is an economic reading of some of Hayek's texts. Their Hayek is the symbol of economic liberalism, liberty, and the spontaneous order. They reworked Hayek's arguments against socialism, central planning and totalitarianism to use them to challenge and roll back the welfare state--that historic social democratic compromise between capitalism and socialism.
The task of the statesman is to remove the obstacles to the spontaneous development of the market order. However, Hayek affirms the need for rules to govern the spontaneous order (cosmos). Liberty is to be constrained.
You rarely hear the economic liberals talk about democracy and citizenship. They do talk about leadership of the executive ongoing economic reform, the wilful Senate blocking reform, and the particular interests of undemocratic minority groups ensnarred by emotion holding the country to ransom. Etc etc. You sense both the anti-democratic ethos and the lurking authoritarianism of running the country as if it were a company(Australia Unlimited) directed by a strong CEO.
However, this pathway of criticism (the understanding of the political in economic rationalism) is not considered in the standard taxonomy of the critics of economic rationalism in Australia.
We can read Hayek in terms of political philosophy and our concerns about deepening democracy, the need for more political deliberation in the context of a dominant executive controlling both the House of Representives and the Senate. You rarely hear about this (latter) Hayek in Australia. This is the Hayek who was no democrat, as he would sacrifice democracy to safeguard (economic) liberty. So what does he say?
The latter Hayek is the Hayek of Law, Legislation and Liberty. He is a constitutional liberal, who understands that the constitution of liberty is intended to safeguard the individual against all arbitrary power by preventing the government in the modern state from becoming unlimited.
Hayek safeguards constitutional liberalism by reviving, and working in, the tradition of Hume and Burke. He places an emphasis on the authority of tradition; relies on a wise elite to govern to preserve, and protect, the basic essentials of the market order; restricts the electoral franchise; has a formal conception of democracy as a mechanism for choosing governments whilst degutting the substantive content (eg., the doctrine of popular sovereignty); and reduces the power of the Senate (the legislative assembly) so that it becomes a conservative body that maintains the market order and the institutions of liberal civilization.
This Hayek devalues participation by individuals in politics whilst valuing the participation of individuals in markets; subordinates the public sphere (taxis) to the spontaneous order of the market (cosmos); limits and restricts the participation of individuals in politics as much as possible; blocks the public deliberation of citizens in the public sphere; sees democracy as having a tendency to demagoguery and totalitarianism; and accepts the idea of an intellectual vanguard.
So democracy is seen as a threat to the market order. Hence it must be constrained and limited so as to protect the spontaneous order of the market.
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In the political conflicts of the '80s and '90s we should not forget that economic rationalism was as much against 'vested interests' as ideological collectivists. This is one of the critical reasons that Labor governments were onside - either anti-competitive rules served no social good at all (eg two airline policy) or had costs exceeding their benefits (eg tariffs, banking regulation).
As for democracy, Hayek - having been born in German-speaking Europe at the end of the 19th century - was perhaps more sceptical of and fearful of the masses than his ideological descendants whose experience is of the West in the late 20th century.
But I think we share with him a view of democracy at the instrumentalist end of the spectrum; that democracy is principally a means of restraining whatever elites are in power, and that democratic participation is not a good that should be privileged above others. We really only need a few % of the population to be politically engaged for the system to work.