With the economic recession rapidly deteriorating into a world depression, a heated debate has flared up regarding the relevance of the writings of the Nobel Laureate and ad nauseum projected by the mass media economist/political scientist Friedrich von Hayek.
According to his rabid disciples the collapse of the system that we are now witnessing in no way refutes the tenets of von Hayek that the market forces, if allowed to operate without any interference, will always optimize the use of resources and automatically correct any anomalies that may crop up. What failed, according to them, is not von Hayek's ideal system but a system warped by massive state interference. They seem to forget the quarter of a century of deregulation when they jubilated as they saw the system rapidly approaching their ideal and was like a juggernaut crushing millions of americans.
Many of von Hayek's defenders correctly reject the accusation of some crude critics that von Hayek’s capitalist operative is a caricature of a homo oeconomicus isolated from his ever-changing social environment.
Correct! His capitalist operative is not this caricature. However the problem with von Hayek’s theory lies exactly on this element. His capitalist is indeed a man of the society in which he lives. He is a wordly man and knows exactly how this society functions. At the same time he happens to be a man with specific targets in his life and it will not be very long before he realizes that some control on the rulers, be they representatives of the people or dictators, can provide a badly needed shortcut for achieving his goals. Whereupon he proceeds with giving his financial support to those political forces that will best serve his interests. Should at some point this "sponsoring" gets to be considered as illegal, the legislators he controls will see to it that he is either exempted or exonerated.
As von Hayek was not a dupe, it is absolutely certain that he was aware of this lacuna in his theory. He was, however, body and soul devoted to the cause of defending the capitalist system in its worst deregulated version. His services were rewarded generously with university chairs and a Nobel prize. All his parlance in favor of an unbridled capitalistic system were, up until last year when the system started to collapse, the favoured topic in social gatherings of financiers and their lowly dependents, the politicians. Von Hayek consciously ignored the analysis of the system by authorities such as Kenneth Galbraith, that independently had come to the conclusion that the fusion of the state with the great financial and industrial interests was an indisputable fact and was also the main obstacle for the implementation of any constructive policy in the USA.
Von Hayek described a world that, in his own words, never existed. Worse than that, he was battling for a world that could never exist. He wrote what he wrote simply because during his lifetime the degree of expoitation in America by the financial and industrial magnates reached unprecidented levels. Let's not forget that according to the official statistcs the wages of the americans in constant prices in 2008 were bellow the level of 1963! In that same period productivity in America was growing by leaps and bounds. The system was in urgent need for crutches and von Hayek furnished one on the ideological sphere.
According to his rabid disciples the collapse of the system that we are now witnessing in no way refutes the tenets of von Hayek that the market forces, if allowed to operate without any interference, will always optimize the use of resources and automatically correct any anomalies that may crop up. What failed, according to them, is not von Hayek's ideal system but a system warped by massive state interference. They seem to forget the quarter of a century of deregulation when they jubilated as they saw the system rapidly approaching their ideal and was like a juggernaut crushing millions of americans.
Many of von Hayek's defenders correctly reject the accusation of some crude critics that von Hayek’s capitalist operative is a caricature of a homo oeconomicus isolated from his ever-changing social environment.
Correct! His capitalist operative is not this caricature. However the problem with von Hayek’s theory lies exactly on this element. His capitalist is indeed a man of the society in which he lives. He is a wordly man and knows exactly how this society functions. At the same time he happens to be a man with specific targets in his life and it will not be very long before he realizes that some control on the rulers, be they representatives of the people or dictators, can provide a badly needed shortcut for achieving his goals. Whereupon he proceeds with giving his financial support to those political forces that will best serve his interests. Should at some point this "sponsoring" gets to be considered as illegal, the legislators he controls will see to it that he is either exempted or exonerated.
As von Hayek was not a dupe, it is absolutely certain that he was aware of this lacuna in his theory. He was, however, body and soul devoted to the cause of defending the capitalist system in its worst deregulated version. His services were rewarded generously with university chairs and a Nobel prize. All his parlance in favor of an unbridled capitalistic system were, up until last year when the system started to collapse, the favoured topic in social gatherings of financiers and their lowly dependents, the politicians. Von Hayek consciously ignored the analysis of the system by authorities such as Kenneth Galbraith, that independently had come to the conclusion that the fusion of the state with the great financial and industrial interests was an indisputable fact and was also the main obstacle for the implementation of any constructive policy in the USA.
Von Hayek described a world that, in his own words, never existed. Worse than that, he was battling for a world that could never exist. He wrote what he wrote simply because during his lifetime the degree of expoitation in America by the financial and industrial magnates reached unprecidented levels. Let's not forget that according to the official statistcs the wages of the americans in constant prices in 2008 were bellow the level of 1963! In that same period productivity in America was growing by leaps and bounds. The system was in urgent need for crutches and von Hayek furnished one on the ideological sphere.
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