Hayek, the Epistemologist.

I did not know about the controversial article that Corey Robin had written about Nietzsche and Hayek until now.  In one sense, this is brilliant.  In another sense, I think this tries to read too much between the lines and misplaces Hayek in history of economic epistemology–I am not going to argue anything about the morality of the latter.

Robin’s article is one of few pieces that avoids the ridiculously grotesque caricature that so-called Libertarians reduces Hayek to be.  Above all else, Hayek was concerned about epistemology, how we know what we think we know.  Assignment of “values” was, in this context, subsidiary question to this larger quest for Hayek.  This was no trivial task for Hayek, unlike the way the modern day “libertarians” treat the problem:  Hayek did not trust the omniscience of the markets.  He was keenly aware that markets are full of people who do not know what they really want, who turn to “others” and various “signs” for guidance for clues to how they should decide, and often get trapped in informational bubbles of their own making.  This, however, is not necessarily uniquely Hayek’s:  the pioneering work along these lines came from America, through Thorstein Veblen and his understanding of the “leisure class” and “conspicuous consumption,” as taught by the Gilded Age.  Hayek’s contemporaries, John von Neumann and John Maynard Keynes, were coming up with their own theories heading in similar direction but with much more probability theory and rather less philosophy–indeed, Keynes’ famous description of the “beauty contest” game makes an argument analogous to Hayek’s, minus the paean to aristorcracy.  Intellectual descendants of Hayeks’ insights include Arrow, and his argument about inherent instability of political markets without a “mathematical dictator” empowered to override the majroity–often mistaken as an argument that “democracy” is doomed to failure, rather than democracy without some instability is impossible, a truer characterization of his argument, Schelling and his ideas about focal points as a stabilizing force in a chaotic society,  and Stiglitz, who similarly pointed out that a fully informative price system coexisting with a stable free market is impossible.

I tend to think Robin makes too much of Hayek’s aristocracy fetish.  He was a von, after all, and an Austrian by birth.  I don’t think it should be a surprise that he thought, if the inherent instability in society needs to be contained by a set of focal points, it should be the aristocracy and the wealthy that should be providing it.  In the end, the “aristocracy” defined broadly, are naturally more visible.  They can create a hype better than the nameless masses.  The modern day “aristocracy” are not necessarily the well-born or even the wealthy–although they may be well-born and wealthy–but the celebrities, who, for whatever reason, can command wide attention:  the Donald Trumps and Barack Obama’s of the world, although, there may be a long hierarchy of these focal points/shortcuts for smaller audiences any and everywhere.  The nature of modern technology transformed who counts as the “superstars” (as per the pioneering article by Sherwin Rosen form 1981) , but the underlying logic is not different from that theorized by Hayek, Keynes, Schelling, and Stiglitz.

Is this reactionary?  I don’t think so.  The alternative is that the common people–including the participants in the marketplace–necessarily always know what they want.  There is no point in campaigns, advertising, persuasion, and advocacy.  People will decide as they want in full knowledge, and the markets, political and economic, will reflect it.  The perfect knowledge rules the day, like the god-emperor of Dune.  Everyone will be trapped in the knowledge and the consequent all-knowing, all-powerful markets, political and economic.  This  counterargument to Hayek actually sounds downright reactionary.

I think, as a political theorist with too much political opinion, Robin just gets carried away by his hostility to the elitism inherent in Hayek’s argument.  But, notwithstanding Hayek’s personal favoritism towards the wealthy and aristocratic, the logic of the argument is not predicated on either aristocracy or the wealth, but a sober recognition that institutions that presuppose perfect knowledge are doomed to failure without some “guidance” by the few clear-minded.  It is petty to attack the argument for thinking that the moneyed aristocracy should be providing this guidance.

PS. “The clear minded” people might be a misleading and perhaps erroneous use of words.  Often, it is more valuable that all players, on the same side, are on the same page, not necessarily that they are on the “right” page.  But who shall define these pages are likely to be those from the more “prominent” people, whoever they might be.

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