Hayek and Spontaneous Order

In the coming academic year I will be leading an online discussion on Hayek and Spontaneous Order which is part of a series of Discussion Colloquia for graduate students organised by the Institute for Humane Studies. In this discussion we will focus on the work of a leading classical liberal whose work has become “canonical” – in this case Friedrich Hayek (1899-1992) and read a selection of his works alongside a more recent book which is related in some important and deep way. The modern work which has been chosen is Finn Brunton, Digital Cash: The Unknown History of the Anarchists, Utopians, and Technologists Who Created Cryptocurrency (Princeton University Press, 2019).

The discussion topics and readings are:

1.) The Structure of Mind and Choice

  • Reading: Hayek, Law, Legislation, and Liberty, Vol. I Rules and Order (London: Routledge and Kegan Paul, 1973). [See the analytical table of contents below]

2.) Action, Design, and Outcomes

  • Hayek, “The Use of Knowledge in Society” (1945) which first appeared in The American Economic Review, 35 (4): 519–530. Republished in Individualism and Economic Order (Chicago: University of Chicago Press, 1948). Chapter 4, pp. 77–91; and most recently in The Market and Other Orders. Vol. XV of The Collected Works of F.A. Hayek. Edited by Bruce Caldwell (The University of Chicago Press, 2014), pp. 93-104.
  • Hayek, “The Results of Human Action but not of Human Design” (1967) which first appeared in a Festschrift for Jacques Rueff Les Fondements Philosophiques des Systèmes Economiques (Paris, 1967) republished in Studies in Philosophy: Politics and Economics (London: Routledge and Kegan Paul, 1967), pp. 96-105; and most recently in The Market and Other Orders. Vol. XV of The Collected Works of F.A. Hayek. Edited by Bruce Caldwell (The University of Chicago Press, 2014), pp. 293-303.
  • Hayek, “Principles of a Liberal Social Order” (1966) which was given as a paper at the Tokyo Meeting of the Mont Pélèrin Society (Sept. 1966) and then published in Il Politico (Dec. 1966) and again in Studies in Philosophy, Politics and Society (1967), pp. 160–77.

3.) The Planner’s Conceit

  • Hayek, The Fatal Conceit: The Errors of Socialism. The Collected Works of F. A. Hayek. W. W. Bartley, III (ed.). (Chicago: University of Chicago Press, 1988).

4.) Hayek Today: Tech, Money, & Culture

  • Finn Brunton, Digital Cash: The Unknown History of the Anarchists, Utopians, and Technologists Who Created Cryptocurrency (Princeton University Press, 2019).

Some additional modern attempts to apply Hayek’s insights about spontaneous orders in new areas, include:

  • on the evolution of the family: Steven Horwitz, Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions (Palgrave Macmillan, 2015).
  • on private governance such as stock markets: Edward P. Stringham, Private Governance: Creating Order in Economic and Social Life (Oxford University Press, 2015).
  • on self-governance by groups like pirates: Peter T. Leeson, The Invisible Hook: The Hidden Economics Of Pirates (Princeton University Press, 2009); and more generally Anarchy Unbound: Why Self-governance Works Better than You Think (Cambridge: Cambridge University Press, 2014).
  • on spontaneous social orders in prisons: David B. Skarbek, The Social Order of the Underworld: How Prison Gangs Govern the American Penal System (New York: Oxford University Press, 2014).
  • on the spontaneous emergence of law itself: see the anthology of essays Research Handbook on Austrian Law and Economics. Edited by Todd J. Zywicki and Peter J. Boettke (Cheltenham, UK: Edward Elgar, 2017). And for the contrary argument that, as an “Ordo-liberal”, Hayek believed the legal and constitutional framework within which the spontaneous ordering of the market took place, was completely different from a market and thus had to be rationally “constructed” and “planned” by legislators, see Viktor Vanberg, “Hayek’s Legacy and the Future of Liberal Thought: Rational Liberalism versus Evolutionary Agnosticism” Cato Journal, Vol. 14, No. 2 (Fall 1994). Online.

Recommended Additional Reading

Introductions to and Overviews of Hayek’s life and work:

Peter Boettke, “Friedrich August von Hayek (1899–1992),” in Handbook on the History of Economic Analysis Volume I: Great Economists Since Petty and Boisguilbert, ed. Gilbert Faccarello and Heinz D. Kurz (Cheltenham: Edward Elgar Publishing, 2016), pp. 557–567.

David Schmidtz and Pedter Boettke, “Friedrich Hayek” Stanford Encyclopedia of Philosophy (2012) online at Friedrich Hayek (Stanford Encyclopedia of Philosophy).

Donald J. Boudreaux, The Essential Hayek (Fraser Institute, 2014). Essential Scholars (Fraser Institute) – Essential Scholars |

Steven Horwitz, Austrian Economics. An Introduction (Washington , DB.C.: Cato Institute, 2020). Online at Austrian Economics: An Introduction | Libertarianism.org.

Entries in the EoL (2008)

More Specialised Monographs

Peter Boettke has compiled (2018) a list of PhDs and journal articles on Hayek: A Living Bibliography of Works on Hayek | Mercatus Center: F. A. Hayek Program.

Peter Boettke, F. A. Hayek: Economics, Political Economy and Social Philosophy (New York: Palgrave Macmillan, 2018).

[Boettke, Coyne, and Storr] Interdisciplinary Studies of the Market Order. New Applications of Market Process Theory. Edited by Peter J. Boettke, Christopher J. Coyne, and Virgil Henry Storr (London: Rowman & Littlefield, 2017).

Bruce Caldwell, Hayek’s Challenge: An Intellectual Autobiography of F. A. Hayek (Chicago: University of Chicago Press. 2004).

[Coyne and Storr] New Thinking in Austrian Political Economy. Edited by Christopher J. Coyne and Virgil Henry Storr. Advances in Austrian Economics Volume 19. (Bingley U.K.: Emerald Publishing, 2015).

[Farrant, Andrew] Hayek, Mill and the Liberal Tradition. Edited by Andrew Farrant (London: Routledge Studies in the History of Economics, 2010).

[Feser] The Cambridge Companion to Hayek. Edited by Edward Feser (Cambridge University Press, 2006)

[McNamara and Hunt] Liberalism, Conservatism, and Hayek’s Idea of Spontaneous Order. Eds. P. McNamara and L. Hunt (New York: Palgrave Macmillan, 2007).

[Peart and Levy] F. A. Hayek and the Modern Economy. Economic Organization and Activity. Edited by Sandra J. Peart and David M. Levy (Palgrave Macmillan, 2013).

[Zywicki and Boettke] Research Handbook on Austrian Law and Economics. Edited by Todd J. Zywicki and Peter J. Boettke (Cheltenham, UK: Edward Elgar, 2017).

The Collected Works of Hayek

The Collected Works of Hayek ed. Bruce Caldwell (University of Chicago Press). Proposed volumes [The plan is provisional. See the current list The Plan of the Collected Works of F. A. Hayek — published and planned titles. ]

  1. Volume I The Fatal Conceit: The Errors of Socialism (1988)
  2. Volume II The Road to Serfdom: Text and Documents—The Definitive Edition (2007)
  3. Volume III The Trend of Economic Thinking: Essays on Political Economists and Economic History (1991)
  4. Volume IV The Fortunes of Liberalism: Essays on Austrian Economics and the Ideal of Freedom (1992)
  5. Volume V Good Money, Part I: The New World (1999)
  6. Volume VI Good Money, Part II: The Standard (1999)
  7. Volume VII Business Cycles, Part I (2012)
  8. Volume VIII Business Cycles, Part II (2012)
  9. Volume IX Contra Keynes and Cambridge: Essays, Correspondence (1995)
  10. Volume X Socialism and War: Essays, Documents, Reviews (1997)
  11. Volume XI Capital and Interest (2015)
  12. Volume XII The Pure Theory of Capital (2007)
  13. Volume XIII Studies on the Abuse and Decline of Reason: Text and Documents (2010)
  14. Volume XIV The Sensory Order and Other Essays (2017)
  15. Volume XV The Market and Other Orders (2013)
  16. Volume XVI Hayek on Mill: The Mill- Taylor Friendship and Related Writings (2014)
  17. Volume XVII The Constitution of Liberty: The Definitive Edition (2011)
  18. Volume XVIII Essays on Liberty and Economics
  19. Volume XIX Law, Legislation and Liberty
  20. Supplement Hayek on Hayek: An Autobiographical Dialogue (1994)

The Analytical Table of Contents of the three volumes of Law, Legislation, and Liberty (1973-79)

All three volumes were published as a single volume with corrections and a revised preface in 1982 by Routledge & Kegan Paul. It also contained a combine Table of Contents, Index of Authors Cited, and Subject Index. The combined ToC is below:

Law, Legislation and Liberty: A new statement of the liberal principles of justice and political economy (London: Routledge & Kegan Paul, 1982, 1998).

Vol. 1 Rules and Order first published 1973
Vol. 2 The Mirage of Social Justice first published 1976
Vol. 3 The Political Order of a Free People first published 1979

First published in one volume with corrections and revised preface in 1982 by Routledge & Kegan Paul Ltd.




1. Construction and evolution 8
2. The tenets of Cartesian rationalism 9
3. The permanent limitations of our factual knowledge 11
4. Factual knowledge and science 15
5. The concurrent evolution of mind and society: the role of rules 17
6. The false dichotomy of ‘natural’ and ‘artificial’ 20
7. The rise of the evolutionary approach 22
8. The persistence of constructivism in current thought 24
9. Our anthropomorphic language 26
10. Reason and abstraction 29
11. Why the extreme forms of constructivist rationalism regularly lead to a revolt against reason 31

1. The concept of order 35
2. The two sources of order 36
3. The distinguishing properties of spontaneous orders 38
4. Spontaneous orders in nature 39
5. In society, reliance on spontaneous order both extends and limits our powers of control 41
6. Spontaneous orders result from their elements obeying certain rules of conduct 43
7. The spontaneous order of society is made up of individuals and organizations 46
8. The rules of spontaneous orders and the rules of organization 48
9. The terms ‘organism’ and ‘organization’ 52

1. Individual aims and collective benefits 55
2. Freedom can be preserved only by following principles and is destroyed by following expediency 56
3. The ‘necessities’ of policy are generally the consequences of earlier measures 59
4. The danger of attaching greater importance to the predictable rather than to the merely possible consequences of our actions 61
5. Spurious realism and the required courage to consider utopia 62
6. The role of the lawyer in political evolution 65
7. The modern development of law has been guided largely by false economics 67

1. Law is older than legislation 72
2. The lessons of ethology and cultural anthropology 74
3. The process of articulation of practices 76
4. Factual and normative rules 78
5. Early law 81
6. The classical and the medieval tradition 82
7. The distinctive attributes of law arising from custom and precedent 85
8. Why grown law requires correction by legislation 88
9. The origin of legislative bodies 89
10. Allegiance and sovereignty 91

1. The functions of the judge 94
2. How the task of the judge differs fro In that of the head of an organization 97
3. The aim of jurisdiction is the maintenance of an ongoing order of actions 98
4. ‘Actions towards others’ and the protection of expectations 101
5. In a dynamic order of actions only some expectations can be protected 102
6. The maximal coincidence of expectations is achieved by the delimitation of protected domains 106
7. The general problem of the effects of values on facts 110
8. The ‘purpose’ of law 112
9. The articulations of the law and the predictability of judicial decisions 115
10. The function of the judge is confined to a spontaneous order 118
11. Conclusions 122

1. Legislation originates from the necessity of establishing rules of organization 124
2. Law and statute-the enforcement of law and the execution of commands 126
3. Legislation and the theory of the separation of powers 128
4. The governmental functions of mrepresentative assemblies 129
5. Private law and public law 131
6. Constitutional law 134
7. Financial legislation 136
8. Administrative law and the police power 137
9. The ‘measures’ of policy 139
10. The transformation of private law into public law by ’social’ legislation 141
11. The mental bias of a legislature preoccupied with government 143



1. In a free society the general good consists principally in the facilities for the pursuit of unknown purposes 1
2. The general interest and collective goods 6
3. Rules and ignorance 8
4. The significance of abstract rules in a world in which most of the particulars are unknown 11
5. Will and opinion, ends and values, commands and rules, and other terminological issues 12
6. Abstract rules operate as ultimate values because they serve unknown particular ends 15
7. The constructivist fallacy of utilitarianism 17
8. All valid criticism or improvement of rules of conduct must proceed within a given system of rules 24
9. ‘Generalization’ and the test of universalizabiiity 27
10. To perform their functions rules must be applied throughout the long run 29

1. Justice is an attribute of human conduct 31
2. Justice and the law 34
3. Rules of just conduct are generally prohibitions of unjust conduct 35
4. Not only the rules of just conduct, but also the test of their justice, are negative 38
5. The significance of the negative character of the test of injustice 42
6. The ideology of legal positivism 44
7. The ‘pure theory of law’ 48
8. Law and morals 56
9. The ‘law of nature’ 59
10. Law and sovereignty 61

1. The concept of ‘social justice’ 62
2. The conquest of public imagination by ‘social justice’ 65
3. The inapplicability of the concept of justice to the results of a spontaneous process 67
4. The rationale of the economic game in which only the conduct of the players but not the result can be just 70
5. The alleged necessity of a belief in the justice of rewards 73
6. There is no ‘value to society’ 75
7. The meaning of ‘social’ 78
8. ‘Social justice’ and equality 80
9. ‘Equality of opportunity’ 84
10. ‘Social justice’ and freedom under the law 85
11. The spatial range of ‘social justice’ 88
12. Claims for compensation for distasteful jobs 91
13. The resentment of the loss of accustomed positions 93
14. Conclusions 96


1. The nature of the market order 107
2. A free society is a pluralistic society without a common hierarchy of ends 109
3. Though not a single economy, the Great Society is still held together by what vulgarly are called economic relations 112
4. The aim of policy in a society of free men cannot be a maximum of foreknown results but only an abstract order 114
5. The game of catallaxy 115
6. In judging the adaptations to changing circumstances comparisons of the new with the former position are irrelevant 120
7. Rules of just conduct protect only material domains and not market values 123
8. The correspondence of expectations is brought about by a disappointment of some expectations 124
9. Abstract rules of conduct can determine only chances and not particular results 126
10. Specific commands (‘interference’) in a catallaxy create disorder and can never be just 128
11. The aim of law should be to improve equally the chances of all 129
12. The Good Society is one in which the chances of anyone selected at random are likely to be as great as possible 132

1. The pursuit of unattainable goals may prevent the achievement of the possible 133
2. The causes of the revival of the organizational thinking of the tribe 134
3. The immoral consequences of morally inspired efforts 135
4. In the Great Society ‘social justice’ becomes a disruptive force 137
5. From the care of the most unfortunate to the protection of vested interests 139
6. Attempts to ‘correct’ the order of the market lead to its destruction 142
7. The revolt against the discipline of abstract rules 143
8. The morals of the open and of the closed society 144
9. The old conflict between loyalty and justice 147
10. The small group in the Open Society 149
11. The importance of voluntary associations 150



1. The progressive disillusionment about democracy
2. Unlimited power the fatal effect of the prevailing form of democracy 3
3. The true content of the democratic ideal 5
4. The weakness of an elective assembly with unlimited powers 8
5. Coalitions of organized interests and the apparatus of para-government 13
6. Agreement on general rules and on particular measures 17

1. The loss of the original conception of the functions of a legislature 20
2. Existing representative institutions have been shaped by the needs of government, not of legislation 22
3. Bodies with powers of specific direction are unsuited for law-making 25
4. The character of existing ‘legislatures’ determined by their governmental tasks 27
5. Party legislation leads to the decay of democratic society 31
6. The constructivistic superstition of sovereignty 33
7. The requisite division of the powers of representative assemblies 35
8. Democracy or demarchy? 38

1. The double task of government 41
2. Collective goods 43
3. The delimitation of the public sector 46
4. The independent sector 49
5. Taxation and the size of the public sector 51
6. Security 54
7. Government monopoly of services 56
8. Information and education 60
9. Other critical issues 62

1. The advantages of competition do not depend on it being ‘perfect’ 65
2. Competition as a discovery procedure 67
3. If the factual requirements of ‘perfect’ competition are absent, it is not possible to make firms act ‘as if’ it existed 70
4. The achievements of the free market 74
5. Competition and rationality 75
6. Size, concentration and power 77
7. The political aspects of economic power 80
8. When monopoly becomes harmful 83
9. The problem of anti-monopoly legislation 85
10. Not individual, but group selfishness is the chief threat 89
11. The consequences of a political determination of the incomes of the different groups 93
12. Organizable and non-organizable interests 96

1. The miscarriage of the democratic ideal 98
2. A ‘bargaining’ democracy 99
3. The playball of group interests 99
4. Laws versus directions 100
5. Laws and arbitrary government 101
6. From unequal treatment to arbitrariness 102
7. Separation of powers to prevent unlimited government 104

1. The wrong turn taken by the development of representative institutions 105
2. The value of a model of an ideal constitution 107
3. The basic principles 109
4. The two representative bodies with distinctive functions 111
5. Further observations on representation by age groups 117
6. The governmental assembly 119
7. The constitutional court 120
8. The general structure of authority 122
9. Emergency powers 124
10. The division of financial powers 126

1. Limited and unlimited power 128
2. Peace, freedom and justice: the three great negatives 130
3. Centralization and decentralization 132
4. The rule of the majority versus the rule of laws approved by the majority 133
5. Moral confusion and the decay of language 135
6. Democratic procedure and egalitarian objectives 137
7. ‘State’ and ‘society’ 139
8. A game according to rules can never know justice of treatment 141
9. The para-government of organized interests and the hypertrophy of government 143
10. Unlimited democracy and centralization 145
11. The devolution of internal policy to local government 146
12. The abolition of the government monopoly of services 147
13. The dethronement of politics 149

1. The errors of sociobiology 153
2. The process of cultural evolution 155
3. The evolution of self-maintaining complex systems 158
4. The stratification of rules of conduct 159
5. Customary rules and economic order 161
6. The discipline of freedom 163
7. The re-emergence of suppressed primordial instincts 165
8. Evolution, tradition and progress 168
9. The construction of new morals to serve old instincts: Marx 169
10. The destruction of indispensable values by scientific error: Freud 173
11. The tables turned 175


Socialism is Zombie Economics

Zombie Economics

A couple of years ago (July 2018) I gave a talk at a Students for Liberty conference on “Zombie Economics” with particular reference to the Marxist “manifestation” of this intellectual beast which refuses to die, no matter how many times it has been “killed” (intellectually speaking of course). It has been the revolutionary Marxists who have done most of the killing once they have seized political power and find that their utopian economic schemes fail to work as planned). As of 1997, the total of deaths caused by the attempt to impose Marxist economic polices since the experiment began in 1917 in Russia is about 94 million and rising. It would be much more if one included other variants of socialism such as “national” socialism. [See, Stéphane Courtois, Andrzej Paczkowski, Nicolas Werth, et al., The Black Book of Communism: Crimes, Terror, Repression (Harvard University Press, 1997)].

[See “ How to kill the Marxist zombie once and for all: or, how you can learn to stop worrying about S&M on campus ,” YAL Conference, Washington D.C. 26 July, 2018.]

Of course, Marxism is not the only variant of “zombie economics” which advocates of the free market have had to deal with. And economists from other schools of thought naturally have the opposite view. They, like the Keynesian economist from the University of Queensland, John Quiggen, think that free market ideas should also be described as “zombie economics”, or as he put it in the subtitle of his book of the same title, “how dead ideas still walk among us.” The specific examples of these ideas he gave prominence on the front cover were “privatized social security,” “trickle-down economics,” and “efficient financial markets.”1.

The most prevalent form of zombie economics until recently is “protectionism”, which is really a euphemism for special privileges granted to some domestic/national producers and their workers in order to shield or “protect” them from competitive forces and thus guarantee the continuation of their profits and wages, and to prevent by force other domestic consumers and producers and their workers from buying cheaper (usually foreign) alternatives. Or in other words, every act of “protection” for some must inevitably cause “harm” to others – which is a classic example of Frédéric Bastiat’s notion of “the seen” (protection of some) and “the unseen” (harm to others). [See my blogpost on Bastiat on the Seen and the Unseen (29 May, 2020) and my paper Bastiat on the Seen and the Unseen: An Intellectual History.]

However a second manifestation of zombie economics has appeared in recent years, that of a resurgence of interest in fully fledged “socialism”, even Marxism. This coincided with the 100th anniversary of the Bolshevik Revolution of 1917 in Russia which was very positively commented upon in papers like the New York Times; the acclaim for the French economist Thomas Picketty’s book Capital in the Twenty-First Century (Harvard, 2017) (which was intended to be an update to Marx’s volume of same name which appeared in 1867); and the appearance of the film “The Young Marx” (2017), funded by numerous state film and TV organizations in the European Union, to celebrate the 200th anniversary of the Marx’s birth in 1818; to cite only a few examples.

Socialist Economic Thought before it became Zombified

Given this revived interest in things Socialist or Marxist I want to revisit some of the key socialist and Marxist thinkers of the past, to see what they actually thought could and should replace the “chaos of the market” and the “immiseration of the working class” by “predatory capitalism,” and the response of classical liberals and political economists of the time to these ideas. I have prepared a summary of socialist criticisms of private property, and the free market; and a similar list of CL answers to these criticisms and their critique of socialism. I will detail these in future posts.

If one were feeling charitable towards the “ideal” of socialism (which I am not) one might take the view of J.S. Mill who argued that the ideal of classical liberalism can be compared with the ideal of socialism (which was possible at his time – the 1850s and 1860s); but the reality of the free market could not be compared to the reality of socialism, as the latter had not yet been put into practice. The 20th century would provide that “reality check” which was not available in Mill’s own lifetime. We now I think have all the evidence we need to make that comparison. By 1920, as Ludwig von Mises conclusively demonstrated in his essay on “Economic Calculation under Socialism”, the jury was in.

In short, I have noticed is two things about the early history of socialist thought: the general weakness (even naivety and absurdity) of the ideas put forward on behalf of socialism beginning largely in the 1820s and reaching a pinnacle in the 1840s on the eve of the 1848 Revolution, and the enduring strength of the CL critique which also began at this time. When Marx attempted to make socialism more “scientific” with his three volume book on Das Kapital (1869-96) things in my view did not improve, as Böhm-Bawerk demonstrated in his demolition of Marxist economic theory when Marx’s third and final volume appeared posthumously in print. It makes one wonder why these zombie economic ideas continue to be advocated today and why the liberal critique continues to be ignored.

Historically, I think we can identify the following different kinds of socialism which have been advocated at different times:

  1. Utopian socialism: “dropping out” or withdrawing from capitalist society in order to form socialist communities which would be a model for the future; the formation of voluntary socialist communities based upon the ideas of Robert Owen and Charles Fourier many of which were located in the United States
  2. Democratic socialism, or “socialism from below” where elected politicians work within capitalist society, to use their numbers to control parliament, and reform it from within; examples include
    1. Louis Blanc’s National Workshops – street activism & “direct action” (Feb.-May 1848) ; state ownership and/or funding of factories and “workshops” in order to guarantee a job for all (the so-called “le droit au travail” (the right to work, or right to a job) as advocated by Victory Considerant and Louis Blanc in the 1840s
    2. the rise of “Fabian Socialism” in the 1880s and the formation of the Labour Party in Britain (1900)
    3. “social democracy”: the formation of Socialist Parties in France (1879) and Germany (Social Democratic Party in 1875)
    4. the welfare state socialism wich emerged in the US (the “New Deal”) and Western Europe during the 1930s and late 1940s
    5. Green socialism (The Greens) in the late 20th century up unit the present, and their proposed “Green New Deal” which is explicitly based upon the comprehensive “socialist” (or “interventionist”) measures of FDR
  3. Bureaucratic socialism: “socialism from above” – imposed by a charismatic political leader who appeals to workers directly, thus by-passing parliament
    1. state socialism (Staatssozialismus, Socialisme d’état)
    2. the “Bonapartism” of Napoléon III 1852-1870
    3. Ferdinand Lassalle and perhaps also Otto von Bismarck in Germany, and
    4. Claudio Jennet in France
    5. war socialism (Kriegssozialismus) during WW1
    6. Adolph Hitler and “Nationalsozialistische Deutsche Arbeiterpartei” (NSDAP) (the National Socialist German Workers Party, or Nazi Party) 1920-1945
    7. what Ludwig von Mises called ”Interventionism” and which in one manifestation came in the form of the hybrid welfare-warfare state
  4. Revolutionary socialism: a more extreme version of bureaucratic and war socialism where the state “owns” the means of production under the control of a “dictatorship of the proletariat” (die Diktatur des Proletariats) which has come to power by means of a revolution and the violent seizure of state power; this had two versions:
    1. Karl Marx – revolution & dictatorship of proletariat (failure of 1848 showed him need for “dictatorship” to prevent electoral backlash or coup d’état); had to happen in most advanced industrialized economies first; socialist would take over the economic system- as advocated by Marx in the Communist Manifesto (1848)
    2. Lenin – who broke with Marx’s vision as he believed communism could be created in a relatively backward, undeveloped country like Russia; became commonplace in 20thC
      1. Lenin and Bolsheviks in Russia 1917
      2. Mao Zedong in China 1949
      3. Fidel Castro in Cuba 1959

The Classical Liberal Response to the Rise of Socialism

Classical liberals and political economists responded to the challenge of socialism in the following periods when socialist ideas were seen as a growing threat:

  1. 1840s France when organised socialism first made an appearance in the 1848 Revolution
    1. the ideas of Victor Considerant, Louis Blanc, and Joseph Proudhon were criticized by Frédéric Bastiat, Michel Chevalier, and Gustave de Molinari
  2. 1870s, 1880s and 1890s in western Europe when organised socialist parties began to emerge
    1. Germany: the ideas of Karl Marx were criticized by the economist Eugen von Böhm-Bawerk; those of Auguste Bebel by the politician Eugen Richter
    2. England: George Bernard Shaw and the “Fabian socialists” were criticized by Herbert Spencer, Thomas Mackay, Wordsworth Donisthorpe, and Auberon Herbert
    3. France: the economists Jennet and Gide were criticized by the economists and politicians Frédéric Passy, Yves Guyot, Paul Leroy-Beaulieu
  3. 1920s and 1930s: when the Austrian economist Ludwig von Mises first exposed the serious economic weaknesses in Marxist/Bolshevik central planning
    1. Lenin and Stalin vs. Mises and Hayek
  4. 1980s and 1990s: a new younger generation of Austrian economists (Don Lavoie and Peter Boettke) examined weakness of planned economies on the eve of their collapse

I have begun to assemble a collection of works by socialist writers and their critics on my website to document the strengths/weaknesses of the socialist position and their enduring appeal; as well as the often devastating critique offered by classical liberals and the political economists. I will begin with “the French Connection” in another post, before moving on to late 19th century English, German, and French socialist thought.

  1. John Quiggin, Zombie Economics: How Dead Ideas Still Walk among Us. With a new chapter by the author (Princeton U.P., 2012). []

Plutology II: Disney Plutology vs. WB Bugsology

Being a mischievous sort of chap, when I first came across the name Hearn gave his book I immediately thought it must have been a scientific study of Walt Disney’s cartoon character “Pluto the Pup”.

The connection between Pluto and wealth or money was rather tenuous until I came across this image of Disney play money with Pluto on the $1,000,000 bill:

Being a timorous creature, Pluto never was able to stand up for himself when the predatory bull-dog attempted to steal his food (i.e. his “wealth”):

In the historical context when Disney, Mickey, and Pluto were made and were very popular, the 1930s and 1940s, one could interpret the heavily dog-collared “Butch” as a fascist or communist tyrant preying upon the docile dogs of the neighbourhood.

By own preference in cartoon characters is not the saccharine, obedient and conformist Mickey Mouse, Mini Mouse, and their pet dog Pluto; but rather the anarchistic, disrespectful, Brooklyn accented, and uncontrollable Bugs Bunny:

Whose face adorns a much more modest $1 dollar bill:

When faced with a tyrant, Bugs preferred to undermine the system from within (as in “Gremlins in the Kremlin”) or outright mockery )of Nazis like Herman Goering):

Or, when he turns into a “Rebel Rabbit” (1949):1

who takes on the entire government when he finds out that some bureaucrat in Washington D.C. – the “Game Commissioner” – thought that rabbits were so harmless that the bounty placed on their capture or killing by hunters was a paltry 2 cents (whereas foxes had a bounty of $50). Bugs considers this to be an act of “discrimination.” and decides to confront the Commissioner. Bugs is put in his place by the abusive government bureaucrat:

so he decides to go on a rampage of protest and resistance, by beating a government guard with his own truncheon:

defacing the Washington Monument by painting it like a barber pole;

and selling the island of Manhattan back to the Indians:

The result is that a new bounty of $1 million is placed on his head:

and the entire U.S. military is mobilised to capture him:

It takes the entire “War Department” to capture Bugs and incarcerate him in Alcatraz Prison, from which he will no doubt escape by tunneling out as he always does:

  1. See the entry for “Rebel Rabbit” Wikipedia and a copy of the whole cartoon here. []

Bruce Smith (1851–1937)

The important although little known Australian classical liberal Bruce Smith (1851–1937) was one of the very few voices in Australia arguing for a radical and consistent liberalism in opposition to the statist (i.e. interventionist) version of liberalism which was home-grown in the colonies and the equally interventionist “New Liberalism” which was being imported from Britain. Greg Lindsay and Gregory Melluish of the Centre for Independent Studies in Sydney attempted to revive interest in his work with the republication in 2005 of his main book Liberty and Liberalism: A Protest against the growing Tendency toward undue Interference by the State, with Individual Liberty, Private Enterprise and the Rights of Property (1887), with some assistance from myself. I got the text coded, they published it in book form, and I put it on the Online Library of Liberty which I directed. See it here.

I have now added the text to my own website, along with some biographical material about Smith, and a copy of another of his books Truisms of Statecraft: An Attempt to Define, in General Terms, the Origin, Growth, Purpose, and Possibilities, of Popular Government (London: Longmans, 1921). See the main page for Australian Classical Liberals and Libertarians, the Bruce Smith bio page, and the HTML version of Liberty and Liberalism here.

David Kemp devotes some space to discussing Smith’s ideas in A Free Country: Australians’ Search for Utopia 1861–1901 (2019) which suggests he is sympathetic to Smith’s kind of classical liberalism, which derived from the English radical liberal Herbert Spencer and the people around the Liberty and Property Defense League, which he contrasts with the other source of influence on Australian liberal thought, that of the much more moderate and even interventionist ideas of John Stuart Mill. The protectionists in Australia seized upon Mill’s glaring exception to the principle of free trade, namely the “infant industries argument” as a justification for the protectionist party in Victoria which ultimately was able to make this policy one of the foundation stones of Australia’s deeply flawed federation of 1901. The other dead-weight stones which were hung around the neck of Australian liberty were the racist White Australia policy, the deeply interventionist compulsory labour arbitration system, and the state socialism of government owned and run railways and other “infrastructure”). Smith opposed all of these awful policies but had little influence over the ultimate outcome.

As Greg Melluish notes in his Introduction:

Bruce Smith’s *Liberty and Liberalism* is significant for two major reasons. The first is that it was the one major critique of the new liberalism produced in the Australian colonies. The second is that it is the most important theoretical expression of classical liberalism written in Australia. It was an account of liberalism that owed a lot to the principles of Darwinian evolution. In part, its significance lies in the fact that it owes its intellectual substance to the Melbourne school of free trade liberalism which has largely been ignored by historians such as Stuart Macintyre who have focused primarily on statist liberals such as Syme, Pearson and Deakin.

And that his influence ultimately lies not in his “political success” or lack thereof but:

… the importance of Smith’s political career did not lie in his political achievements. They were not substantial. Rather Smith’s continuing presence in public life was important because through him the tradition of classical liberalism also continued to have a public presence. There has been a tendency to paint both Smith and his work on liberalism as some sort of anachronistic dinosaur, a vestige from an earlier age. This is both incorrect and highly ideological. It rests on the dangerous notion that liberalism was being ‘progressive’ by becoming more statist.

It seems that Australian libertarians have to still face the same charges some 140 years later.

In re-reading the book I came across a couple of my favourite passages which I include below as an appetiser to reading the entire book. The first is his view of what it is the limited state should actually do; and the second is his view of the role of the state in education, mass, compulsory, state education being one of the cornerstones of the edifice of the Australian state for both “left” and “right”.

On the proper function of a “legislator” (CIS ed. pp. 299-300):

The broad principles, then, which I should venture to lay down as guides for any one assuming the responsible position of a legislator are three in number.
1. The state should not *impose taxes*, or *use the public revenue* for any purpose other than that of *securing equal freedom to all citizens*.(29)
2. The state should not interfere with the *legally acquired property* of any section of its citizens for any other purpose than that of *securing equal freedom to all citizens;* and in the event of any such justifiable interference amounting to appropriation; then, only conditional upon the lawful owner being *fully compensated*.
3. The state should not in any way restrict *the personal liberty* of citizens for any other purpose than that of *securing equal freedom to all citizens*.

I repeat that I do not offer these as *conclusive tests* of the wisdom of any proposed legislation. I claim for them this use, however, that they should, in every case, be applied to any such proposal; and if, on such application, the new rights sought to be conferred, and the restrictions on liberty which they must necessarily involve, do not conflict with either of the three principles, there can be little objection to its legislative sanction. If, however, any such proposal *is* found to come into conflict with either of those principles; then, I contend, a great responsibility is cast upon him or them who demand the interference of the legislature; and he or they should be forced to prove, conclusively, that the necessity for the proposal is *so urgent* that it overrides the consideration of its transgressing one of the fundamental principles upon which our social system has been built up. He should be compelled, too, to show a strong probability that the proposed means *will effect the desired end*, without producing an *equally or more injurious* result to society, in *some other direction*, or at *some other time*. The effect of the regular application of these principles to proposed measures would be, in the first place, to determine on which side the burden of proof lay; and then it would rest with those who have cast upon them the responsibility of giving the legislative sanction, to determine (1) whether the *necessity* has been proved; (2) whether, under all the circumstances of the case, that necessity is *sufficiently urgent* to justify the subversion of a principle which is immemorial, and which has for centuries served as one of the pillars of our social fabric; (3) whether it has been shown that the proposed measure will effect the purpose aimed at, without, at the same time, producing injurious results to society in *some other*, perhaps unsuspected, *direction*, or at *some other time*.(30)

Smith’s Notes

(29) I am well aware that the first of these three principles could, strictly speaking, be included within the second, for to impose taxes is really to interfere with property; and to use the public revenue, in which each and every citizen has an interest, practically produces a similar result; but inasmuch as the lapping of the two is not palpable, I have chosen to separate them.

(30) “It is not sufficient (says Professor Stanley Jevons) to show by direct experiment or other incontestable evidence that an addition of happiness is made. We must also assure ourselves that there is no equivalent or greater subtraction of happiness—a substraction which may take effect either as regards other people or subsequent times.”

And on education (CIS ed. pp. 307 ff.):

*State Education*.—I have no hesitation in characterising the maintenance of state education as a distinct transgression of the first principle of the three which I have deduced from an analysis of man’s wants as an individual member of society, viz., that the state should not *impose taxes, or use the public revenue* for any other purpose than that of *securing equal freedom to all citizens*. It is undoubtedly true that every citizen should have the *liberty* to be educated if he so wish; but state education, as now established in most English-speaking communities, involves a recognition of a right to be supplied with the *means* by which to secure such education. No one, I think, has ever seriously disputed the proposition with which I have opened this section of the present chapter. With the exception of Mr. Herbert Spencer’s treatment of the subject in his “Social Statics,” I do not think any other writer has recorded his objections to the system on that ground. …

… But now, having admitted so much, I have yet to ask—should the state *supply* this education? Are there not a hundred things more necessary for all classes? However desirable reading, writing, and arithmetic may be, mankind succeeded without them. Is not food more important—is it not absolutely indispensable? So also clothing, shelter, warmth in winter, medicine in sickness. Is it not more important that the food we eat should be wholesome, than that our education should be good? Yet the state takes upon itself none of these wants. It does not undertake the supply of meat, bread, butter, or milk. It does not concern itself about the thickness or sufficiency of our clothing; about the temperature of our dwellings. Surely the proper feeding of the *body* is of as much importance as the feeding of the *mind*. Then why should education be undertaken by the state? While many hundreds of children, in Great Britain, are being taught to read and write, they are suffering from a want of clothing, and in some cases from an empty stomach. Why does the state not come to the rescue in those more important wants? There must surely be some other reason for state interference in this matter. Now, the advocates of state education have John Stuart Mill on their side. Let us then see what arguments he advances. In the first place, he justifies the state taking education in hand on the ground that it is one of those commodities which the consumer cannot judge for himself. He, therefore, claims it as an exception to the rule of allowing the individual to be the judge of his own wants. Practically, this means that every man, being a judge of butter, or sugar, or bread, or meat, or cloth, or linen, he should be left to look after his own interest; but in matters in which he is *not* a “competent judge” it is “admissible in principle that the government should provide it” for him. Considering the authority from which this doctrine comes, it is indeed extraordinary. Let us see where it would lead. Mill himself admits that even in “material objects produced for our use,” it is “not true universally” that the consumer is the best judge. If this is so, which we may assume on the admission, should the state provide for the stupid people? Should the state undertake the function of advising citizens what is, and what is not a good article? This is really what Mill’s doctrine would lead to. To go further; if the state is only to interfere when the inability of the consumer to judge the article is tolerably universal, why should not the state take in hand the work now performed by lawyers, physicians, and chemists? How many of the public are “competent judges” of law or physic? How many of them are “competent judges” as to whether they really want such advice? Surely the state should come in here also! I cannot follow up the illustrations of its unsoundness as an argument; but it applies to such subjects of “consumption” as art, literature, the drama, and even the sciences. It is true that the masses are not “competent” judges of the higher branches of culture; but is it not unreasonable to assume that their ignorance is so profound that they cannot appreciate the advantages of reading the newspaper, writing a letter, and being able to correctly add up an account, or expeditiously check the money-change which they receive in their every-day transactions? Yet these are obvious results of the ordinary state-school curriculum, and if any part of the masses are so dense that they cannot really discern these advantages, I venture to think that when the schooling has been forced upon them it will not be to much purpose. But if this reason—the inability of the consumer to judge any commodity for himself—is a sufficient one for justifying the assumption by the state of the supply of that commodity, where is the result to terminate?

Mises on Economic Calculation under Socialism

A Parallel Edition of Ludwig von Mises on Economic Calculation under Socialism (1920) “ with versions of the article in German (facs. PDF and HTML), the Adler English translation, his expansion of his argument into the book Die Gemeinwirtschaft (Socialism) (1922) also in German and English.

2020 is the 100th anniversary of the publication of Ludwig von Mises’ seminal essay on the inevitable problems faced by socialist central planners in trying to organise a “socialist” economic system. From the mid-19th century onwards classical liberals had pointed out the many serious problems which they thought would hamper socialists from creating a “rationally planned” and well-organised socialist system of production which would not be based on the private ownership of property and the profit system which existed in a free market in the “capitalist system” of production.

However, it would not be until 1920 when Ludwig von Mises, observing the actual efforts of the new Bolshevik communist government in Russia which had come to power in the revolution of 1917, asked the most penetrating question of how socialist central planners could do anything economically rational in an economic system in which there were no prices for goods, labour, raw materials, expertise, or most importantly for capital. He began this investigation in this essay of 1920, and deepened it into a book-length work Die Gemeinshaft (Socialism) (1922, revised ed. 1932), and later, in 1949, in a section of his treatise Human Action, Vol. 3, Part 5 “Social Cooperation without a Market”, especially chapters 25 and 26: 25. “The Imaginary Construction of a Socialist Society” and 26. “The Impossibility of Economic Calculation Under Socialism”). [Ludwig von Mises, Human Action: A Treatise on Economics, in 4 vols., ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2007). Vol. 3. OLL.

We present here his original 1920 essay in a parallel edition showing the German and English translation side by side so readers can see for themselves this important essay which, had economists and politicians taken more seriously in the 1920s and 1930s, might have saved the Russian people from the catastrophe which was central planning.