Lindsay Perigo
Lindsay Perigo

The Fatal Deceit

Editor's note: In her newly-published book, Liberty Belle, Deborah Coddington tells the story of her intellectual odyssey from leftie-liberalism to libertarianism. On the way she was nearly derailed by ACT & their pin-up, the Austrian economist F.A. Hayek. Exhorted by Alan Gibbs to read Hayek's The Fatal Conceit, she lamented to me one day how boring it was. "Oh, don't bother with it!" I said, handing her a copy of my own critique of it, written in response to a challenge from Gibbs earlier that year (1993). Deborah read the critique, abandoned The Fatal Conceit, & resumed her journey to genuine libertarianism. My critique is reproduced below; for a broader overview of the totality of Hayek's works, readers are referred to the article by Larry Sechrest in TFR #28.

"The rules of morality are not the conclusions of our reason." – David Hume, quoted approvingly by F.A. Hayek in The Fatal Conceit.

"One should never suppose ... that only those moral rules are valid that reason endorses." – F.A. Hayek.

"The idea that reason, itself created in the course of evolution, should now be in a position to determine its own future evolution, is inherently contradictory." – F.A. Hayek.

"The idea that human nature is reasonable is a disastrous mistake." – John Maynard Keynes.

"We are now at the end of the Age of Reason. The intellect has grown autocratic, and has become a disease of life." – Adolf Hitler.

In a sense, these quotations say it all. Hayek, a leading contemporary advocate of capitalism, turns out on closer inspection to endorse the fundamental premises of capitalism's enemies. He is an apostle of unreason, of tradition-worship for its own sake, of a mechanistic evolution which man's mind is powerless to grasp or control; and of the deadly ethical poison that continues to infect the bloodstream of freedom and civilisation: i.e. altruism, the belief that one's life belongs to others, that the good of others should be the primary purpose of one's life and actions. Thus, while conceding that in a free market, individuals act for their own good, Hayek argues that they are exempt from moral blame for this, and remain morally virtuous, because they unintentionally benefit others in the process! He is an eloquent example of why capitalism has been languishing for want of a viable, i.e. rationally justifiable, moral defence — by his own admission, he doesn't believe such a defence is possible.

It is tempting to ask, before moving further: in that case, why does Hayek bother making any sort of case at all? If reason is irrelevant to the existence and validation of the "extended order" (the outcome of his inexorable evolutionary process), why bother proffering any reasons whatsoever — even flawed ones — for the desirability of this order? To argue a case for anything is to invoke the faculty of reason ... but if this faculty is irrelevant, or indeed inimical ,to that which one is arguing for, one is subverting one's own position. Better, surely, that Hayek simply leave us to immerse ourselves in the ineffable tradition that he says has spontaneously and inexplicably become the repository of all wisdom, and passively await enlightenment?!

Hayek's problem in my view is that he has failed to observe the crucial role of ideas in human history. He assumes that when cultural evolution took over from biological evolution, it was equally blind, spontaneous, unaware of itself; it occurred independently of any ideas held by the entities whose culture was evolving. He accepts Marx's view that ideas do not shape man's "social being," but rather, the other way round. What then does determine man's social being? According to Marx, inexorable laws that are independent of man's will; according to Hayek, "moral traditions" that are "spontaneously generated" and are also independent of man's will. Where's the real difference? Both are positing forms of historical determinism.

But it is not just any old life form we are talking about here. What distinguishes man from all other conscious organisms is his conceptual faculty, the ability to form concepts from the percepts that his sensory apparatus automatically absorbs, to integrate concretes into abstractions, to reach conclusions about the world, man's place in it, and what he should do if he wants to remain in it and flourish. This faculty is what we refer to as reason; the conclusions it draws, the ideas it forms, however primitive, are its currency. They determine not merely whether, but how, men will live. In short, they determine culture, and they move history.

Hayek unintentionally concedes this from time to time — for example, in linking the advance of civilisation to the development of private property and the concept of liberty. He notes that in ancient Crete, private property was prevalent and makes a connection between this fact and the enshrining of personal liberty as the state's highest good in that state's constitution. Well, where does he think that notion came from? That it was emblazoned in the sky? That the constitution spontaneously wrote itself? That men woke up one morning and found themselves suddenly occupying private property, free from the shackles of other men? For liberty and private property to be prevalent, they must be institutionalised; to be institutionalised they must first be grasped as concepts. Someone has to think of them.

This is not to suggest that such ideas could be conceived in a vacuum. Men would have to make significant advances from the stage of cave and club and hunting tribe before advanced abstractions such as individual liberty became conceivable or applicable; but these advances too are dependent upon the application of man's reasoning mind to his external circumstances. He has no innate knowledge of how to make a fire. Someone has to think of it — or, if he discovers it by accident, to think of uses for it. Reason, even at that primitive level, is man's distinctive mode of functioning and means of survival. How it became so is for science to discover; that it is so is the only appropriate starting point for a tenable ethics.

To put this point another way: in upholding the primacy of tradition, Hayek is side-stepping the question of how that tradition developed. His own answer would be that the question is unanswerable, the process unknowable. The true answer, empirically derived, is that tradition — any tradition — is the upshot of whichever antecedent ideas have achieved dominance in human affairs. The issue then becomes one of evaluating those ideas — and this is where Hayek dissembles.

For him, there can be no such thing as an objective ethics, no code of morality that can hold its own against all comers, no standard of evaluation, no possibility of objectivity in forming conclusions as to how human beings ought to behave. Observe his equivocation here, for he obviously understands full well that on this basis he has no business dispensing moral prescriptions of his own — yet he does precisely this; and in the process, of course cannot avoid assuming a standard of morality even though he would dismiss it as subjective. Thus: "although this morality [i.e. his, the one derived from tradition] is not ' justified' by the fact that it enables us to survive, it does enable us to survive, and there is something perhaps to be said for that."

Perhaps??!! Is there or isn't there?! Is there "perhaps" something to be said equally for a morality that doesn't enable us to survive, or one that explicitly encourages self-destruction?! To be consistent, of course, Hayek would have to answer in the affirmative, since if no objective ethics is possible, any ethics is as "good" as any other.

Hayek's error lies in a mistaken view of objectivity, in his unstated assumption that objectivity must consist in floating abstractions, divorced from man and this earth; that the instant a man makes a value judgement it becomes subjective because it is a man who makes it; that any value judgement whatsoever is thereby subjective; that there is no objective means of evaluating the respective merits, for example, of Thomas Jefferson's view of the status of the individual in society — and Adolf Hitler's. In holding this view he is simply a child of his times, a footnote to Immanuel Kant, the father of our times, who taught us, with far more sophistication than David Hume or Plato, that we can't know anything. [How does he know that we can't know anything if we can't know anything? Blank-out!]

"Objectivity" is conformity to reality; to be "objective" is to identify reality; one's tool of objectivity is one's reason. To assert that there is no such thing as reality and that objectivity is impossible is to commit the fallacy of the stolen concept, since one is purporting to make an objectively true statement while denying the possibility of objectivity. One does not negate a concept by invoking it!

It is interesting to note, in passing, Hayek's disdain for, and misrepresentation of, Aristotle, the father of biology and of logic, of observation and reasoning, of induction and deduction, the arch-purveyor of the efficacy of the human mind, of a reality-based ethics, of the virtues of self-fulfilment, personal happiness and pride. Aristotle most assuredly made errors and did not proceed consistently in all matters, but this is said with some arrogance with the benefit of hindsight. To attribute to him the stagnation and rigidity of the mediaeval period [while ignoring Plato, Plotinus, Augustine and other altruism-mongering mystics] as Hayek appears to do, is absurd. Moreover, observe the gaping contradiction here: he who downplays the potence of ideas attributes to one man's ideas the stagnation of a millennium!

Contradictions, alas, seem to abound in The Fatal Conceit. Observe that Hayek regards altruism as a genetically transmitted instinct that developed during the biological evolution leading to homo sapiens, but that became inconsistent with the requirements of the "extended order" as it came into being. Since he approves of the extended order, one would expect him to argue in favour of an alternative to altruism as the moral base of that order; but lo, what do we find? First, an acceptance of altruism as being axiomatic; second, the most tortuous verbal gymnastics being practised in an effort to prove that the free market is altruistic and immune from the charge of selfishness. Thus:

"All systems of morality of course commend altruistic action."

"The morals of the market do lead us to benefit others not by our intending to do so, but by making us act in a manner which nonetheless will have just that effect."

"...the institution of private property is not selfish, since it serves the needs of distant, unknown individuals."

"We can still call his [the entrepreneur's] motives altruistic in that they eventually redound to the benefit of others."

Observe the confusion here: to act for the sake of others, Hayek accepts, is noble. In the free market, one acts for oneself...this, by implication, must be ignoble. But wait ... it just so happens, by a fortunate coincidence, that self-interested actions benefit others also. Phew!! That's all right then! Even though a man intends that he himself should be the beneficiary of his own actions, we can pretend his motives don't exist and exempt him from the severe moral censure that he would otherwise deserve for his despicable selfishness, because he unintentionally benefits others. What a relief! For a moment it looked as though we might have to contemplate finding a justification for self-interest.

This ethical ambiguity, incidentally, is paralleled by the epistemological ambiguity Hayek displays in asserting that belief in a personal god, though false, has been efficacious. Aside from the treason of applauding anything that is false, the countless millions who were tortured, murdered, or had their lives made unendurable in the name of a personal god, might take a different view.

Let us now extricate ourselves from this Hayekian mess and see if we can't posit something better.

Let's say we were observing from afar the actions of one man stranded alone on an island, and saw that he opted not to lie down and die, but to take actions conducive to his survival. Suppose we said, "Well good for him. He is doing consciously what all other forms of life do naturally — he is acting to live. He is applying his mind to the material around him so as to adapt it to the needs of his survival." As time went by, & we found him surviving on an increasingly sophisticated level — not merely in the manner of the plants and animals around him, but savouring his existence, the fruits of his actions — we would, consistent with our initial approval, applaud him even more loudly. Without stating the issue in philosophical terms, we would have accepted life as the standard of evaluation appropriate for the living organism capable of the act of evaluating, & it would strike us as very eccentric to posit any other standard (and to try to act on it!).

Now suppose several other people were subsequently stranded on the same island. What, ethically, would alter? Nothing — except that our solitary individual now would have the opportunity to further enhance his existence considerably. The self-interest of all parties would consist in their collaborating on terms mutually agreed to, effecting a division of labour, and attaining an ever-improving quality of life. In pursuit of that self-interest, they would also have to agree not to kill or otherwise visit physical harm upon each other. Observing this, consistent with our standard of evaluation being life, we would have to conclude that all of these people, acting in their own self-interest, were acting morally. To pretend that they were not acting in their self-interest, or to acknowledge that they were and then allege that this was immoral, would be an inversion of morality, a slap in the face of life itself. Why then, do we feel obliged to practise this inversion or maintain this pretence when dealing with modern market economies? Why do we not shout it from the rooftops that self-interest, and the individual freedom its exercise presupposes, are good, and capitalism is good because it is based thereon? And so what if tradition has it that self-interest is evil; more fool tradition! Look at the devastation, the destruction of life, that traditional altruism has wrought!

The peddlers of self-sacrifice know that it cannot be justified by reason, and so they must resort to a tradition steeped in the suspension or outright defiance of reason: faith. To claim that this tradition is not only compatible with a system dependent on reason (capitalism), but also caused that system to come into being, as Hayek does, is dishonest. To credit that system's enemies with seeking rationality in man's social existence is gullibly to swallow the rhetoric of some of its enemies while ignoring the accurate rhetoric of most. Rationality is an attribute of the individual, exercised volitionally; capitalism's enemies, be they Keynesian, communist or fascist, deny volition and claim that true individuality lies in surrender to the common good, i.e. the suspension of one's own rational judgement. The enemies of capitalism are the enemies of reason ... and many are honest enough to say so. Conversely, the enemies of reason are the enemies of capitalism ... and it ill-behoves capitalism's friends to attack reason.

Observe that every time Hayek, in spite of himself, posits something as being good, it is something collectivist in character: custom, tradition, survival of the largest number, the greatest good of the greatest number, etc.. Individual sovereignty in his view does not exist by right, i.e. by dint of each individual possessing the capacity to think and choose for himself, but as a means to "maximum economy in the use of resources" and the unintended welfare of unseen others. Of course, capitalism does achieve these results, but these are secondary consequences, not its primary justification. After all, these are precisely the objectives Keynes, Marx et al purport to be striving after! One cannot defend individualism, the prerequisite of capitalism, on collectivist premises. Individualism rests on reason, both for its practice and its defence; to abandon reason is to embrace collectivism.

By paraphrasing the David Hume quotation of which Hayek is so fond, one can make it fruitful:

"The rules of morality hitherto have not been the conclusions of our reason."

All the more reason to make them so now!


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