Hayekian Interpretations: A Debate over �The �Asian Way� and Modern Liberalism
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Hayekan Transitions By David Moore

Dr Kukathas�s edited version of his address to the Bali regional meeting of the Mont P�lerin Society is a fascinating exegesis of Hayek�s thought and its potential application to the Asian region (even though, as Kukathas repeats many times throughout, Hayek did not apply himself to the study of Asia, and the article does not refer very often to Asia in any empirical sense). However, I fear that Kukathas�s enthusiasm misses an important point. Hayek celebrated the individual�s inherent capacity to figure things out for him or herself in a purely capitalist society. However, there may not be very many examples of� this �abstract� individual in societies on the rocky road of transition from something which could be called �pre-capitalism� to that of which Hayek speaks. By jumping over this contradiction, Kukathas improperly celebrates James C. Scott�s fascinatingly anarchistic Seeing Like a State as Hayekian. This brings Kukathas close to advocating peasant resistance against the market society venerated by Hayek and his latter day disciples in institutions such as The Centre for Independent Studies.

The article inspires at least two trains of thought as a response. The first takes the form of some questions. Would Hayek have celebrated the �local knowledge� of members of a society which did not value property rights? What means would Hayek justify for the transition of a �third world� society�perhaps with communal property-holding traditions�into a liberal, individualist property-holding �democracy�? In the case of the recently de-toothed Asian �tigers�, would the �free-market� have brought them along the capitalist road as far as they have travelled, or was the heavy hand of a �feudal� landowner-smashing and industrially planning state a necessary�if temporary�evil?

The second train of thought involves a quick reading of Scott�s Seeing Like a State to see just what he says about Hayek. I will deal with each line of inquiry briefly, as befits one who is neither an expert in Hayek or Asia, but who is interested in questions of the place of the state and the phenomenon of violence in �transitional� societies.

Roads to capitalism

Unless I am mistaken, Hayek does not consider what Ernest Gellner has said is �the problem of politics:� how to escape from �traditional� society��a world doomed to starvation, inequality, oppression and superstition and one in which . . . there is not much knowledge over and above �intimations� contained in �traditions�.�1 If we understand Kukathas correctly, Hayek would celebrate the �local knowledge� herein described, and be appalled if a state or a monopolistic enterprise bulldozed these traditions down in the name of �progress�. But if either this state or this modernising corporation justified the removal of indigenous knowledge with the claim that the true realm of freedom�incarnated in individualised property rights�was about to ensue, would Hayek be against it? How many resisting subsistence farmers could justifiably be killed�or lose their lives in quieter ways as they search for employment in cities incapable of absorbing their migration�in the advance to market democracy? Or would this all happen through the invisible hand of the globalised market place?

One does not have to search too long throughout history to find many examples of people wishing to hang on to �tradition� being rather brutally dispensed with by either collectivist state tyrants or individualist entre-preneurs: were the choices Stalin in the Soviet Union or King Leopold in his Congo Free State? And what are they now? The questions are not disingenuous: does Hayekian thought offer one a way out of what seems to be a dilemma for people who are not members of the �historically eccentric� (Gellner again) moment of the �enlightenment�? Hayek�s thought seems to assume that even though �we� are not entirely rational, we make our day-to-day decisions on the basis of a capitalist structure, in which if property rights are not taken for granted, they are protected by a state. His thoughts on the role of the state for the maintenance of this structure are fairly clear�Hayek is no advocate of laissez-faire, but rather of a lean and somewhat mean state which both promotes and enforces the market�but it is not clear how he might see the �transitional� state. Can it create individual property rights? Gellner thought so: he saw the absolutist state playing a crucial role throughout European history, even if it did manage to create a vigorous civil society in its shadows (largely because it guaranteed offices to a nobility which was otherwise becoming disenfranchised: this would look a little bit like corruption to the offices of Transparency International).

One supposes that a Hayekian response would be that in today�s society, when presented with the opportunity to enter the �market�, non-capitalist �indigenous� peoples would freely choose to do so. The only way out of the transition connundrum is to assume that all indigenous people would choose to enter the market if they could�there is no need to be forced to be free. This is a laissez faire solution, and we are told that Hayek was not of that persuasion. Yet he can get away with the coincidence between the �unique information� afforded by �unorganised knowledge� because he is writing of an already marketised society. Kukathas, however, takes a bold leap to celebrate�if only fleetingly�the pleasures of �local knowledge� which are not necessarily bound to the Enlightenment. Is he a relativist, or is there a line which he would care or dare to draw and say that some societies�some forms of local and unorganised knowledge�are not conducive to �progress� and thus are not worthy to be called �civilisations�? If not, and if they do not �take� spontaneously to �the market�, what then? Both markets�or, rather, �private� capitalists and those working in their employ�and states, have utilised various degrees of force upon individuals unwilling to part with land that is collectively �managed�, with �organic� rather than contractually mediated relations to those who supervise their labour, and with �knowledge� oriented to ends other than profit; and they will continue to do so. Does Hayekian thought justify this in the name of greater freedom as well as increased productivity?

The second line of inquiry is rather less abstract. It focuses on a text Kukathas rallies to his cause. At first glance, James Scott�s Seeing Like a State appears to support Kukathas�s Hayekian appropriation�and maybe it does at a level or two further than that�but Scott certainly tries to distance himself from such company. No later than that last paragraph of his introduction does he disclaim: �my bill of particulars is by no means a case for politically unfettered market coordination as urged by Friedrich Hayek and Milton Friedman. As we shall see, the conclusions that can be drawn from the failures of modern projects of social engineering are as applicable to market-driven standardisation as they are to bureaucratic homogeneity� (p.8). He claims that �global capitalism� is a more powerful �force for homogenisation� than states: where then Kukathas�s minute accumulations of �local knowledge?�

Furthermore, Scott denies Hayek�s claim that the market arises accidentally and is �synonymous with �spontaneous social order�.� He argues, joining Karl Polanyi, that it �had to be imposed by a coercive state in the nineteenth century.� Then he slips into some agreement with Hayek on the evolution of common law, only to contend with him again by stating that both the market and the law create decidedly un-natural power relations and social orders (p.388, n.106).

More importantly, however, Scott holds hard to the belief that his hated �high modernising� states share much with the �market� that Kukathas tends to keep out of his warnings to Asians against �western seductions�. Scott owes us another book to keep himself true to these arguments, since Seeing Like a State is too susceptible to Kukathas�s importuning, but he does warn the readers again and again to be suspicious of the case for �the invisible hand of market coordination as opposed to centralised economies . . .� [because it] is itself an instituted, formal system of coordination . . . dependent on a larger system of social relations which its own calculus does not acknowledge and which it can neither create nor maintain� (p.351). Earlier, he collapses liberal and statist perspectives on the standardised and �unmarked citizen�, both consistent with a frame of mind that reduces �qualitative matters into quantitative issues with a single metric and, as it were, a bottom line: profit or loss� (p.346).

It is unfortunate that Seeing Like a State does not discuss the role of the modernising state in the Asian tigers, where the state planners were far from Hayekian but not at all anti-capitalist. I think Scott would be as impatient with IMF and World Bank solutions to matters Asian as he is with the statist utopias of the recent past. Neither he nor Kukathas explore the complicity between the two sorts of institutions�one a country-specific state, the other perhaps an incipient global state�but Scott�s long held celebration of the �peasant option� in opposition to both state and market make his implicit warnings to �Asians� seem somewhat more consistent than those of Kukathas. If the latter is to stay on his track of defending �the local� against �high-modernist� authoritarians pretending to �Asian values�, while simultaneously heralding Hayek, he had better be clearer on how to get to the market�and its roots in private property and workers with no property but their labour�while avoiding them.

References

Cockett, R. 1995, Thinking the Unthinkable: Think-Tanks and the Counter-Revolution, 1931-1983, Fontana, London.

Gellner, E. 1994, Conditions of Liberty: Civil Society and its Rivals, Penguin, London.

�� 1997, �Reply to Critics,� New Left Review 221 (January-February): 81-118.

Hochschild, A. 1998, King Leopold�s Ghost, Houghton Mifflin, Boston.

Kukathas, C. 1999, �The �Asian Way� and Modern Liberalism: A Hayekian Perspective,� Policy, 15(2), Winter: 3-9.

Lacher, H. 1999, �The Politics of the Market: Re-reading Karl Polanyi,� Global Society, 13(3): 313-326.

Polanyi, K. 1944, The Great Transformation: The Political and Economic Origins of Our Time, Beacon Press, Boston.

Scott, J.C. 1998, Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed, Yale University Press, New Haven and London.

Author

David Moore is a lecturer in Economic History and Development Studies at The University of Natal, Durban, South Africa and Visiting Scholar at Flinders University. This article is in response to �The �Asian Way� and Modern Liberalism: A Hayekian Perspective�, in Policy, Winter 1999, by Chandran Kukathas.

Seeing Like a Hayekian by Chandran Kukathas

There is nothing in the basic principles of liberalism to make it a stationary creed, there are no hard-and-fast rules fixed once and for all. The fundamental principle that in the ordering of our affairs we should make as much use as possible of the spontaneous forces of society, and resort as little as possible to coercion, is capable of an infinite variety of applications. There is, in particular, all the difference between deliberately creating a system within which competition will work as beneficially as possible, and passively accepting institutions as they are. Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rough rules of thumb, above all the principle of laissez-faire.

F.A. Hayek (1976: 13)

In �The �Asian Way� and Modern Liberalism� I suggested that it might repay us to look at the political claims of some of Asia�s modernisers through Hayekian eyes. More than this, I said I thought that, with Hayek�s help, we should see through those self-proclaimed modernisers�and recognise them for what they are: authoritarians interested less in freedom than in power. David Moore is understandably sceptical about all of this, and for reasons that are interesting and important.

The first is that the Hayekian world-view seems to direct institutional design or social reform towards the creation of markets and property rights. If this is, after all, what the modernisers are doing, how could a Hayekian complain? And given Hayek�s belief in progress, and the importance of getting out of the closed society, how could one think that his emphasis on the significance of local knowledge bespeaks a sympathy with the peasantry who are resistant to market transformations? Can Hayek say anything useful or interesting about the transition to the market?

The second is that putting Hayek in the company of James Scott on this question is misleading because Scott, unlike Hayek, was just as critical of the market as of the state. Capitalism, according to Scott, was no less a homogenising force than the state�one which was destructive of local knowledge. If one is for the local, then better to follow Scott, who is at least more consistent in his opposition to both market and state.

The upshot of this critique, then, is: where does that leave Hayek? Indeed, one may go further than Moore does, to ask whether Hayek does have much to offer at all.

Without wishing for a moment to suggest that Hayek�s thought is without its difficulties, I would argue that he has a great deal to offer. On the question of institutional design and the transition to liberal society, Hayek�s prescriptions rest on his often asserted conviction that our problem stems from human pride. �If the Enlightenment has discovered that the role assigned to human reason in intelligent construction had been too small in the past, we are discovering that the task which our age is assigning to the rational construction of new institutions is far too big� (Hayek 1982, v.3: 176). In the twentieth century, humanity was fooled into thinking that it could take control of its own destiny and recreate society in accordance with a settled plan. The result, Hayek insisted until he was vindicated, would be disaster: socialism would prove to be a catastrophe for the lives of ordinary people everywhere. Yet the alternative, Hayek also maintained, was not for liberals to sit and do nothing. Underestimating the importance of reason could be no less dangerous than overestimating its power. The point was to recognise the limitations of human intelligence without neglecting the task of working out what kinds of reforms might be needed, how constitutions might be improved, or in what ways property rights were best defined. Hayek�s concern was to find that path between authoritarian central planning and �laissez-faire�.

In this regard it is hard to say precisely what Hayek would have recommended by way of specific reforms in �third world� societies. One can only ask how we should view these societies if we think like Hayekians. The first thing to make clear is that heavy-handed intervention to create a market society was never the Hayekian way. First, Hayek was always wary of trampling on local traditions, even if they were not particularly market oriented. Second, Hayek remained convinced till the end that the battle for liberal society would have to be won not on the fields of politics but in the world of ideas. The trick was not to force policies through but to influence the climate of intellectual opinion so that good policy was more likely to find favour. This was the message of his most famous essay, �The Intellectuals and Socialism�. Unlike many of those authoritarian leaders touting Asian values, Hayek was never a Leninist. Nor, for that matter, did he have any sympathy with the greatest expropriator of peasant land-holdings: Stalin.

This brings us to the second issue raised by Moore: whether seeing like a Hayekian really does amount to seeing the world in the same way that James Scott does. To be sure, Scott makes some effort to distance himself from Hayek and Mises at several points in his book. And the extent to which capitalism, no less than the state, transforms and homogenises societies is an important theme in Scott�s writings. Moreover, Scott has, in other works, carefully described and documented the ways in which peasant societies have tried to resist the encroachments of the economically and politically powerful. But several points need to be noted at the outset. First, Scott is simply wrong to say that Hayek and Friedman have called for �politically unfettered market coordination�. Hayek has berated those liberals who think this. Second, it would be wrong to think that Hayek is unaware of the social transformation brought about by capitalism. He makes very clear in chapter 2 of The Constitution of Liberty, on �The Creative Powers of a Free Civilisation�, that civilisation itself is a mixed blessing. Third, the fact that market-driven standardisation is as much a fact of life as state-driven homogenisation should not lead us to equate them. This point is of critical importance, and requires a little elaboration.

There is no question that markets standardise. The virtue of markets is that they facilitate co-ordination among people with different purposes who, nonetheless, stand to benefit from exchange. Beyond a simple barter economy, exchange works best when there are settled mediums of exchange; and when standards of value are agreed. But markets also unsettle established standards, whether those be the standards of the traditional community entering the world of commerce by trading with others, or those of the mega-corporation hoping to convert the world to its web-browser.

Hayek has never argued for or against standardisation. For while it makes sense for people to cluster around, and so push into prominence, goods they find valuable, there is no reason to think that no better goods (or standards) are possible. What he has always argued against, however, is the inclination to entrench existing standards, and to enforce them everywhere. Governments do this all the time. Often they do this under the influence of powerful economic agents (corporations, trade unions, and other pressure groups) who stand to benefit from their preferred standards being entrenched and extended to others. Their concern is not to allow open competition on free markets; it is, rather, to manipulate markets to their advantage. Because the state is such a powerful institution, they devote great energy to capturing (elements of) the state, to try to regulate for standards that favour their own. Hayek has never argued against regulation: rules are necessary for order, and the question of what rules are best deserves serious attention. He has argued against regulation which privileges particular interests which seek to insulate themselves against competition.

In this regard, one should indeed look warily�indeed, critically�at some of those institutions David Moore and James Scott find troublesome. At the Mont P�lerin meeting at which my paper was originally presented, one of the most important discussions focussed on Helen Hughes�s critique of these international organisations. One does not have to be terribly Hayekian to see the World Trade Organisation as mercantilism dressed as lamb.

In the end, seeing like a Hayekian does not mean seeing the market through rose-coloured glasses. The market as such cannot be an object of desire, or a good in itself. The purpose of policy or institutional design is not to get to market society. The liberal goal is to create a free society under law: a society in which people, as Hayek puts it, can use their knowledge to pursue their own purposes. We should be wary of those high-modernist authoritarians pretending to �Asian values�, who even as they claim to be taking their societies to market, are more than likely leading them into the wilderness.

References

Hayek, F.A. 1976, The Road to Serfdom, Routledge and Kegan Paul, London.

�� 1982, Law, Legislation and Liberty, 3 vols., Routledge and Kegan Paul, London.

Author

Chandran Kukathas is Associate Professor of Politics, University College, University of New South Wales, Australian Defence Force Academy.

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