[OPE-L:4764] Re: opposition to Hayek

Michael William (mwilliam@compuserve.com)
Mon, 14 Apr 1997 04:37:31 -0700 (PDT)

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Paul C writes:
> Sometimes I wonder whether members of Ope really have lived through
> the 20th century or not.

Wonder no more. I didn't parachute into EEA'97 from a parallel universe,
but have been living in the 20th century since 1941.
> The politics of the 20th century have been dominated by the epochal
> political struggle between socialism and capitalism. For most of this
> century two quite different economic systems have existed on this
> planet with correspondingly different theoretical reflections.

I won't take up the issue of why I don't thank that the regimes you call
'socialist' are usefully so-called. They certainly employed significant
measures of central planning, and a much-reduced role for markets in their
economic (resource allocating) mechanisms. However, Marx provides us with
very little as the basis of a theory of either socialism or central
planning, and rather a lot of excellent work developing a critique of
capitalism through critique of existent political economy of capitalism. It
is this latter they I seek to understand, develop, reconstruct, deploy.
In this context, socially necessary abstract labour is, IMO, a categfory
specific to capitalism. One manifestation of this relevant here is that
Central Planners work in terms of quantities (including of speicifc kinds
of labour) and shadow prices, not abstract labour.

> The
> theoretical proponents of each system have tried to construct a
> systematic critique of the other system. Marxist theory has obviously
> been one of the main forms of socialist critique of capitalist
> economies.

So I don't agree with this. There was certainly no socialist system when
Marx was working, nor, IMO, did he have an clearly worked out speculative
conceptualisation of one. Modern Marxism is a scientific not (in the first
instance) a moral, ideological or political critique of capitalism. More
tot he point, it emerges not out of any rival system but out of a study of
capitalism itself, and its theoretical reflection in orthodox economics.

> The corresponding body of theory on the other
> side has been the austrian school of von Mises and Hayek. This
> school has as its prime objective the critique of socialist economy.

No doubt some 'Austrians' have been motivated by an ideological dislike of
'planning' as an inefficient and freedom-threatening interference with 'the
market'. No doubt right-wing 'neo-liberal' politicians have adopted
Austrian theories/theoreticians (especially Hayek) as their ideology/gurus.
Nevertheless 'Austrian Economics' contains a putatively scientific account
of a capitalist economy, that is critical of neo-classical orthodoxy, and
has interesting things to say about intentionality, subjectivity,
formalism, 'scientism', etc. All of this has to be critically appropriated
on the basis of its coherence and congruence with reality, not on the basis
of any alleged ideological genesis or implication.

> This is probably the most significant new component of bourgeois
> political economy this century.

OK. But it is almost as marginalised within economics as Marxism.
> Until socialism became a practical reality this century, there was
> simply no need to perform a critique of socialism. With the comming
> to power of both reformist socialist governments such as the Austrian
> social democrats, and revolutionary socialist governments such as
> the Bolsheviks, it became a matter of central importance to the
> property owning classes. The Hayekian school provided the ideological
> impetus to both the Thatcherite rolling back of reformist socialism,
> and the Eastern European counter revolutions of the late 80s against
> revolutionary socialism.

I would need more evidence of this alleged causal relation between the rise
of social democracy and bolshevism and the development of Austrian
economics. Even if it is confirmed, whatever its genesis, its critical
appraisal needs to be in the first instance scientific.

> A key element of the Hayekian school is its emphasis on the market
> as the mechanism that validates prices. Their argument is that there
> can be no rational economic calculation in the absence of market
> prices.

Yes, and this argument needs to be dealt with. I, for one, am not clear
that a complex advanced economy can dispense with (as opposed to control)
market mechanisms. And I fear we are stuck with 'economic mechanisms' until
scarcity is abolished.

> The market itself, rather than production conditions is seen as the
> key
> factor in determining prices. It is a social subjectivist school
> in that it treats the market as a social mechanism, but one that is seen
> as unifying the multiplicity of distinct subjects engaging in trade,
> each of whom has knowledge which is essentially private and subjective
> about the conditions of production.

And about their self-perceived wants and needs. So what?

> It is ideological in that its main aim is the critique of socialism and
> the defence of capitalist forms of economy.

I do not agree - see above. Anyway, Marx's intellectual work was no doubt
motivated by his developing political views. But that is not a basis for
either accepting or rejecting it.

My remarks here are, of course, a little one-sided. The complexity and
fluidity of social determination, and the ,IMO, inescapable problems of
teleology, intentionality and reflexivity in social science leave lots of
indeterminacy into which ideological factors can intrude. Nevertheless,
whilst the ideological position of particular practitioners, the apparent
ideologically motivated assumptions of a theory and the ideological uses to
which theories may be put may alert us to the kinds of critique that we may
wish to pursue, any theory is to be appraised finally in terms of its
method, argument and knowledge claims, not by its genesis or use.

Your touching Faith that (naturalistic, positivist) social science is bound
to be on the side of the angels is, I think, unwarranted.

Dr Michael Williams
"Books are Weapons"

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