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Saturday, March 5, 2011

Hayek and Roosevelt: Tending the garden of liberalism

by John MacBeath Watkins

At the bignning of the first chapter of The Road to Serfdom, F.A. Hayek positions this quote:

A program whose basic thesis is, not that the of system free enterprise for profit has failed in this generation, but that it has not been tried.
--Franklin D. Roosevelt
That's taken from "Recommendations to Congress to Curb Monopolies and the Concentration of Economic Power," which was collected in The Continuing Struggle for Liberalism, vol. 7 of The Collected Public Papers and Addresses of Franklin D. Roosevelt.

It seems that Hayek considered Roosevelt to be on the same side as he was in the struggle for liberalism. A few pages farther on in the book, while discussing the advances in understanding economics and how "we gained intellectual mastery of the forces of which we had to make use," he states that "There were many obvious tasks, such as our handling of the monetary system and the prevention of control of monopoly..."

In that one sentence, he contradicts the political views of some of the conservatives who happily adopt the more paranoid aspects of his philosophy, regarding the dangers of planning.

But Hayek, while he may have had some problems with some aspects of the Roosevelt Administration (who doesn't?)  he considered it obvious that discretionary monetary policy and avoiding monopoly control of segments of the economy as things that obviously needed to be done. Clearly, he did not regard markets as natural phenomenon, as he made clear in using the simile of a garden that needs tending.

"The attitude of the liberal toward society is like that of the gardener who tends a plant, and, in order to create the`conditions most favorable for its growth, must know as much as possible about its structure and the way it functions," Hayek says in the same chapter. For Hayek, pumping money into  an economy that lacks liquidity or pruning an economy growing ragged with inflation are proper functions of governments, just as watering a parched plant or pruning a ragged rosebush would be proper for a gardener.

Like Hayek, I consider capitalism the most congenial system yet discovered for the flourishing of liberty, but again like Hayek, I don't consider it a natural phenomenon. It as a made environment, like a garden, not a jungle as the Social Darwinist thought.

And yet there is a strain in market libertarianism that has turned capitalism into an ideology, which wants to see the limiting of government as a way to return to the Eden of a market without government. This would be a market where the government does not restrict the market even when monopolies flourish, and in which discretionary monetary policy is a kind of original sin. It would in fact be a "just world".

This is the group that wants a return to the gold standard, as a more natural system of value, not, as Ron Paul's website puts it, money that is just "blimps on a computer screen."

But of course, gold is no more natural a store of value than any other. I don't wear a lot of bling, so I'm not a person who values gold for itself much. Should it become a medium of exchange, I would value it because it represents value to others, just as I value bits of paper with pictures of dead presidents (and Alexander Hamilton & Ben Franklin) on them.

The thing is, there is no Eden for markets or liberalism.  Liberalism and capitalism are attempts to build human institutions that allow the flourishing of human nature, they are not nature itself. The social contract makes possible governments, and governments make possible the secure property rights and orderly markets that make capitalism possible. But if you think those things are obvious to all, you haven't been watching our political debates.

My posts on Hayek, by the way, are here:

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