Tuesday, October 4, 2011

Why ideas matter

Every once in a while, I am confronted with an earnest young man who vaguely understands that I am into economics and having been exposed to a few intro classes in college will ask (anxiously? fervently? excitedly?) if I have ever heard of the Austrian School.

Actually I have.  There is a strain of REAL conservatism in Austria.  Just remember, Vienna was once, not so long ago, the capital of an empire.  The Hapsburgs were authoritarian Catholics who ruled by the grace of God.  Over the years, the emperors hired guys like Mozart and Beethoven to entertain them.  The Austrian School of economics came from the thinking that kept this empire going.

Not surprisingly, the Austrian emperors feared the Marxists who finally won a revolution in Russia in 1917.  With good reason.  The Russian revolutionaries executed their emperor and a sizable chunk of his family.  And the Austro-Hungarian Empire was broken up in the aftermath of WW I so there was no more emperor.  But the institutions that had propped up the empire didn't just go out of business.  The economists whose job it had been to justify the oversized and utterly useless Leisure Class of the emperor and his posse, still thought their mission in life was to suck up to wealth and power.  And if the empire was no more, perhaps there were the North American new rich who needed the attention of someone who had learned sucking up in a country with old-fashioned royalty.

And so Friedrich Hayek came to the University of Chicago to spread his right-wing extremism.  Hayek had written this ugly little tome called The Road to Serfdom that claimed that anything that remotely smacked of collectivism—even something as utterly practical as social medicine—was just the first step down the slippery slope to the Gulag.  After WW II, he was hired by the notorious Charles Koch to bring his extreme ideas to bear on the battle to roll back Social Security.

I have never been impressed by toadies and so I have zero respect for the intellectual droolings of the Austrians.  Mostly because they are so often just flat-out wrong about damn near everything.  Mostly because they are SO wrong about the "slippery slope."  It is quite possible to construct a social order where there is a balance between individual freedom and collective planning.  All the really successful societies of the 20th century were such mixed economies.  So while we watch the assumptions of Hayek-Chicago neoliberalism crash and burn these days, we are reminded that the Austrian individualist extremists caused as much damage with their nonsense as any collectivist extremists.  Balance, folks.

Anyway, some documents concerning the relationship between Koch and Hayek have recently been found among Hayek's papers at the Hoover Institute.  Turns out Hayek was quite willing to turn his intellectual "firepower" on Social Security but he certainly did NOT want to go without it personally.

Mark Ames takes it from here.  More.

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