Per Caritatem

In reading various texts—whether of a philosophical, political, literary, or economic nature—it is striking how many authors offer a (re)reading of the Genesis Fall narrative and then proceed to use their particular reading as the hermeneutical lens through which they explicate their position as a whole or at least to illuminate some significant theme integral to their position.  Consider Hegel’s interpretation of the Fall as necessary for the ultimate good of humankind, or Kant’s re-reading of Genesis in his essay, Conjectural Beginning of Human History, where he claims that the original transgression actually causes reason to emerge.  That is, prior to the Fall, humans did not possess a moral or rational capacity for such a decision. However, with the Fall, we overcame our “tutelage” to nature (i.e., instinctual animal-like existence).  For Kant, within the human race itself and from the very beginning, there is an inherent struggle, a tension between sociability and unsociability.  This is quite different than the traditional Christian narrative, which affirms the current dis-integration of humans, that is, an inner struggle of desires that tear at our very being and which was not present from the beginning; rather, this unnatural condition is a result of our willful turn away (“fall”) from the Triune Creator.Invisible Hand by Mark Bailen

Friedrich Hayek, economist, philosopher, self-professed promoter of liberalism even writing an essay to distance himself from conservatism,[1] ardent defender of free-market capitalism, and winner of the 1974 Nobel Prize in economics, though in no way an advocate of Christian Holy Writ, offers a narrative about economics that, as Jung Mo Sung observes, shares certain structural similarities with the Genesis Fall narrative. Though himself an agnostic, Hayek acknowledges rather begrudgingly that beneficial practices have resulted from religious beliefs, in particular, monotheistic religious beliefs, “which are not true—or verifiable or testable in the same sense as are scientific statements and which are certainly not the result of rational argumentation” (The Final Conceit, 136–7).  If Hayek were a Christian, we might interpret this statement as allowing for the possibility of truths that are revealed by faith—suprarational, not irrational truths; however, given Hayek’s rejection of Christianity, this interpretation is not an option.  Interestingly, Hayek’s view of economics has deeply influenced the way that many conservative Christians (as well as others) think about the free market.  (This is not in itself “damning” in my view, as many non-Christian philosophies, insights, etc. have been appropriated by Christians for the furtherance of their tradition and to aid in the explication of their own teachings; however, what would be “damning” is if the teaching or ethos appropriated is fundamentally at odds with the Christian faith, tradition, and teachings of Christ himself).

Upon reception of the Nobel Prize in economics, Hayek presented a lecture entitled, “The Pretence of Knowledge.” In the lecture, he speaks against a “scientist” approach to economics which attempts to apply “habits of thought to fields different from that in which they have been formed.”[2] In other words, according to Hayek, economics does not belong with the “hard” (physical) sciences, as it deals with complex phenomena that are not quantifiable, observable, measurable, etc. in the same way that the phenomena of the physical sciences are.  One might grant this conclusion; yet, Hayek goes further, claiming that because we cannot understand, completely master, etc. a phenomena as complex as the market, attempts to do so are dangerous and harmful.  For Hayek, the great economic crisis of the 1970s was due to Keynesian interventionist policies.  Like Adam and Eve, whose desire to be omniscient overtook them, moving them to partake of the fruit of the forbidden tree and thus created havoc for them and others beyond their wildest dreams, so too, according to Hayek, do those who dare steer the invisible hand of the free market system lead us to our doom.  “To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”[3] There is no doubt that certain kinds of interventionist policies could be used for tyrannical, totalitarian purposes; however, does it necessarily follow that they must?  One could become very pessimistic about any attempts to regulate or direct the market for purposes of social justice. One could also choose to believe that social and economic problems will somehow solve themselves through the unintended effects of the Smithian benevolent, invisible hand.  (I am not claiming that these are the only possible options). To opt for the second possibility, as Sung highlights, is not only an act of faith, but an (irrational) leap of faith.

[I]f it is true that we cannot sufficiently understand the factors and dynamics of the market so that we can intervene in it, how can we know that the market always produces beneficial effects or that it is essentially a ‘force for good’? Is knowing that the market always produces beneficial effects not a pretension of knowledge of the market? Since one cannot prove this providential character of the market, we have here a ‘leap of faith’ in the affirmation of the essentially beneficent quality of free market.[4]

Hayek, highly influenced by philosopher Karl Popper (and, it seems, Popper’s literal reading of Plato’s Republic as a blueprint for totalitarianism!), held to an (obviously non-theistic) view of evolutionary morality, which as I understand it—and I am open to correction here as I have not read the entire book and am no expert on Hayek’s work—suggests that we move beyond primitive instincts—“rules of solidarity and altruism” (The Fatal Conceit, 13) and “treat[ing] all men as neighbors.”  Why?  “For those now living within the extended order gain from not treating one another as neighbors, and by applying, in their interactions, rules of the extended order [=”free market economy”]—instead of the rules of solidarity and altruism” (Ibid.). Somehow, I just don’t think Jesus would approve.

Notes


[1] See his essay, “Why I am Not a Conservative.”

[2] “Friedrich August von Hayek – Prize Lecture.” Nobelprize.org. 22 Jul 2010 http://nobelprize.org/nobel_prizes/economics/laureates/1974/hayek-lecture.html.

[3] Ibid.

[4] Beyond the Spirit of Empire, p. 82.

* The Invisible Hand Image was created by Mark Bailen and was copied from this website.


4 Responses so far

I had believed that Milton Friedman was the main culprit for the spread of this idolatry among evangelical Christians, but Hayek, von Mises, and others also deserve blame for this irrational idolatry. Thanks for continuing to highlight issues that most evangelicals ignore.


I will confess at the outset that I have been totally won over by Hayek, although it took me years to escape my previous modes of thought. If I were a believer in God (which I’m not, partly as a result of Hayek) I would say that he had a mind sent to us by God. His views are in my opinion very very sophisticated and difficult for most people to grasp, partly because they are often counter intuitive, partly because most of us have been taught to think in a particular way that is probably incorrect.

His words are also very carefully chosen and often misinterpreted. I don’t think Hayek ever said that what the market produces is always “good” or “the best” so that Sung knocks down a straw man when he asks “how can we know it is a force for good?” which is often what happens with Hayek. (Keynes and Sraffa did this in the 1930s as well with his economics mainly in response to Hayek’s brilliant critique of Keynes’s Treatise on Money.

Michael Westmoreland-White also mentions Milton Friedman. While Friedman and Hayek may have shared many views on methodology they were miles apart. Hayek regarded Friedman as completely wrong on methodology and described his book “Positive Economics” as quite as dangerous as Keynes’s “General Theory”.


Having started I think I ought to offer a better comment than I did above on a number of points that you raise.
First you note that Hayek sees that some beneficial practices have resulted from religious beliefs. This is really derived from his own belief in evolution. We may do something for the “wrong” reason, for example not eat pork on religious grounds but this may well lead us to derive benefits, through not contracting disease. Because this makes us better able to survive our non pork view may continue, although the reason for our not eating pork may be completely unverifiable or even completely wrong. Bringing in Christianity you could take this further. Some of its basic principles, honesty and trustworthiness are essential to a properly functioning economy. We may have adopted these principles as a result of a religious belief which is completely unfounded but they will provide enormous benefits, if in general people stick to the rules. If you can no longer trust your neighbour the costs of dealing with him rise. In societies where there is little or no trust economic activity is usually held back substantially to everyone’s detriment.
Hayek’s lecture “The Pretence of Knowledge” is first and foremost about methodology in economics. As he put it in his lecture we can describe well the circumstances in which an equilibrium price will be established but we cannot know what that price actually is. His critique is then of the association between total demand and total employment, which appear to move together and the apparent deduction that if we can raise total demand then full employment will follow. The false methodology leads us to a false theory, which nevertheless appears to be right. What he does not describe in that lecture, or not in any detail, is how an attempt to secure full employment by boosting demand through low interest rates can actually bring about a financial catastrophe. If you are interested and have a cold towel to hand to put on your head I would recommend that you read his “Prices and Production”. This is a series of lectures that he gave at the London School of Economics in 1931. They set out an explanation of how (and this is why I say much of his work is counterintuitive) too much consumption and excess demand will lead to a financial crisis and make widespread unemployment at least temporarily unavoidable. I am told that many of those who heard the lectures suddenly saw an explanation of the economic disaster around them and certainly his view would fit the events of 2000 to 2008 when a period of deliberately low interest rates culminated in a huge financial crash. So I think the point is intervention can be well intended (rather than tyrannical or totalitarian purposes) but have detrimental unforeseen consequences out of all proportion to and opposite from what has been planned.
Turning now to your final point, which is related to Mr Sung’s, do we choose to believe that social and economic problems will somehow solve themselves through the unintended effects of the Smithian benevolent, invisible hand and is this not only an act of faith, but an irrational one? How can we know that the market always produces beneficial effects or that it is essentially a ‘force for good’?
A great deal of Hayek’s work was centred on demonstrating that much of what we have and achieve is the product of human action but not of human design. When you eat some bread in the morning it has probably been produced by a whole series of people and processes (think of the equipment, how it was made, the raw materials to construct it, the raw materials for the bread, the farmer, the miller and so on) most of whom did not know one another or you. Smith’s invisible hand is what enables all of the producers to co-ordinate their activity in such a way that you have a loaf of bread to buy when you want it and where you want it. None of these producers set out with the idea of producing bread for you out of the goodness of their heart but the end result is that it is available. Without the invisible hand production cannot be co-ordinated. I think it is no exaggeration to say that most of current humanity would not be able to survive without the price mechanism. Without it only a near subsistence existence for a very few people would be possible.
So the question “is it a force for good?” is a false one. It is neither good nor bad but it is the only system that we have and it is what enables us to survive. The question to ask is “what could we replace it with?” and to that there has never been an answer. Here I would suggest that you read Hayek on the socialist calculation problem. If you do away with the price system how would we know what to produce and how to produce it? The only answer that the socialists were able to come up with was that they would have an identical price system but with all the means of production owned by the state.


Elsa, Thank you so much for your very helpful and thoughtful comments. When I get a breather, which won’t happen for the next month or so, I’ll try to get back to those texts and interact with you. For the present, I am swamped!