Many have noted how the political mainstream is defined by a narrow spectrum that varies between moderate and extreme forms of intervention into private affairs. In a short essay published in 1949, “The Intellectuals and Socialism,” F. A. Hayek gave several reasons why intellectuals, or what we today call pundits or political commentators, tend toward statism.1 On the heels of the current recession, these reasons illuminate the consensus for more state intervention and the renewed calls for the standard alleged remedies, from pump-priming interest-rate cuts on the left, to warfare statism on the right.
A typical representative of the former is Paul Krugman, the New York Times columnist and recurrent panelist on CNN’s “Moneyline.” Professor Krugman has on several occasions floated the standard old Keynesian standby explanation that recessions are caused by evaporating consumer demand, which in turn causes rising unemployment and the rash of bankruptcies and liquidations that signal a recession. The obvious remedy is to artificially stimulate demand by encouraging the accumulation of additional consumer debt.
An example of the latter is Lawrence Kudlow, the National Review columnist and television financial commentator, who wrote, “The shock therapy of decisive war will elevate the stock market by a couple-thousand points. We will know that our businesses will stay open, that our families will be safe, and that our future will be unlimited.”2 In Mr. Kudlow’s view, companies can recover their bottom lines by joining the war effort, supplying goods and services to the expanding state. And taxpayers can rebuild their hollowed out portfolios by piggybacking on tax-funded defense contractors.
These two examples are not isolated cases. The collapse of the stock-market bubble, the 9/11 terror attacks, and the ensuing “war on terror” have brought forth among Americans a broad approval for renewed statism. Pundits and commentators in particular have followed this reversal of fortune with serious claims about the failings of a society with too much freedom, as if there could be such a condition, and have drawn from the collapse of Enron, Global Crossing, and WorldCom the conclusion that trade and enterprise are inherently corrupt and pose a danger to the public.
As many libertarians have struggled to explain, the boom and bust are the results of previous monetary interventions, but the diagnosis of the mainstream intellectuals misses the fact that the Federal Reserve, the central bank, was the silent and unacknowledged partner in the excesses now coming to light.
In his essay, Hayek described intellectuals as “second-hand dealers in ideas,” by which he meant propagators of ideas, rather than the original discoverers of new knowledge — in essence, those who guide and educate, or miseducate as the case may be, public opinion. Hayek described the pervasive influence of the intellectuals by noting that “(t)here is little that the ordinary man of today learns about events or ideas except through the medium of this class; and outside our special fields of work we are in this respect almost all ordinary men.” Hayek noted the power of the intellectuals in deciding what views, opinions, and facts we’re to be told of, and what slant they will be told from: “Whether we shall ever learn of the results of the work of the expert and the original thinker depends mainly on their decisions.” Those familiar with the Austrian tradition are fully aware of the truth of this statement. The pioneering work of Ludwig von Mises and Hayek himself are virtually absent from the ideas discussed and advocated by mainstream intellectuals. Why is it that the intellectual class is so hostile to genuine free market ideas?
Hayek speculated that the reason lies in the occupation of the commentator itself. He simply lacks the direct knowledge that experience provides from what Hayek called “the administration of property.” Consequently, intellectuals lack firsthand knowledge of direct responsibility for business matters, and this distinguishes the intellectual from others who make a living from speaking and writing.3 Most intellectuals would counter that, far from being a handicap, this alleged absence of economic self-interest allows commentators to be selfless and neutral observers, besides being able to exercise good citizenship.
How interventionist ideas came to predominate can be more or less traced back to the Progressive Era in American history. In two essays, “World War I as Fulfillment: Power and the Intellectuals” and “Origins of the Welfare State in America,” the late Murray N. Rothbard described how the turn of the twentieth century came to be characterized by a movement for state intervention throughout the economy.4 Certain ideas about society and the state were combined with a secularized religious fervor that saw in an expanding interventionist state the instrument to counteract the alleged evils of laissez faire. These ideas were propagated by the dominant intellectual class.
As Hayek pointed out, the commitment to a worldview, or Weltanschauung, is what first motivates the intellectual. And the origin of the Progressive, or collectivist, worldview is the error that is the source of the horrors of the twentieth century, namely, that as “man has learned to organize the forces of nature . . . [he has come to believe] that a similar control of the forces of society would bring comparable improvements in human conditions.” With this belief, it was only a short step to apply engineering principles to devise “a single coherent plan [for] . . . the direction of all forms of human activity.” And so central planning was born.
Hayek thought that intellectuals were attracted to interventionism because they mistakenly believe that man is no different from the clay the sculptor molds to create his art. The analogy was first used by Frederic Bastiat. In believing this, interventionists mistakenly apply the empirical method to human action and are able to convince others using the prestige of mechanical engineering that their schemes for social engineering are truly humane and just.5
The current mainstream intellectual worldview is still one that views the economy as a human version of a Rube Goldberg contraption: inexplicable in operation, but prone to endless tinkering. And with this worldview in place, not surprisingly, intellectuals favor those ideas that reinforce their desire to advise, manipulate, and tinker. As Hayek explained: “the intellectual . . . judges new ideas not by their specific merits but by the readiness with which they fit into his general conceptions, into the picture of the world which he regards as modern or advanced.” And: “his criterion must be consistency with his other views and suitability for combining into a coherent picture of the world. Yet this selection from the multitude of new ideas presenting themselves at every moment creates the characteristic climate of opinion, the dominant Weltanshauung of a period.”
But it doesn’t end there, of course. This worldview has long since spread far beyond merely the media. Hayek linked its spread to the proliferation of pressure lobbies and their associated incentives and interests. A major consequence of this is the widespread devaluation of expert knowledge in favor of general knowledge. As Hayek said, instead of experts in a field, “It is rather the person whose general knowledge is supposed to qualify him to appreciate expert testimony, and to judge between the experts from different fields, whose power is enhanced.” And being generalists, these intellectuals “judge all issues not by their specific merits but, in the characteristic manner of intellectuals, solely in the light of certain fashionable general ideas.” Since they are not experts, intellectuals are easily swayed by ideas that are already popular with their friends and colleagues.
So while the number of pressure organizations and their influence increased, the actual knowledge and expertise of their members declined. “Even though their knowledge may be often superficial and their intelligence limited, this does not alter the fact that it is their judgement which mainly determines the views on which society will act in the not too distant future,” Hayek wrote, and because of their influence as “opinionmakers” “it is their convictions and opinions which operate as the sieve through which all new conceptions must pass before they can reach the masses.”
With this role in society today, the intellectuals have come effectively to steer debate by their de facto control over who becomes famous as a thinker. Hayek alludes to those who have undeservedly achieved reputations “solely because they hold what intellectuals regard as ‘progressive’ political views.” And this control over reputation has had other effects. “This creation of reputations by the intellectuals is particularly important in the fields where the results of expert studies are not used by other specialists but depend on the political decision of the public at large.” That is, the choices of intellectuals in turn influenced the choices presented to the electorate by politicians during elections.
Using their influence on the culture, intellectuals have been able to exert a degree of control over what information about current issues the public is exposed to. And using the ideas picked up from the intellectuals, politicians have advocated reforms for education, especially higher education, where the process is reinforced. (Hayek believed that the majority of university teachers have to be classified as intellectuals rather than as experts.6)
The education establishment for several generations now has produced new intellectuals firmly indoctrinated in the worldview of interventionism and “market failure.” As a result of the social influence of intellectuals in regulating the ideas that students and the general public are exposed to, Hayek noted that “in most parts of the Western World even the most determined opponents of socialism derive from socialist sources their knowledge on most subjects on which they have no first-hand information.” A man, he said, “cannot disagree with a socialist analysis in a field in which he has no knowledge.”
Secure in their tenured positions, academic intellectuals are free to indoctrinate students in the same manner as intellectuals indoctrinate the general public, by restricting ideas and applying erroneous knowledge. Ostracism and fear of failure keep any dissenters in check. As Hayek put it: “The forces which influence recruitment to the ranks of the intellectuals . . . help to explain why so many of the most able among them lean towards socialism.” He described this phenomenon of interventionist peer pressure like this: “although outside intellectual circles it may still be an act of courage to profess socialist convictions, the pressure of opinion among intellectuals will often be so strongly in favour of socialism that it requires more strength and independence for a man to resist it than to join in what his fellows regard as modern views.”
While intellectuals today generally no longer advocate any school of orthodox socialism, they still are largely motivated by the same myths that motivated the socialists of the past. All mainstream commentators on the ups and downs of the economy interpret these events through the miseducation they received from mainstream economics training. For example, behind their calls for artificially low interest rates is the belief that the business cycle is a natural unavoidable phenomenon of the free-market system of savings, investment, production, and consumption. In particular, their prescription to prevent another Great Depression are formed by the mainstream interpretation that the welfare/warfare-state schemes of Franklin Delano Roosevelt’s New Deal saved capitalism from itself and that World War II, with its controls, quotas, rationing, and super-patriotism, brought the country out of depression.
This is the mainstream view of the history of the twentieth century, taught in high schools and college economics courses, and repeated by columnists and pundits far and wide whenever the downward slump of the business cycle comes around. The “failures” of capitalism are ingrained in the interventionists’ worldview, and the unfortunate effect of this interpretation of history is that the same mistakes are repeated again and again, year after year, decade after decade. Generations of intellectuals and the public have been indoctrinated with the myths of statism.
Hayek concluded his essay with an appeal for a libertarian program that sticks to principle, for intellectual leaders committed to resisting the lure of power and political influence, and for those who will have the courage to fight for libertarian ideas against all odds.7 In the years since he wrote “The Intellectuals and Socialism” there have been many setbacks, but the idea of liberty has grown in prominence. As Hayek noted: The intellectual revival of [classical] liberalism is already underway in many parts of the world.” But he could still ask, “Will it be in time?”
Unfortunately, it is still possible to ask this question. Yet thanks to Hayek’s inspiring example and labors, many have been brought over to the idea of liberty, just as he himself was by reading Ludwig von Mises. It is up to us to continue their work.