Published by EH.NET (April 2004)
Kenneth R. Hoover, _Economics as Ideology: Keynes, Laski, Hayek, and the
Creation of Contemporary Politics_. Lanham, MD: Rowman and Littlefield,
2003. xv + 329 pp. $27.95 (paper), ISBN: 0-7425-3113-9.
Reviewed for EH.NET by Steven Horwitz, Department of Economics, St.
Lawrence University.
Attempting to weave together intellectual and personal biographies of more than one great
thinker is a daunting enough task, but when the attempt includes three of the towering
figures in twentieth-century political economy, the task is that much more difficult.
Kenneth Hoover, a political scientist at Western Washington University, takes on this
high-degree-of-difficulty act of authorship in his book on Keynes, Laski, and Hayek, and
is quite successful, at least for the first two-thirds of the book. For the first eight
chapters, Hoover does a marvelous job in interweaving the ideas and lives of these three
men by setting them against the great events of their time. Rather than offer us
sequential biographies of each, Hoover organizes his chapters by decades and events, and
then demonstrates how each thinker's life and ideas were affected by the events of their
times. The result in those eight chapters is a rich portrait of the politics and
intellectual life of Great Britain (and to a lesser extent, the United States) during the
formative events of the century, and these chapters serve as a good, though flawed,
general introduction to the ideas of these three men.
Hoover's analytical framework is what he terms "identity relations
analysis," where an individual's identity is not determined by fixed
characteristics such as gender, nor is it solely about one's "personal
characteristics, nor an artifact of an exercise of power nor of social
construction, but a dynamic set of relations in which both self and society
play an inescapable role" (p. 6). Hoover is particularly interested in the
ways in which these identity relations link to the formation of ideologies.
One way of capturing the perspective he brings is his interest in how the
events of one's personal life and social context help to create one's
identity and then how one's ideological views in turn reflect that
understanding of one's identity. That is, how did the lives and contexts
of these three great thinkers affect the ideas that have become associated
with them both during their lives and after? In Hoover's own statement of
this perspective, there is not a simple, direct line between one's "inner
self" and one's ideological perspective, e.g., it is not the case that we
adopt particular views because we are the product of divorced parents, or
because we clamored for attention among numerous siblings. It is a more
complex interplay of history, psychology, and social relationships.
His account of Keynes is fairly standard in seeing Keynes's privileged
upbringing and association with the Bloomsbury crowd as central to his
identity formation and the ideas that emerged from it. Keynes is the hero
of this story, it should be noted, with his, in Hoover's view, more
pragmatic commitment to the importance of democratic processes and
intellectually-oriented leadership and expertise being preferred to Laski's
and Hayek's more rigid ideological stances to Keynes's left and right
respectively. Keynes's background is linked to his rejection of accepted
social norms and ideas, and his willingness to "tinker" with those through
various processes of trial and error. Hoover also sees Keynes's background
and eventual rise through the ranks of British intellectual and political
circles as forcing him to both trim off any ideological excesses and
maintain a willingness to shift ideas and strategies as the demands on him
changed. Hoover sees his ongoing shifts in position as evidence of
discovery and learning (though he is notably unwilling to extend the same
charitable interpretation to Laski and Hayek), and evidence of his ultimate
trust in the morality of the leadership, encapsulated in Keynes's famous
quip about the acceptability of "dangerous acts" in communities that "think
and feel rightly" as well as the similar idea in his comments on Hayek's
_Road to Serfdom_ about the danger being lessened with "right-minded"
people making policy.
Hoover's take on Laski centers around Laski's rebellion against both his
family and the capitalist structure of society. Laski's marriage to Frida
Kerry was a slap in the face of his Jewish family and their expectations of
him and his future. Their relationship, in Hoover's view, both symbolized
Laski's willingness to challenge radically the old order, and also provided
him with the intellectual and personal companionship that made his
productive career possible. His sympathies to socialism were further
rebellion against his family background from the merchant class of
Manchester. His well-to-do upbringing also enabled him to get the
"cultural tools" necessary to engage in the battle of ideas in the decades
to follow. These tools and the motivation coming out of his family
circumstances help to create Laski's position as radical critic of the
existing economic order, both through the world of ideas and through his
political and social activism. In addition, the variety of communities
with which Laski identified, from his Judaism to his upbringing in
Manchester to the academic communities of the U.S. and U.K. to his work
with union organizers, help to explain his "initially pluralist approach to
politics" (p. 226).
Interestingly, Hoover's interpretation of Hayek parallels Laski's in some
important respects. Hayek, as the child of a family of academics and
intellectuals and coming to adulthood during World War I, would
understandably be attracted to the world of ideas and to saving
civilization from what appeared to be forces gathered against it early in
the century. Not originally seeing himself as a radical or intellectual
rebel, it would be his contact with von Mises and the rise of Soviet Russia
that would push Hayek toward the political views that are now so tightly
associated with him. But as Hoover rightly notes, Hayek wrote little of
broader political concerns in the 1920s and 30s, sticking with his more
technical work in economics in his battles with Keynes and the market
socialists. What Hoover wishes to explain is Hayek's move to a more
"ideologized" perspective. Hoover's answer is that an important explanation
for that move is Hayek's contentious divorce from his first wife Hella and
remarriage to his first love Helene in the early 1950s.
In Ebenstein's (2001) recent biography, as well as Caldwell's recent book
(2003), more details of Hayek's divorce and remarriage have come to public
attention. The archival materials do not paint a very pretty picture, with
Hayek going through a number of legal maneuvers, including taking a
one-term position in Arkansas to take advantage of their liberal divorce
laws, so as to force a divorce on Hella that she would not consent to. In
addition, the archival materials suggest he made limited provisions for his
kids, although there appears to be some dispute about that claim as newer
archival materials may tell a different story. Hoover makes much of this
series of events, seeing them as possibly central to Hayek's "increasingly
antistatist attitudes" because restrictive divorce laws overly limited
individual choice (p. 232). Hoover also adds some important details about
Hayek's contacts with the nascent American conservative movement of the
post-War era, and the role it played in bringing him to the U.S. and making
the divorce possible. Hayek's personal circumstances and the relationships
that he was cultivating with U.S. conservatives are seen by Hoover as a
turning point in Hayek's identity formation that led to a more ideological
approach to his understanding of the social world.
In offering a few words of criticism, I will keep my focus on his treatment
of Hayek, as that is the one of the three I am most capable of commenting
on, and because some of the issues I wish to raise apply more generally.
Although the approach Hoover takes has its moments of insight, I find it
too psychologically driven in key places. It is difficult to deny that
psychological, personal, and relationship factors matter for the ways in
which a thinker's ideas might evolve over time. However, the relative
weight those factors should play as compared to genuine moments of learning
and discovery, as well as the pressure exerted on a thinker by other
people's ideas, is a matter of much more uncertainty. For example, Hayek's
move to political philosophy and his increasing "anti-statism" could be
explained a variety of other ways. Caldwell (2003) offers one such
explanation, seeing it as part of a broader evolution in Hayek toward
grasping the nature of the social sciences, and hence society, in response
to his perceived defeat at the hands of Keynes and the market socialists.
From Hoover's perspective, why would Hayek turn toward methodology and the
theory of mind at the very same time he is angling for his divorce and
becoming a "client" of conservative foundations? The book contains no
references to the essays that comprised _The Counter-Revolution of Science_
nor _The Sensory Order_, both of which were written during this stormy
period of the late 40s and early 50s, and neither of which has an obvious
connection to the divorce. Could it be that Hayek's turn toward political
philosophy was the product of his engaging in the very same process of
"learning and discovery" that Hoover attributes so charitably to Keynes's
shifting ideas?
This points to a more general problem with Hoover's treatment: he relies
mostly on the major books of each thinker as well as archival material, and
does very little with journal articles and other forms of publication. In
the case of Hayek, this leads to several problems, one of which is not
seeing the alternative, and in my belief, more plausible explanation for
Hayek's turn toward political philosophy. Granted, trying to deal with
three major thinkers in a 300-page book, one is limited, but one also has
an obligation to provide as complete treatment as possible. Two examples
of this problem with respect to Hayek are his misreading of Hayek's
critique of social justice and his assertion that Hayek provides no
evidence for his various claims about the division and effective use of
knowledge in the market.
Hoover (p. 228) claims that Hayek argues that "if morality is an attribute
only of individual voluntary acts, not of collective or coerced actions,
then government actions are amoral at best." However, that is not Hayek's
position. Rather he claims that morality can only be ascribed to
_intentions_ not to patterns of outcomes that are unintended consequences.
The dichotomy for Hayek is between the intended (to which attributions of
morality apply) and the unintended (to which they do not because they were
not the product of intentional choice). Thus, Hayek's critique of social
justice is that market outcomes, such as the distribution of income, are
not the product of anyone's intention, thus they cannot be judged immoral
or unjust. Governments, or other collectives such as firms and families,
can take actions that can be judged moral or immoral, or just or unjust,
just as individuals can. Hoover does not cite volume two of _Law,
Legislation, and Liberty_ (Hayek 1977), where this argument is spelled out
most clearly.
In his treatment of Hayek's work on knowledge, Hoover does not cite any of
Hayek's seminal papers (1937, 1945, 1978), all of which provide arguments
for his contention that markets serve as knowledge discovery and conveying
social processes. Hayek provides the "scientific" evidence for his view of
knowledge in _The Sensory Order_ (1952) and in several essays in the late
1960s. None of that work is cited, either. Nowhere in the book does Hoover
discuss Hayek's distinction between scientific, articulate knowledge, and
the tacit and contextual knowledge "of time and place." This distinction is
crucial to understanding Hayek's epistemic defense of the market and
critique of many forms of state intervention, yet it makes no appearance
here when those subjects are treated. Again, no author can be expected to
do it all, but then the author should be careful where he treads.
Hoover's own ideological perspective is at work in his treatment of Hayek
as well. One example of this is his continued insistence that Hayek's
defense of capitalism is a defense of economic privilege and that his
defense of freedom of choice works to the benefit of the wealthy and to the
detriment of the poor. This may or may not be true, but, importantly, it
was not Hayek's (1973: p. 62) view of the matter: 'Capitalism' is ...
always [a] misleading [name] because it suggests a system which mainly
benefits the capitalists, while it is in fact a system which imposes upon
enterprise a discipline under which the managers chafe and which each
endeavours to escape. The principle of charitable interpretation once again
rears its head and suggests that Hoover should have been more circumspect
in making such claims.
The second example is Hoover's word choice in describing Hayek's ideas and those of his
followers. The last third of the book is littered with invocations of "scripture,"
"proselytize," "faith," "corps of committed believers," and even "peddlers." This is
unfair both to Hayek and to those who attempted to put his ideas into practice. After
all, there would appear to be no less reason to apply the same sort of language to Laskian
socialists or Keynesian technocrats. Were not _The General Theory_ and Samuelson equally
the Old and New Testament of the macroeconomics of the post-War era? To Hoover, the
Laskians are cute, well-meaning, but overly radical seekers of social justice and the
Keynesians are open-minded, flexible, morally-aware intellectuals out to save the Western
world from the excesses of capitalism and socialism, but Hayek and the Hayekians are the
equivalent of fundamentalists for whom the defense of the market is an article of "faith"
rather than a reasoned argument for what is best for society.
It is unfortunate that a book that tells, for the first two-thirds, such a
wonderful and rich story of three key players in the development of
economics and of twentieth-century politics ends up with not "economics as
ideology" but "ideology as intellectual biography" when it comes to making
sense of that story. However, the strengths of the first eight chapters
ultimately outweigh the problems in the last few, making this a useful read
for historians of economics and economic thought, as well as those with an
interest in the development of political thought in the twentieth century.
References:
Caldwell, Bruce. 2003. _Hayek's Challenge: An Intellectual Biography of
F.A. Hayek_. Chicago: University of Chicago Press.
Ebenstein, Alan. 2001. _Friedrich Hayek: A Biography_. New York:
Palgrave.
Hayek, F.A. 1937. "Economics and Knowledge," reprinted in _Individualism
and Economic Order_, Chicago: University of Chicago Press, 1948.
Hayek, F.A. 1945. "The Use of Knowledge in Society," reprinted in
_Individualism and Economic Order_, Chicago: University of Chicago Press,
1948.
Hayek, F.A. 1952. _The Sensory Order_, Chicago: University of Chicago
Press.
Hayek, F.A. 1973. _Law, Legislation, and Liberty_, volume 1, Chicago:
University of Chicago Press.
Hayek, F.A. 1977. _Law, Legislation, and Liberty_, volume 2, Chicago:
University of Chicago Press
Hayek, F.A. 1978. "Competition as a Discovery Procedure," in _New Studies
in Politics, Philosophy, Economics and the History of Ideas_, Chicago:
University of Chicago Press.
Steven Horwitz is Professor of Economics and Associate Dean of the First Year at St.
Lawrence University in Canton, NY and is the author of _Microfoundations and
Macroeconomics: An Austrian Perspective_ (Routledge 2000).
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2004). All EH.Net reviews are archived at http://www.eh.net/BookReview.
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