Digressions&Impressions

On adequately filled places (Covid Diaries & Seneca)

After nearly a month, it's time for another long covid update. (For my official "covid diaries," see here; here; here; here; here; here; here; here; here; here; here; here; here; here; here;  here; here; here; here; here; here; here; here; here; here; here; here; here, here;  here;  here, here; here; and here). And, as usual, the situation is a mixed bag.

First, the good news. Thanks to non-steroidal anti-inflammatories (basically extra strength Aleve for those Stateside) I have managed to eliminate debilitating headaches. By 'debilitating' I mean: being in bed all day, and being incapable of reading or watching streaming online content. So, the amount of suffering has been reduced dramatically! In addition, if I take the meds before I socialize -- say a lunch in a quiet place -- I am capable of enjoying it without nuisance. So, I have some hope that I can reduce my relative social isolation. My body does notice I have socialized (I have a strange kind of fatigue then), so it's not without consequence, but it's better than it was. 

Unfortunately, some of life's simple pleasures remain out of reach due to my inability to engage in quite modest cognitive multitasking: even gentle walking while talking with others wipes me out cognitively. (I can do serious walking alone.) I am unable to enjoy music in the background while we're talking or even playing silently. I can't cycle in the city, I can't play basketball with my son, etc.

For example, recently, I had a lunch with a college friend in a quiet London club. The background music and noise of other lunch-guests were quite modest. I enjoyed it. (Hurrah!) I did have a vague sense that my capacity to eavesdrop on other conversations was much diminished. Once I walked out of the club into the air, I noticed how exhausted I was; and despite the lack of headache, and more meds, I was unable to concentrate again that day. It would not be wrong to call it 'brain fog', but the fatigue in my body is even worse: I walk slower then, and think slower. As I have mentioned before, I suspect a lot of symptoms commonly associated with aging are really the effects of post-viral syndromes. 

In Seneca's Letter 56, he notes that "words seem to be more distracting" to him "than noises; for words demand attention, but noises merely fill the ears and beat upon them." Seneca mentions that shouting is not as distracting as singing and an intermittent noise more troublesome [molestior] than a steady one, and I would agree. In fact, hearing other people talk or even just hum while I am engaged in some activity of my own drives me batty. (Well not as badly as a few months ago, but still.) I have mentioned, I think, that this makes family life with a teenager challenging. He hums when he is happy.

While Seneca repeatedly suggests in this letter and others that finding inner mental tranquility is fundamentally healing, he also recognizes that rousing ourselves to keeping busy with good works is healing, too [ad rerum actus excitandi ac tractatione bonarum artium occupandi sumus], and, if I read him alright, necessary for the non-sage (that is all of us). A Christian may well think this is a call to charity, but I read it somewhat self-servingly as keeping true to my vocation (as scholar and teacher). I don't want to claim Seneca invents the protestant work ethic, but I do think he is an important voice in its development.

In fact, Seneca notes that when he is in forced retirement (due to illness or political failure--the letter contains a rare admission or at least allusion to it) ambition is often revived [interdum recrudescit ambitio]. I recognize the truth of this because much to my own surprise, in my forced leave of absence, my disabilities have re-directed even expanded my vocational ambitions as a scholar (even if I have come to accept that some projects have to be let go), and (while more challenging) teacher.

Even though I had to withdraw from quite a few projects and also have given up on a number of papers, in some respects being a scholar has become easier because I have so many fewer social interactions and don't travel to conferences. I probably read more than I have ever. 

One unexpected effect -- I have mentioned it before -- of these covid diaries is that other scholars reveal their own enduring challenges with disability to me. I recognize that in my environment I have missed a lot of quiet suffering and almost heroic persistence. It's humbling to recognize what a bad observer of my umwelt I have been and, more importantly, to recognize that so many folk have achieved so much with chronic pain and cognitive instabilities. 

This experience makes me interpret Seneca's suggestion that a hidden disease is worse than one in the open (which is on the road to being cured) in a social way. Norms that internalize suffering, 'being Stoic' as they say, hidden from the world are, while convenient to the powerful, a social evil. In a famous passage, Adam Smith notes that people tend to refuse acknowledgment of poverty and disease and thereby make it worse. (Smith thinks our gaze and recognition naturally falls on the rich, famous, and beautiful/healthy.) Sometimes I wonder if I hear about other people's suffering now because other people sense greater receptivity on my part, or if they think it's only fair that after having read about my trials I ought to welcome learning of theirs, or if I have actually become more willing to discern other people's struggles. Despite my vocation as a teacher, I tend to be skeptical of narratives of growth. 

And after hinting at the need for regular cognitive-therapy -- good and solid thoughts [cogitationes bonas, solidas] -- as the road to wisdom, Seneca grudgingly admits that sometimes the best self-care is to seek out a quiet spot. I laugh, and admit that the reading room of the British Library is indeed my best friend. In fact, I now have my spot in the reading room that the other regulars leave alone -- and the librarians at circulation have started to recognize --; I love quietly reciting, in the spirit of cognitive-therapy, Newton's (early) definition of place being a part of space that a thing fills adequately just before I sit down at 'my' desk. 

This past month a co-authored paper was rejected by referees. And I had hoped to circulate the first seven chapters of my Foucault/liberal art of government book [I am soliciting catchy titles!], which covers his material on the physiocrats and the ordoliberals, to trusted friends. But the manuscript is still too much a mess, and so its circulation has been pushed back into the Summer. No professional life without ordinary professional disappointments, I tell myself. 

This is also my last digression of the academic year. On Saturday, we go on family holiday, and I don't expect resuming D&I until August. Thank you, my dear reader, for your continued interest in my (near) daily mumblings. 

Haberler on Schumpeter; Plutarch, Adam Smith, Huizinga, and Some Decision Theoretic notions

One very nice feature of Quinn Slobodian's Globalists: The End of Empire and the Birth of Neoliberalism is that he has keen eye for the way Austrian economics and Ordoliberalism helped shape international institutions and international law in the era we often lazily call 'Bretton Woods' and then mistakenly associate exclusively with Keynes and Keynesianism. Rather than seeing Austrian economics and the ORDOs as the opposition, waiting with Monetarism for stagflation in order to get a hearing, they are, correctly, re-inscribed into the shaping of the world we have inherited.  And he, thereby, also helps recall the significance of figures like Gottfried Haberler (who are otherwise overshadowed in the popular imagination by the Hayeks and Milton Friedmans of the world.) 

Last week, in the British Library reading room, while I wanted to check a copy of Schumpeter's Capitalism, Socialism, and Democracy, I accidentally called up Gottfried Haberler's Schumpeter's Capitalism, Socialism and Democracy after Forty Years (American Enterprise Institute, 1981). The volume was edited by Mutsumi Okada, who seems to have published it (but does not get credit for it anywhere, which is why I mention it here).

In the context of discussing Schumpeter's attitude toward Marx, Haberler (1900–1995) notes that "Schumpeter had developed his own theory of imperialism as early as 1919 in an article, "The Sociology of Imperialism." There [Schumpeter] describes the phenomenon of imperialism as "'objectless' tendencies toward forcible expansion, without definite, utilitarian limits -- that is non-rational and irrational, purely instinctual inclinations toward war and conquest" that have played "a very large role in the history of mankind. It may sound paradoxical, but numberless wars -- perhaps the  majority of all wars -- have been waged without adequate 'reason'--not so much from a moral viewpoint as from that of reasoned and reasonable interest."* Since Schumpeter is clearly familiar with Hobson's evidence that modern imperialism is profitable for well-connected some, one may well wonder why he wishes to emphasize the instinctual.

The quote is from the English translation published in Imperialism and Social Classes translated by Heinz Norden. This was published in 1951. In an accompanying footnote, Haberler cites p. 83. Unfortunately, I only have access to a reprint from 1966 (which reproduced the 1955 edition). There it's on p. 64 at the start of the section on "Imperialism and Capitalism." As an aside, in the translation the title of Schumpeter's essay is in the plural ("The Sociology of Imperialism"), as it is in the original German (imperialismen) whereas Haberler has the singular 'imperialism.'

That wars often lack adequate reason from the perspective of interest does not mean that they are without explanation. In the essay, Schumpeter himself goes on to explain that there are atavistic dispositions and structures, especially among the aristocratic elites, which do provide such an explanation. Haberler seems to ignore this. But in the accompanying footnote (in which Haberler gives the page-number) Haberler adds the following. "A beautiful example from antiquity of "objectless" conquest is reported in Plutarch's Lives:" Haberler then offers a mix of summary and quote:

King Pyrrhus, of Epirus, had a trusted advisor, "A certain Cineas, a man...of great wisdom" who tried to restrain his monarch. When Cineas noted that Pyrrhus made preperations to attack Rome, he started a conversation: "The Romans, O Pyrrhus, are said to be good fighters, and to be rulers of many warlike nations; if, then, Heaven should permit us to conquer these men, how should we use our victory?" Pyrrhus replied: Thy question, O Cineas, really needs no answer; the Romans once conquered, there is neither barbarian nor Greek city there which is a match for us, but we shall at once possess all Italy." After which Cineas said: "And after taing Italy, O King, what are we do to?" And Pyrrhus said: "Sicily is near, and holds out her hands to us, an island abounding in wealth and men, and very easy to capture..." "What thou sayest, replied Cineas, "is probably true; but will our expedition stop with the taking of Sicily?" Pyrrhus replied: "Who could keep his hands off Libya, or Carthage, when that city got within his reach...? And we have become masters here, no one of the enemies who now treat us with scorn will offer further resistance; there is no need of saying that." "None whatever," said Cineas, but "when we have got everything subject to us, what are we going to do?" Pyrrhus smiled and said: "We have a good time, will drink bumpers every day." And now that Cimeas had brought Pyrrhus to this point he said: "Then what stands in our way now if we want to drink bumpers...? Surely this privilege is ours already, and we have at hand, without taking any trouble, those things to which we hope to attain by bloodshed and great toils and perils, after doing much harm to others and suffering much ourselves. Why not have the good  times now?" Plutarch comments: "By this reasoning of Cineas, Pyrrhus was more troubled than he was converted." He attacked any way, and defeated the Romans in a famous battle, his last victory--which ever since has been known as the Pyrrhic victory.**

The footnote takes up nearly two pages in Haberler's slim volume (which runs to under 60 pages). I had to look up what a 'bumper' is--it seems to be a cup filled to the brim.

Now, as readers of Smith's The Theory of Moral Sentiments (TMS) and my own regular readers know (recall here), Smith uses the very same passage from Plutarch in Part 3 of TMS. And in that post I trace the anti-imperialist provenance of the Cineas story  But in Smith, Cineas' name goes unmentioned (he's just called the King's 'favorite'), and the point is not to illustrate "objectless" conquest, but rather to illustrate what I have called the axiom of status quo bias, that is, "Wherever prudence does not direct, wherever justice does not permit, the attempt to change our situation, the man who does attempt it, plays at the most unequal of all games of hazard, and stakes every thing against scarce any thing." 

Now, it's probably possible to concoct a chain of reasoning such that the axiom of status quo bias is always presupposed in objectless conquest. After all, the absence of prudence may well entail objectless action. But I was struck that the same anecdote illustrates different kinds of things (a kind of principle of decision-making vs a kind of social phenomenon). In addition, in Smith the axiom of status quo bias links up with a more general anti-militarism whereas in this context, Haberler's Schumpeter at least allows some wars of conquest if they can pass a kind of cost-benefit analysis (if they are 'utilitarian').

When Smith concludes his version of the anecdote, he adds the claim: "In the most glittering and exalted situation that our idle fancy can hold out to us, the pleasures from which we propose to derive our real happiness, are almost always the same with those which, in our actual, though humble station, we have at all times at hand, and in our power." Smith here, as elsewhere, is not a subjectivist about happiness. And the passage also links up to his more general concern that our imagination tends delude us about how we might experience possible outcomes (and that we are especially biased by the aesthetic spectacle the rich and powerful present). We often chase fantastic possibilities while we disdain available solid pleasures (and this mistake creates civilization with the arts and sciences and economic growth as we know it).

Smith here partially echoes Plutarch. For just before the anecdote with Cineas we learn that the King of Epirus disdains idleness and actually grows sick from lack of adventure. And both Pyrrhus and his citizens are inspired into military action by the gifts and promises they receive from the war-party in Tarentum (which needs their military aid to hold off the Romans). 

But Plutarch himself offers a subtly different moral to the story which can be seen if we quote the full sentence that Haberler only partially quotes: "By this reasoning of Cineas Pyrrhus was more troubled than he was converted; he saw plainly what great happiness he was leaving behind him, but was unable to renounce his hopes of what he eagerly desired." Now, whatever Pyrrhus desired military glory or adventure (or both), it's noticeable that in Plutarch Pyrrhus becomes a kind of exemplar of akratic action. A life of great happiness holds little allure for him, and despite having it in hand he is willing to throw it away for adventure (or glory).

Perhaps, we are also meant to see a kind of practical irrationality in Pyrrhus where certain happiness is foregone for a path with uncertain outcomes. Obviously, if we care about rationality it matters greatly if we decide that what Pyrrhus really wants is not glory (which is very uncertain), but adventure (which is pretty certain). In the latter case Pyrrhus is not irrational (playing "at the most unequal of all games of hazard") but simply revealing his true preferences. 

I don't mean to suggest Haberler is all wrong here about using Plutarch to convey Schumpeter's idea. One can treat Cineas as representing the pacific values of the market-place with his eloquence (which lands him a reputation for great wisdom), and Pyrrhus represents aristocratic warrior values. And from the vantage point of the market-place, Pyrrhus' actions are not just in violation of justice, but objectless and atavistic. It is no surprise that economists would treat the aristocratic warrior values as atavistic. But one need not be Huizinga to recognize that playing "at the most unequal of all games of hazard" and staking "every thing against scarce any thing" can, in the right circumstances, have an attraction of its own, Dutch books be damned.

 

Hobson on The Referendum and Training in the Art of Government

The final and weightiest claim for the Referendum, as attested by Swiss experience, is the training in the art of government it gives to the people. It may indeed be questioned whether a people whose direct contribution to self-government consists in a single vote cast at intervals of several years, not for a policy or even for a measure, but for a party or a personality, can be or is capable of becoming a genuinely self-governing people. Some amount of regular responsibility for concrete acts of conduct is surely as essential to the education of a self-reliant people as of a self-reliant individual. To the intelligent Swiss democrat it never occurs to base his democracy upon a doctrine of infallibility of the people. The people, he is aware, make mistakes; the Referendum offers more opportunity to make mistakes, and therefore to learn from their mistakes than is furnished under purely representative government. But he holds that the obligation imposed on each citizen to take a direct part in the making of the laws he is called upon to obey is essential to the reality of popular self-government.--John A. Hobson (1909) "The Swiss Referendum" in The Crisis of Liberalism: New Issues of Democracy, pp. 69-70

Since David Hume (here), there is a persistent strain of liberal thought, that looks to Switzerland as a source of inspirational on constitutional matters. And while some authors (like Hume) will emphasize its federalism (or its militia), later authors will also emphasize its history of regular so-called corrective referenda since 1830.

In fact, while neo-liberals of the middle of the twentieth century are often not exactly known for their fondness for democracy and one-man-one-vote, they often celebrate the federated Suisse and their democracy. In fact, Röpke (who lived there in exile for a while), sometimes even modelled his defense of the process of market economies on the positive valence of referenda: "The process of the market economy is like an uninterrupted referendum on what use should be made (at every minute) of the productive resources of the community."* Even Hayek, who allows himself plenty of skeptical comments about democracy, thought that judicial review of the sort practiced Stateside ought to be complemented by a referendum (see The Constitution of Liberty, p. 286).**

Before the neoliberals of the second half of the twentieth century there were the 'New Liberals' of the early half.  Of these Hobhouse and Hobson (1858-1940) were the most famous. And while it is quite possible to emphasize the differences between the left-leaning New Liberals (Mises called them 'moderate socialists') and the later (more right leaning) neo-liberals, it would also be a mistake not to notice some of their important similarities. (There is also a historical fact that the New Liberals shaped, as I first learned from Stefan Kolev and Ekkehard A. Köhler (recall), Herkner and Oppenheimer, the social liberal teachers of the Ordoliberals.) In fact, Hobson's emphasis on the significance of equality of opportunity (which is articulated in a companion piece in The Crisis of Liberalism) is itself an enduring contribution to liberal thought.

Okay, let's turn to Hobson's fondness for the Swiss, corrective referendum. Hobson's argument for the utility of a referendum is rooted in his concerns over rent-seeking practices of concentrated interests facilitated by parliamentary democracy. (I wouldn't be surprised to learn if Mancur Olson had studied Hobson!) This concern, which is key to the ORDOs analysis of monopoly and democracy, is central to Hobson's really famous analysis of late nineteenth century imperialism, and it also shows up in his The Crisis of Liberalism, including the chapter on the utility of the corrective/veto referendum. This chapter is a companion to an essay, "Lords or Referendum," which proposes the reform of the House of Lords alongside a corrective referendum (to be initiated by the reformed upper house as a check on parliament). I quote from both in this post.

In fact, Hobson makes two very important points. First, what makes rent-seeking by the rich and powerful so easy in a modern parliamentary system is that "the real control of our legislation is in the hands, not of the body of elected representatives, but in those of a small Cabinet." (47) The party-whip alongside the effective control of the party by the cabinet makes it easy to lobby for rents through only a few insiders. While in his (1902) Imperialism Hobson emphasizes financial corruption, in these essays Hobson emphasizes that rent-seeking is facilitated by the fact that the Cabinet is recruited "mainly out of of a little aristo-plutocracy with a leaven of successful lawyers" (and supported by a "powerful bureaucracy whose class sympathies" are narrow). This anticipates Schumpeter's account of rent-seeking.

Second, interest groups are often created by government policy and can create the conditions under which parliamentary democracy is undermined:

Wherever powerful business interests are founded upon or supported by legal privileges in the shape of charters, tariffs, or other concessions, wherever lucrative offices are available for party spoils, wherever public expenditure can be made a source of private profit through contracts, loans, and subsidies, this skilled manipulation of the representative system will continue. (Hobson, "The Swiss Referendum, p. 51)

Now, it's important to recognize that Hobson's argument for a corrective referendum is not that it is infallible. He recognizes that it may well allow for the expression of, say, anti-Semitism in the "famous anti-Jewish Slaughter House Law" or "to the unimaginative parsimony of the peasant and the petty bourgeois. (63) 

Rather, he views -- and there is an anticipation of Dewey here -- the habitual exercise of a corrective referendum as an education in becoming a self-governing people. The corrective referendum doesn't just school people in the issues of the day, it also provides a form of feedback loop between voting on the issues and responsibility. Getting things wrong is not without public or social consequence. And because referenda are more focused (and more regular) than parliamentary elections the relationship between the exercise of the vote and outcome is more direct and so more informative.

And so while most contributions to the liberal art of government focus on rulers and their intellectual advisors, Hobson thinks the corrective referendum has the capacity to school 'the people.' And so a referendum is a mechanism to bridge the gap or tension between liberalism and democracy. As my colleague, the political sociologist, Tom van der Meer has argued where they are used frequently, referenda correlate with higher political trust.

All friends of liberalism (left and right) can point to referenda with perverse outcomes. Even in places where the referendum is used regularly and with sober pre-conditions, it may misfire spectacularly. But in an age in which the dangers of the concentrated power of elected presidents (and prime-ministers) and unelected judges and bureaucrats are quite apparent to many, and friends of liberty are often pushed into despair or techno-utopia, it is a mistake to forego the use of one of democracy's most democratic institutions as a countervailing power to the others. In a system of checks-and-balances a corrective referendum would provide a democratic veto in an existing context of extremely imperfect democracy! So, two cheers to the corrective referendum. 

Duncan Bell, Liberalism, and Bentham

While the term “liberal” had long been used in English to denote assorted aristocratic dispositions, mores, and pursuits, it only assumed a specifically political meaning in the early nineteenth century. Borrowed from the Spanish Liberales of the 1812 Constitution, the term was first employed in a derogatory manner by Tories to malign their Whig opponents. During the 1820s it was reclaimed by some radical Whigs, in a classical example of rhetorical redescription, to characterise individuals and policies dedicated to non-revolutionary reform, although it also became associated with the small but vocal group of “philosophic radicals,” including the young John Stuart Mill. “Liberal” was increasingly utilised to describe the politico-economic demands of the emergent middle classes. Yet it was still an obscure and marginal category: during the 1820s and 1830s ‘“liberals’ were not a firmly defined group and ‘liberalism’ did not securely mark out a single intellectual phenomenon.” It was only during the second half of the century that usage proliferated, though it remained closely tied to the creed of the newly named Liberal Party.--Duncan Bell (2014) "What Is Liberalism?" Political Theory, 2014, Vol. 42(6) 6 693

I have quoted the passage from Duncan Bell's famous paper before (recall here). In that post I argued that the political meaning of 'liberal' can be found in Adam Smith and that, in fact, other scholars have shown that Smith played a very considerable role in the debates around the Spanish 1812 Constitution. It is outside my competence to argue that the Liberales were inspired by Smith to call themselves 'liberals,' but I am willing to put money on it. Either way, this matters because 'liberalism' was invented at the same time a doctrine called 'mercantilism' was invented in order to attack mercantilism and to situate liberalism as the ameliorative alternative to it.

Of course, that's compatible with the diffusionist account in the passage I have quoted from Bell above. Even so, there is also something off with the spirit of that account if we reflect on the role of Bentham in Bell's argument. Bentham is mentioned four times in the body of the paper. And each time he figures in retrospective, backward projections by later authors who tell origin stories of liberalism. And the very natural reading of Bell's argument -- I hope he corrects me if I am mistaken -- is to suggest that all such backward projections are anachronistic narratives. 

Now, in what follows I want to suggest that Bentham was a key vector in connecting Spanish Liberales to the 'philosophical radicals'. And that, in fact, Bentham's interventions in the debates over the fate of the Spanish constitution in 1820/1 also reveal that 'liberal' was taking on something like the Smithian use of a wider political program (or ideology, if you insist) that is not limited to economic matters. My key evidence derives from Bentham's (1821) Three Tracts Relative to Spanish and Portuguese Affairs. (London: William Hone).* The three tracts are three letters that Bentham had sent to intervene in the debates about the Spanish constitution. And the Three Tracts also includes material on the reception and circulation of Bentham's letters.

In the advertisement to the first letter of the Three Tracts, the relationship to the three pieces by Bentham and political events in Spain and Portugal is recounted. The first passage I quote is from that context:

While corruptionists and their dupes are in extacy at the sight of their Utopia With her stag-neck, and three Old Men of the Woods fastened upon it, Spain and Portugal are congratulating themselves on having each but one of them, and his hold growing every day looser and looser, while they are cheered by Yankee-land, whose neck has, for these forty years, been free from all such vermin, and who bids the haw bitable globe observe and declare, whether, in any and what respect, she is the worse for it.

At a time when those prospects, - which are now so­ happily realized, had not so much as opened, the name of Bentham had become familiar to whatever was liberal in the great southern peninsula of Europe. That exclusion which the system of corruption has hitherto put upon it in England, the united force of Censorships and Inquisitions has never been able to effect either in Spain or Portugal. (iv)

It is pretty clear that here 'liberal' means a particular political or social outlook that is not confined to Spain and Portugal and that is also not self-evidently reducible to the party or parliamentary faction. Admittedly this is slender evidence. The Three Tracts defends (inter alia) one-man-one-vote, attack the veto power of landed aristocracy, argue for the role of judiciary and fair jury trials in securing freedom, and attacks imperialism because it is a source of corruption and absolutism. Economic matters are subsidiary to political ones.

The (rather brief) Three Tracts ends with an appendix with three (short) letters from the Portuguese Cortes about the translation of Bentham's Collected Works into Portuguese by the Portuguese government. The second of these letters starts as follows:

Read by Secretary Freire a Letter, presented by Senhor Sepulveda to whom it had been addressed by Senhor Carvalho, Member of the Regency of the Kingdom, along with the works of Jeremy Bentham, offered by their venerable author to the Portugueze nation: in which letter of Senhor Carvalho it was said, that the writer could not give a more authentic testimony of the value he set upon so flattering an offer­ing, than by accompayig it with a wish, that, in their practice, the Cortes may take their guidance the liberal doctrines of the principal and earliest constitutionalist of Europe. (53)

Now, it's possible, of course, to read 'liberal' here as meaning, generous. But the structure of the Three Tracts book-ends Bentham's material with the appellation 'liberal.' And, in fact, the last quoted sentence strongly implies that Bentham is the seminal and original liberal constitutional theorist. Bentham himself also used 'liberal' in this way on the front page in his 1822 Codification Proposal (of the law) addressed to "all nations professing liberal opinions."

So, let me wrap up. In so far as later narratives about the nature of liberalism backwardly projected liberalism as a broader coherent set of political and constitutional doctrines onto earlier English philosophical radicals, including Bentham, they deployed or re-activated, I would argue, material that had been at least articulated in the context of Bentham's Iberian intervention for some such purpose. And while the original audience for Bentham's letters were Iberian, the Three Tracts is directed at an English audience. 

If I understand Bell's narrative correctly, the material I have discussed here precedes the derogatory use of the term 'liberal'. Obviously, I am not claiming that Three Tracts generated a huge diffusion. But what I am claiming is that the use of 'liberal' in it presupposes familiarity with the term in a sense quite familiar to us. And I suspect that's due to the impact of Smith's writings, including its uptake by the Spanish Liberales. And Bentham's willingness to make himself known as a liberal.

 

 

Hayek on Mannheim: Or how One Road to Serfdom Thesis is Used to Block Another Road to Serfdom Thesis

Last week (recall) I noted the significance to Foucault's Weberian reading of Hayek that in The Road to Serfdom (1944) Mannheim's historicist interpretation of the law is one of the official targets of Hayek (especially in chapter “Planning and the Rule of Law”). In the passage from Mannheim's Man and Society (1940) that Hayek cites (without page-number), Mannheim himself calls attention to Weber (and his differences with Weber).* In his (1960) The Constitution of Liberty, Hayek drops the Mannheim reference and near the end of chapter 10 criticizes Weber's (indeed slightly different) historicist interpretation of the law (recall here). In both cases, he offers detailed responses to the historicist. That's not the end of the matter because in Volume II of Law, Legislation and Liberty (1976: p. 86), Hayek then uses the very same Mannheim quote, albeit shortened, as he had used in The Road to Serfdom (but now with page-number reference--see note 33!)

As it happens, Mannheim goes unmentioned in the The Constitution of Liberty. This is quite a difference from The Road to Serfdom, where Mannheim -- and his Man and Society in the Age of Reconstruction in particular, which Hayek calls "a widely acclaimed book" (p. 21) --is really one of Hayek's main negative exemplars.+ Mannheim is presented as holding the "extreme position" which defends "planning for freedom." This position entails, on Hayek's reconstruction, the "collective and "conscious" direction of all social forces to deliberately chosen goals." And Hayek alerts the reader that "we shall have to comment [on it] yet more than once." (p. 21) And on the same page, Hayek lists Mannheim among the German thinkers who have helped perfect "socialism" in the more radical and less radical forms (p. 21-22).

Unsurprisingly, then, later in The Road to Serfdom, Hayek treats Mannheim not just as a defender of legal historicism, but also as somebody who holds that collective planning is compatible with parliamentary control (and so democracy) over the planning process (p. 72). And, in fact, while Hayek doesn't mention this, on the very page he quotes from Man and Society, Mannheim also asserts that by reshaping the separation of powers along "functional lines" these can be "more easily applied to a planned society than to a liberal democratic one." (Man and Society, p. 340) And while Mannheim seems to grant that in a planned society sovereignty may take the form of a dictatorship, he denies that it is "necessary." Interestingly enough, Hayek, in response, does not assert the necessity, but only claims explicitly that such a system "tends toward the plebiscitarian democracy." (p. 72) So, here Hayek and Mannheim actually agree formally about the facts, but we might say have a different risk tolerance.

Finally, in the chapter ("the end of truth"), Hayek returns a final time to Mannheim (in The Road to Serfdom). In order to note that the old meaning of 'liberty' has been destroyed and discarded for a new idea of 'freedom.' (The Road to Serfdom, p. 162) Hayek treats Mannheim's ideas about "collective freedom" as entirely "misleading." (And even compares Mannheim here explicitly to "totalitarian politicians.") For Hayek, such collective freedom merely involves "the unlimited freedom of the planner to do with society what he pleases." (162) I return to this below.

It is worth noting that Mannheim's historicism, leads him to distinguish among three uses of 'freedom' and so three kinds of liberty depending on the three social/historical stage. More important from the perspective of Hayek's criticism, Mannheim explicitly recognizes the worry that under planning there is no restriction on the "powers of the planner." (Man in Society, 378) And so his response to the worry that Hayek presses later is that the "existence of essential forms of freedom" have to be secured by the plan itself. (378) He sometimes also calls for the "creation of free zones within the planned structure." (379) For Mannheim, "the advent of planned freedom [in the third stage] does not mean that all earlier forms of freedom must be abolished." (379) And, in fact, for Mannheim this means that independence of intermediary institutions such as "hospitals, schools, and universities" is preserved. (380) As we have seen, Hayek finds this idea to preserve Burkean platoons under planning impossible to take seriously as a genuine possibility under planning.

Anyway, the disappearance of Mannheim in The Constitution of Liberty after being so important to the rhetoric and argument of the Road to Serfdom was striking to me. I also thought it odd that Hayek only focuses on Man and Society, and the not more famous Ideology and Utopia. This got me curious about Hayek's wider engagement with Mannheim.

And, in fact, in earlier work published as the (1952) Counter-Revolution of Science, but mostly dating to the early 1940s, Hayek had engaged with the idea that consistently pursued historicism leads to a sophisticated sociology of knowledge (p. 76). But Hayek doesn't name anyone in particular. In his edition, Studies on the Abuse and Decline of Reason, Bruce Caldwell plausibly suggests Hayek has Mannheim's Ideology and Utopia in mind here (p. 139 n). 

In another essay, ""Conscious" Direction and the Growth of Reason," in The Counter-Revolution of Science, Hayek explicitly quotes again from Man and Society (p. 213) in order to illustrate the tendency in modern  thought (he also cites Hobhouse and Needham) for "the growth of the human mind itself" under conscious control (p. 88). And he quotes Mannheim as follows: "man's thought has become more spontaneous and absolute than it ever was, since it now perceives the possibility of determining itself." ** So, this echoes (or historically anticipates) the treatment of Mannheim on p. 21 in The Road to Serfdom quoted/discussed above.

Finally, in his chapter, "Engineers as planners" The Counter-Revolution of Science, Hayek writes that "in recent years this desire to apply engineering technique to the solution of social problems has become very explicit." (p. 94) And in the accompanying footnote he cites Mannheim's Man and Society, pp. 240-4 at length:

"functionalism made its first appearance in the field of the natural sciences, and could be described as the technical point of view. It has only recently been transferred to the social sphere... Once this technical approach was transferred from natural sciences to human affairs, it was bound to bring about a profound change in man himself. . . The functional approach no longer regards ideas and moral standards as absolute values, but as products of the social process which can, if necessary, be changed by scientific guidance combined with political practice. . . The extension of the doctrine of technical supremacy which I have advocated in this book is in my opinion inevitable . . . Progress in the technique of organization is nothing but the application of technical conceptions to the forms of co-operation. A human being, regarded as part of the social machine, is to a certain extent stabilized in his reactions by training and education, and all his recently acquired activities are co-ordinated according to a definite principle of efficiency within an organized framework."

This passage is not quoted in The Road to Serfdom. But it is definitely alluded to in Hayek's claim that in a system of collective planning, "The only tastes which are satisfied are the taste for power as such, the pleasure of being obeyed and of being part of a well-functioning and immensely powerful machine to which everything else must give way." (Hayek (1944 [2001]), p. 155) And Hayek's position here relies on the idea (already quoted above) that under collective planning there only freedom that exists is "the unlimited freedom of the planner to do with society what he pleases." (162) And Hayek clearly means to imply that Mannheim's identification with the social planner makes him unreliable on the possible experiences of those whose lives are planned.

So, what Hayek's explicit response to Mannheim in "Engineers as planners" The Counter-Revolution of Science helps explain is that even when Mannheim is not mentioned in The Road to Serfdom, he is still polemically engaged with Mannheim as the exemplary intellectual who advocates planning. I would not be surprised if a close reading of Man and Society in light of The Road to Serfdom would find more polemical points of contact between Hayek and Mannheim.

The reason I think that is because if we look at what Hayek cites from Man and Society (pp. 240-244) in "Engineers as planners," we can discern that at a key moment, Mannheim embraces a species of historical determinism: "The extension of the doctrine of technical supremacy which I have advocated in this book is in my opinion inevitable." (this is from p. 243 in Man and Society.) And in context, Mannheim makes clear that while his "dynamics of history" is indebted to Marx, it's also distinct. And the reason it's distinct, according to Mannheim, is that for Mannheim modern weapons technology alters the nature of warfare and the class system by producing a kind of mind that is neither bourgeois nor proletariat. (This kind of anticipates Burnham by the way.) And this new kind new kind of mind with access to weapons that can shape the economy, will make an entirely different dictatorship (than the dictatorship of the proletariat) possible.  (p. 243) 

And, in fact, if I understand him correctly, it is in order to prevent this new kind of dictatorship that, according to Mannheim, collective planning for freedom is required!++ So, in order to avoid a road to serfdom in which as a consequence of modern technology and social techniques of control (see especially p. 260 of Man and Society), military dictatorships that are immune to revolution -- a view more common in the era -- become entrenched that collective planning is required (pp. 260-261). That is to say, while the idea of a road to serfdom anticipates Hayek's account (we have seen it in Hobhouse, Mises, Belloc, and it has been attributed by Knight to Lippmann), Hayek's road to serfdom is -- inter alia -- a rather explicit response to Mannheim's own road to serfdom thesis.

On Ivor Jennings, Hayek, A Federation for Western Europe

It is a great pity that the flood of federalist publications which in recent years has descended upon us has deprived the few important and thoughtful works among them of the attention they deserved. One which in particular ought to be carefully consulted when the time comes for the framing of a new political structure of Europe is Dr. W Ivor Jennings's small book on A Federation for Western Europe (1940).--Hayek (1944 [2001] The Road to Serfdom, p. 239.

Despite Hayek's signal boost Jennings's small book has languished in relative obscurity. This despite the fact that scholars are aware that Jennings (1903 -1965) was a member of the Federal Union Research Institute which included Beveridge, Brailsford, Hayek, Jennings, Robbins, Wilson and Wootton, who worked together on proposals for a European union after the war.* Jennings himself was a constitutional lawyer, and educational administrator (also in the colonies).

Hayek's interest in the book has also not received much attention despite the huge interest in Hayek's ideas on European federalism during the last decade. This is prima facie surprising because as Edwin van der Haar (2009) notes, "it is somewhat puzzling that Hayek also recommended the ideas of the socialist Ivor Jennings." (Classical Liberalism and International Relations Theory: Hume, Smith, Mises, and Hayek, p. 108) It is not obvious Jennings is a socialist when you read Jennings' A Federation, and Van der Haar does not provide any evidence for the claim.

However we can state Van der Haar's puzzle in a modestly revised form. In the proposal, Jennings claims that "the constitutional scheme in this book is not suggested as a mans for protecting capitalism or hindering socialism. Nor, on the other hand, it is suggested as a means for attaining socialism." (A Federation Cambridge University Press [1940 (2016)], p. 122). (In my view Jennings here echoes Lionel Robbins' approach to European federalism; and Robbins was not a socialist.) So, the fact that it does not decisively block socialism may well be raise questions about Hayek's endorsement. For, Hayek's account of European federalism is almost uniformly presented as a means to prevent socialism.**

In addition, Jennings foresees the "extension of trade unionism" in the federation. (P. 130) And he echoes Lippmann in claiming that the age of "strict laissez faire" has "long passed." (p. 131) He believe that the choice for or against socialism should be left to democracy because a "constitution which does not enable the people to try experiments which it wants to try is a faulty instrument." (p. 132) It it is worth noting that Hayek himself is explicitly seeing federalism in democratic terms (again, in general commentators tend to notice Hayek's skepticism about democracy, although I think that because of his association with Pinochet this is not wholly unfair). Here's what he says in the passage surrounding the note to Jennings (I left the footnote mark in):

The form of international government under which certain strictly defined powers are transferred to an international authority, while in all other respects the individual countries remain responsible for their internal affairs, is, of course, that of federation. We must not allow the numerous ill-considered and often extremely silly claims made on behalf of a federal organisation of the whole world during the height of the propaganda for "Federal Union" to obscure the fact that the principle of federation is the only form of association of different peoples which will create an international order without putting an undue strain on their legitimate desire for independence.1 Federalism is, of course, nothing but the application to international affairs of democracy, the only method of peaceful change man has yet invented. But it is a democracy with definitely limited powers.--Hayek (1944 [2001] The Road to Serfdom, p. 239.

I think it's little remarked that Hayek identifies federalism with democracy, and that he stresses it's peaceful nature. This echoes Jennings because for Jennings it is a sine qua non that the members of the federation are democratic and that its institutions are democratic (pp. 17 & 94-100).

Democratic critics of Hayek unsurprisingly seize on the equally clear emphasis of limiting the powers of democracy. Although I think in particular context it is clear that by the limitation on democracy Hayek does not mean a rejection of one-man-one-vote (although he is not especially perturbed by the lack of vote for women as, say, Mill and Hobhouse were), but rather rejection of popular sovereignty such that it could override the principle based rule of law/Rechtstaat that Hayek promotes. As Foucault notes, the rule of law and collective planning, which allows a high degree of arbitrary government control, are explicit antonyms in Hayek (and defined in light of each other in The Road to Serfdom). I return to this below.

Now, Jennings is eager to leave the federal states as much leeway as possible to pursue their own policies (this also echoes Robbins). But he also seems to think, if I understand him correctly, that the kind of judicial extension of a commerce clause familiar from the US where nearly everything comes under federal purview is eventually unavoidable in Europe, too(p. 141). 

I don't mean to suggest there is nothing to like for Hayek in Jennings' proposal. For it is by no means easy to bring about a socialist revolution in the multi-layered democracy Jennings foresees. For, Jennings clearly envisions a transition to free trade in about ten years (p. 119). And he is very much thinking about this along the functional lines set out by Cobden (and (recall) anticipated in Molesworth), that is, the "generalisation of "most favored-nation" clause...common in commercial treaties." (p. 117). And Jennings is very alert to the fact that there are many means for concealed protection by states, and he provides the federal entity with powers to prevent it (pp. 126-128), including a road map to stable currencies and a common currency (pp. 127-128).

But Jennings' vision of federal free trade is constrained by the need to regulate, "health, morals [!], safety, and general welfare of the citizens." (p. 120)+ Jennings calls these constraints the 'police power' a term he claims then used Stateside. (Readers of Foucault and Adam Smith are familiar with this terminology, which is not uncommon in the eighteenth and nineteenth century, especially before the rise of professional police forces.) I suspect Jennings is here also alluding to the US tenth amendment, but in a substantive (and not pro forma) way.

Before I wrap up, I should explicitly note that Jennings is not committed to a slow functional integration of Europe. Rather, Jennings' vision of federalism is organized around the need to avoid future wars in Europe and caused by European rivalry: "not only should we prevent wars in Europe, but also we should prevent European rivalry from leading to wars elsewhere." (p.6; see also p. 104 where the central importance is reiterated.) And so the lynchpin of Jennings' proposal is a willingness of European states to give up independent armies and even local police forces to the Federation (pp. 101-104).++

Above I emphasized Jennings' commitment to democracy. But as he notes with disarming frankness, "necessarily a federation is a "lawyer's paradise". Disputes arise not only under the law about the law." (92) And while Jennings' builds in many precautions to avoid what we would judicial activism or the politicization of constitutional jurisprudence and judge selection, he also recognizes that this cannot be prevented altogether in a federal structure. As he puts it, "Rule or government by law cannot be placed on a firm foundation unless all disputes are determined by judicial decisions." (144 [emphasis added]) And so, in his plan, the democratic institutions are protected and shaped by a relative restrained jurisprudence that (with the exception of preserving democratic institutions) focuses primarily not on outcomes but on legal form. And so Hayek's fondness for Jennings anticipates (see chapters 3-4 of Quinn Slobodian's Globalists) the ordoliberal ideals for international law.

 

 

 

Inflation, Interest Rates,and Political Meltdowns

In most wealthy countries, most professionals working in real estate and financial markets only know of broadly falling interest rates in a relatively low inflation environment (and deflation for many goods). The remaining people with memories of the before times are retiring. Because during the last few decades monetary policy has also been accommodating, and asset prices have risen it has been relatively easy, for those with access to credit, to make money in such an environment. (This has had upwardly distributive effects.) Here's a chart with inflation adjusted returns on the S&P 500 (and look at how steep that curve is from 2010-2020, and even from 1980 to the present, and then look at the Y axis):

 

Now with inflation at forty year highs, and several rounds of interest tightening in the pipeline we may be at a dangerous inversion point. There are really two questions lurking here: first, what kind of short-term carnage will this create to all kinds of business models used to cheap money and rising asset prices not to speak of those financial institutions that never really managed to clean up their balance sheet after the Great Recession? I suspect that the (painful) answer to this question will start to become clear this Fall and next year.

Since the mid 1980s most major financial corrections have been followed by easy money by the Federal Reserve (and eventually ECB). This was made possible by incredible low inflation (see here). If inflation does not come down, the FED may be unwilling to exercise the Greenspan put when the current bear market turns into a rout. And then we will be in uncharted territory for many in the financial sector and industries built around rising asset prices.*

Yes, folks lived through the financial meltdown of 2007-2009, but the business survivors are used to cheap credit and so are the fancy systemic risk models used in all the stress testing exercises. I looked through the Basel Committee's guidance and Bank of England instructions, and the main indicator they are using is the build up of the ratio of non-government credit/GDP.  The average in Europe is about 80% (with the Scandinavian countries and the UK being outliers over 140%). But in the United States it's over to 200%. (To be sure, these absolute numbers are not as informative than the change in the rate.) I saw no mention of inflation in any of the guidelines (but maybe I missed it). 

The Federal reserve's stress testing scenarios do include inflation. (This makes me suspect I missed it in the European guidelines.) In all the scenarios, including the worst case modeling, inflation comes down a lot from its current rates. So, second, what if higher inflation and higher interests rates are here to stay? The natural assumption for many is that with a bit of time the effects of post-Pandemic shortages and Putin's war will play themselves out alongside the higher interest rates. Even if prices don't return to pre-pandemic levels, and Ukraine becomes the site of a long-term war of attrition, an optimistic may well believe these rates may stabilize at some point like they have done every time in the last four decades. Especially in Europe, inflation really is still mostly an effect of high energy prices. (Stateside the economy really seem to be growing above the long term trend.)

But while not unprecedented, this, too, makes some heroic assumptions. First, Putin's war means defense spending will go up structurally around the world. Second, the free trade and relative open borders era has come to an end. This already started with Brexit and the Trump's trade wars in the Anglo-heartland of free trade, but effectively Russia has been decoupled from the world economy. This last fact alone will incentivize countries outside Pax Americana (and that's about 2/3 of the world population) to build up redundancies and to become more sanction proof and less vulnerable to the world market. This is especially so for the two colossuses: China and India, both of whom are governed by political classes who view Pax Americana with considerable suspicion. And in many OECD countries, the balance of political forces may well favor nationalists over their cosmopolitan rivals. The closed door to migration will only push inflation up. And this, in turn, that is such inflation, will radicalize people living on fixed pensions and those whose retirements are dependent on inflation adjusted outsized asset price gains.

As an aside, for the world's poor countries serious inflation in food and energy prices, even if relatively short term, are a real humanitarian disaster and it may well put hundreds of millions of people at risk of starvation. They will pay the price for the failure of collective security in Europe, again, (alongside, perhaps their political elites' cozying up to Russia and China.)

Third, climate change will keep putting upward pressure on prices both due to need to finance the transition to lower carb energy sources as well as due to the investment needed to mitigate the risks associated with it and due to pressure on food prices. While it's possible there may be great technological breakthroughs that counterbalance all these effects, our best hope is still for many countries simply to continue to catch up with the labor productivity of wealthier nations by better education of the labor force.

Let me wrap up. With money cheap, during the last decade several countries have also let their debt balloon: Japan (a perennial), but especially US and Italy have government debt to GDP ratios over 140% now, and France and the United Kingdom are seeing levels of about 90-100%. Such countries may well welcome several years of moderate inflation in order to avoid insolvency. But if central banks engineer recessions to kill off inflation expectations, the political classes of those countries, especially, will have very unpleasant political choices to make. The next decade may well be turbulent and it is by no means obvious their political classes -- which in the US is nearly dysfunctional now -- are equipped to handle it. 

 

Schumpeter, Marxism, True Liberalism, and Imperialism (with a hint of Foucault)

At first sight, the [neo-Marxist] theory [of imperialism] seems to fit some cases tolerably well. The most important instances are afforded by the English and Dutch conquests in the tropics. But other cases, such as the colonization of New England, it does not fit at all. And even the former type of case is not satisfactorily described by the Marxian theory of imperialism. It would obviously not suffice to recognize that the lure of gain played a role in motivating colonial expansion. The Neo-Marxists did not mean to aver such a horrible platitude. If these cases are to count for them, it is also necessary that colonial expansion came about, in the way indicated, under pressure of accumulation on the rate of profit, hence as a feature of decaying, or at all events of fully matured, capitalism. But the heroic time of colonial adventure was precisely the time of early and immature capitalism when accumulation was in its beginnings and any such pressure—also, in particular, any barrier to exploitation of domestic labor—was conspicuous by its absence. The element of monopoly was not absent. On the contrary it was far more evident than it is today. But that only adds to the absurdity of the construction which makes both monopoly and conquest specific properties of latter-day capitalism.--Joseph A. Schumpeter (1950 [1943]) Capitalism, Socialism, Democracy, third edition, p.53 [emphasis added]

Schumpeter spent a good part of his life thinking about Marxism, and even wrote quite a bit about Marxist accounts of imperialism. So, it might seem unfair to him and to Marxists to focus our attention on the quoted passage which does no justice to his (and the Marxists') theoretical virtuosity. Even so, the apparent superficiality of the claim may well obscure the significance of it. And since we here at Digressionsnnimpressions, live by the Dutch proverb, wie kleine niet eert is het grote niet weerd, [google it] we embrace even the solidly superficial.

Let me do a quick set up. Liberalism and Marxism both have theories of imperialism and the way it connects to political economy, rent-seeking and militarism. The paradigmatic forms of these are offered by Hobson (the liberal) and Lenin (who stands in for Marxism here). And because Lenin explicitly drew on Hobson, this allows for some comparison and shared commitments. 

Both (recall; and here) Hobson and Lenin noticed that (militaristic) imperialism and monopoly were mutually reinforcing. For Hobson (in 1902), monopoly capitalism was the effect of rent-seeking political behavior (by corrupt, imperial, financial interests). Lenin (ca 1916) didn't deny this, but he also thought that capitalism had an inevitable tendency toward monopoly and cartels, and imperialism (the search for monopoly markets overseas) is an effect of this tendency. Lenin's position doesn't just build (explicitly) on Hobson's position, but it can also grant (admittedly not in Lenin's character) that counterfactually even if Lenin were wrong about the causal arrow, Hobson lacks a political or economic solution to the problem Hobson diagnoses.

As regular readers know, (recall) my interest in Schumpeter here is motivated by Foucault's use of Schumpter in Lecture 7, The Birth of Biopolitics, 21 February 1979. There, Schumpeter represents a sophisticated version of the Leninist insight in response to Hobson. In Foucault's re-telling Schumpter agrees with Hobson that markets do not have an "inherent to the economic process of competition" tendency toward monopoly (BoB, p. 177). But the tendency is a social effect of, and caused by, the "concentration of decision-making centers of the administration and the state" (p. 177). This concentration is, itself, the effect of the kind of modernization that modern capitalism promotes (and facilitates). This makes rent-seeking easier, and also the centralized decisionmakers of administration and the state have a natural desire for counterparts in industry (to reduce coordination costs), which, in turn, facilitates an extrinsic tendency toward monopoly (and so Socialism is inevitable, alas). Schumpeter then adds for good measure that socialism while not ideal may be a price worth paying.

There is a lot more to be said about Foucault's use of Schumpeter. But it is worth noting that Foucault ignores Schumpeter's criticisms of the neo-Marxist theory of imperialism. I now see this has a huge impact on the Birth of Biopolitics because in his third lecture (of 24 January, 1979), Foucault quietly embraces (recall) a version of the neo-Marxist theory of imperialism. About that more some other time.

So, why does it matter that according to Schumpeter monopoly capitalism is responsible for imperialism. First, because as Schumpeter explicitly notes, within Marxist analysis of capitalism, monopoly is supposed to be the effect of a dynamic internal to capitalism and simultaneous with the age of imperialism (see Chapter IV of Lenin's The State and Revolution). That is it comes at the end of capitalist development. According to some (a bit less orthodox) it is supposed to be a very late stage before fascism as (recall) Karl Mannheim and/or Karl Polanyi thought (recall here; here).

By contrast, ever since Adam Smith's account of mercantilism, liberalism predominantly understands itself as an ameliorative and mitigating response to the mercantile-state and its imperial ambitions (this also comprises Bentham, Cobden, and Bright). The liberal treats mercantilism as a species of monopoly capitalism. In addition she denies that monopoly capitalism expresses the true nature of capitalism. So, here Schumpeter echoes the traditional liberal self-understanding. That Schumpeter is self-consciously echoing Smith on this point can be proved because he praises Smith's account of imperialism explicitly on the next page!

As an aside, since most students' introductions to the history of liberalism comes through J.S. Mill. And because Mill was an attenuated defender of civilizational mission of empire (and an employee of the India Company), the traditional liberal self-understanding is invisible to students (and critics) of liberalism.*

I don't mean to suggest only a traditional liberal can explain the phenomenon of early monopoly capitalism and its imperialism. Belloc, who is no liberal, can explain it just as adequately with his account of the rise of a narrow, and early oligarchy through the actions of Henry VIII and Elizabeth I.  

I don't mean to suggest that this exhausts Schumpeter's criticism of the neo-Marxist account of imperialism. He goes on to argue that class struggle does worse as an explanatory feature of imperialism which he treats as exemplary in providing class cooperation among Europeans. (Although he recognizes that one might reinterpret the Marxist account by treating all the Europeans as exploiters and the natives as exploited classes.) 

And I certainly don't mean to suggest a Marxist needs to capitulate at the sight of Schumpeter's argument. (Which I did suggest has a hint of superficiality to it.) A Marxist may well resists the liberal idea that there are different kinds of capitalism. And may well respond by rejecting the Leninist narrative of imperialism.

 

A footnote to a Hayekian Motto derived from Mannheim and a speculation about Foucault and Max Weber

As I noted last month (recall), in Part II of (1960) The Constitution of Liberty, Hayek treats Weber's historicist account of the rule of law in bourgeois society as a key target. In particular, Hayek understands Max Weber as analyzing the formal legal structure of a polycentric order just as a special feature of bourgeois society. (Hayek explicitly cites Weber's Theory of Social and Economic Organization.)

In the earlier (1944) The Road to Serfdom Max Weber is absent. This has generated a puzzle for me because in The Birth of Biopolitics, Foucault is adamant in framing (the ordoliberal variant of) neoliberalism as a response to Max Weber. And I increasingly see that some of Foucault's crucial arguments about the nature of European neoliberalism (so not the Chicago school variant) are derived from Foucault's close reading of The Road to Serfdom. Yet, as my friend, Stefan Kolev, has shown in his "The Abandoned Übervater: Max Weber and the Neoliberals," Weber does not loom especially large in Ordoliberal literature. As he puts it there is a "curious disregard of Max Weber in the writings of the neoliberal generation. While certainly a towering figuring during his lifetime, after his passing in 1920 Weber successively fell into oblivion." 

Interestingly enough, the historicist account of the rule of law is present in The Road to Serfdom. But it is explicitly associated with (the sociologist of knowledge) Karl Mannheim, who, at the top of chapter 6 – “Planning and the Rule of Law” is quoted as follows:

“Recent studies in the sociology of law once more confirm that the fundamental principle of formal law by which every case must be judged according to general rational precepts, which have as few exceptions as possible and are based on logical subsumptions, obtains only for the liberal competitive phase of capitalism.”[1]

The quoted passage is from Karl Mannheim’s Man and Society in an age of Reconstruction, which Hayek identifies elsewhere in The Road to Serfdom.[2]

Now, it is important for what follows, that Foucault quotes repeatedly from this very chapter “Planning and the Rule of Law,” on 21 February 1979 in lecture 7 of Birth of Biopolitics. As the editors of Birth of Biopolitics note (see especially notes 26-33), Foucault says (and is recorded as saying) that he is quoting The Constitution of Liberty, but the passages he quotes from Hayek are actually from this chapter in The Road to Serfdom (which is mentioned once in the manuscript text Foucault had prepared.) Okay, that's the kind of thing that certainly would have been corrected if the lectures had ever been prepared for a publication.

Now, here's where things get funky. If you go to Man and Society, and look up this passage you will find that Mannheim presents his own view as a correction to Weber’s account! For, in Mannheim, the sentence that in Hayek ends with “obtains only for the liberal competitive phase of capitalism” continues with “and not, as Max Weber believed, for capitalism in general.” (Man and Society, p. 180)

So, while both Mannheim and Weber treat the formal rule of law as epoch-specific, Mannheim situates it in a more narrow era. In the accompanying footnote, Mannheim explicitly cites the (rather long) chapter on rechtssoziologie in volume ii of Weber’s Wirtschaft un Gesellsaft (known in English as Economics and Society). Mannheim’s reason for this narrowing of scope, is that he thinks the Rule of Law does not obtain in an age of ‘monopoly capitalism.’ (Hayek would agree!) On Mannheim’s view monopoly capitalism precedes and leads into fascism. (A view now commonly associated with Karl Polanyi (recall here; here.) It's easy to forget that the Hayekian road to serfdom is, in part, an intended alternative to the Mannheim-Polanyi road to fascism.

As an aside, in broader context of the passage, Mannheim is treating the possibility that social structures may be changing dramatically such that the (to use Hayek’s language) the very rules of the game, or even the game itself, is fundamentally changing. Mannheim recognizes that for individuals living through such a transition circumstances may be quite bewildering (this actually echoes an observation Adam Smith who likens it 'to being all at once transported alive to some other planet;'); but he also emphasizes that for social scientists it provides an opportunity to learn which social and legal laws are truly eternal and which are epoch specific.  

Let me wrap up. Given the conflation between The Constitution of Liberty and The Road to Serfdom in lecture 7 of the Birth of Biopolitics, it wouldn't be surprising if Foucault read themes of the later book back into the earlier one. And this might be thought sufficient to explain why he thinks German neoliberalism is critically responding to Weber's views on capitalism. But this point would come even more naturally to Foucault if he was familiar with Mannheim's Man and Society. For, it is quite clearly a polemical target of Hayek in various places in The Road to Serfdom. And, more important, in some key ways throughout Man and Society, Mannheim's own analysis of capitalism is indebted to Weber and presents itself also as a correction to it. (As I will also show in future posts.) At the moment, however, I can't prove that Foucault would have been familiar with Mannheim's Man and Society. But if he was, I think it would help explain the manner in which he situates the ordos and Hayek.

PS After I posted this post, I learned from Stuard Elden that Foucault read  Mannheim's Freedom, Power and Democratic Planning around the time he was working on The Birth of Biopolitics course. To be continued!

The Road to Serfdom in Light of the Invisible Hand (with some mention of Foucault, Spinoza, and Machiavelli)

There are strong reasons for believing that what to us appear the worst features of the existing totalitarian systems are not accidental by-products but phenomena which totalitarianism is certain sooner or later to produce. Just as the democratic statesman who sets out to plan economic life will soon be confronted with the alternative of either assuming dictatorial powers or abandoning his plans, so the totalitarian dictator would soon have to choose between disregard of ordinary morals and failure.--Hayek (1944 [2001]) The Road to Serfdom, chapter 10, p. 139

In what follows, I'd like to show how, conceptually, the invisible hand and the road to serfdom are related as ideal types.  And in order to exhibit this, I'll draw on my analysis of what I have called a 'Smithian Social Explanation' (or SSE; this was developed, in part, by building on Jim Otteson's work). A SSE is an unintended consequence explanation of a certain type, and in Adam Smith's writings it is the paradigmatic case of large scale social explanation of, say, the division of labor, the origin of money,  the origin of justice and morality, and even of language. To be sure, the explanatory model was probably not invented by Smith (one can find anticipations of it not just in Mandeville and Hume, but in other earlier social theorists).

A SSE has three main components:

• (1) it is a causal account
• (2) it is a historical explanation of a long-term process. By “historical” I mean to capture two features:

    (A) that the stable consequence would not have been in “view” (or predictable) to observers of human nature at an early time and, thus, not capable of being intended.

    (B) that to be cause (of a SSE or within a SSE) does not require temporal contiguity between the cause and the effect.

• (3) After certain consequences become visible to observer-participants, they become self-reinforcing, or lock-in (because, say, these participants grow aware that they benefit from certain effects). That is, in the long run and in the aggregate, human propensities and incentives will produce initially unpredictable, albeit definite and determined outcomes.

In addition, it is characteristic of SSE's

• (4) That they can support counterfactual judgments—the process characterized by the Smithian social explanation describes not just what happened, but also how it differs from what would have happened without the process characterized by the Smithian social explanation. (This means that a SSE often presupposes a model or a theory of the 'natural' course of events absent the SSE.)

I am sure this is rather abstract even to regular readers, but you can either re-read this post or chapters 2& 10 of my book on Adam Smith. And, to repeat, this is the main explanatory template in Smith's writings. While I tend to avoid the language of 'spontaneous order,' it is natural to see similarities between SSEs and spontaneous orders as ideal types (see, for example, Jeffrey Young's review of my book). 

Now, unlike Emma Rothschild, who famously argued that the 'invisible hand' is an ironic joke in Smith's writings, I show (in chapter 10 of my book) that it picks out a distinctive kind of explanation for Smith one that is, in fact, different from a SSE (or a spontaneous order).  

In particular, any given iteration of an invisible hand process is (I) a relatively short-term process in which (II) the agent produces unintended and to him/her unknown consequences. Crucially, in an invisible hand process (III) these consequences are, in principle, knowable to the right kind of observer at the time of the agent's actions because the observer is theoretically properly informed or has access to accumulated common sense. In fact, (IV) Smithian invisible hand processes are cases where the agent could have known better epistemically.

The last feature (IV) is very important to the sole instance when Smith uses 'invisible hand' in Wealth of Nations. For the phrase occurs in the midst of a withering attack -- one might see it as a species of ideology critique (as my colleagues Paul Raekstad and Enzo Rossi have suggested to me) -- on mercantilism and the merchants that profit from the policies promoted by the propaganda that emanates from it in what we would call 'policy circles.' (In fact, Smith may be the first to describe a whole bunch of policy claims as a coherent system, 'Mercantilism,' in order to unmask it!) And in that context, the mercantilists claim falsely that a nation’s wealth consists of its holdings of gold and silver (something Smith challenges). And because the merchant class is committed to mercantile doctrines, they don't know how much their ordinary economic actions do promote national wealth.

So, while SSEs and invisible hand explanations are both unintended consequence explanations they operate (a) on different time scales and (b) they involve different kind of epistemic circumstances. They are also asymmetric in the following sense: an invisible hand explanation can be part of or a component of a SSE, but not vice versa. 

Now, what I'd like to do next is to offer an analysis of a road to serfdom thesis at the same level of generality as that I have described SSEs and invisible hand processes. For, the road to serfdom thesis is also an unintended consequence explanation.

At a high level of generality, a road to serfdom thesis holds (p) that an outcome unintended to political decisionmakers is, given some fairly minimal assumptions about human nature and the role of incentives, (q) foreseeable to the right kind of observer and that in addition the (r) outcome leads to a loss of political and economic freedom (s) over the medium term. I use ‘medium’ here because the consequences tend to follow in a time-frame within an ordinary human life, but generally longer than one or two years, which is the relative short-run of the invisible hand process, and shorter than the potentially centuries’ long process covered by Smithian Social Explanations. Crucially for a road to serfdom thesis, (t) in order to ward off some unintended and undesirable consequences, along the way further decisions, forced moves really ("assuming dictatorial powers or abandoning his plans,"), are taken that tend to lock in a worse than intended and de facto bad political unintended outcome(s).

To illustrate a road to serfdom thesis, I have quoted a passage from Hayek's famous book at the top of this post. This passage is singled out in a famous (1995) paper by Pete Boettke to illustrate the point that totalitarianism is a logical consequence of "the institutional incentives of the attempt to centrally plan the economy." (p. 12) It's worth noting that in context, Hayek is here echoing a point one can also find in Machiavelli's Discourses on Livy and Spinoza's Theological Political Treatise, that is, why, in dictatorships/tyranny, to quote the title of Hayek's chapter 10 "the worst get on top."

So, in common with an invisible hand process, in a road to serfdom process, there is a mismatch between an agent's decision-making and what better informed outsiders can foresee. And part of the problem in both instances is that the decision-maker is in the grip of a false social theory and crucially that this is knowable if not known to others. In fact, invisible hand processes and road to serfdom narratives are often trotted out by critics of existing policy!

And not unlike a SSE, in a road to serfdom process, there is a moment of lock-in once initially unforeseen effects become visible to the decision-makers. This is illustrated nicely by another passage quoted by Boettke (p. 13) this time from a (1938) review by Frank Knight of Lippmann's The Good Society in the Journal of Political Economy):

[the planning authority would] exercise their power ruthlessly to keep the machinery of organized production and distribution running.... They would have to do these things whether they wanted to or not; and the probability of the people in power being individuals who would dislike the possession and exercise of power is on a level with the probability that an extremely tender-hearted person would get the job of whipping-master on a slave plantation. Knight 1938: 869 [emphasis added]*

Of course, in a SSE decision-making tends to be dispersed and we're dealing with outcomes that have wide benefits. Whereas in a road to serfdom process, decision-making tends to be concentrated and benefits tend to accrue to a few. What I hope this exercise has shown is that if one is immersed in what one might call Smithian political economy (with SSEs and invisible hands) then a road to serfdom thesis involves fairly minimal conceptual extra steps given some modest variation of time-scales.

Let me close with two observations. First, as Foucault (correctly) noticed (recall, especially, the fifth lecture of the Birth of Biopolitics on 7 February 1979) [but also the qualifications (recall) in the eight lecture on 7 March 1979], in Hayek and the ordoliberals, the road to serfdom thesis was by the 1940s something experienced (and not just merely a speculative prediction about the future of the welfare state). For they treated the development of Weimar Germany as one in which collective planning, socialization of various industries, and toleration of cartels created the pre-conditions for the inevitable rise of Nazi totalitarianism (see especially chapter 12 of The Road to Serfdom). 

Second, it is important to see that at this level of generality the road to serfdom process does not require commitment to free or efficient markets. As I noted, building on Hobhouse's (1911) Liberalism ((recall), which defends a left liberalism, Belloc (recall), who is more akin to a property owning democrat, developed the template of a road to serfdom thesis without such commitments.** In fact, as my mention of Machiavelli and Spinoza above suggests, I would argue the road to serfdom template predates debates over collective planning and socialism altogether. But about that another time more.