Kant, Hayek, And The “Truth” Of The Market

The following is the second installment of a multi-part series on the emerging crisis of neoliberalism.  The first installment can be found here.  Whereas previous articles in this online journal have focused on current events, this series delves into the theoretical and politico-theological genesis of the crisis.

Immanuel Kant is the progenitor of liberalism and neoliberalism alike because, in contrast with the tradition of English utilitarianism, he was the first to understand within the ambience of Frederick the Great’s Prussia that the “freedom” esteemed by the eighteenth century philosophes was impossible without the internal conviction of being obliged toward an abstract universal totality, his so-called “kingdom of ends” or “moral commonwealth” for which garden variety nationalism must ultimately give way to the “supreme good” to which the “good will” without any desire for private satisfaction must dedicate itself in every ethical situation.

Thus in his Groundwork of the Metaphysics of Morals Kant hazily anticipates what Wendy Brown in  Undoing the Demos: Neoliberalism’s Stealth Revolution characterizes as an “entrepreneurialism of the self”.  Brown self-entrepreneur is the polar opposite of the self-seeker, the virtueless paragon of the Enlightenment consumed by self-love, or amor propre.   The self-entrepreneur is constantly improving and refurbishing oneself, always striving to conform to a bloodless and asymptotic ideal of the “good” that can never be filled, as Kant would say, with “empirical content.”

In the same way that Kant’s personal agent can never have a specific end in view for acting morally, but must, as his first formulation of the categorical imperative conveys it, act only according to that maxim whereby one can at the same time will that it should become a universal law, so the demands of entrepreneurial selfhood rigorously contend for the same “ascetic” sacrifice of one’s immediate goals for the sake of a cosmopolitan harmony of both private and public incentives, one which may in fact by achieved optimally by market forces.

It is no accident that the cornerstone of economic neoliberalism, Friedrich Hayek’s “big idea” of market self-regulation  (or what we might call pure transactional reason), could in the long run become the occasion for a postmodern, stateless, global commonwealth for educated elites.  As Stephen Metcalf in an insightful article in The Guardian about the origins of neoliberalism has put it, Hayek “thought he was solving the problem of modernity: the problem of objective knowledge. For Hayek, the market didn’t just facilitate trade in goods and services; it revealed truth.”

Neoliberalism’s “truth” of the market, as it turned out, was also inseparable from the truth of what it means to be human.  In his trenchant account of the rise and fall of neoliberalism entitled Masters of the Universe, Daniel Stedman Jones stresses how its early exponents such as Hayek, Karl Popper, and Ludwig von Mises were mainly motivated by a recoil against the revealed horrors of Nazi Germany, followed forthwith by the mushrooming specter of totalitarian Stalinism during the decade after the Second World War.

Neoliberalism was initially, according to Jones, less an economic than a political theory.  Given the way in which the state had in response to the Great Depression  seized control not only of the economic, but also the political apparatus, even in the historic democracies, Hayek in particular was bent on re-asserting the values and virtues of the classical liberal ideal of individual freedom.   Like advocates of so-called “democratic capitalism” throughout the 1980s and 1990s, Hayek was convinced that laissez-faire economics was but the handmaiden to the centuries-old commitment among the Anglo-Saxon peoples especially to personal liberty.

Whenever a regime abandoned the former, they inevitably sacrificed the latter.  Nazism was but the nightmare liberal democracies might expect if they took the principle of state interventionism to its logical conclusion.  In order to mobilize against the Nazi war machine, the democracies, Hayek wrote in 1944, were compelled to take the first steps in a march down the very same road as Germany in the early 1930s.

It was not inadvertent that economic fruits of the mobilization had been the unexpected remedy for over a decade of economic stagnation, because the goal of postwar prosperity now required the acceptance of a certain permanent measure of full-blown state supervision of social and political affairs.  Such supervision served as ongoing inoculation against the ever-present danger of chaos through the kind of top-down regimentation of all spheres of cultural life the National Socialists had named  Gleichschaltung (loosely translated as “forced co-ordination”).

According to Hayek in The Road to Serfdom, “at least nine out of every ten of the lessons which our most vociferous reformers are so anxious we should learn from this war are precisely the lessons which the Germans did learn from the last war and which have done much to produce the Nazi system.”(3)  Gleichschaltung rested on control of thought through both subtle and overt manipulation of available ideas within the educational system and the messaging of the mass media.

Ironically, Hayek had almost exactly the same insight as the Frankfurt School, recognizing early on that the Marxist aim of “expropriating the expropriators” who had previously commandeered the “means of production” included the captains of culture as well as industry.  “To make a totalitarian system function efficiently,” Hayek argued, “it is not enough that everybody should be forced to work for the same ends. It is essential that the people should come to regard them as their own ends.”(157)  Hayek wanted to restore personal freedom as the most consequential “end” which the people should view as their own.

Market “truth”, therefore, in the early days of neoliberal cloud-gazing functioned simply as the practical correlate to the liberal bromide and its attendant politics of preserving personal freedom, which Hayek believed had been pushed aside with the new fashion for centralized economic planning and what came later to be known as “industrial policy.”

In an essay that later came to serve as one of the foundational texts for second-wave neoliberalism during the 1970s and 1980s, Hayek took much the same tack as Scott does, insisting that “rational” analysis, prediction, and decision-making in economic theory is restricted by the finitude of what any actor knows at any moment in any given situation.  It is impossible for either anyone with even maximal expertise to “know” the entire scope of things, or even the lion’s share of all the interlocking causal factors from which one might improvise a “stable” solution to economic problems, or systemic dysfunctions.

Economic savvy is derived from local knowledge; it amounts to metis, or practical knowledge.  “The shipper who earns his living from using otherwise empty or half-filled journeys of tramp-steamers, or the estate agent whose whole knowledge is almost exclusively one of temporary opportunities, or the arbitrageur who gains from local differences of commodity prices, are all performing eminently useful functions based on special knowledge of circumstances of the fleeting moment not known to others.”(522)

What Scott describes as the “high modernist” enterprise of rationalizing society as far as possible in all its components and connections, Hayek was sure, was the real impetus for the kind of massive social engineering that attained its grim apotheosis in the competing totalitarian experiments.  On this score Hayek’s position was not far afield from Horkheimer and Adorno in The Dialectic of Enlightenment, authored roughly around the same time.

But what distinguished the prophet of neoliberalism from the critical theorists was their respective strategies for combatting the monster.  The critical theorists, with Herbert Marcuse later on as its arch advocate, relied on fleshing out the “revolutionary” power of reason itself.  Hayek, in contrast, took what might be somewhat metaphorically characterized as a “fideistic” approach.  If we cannot control the economy – and we do so only at the peril of writing the script for a dystopian horror movie along the lines of Orwell’s 1984 – we must fall back on the mysterious power that makes all things work for good, despite our failures at social engineering.

For Adam Smith it was the “invisible hand” of the market.  For Hayek, it was something even more subtle – the price mechanism as the behind-the-scenes arbiter of unfettered economic competition.  The measure of price is the measure of liberty in any set of circumstances.

Furthermore, it is truly the “God particle” that can in the long run explain why liberal democracy ismust remain inseparable from economic freedom.  As Hayek wrote in The Road to Serfdom, “any attempt to control prices or quantities of particular commodities deprives competition of its power of bringing about an effective co-ordination of individual efforts, because price changes then cease to register all the relevant changes in circumstances and no longer provide a reliable guide for the individual’s actions.”(38)

Like Kant, Hayek was caught up in what might be called the paradox of rational free agency.  For Kant, one can only be “free” if one conforms their motivating maxim to a “necessary law” of pure moral reason. In other words, one only has liberty if one submits themselves totally to the “majesty” of the moral law itself.   In Hayek’s world both economic and political freedom demand that one subjugate themselves completely to the workings of the market and the pricing mechanism.  The only alternative is tyranny, or “serfdom.”

Early on in The Road to Serfdom Hayek talks about “the common hostility [on both the left and right] to competition” because the outcomes are always uncertain.  The tendency is always to give the state an important, if not a final, say in order to ensure a modicum of justice in the balance between those favored and those who are not so favored in the competitive struggle.

In other words, “mixed economies” are invariably the preferred model insofar as they seem to strike a reasonable compromise between liberty and autocracy.   But this “moderate” stance, according to Hayek, gives the edge to cartels and monopolies, and monopoly is inevitably a malignant force that consumes everything in its path.  Once the stage of monopoly is attained, “the only alternative to a return to competition is the control of the monopolies by the state, a control which, if it is to be made effective, must become progressively more complete and more detailed.”(42) 

Kant makes a comparable argument in The Groundwork for the Metaphysics of Morals, where utilitarian forms of moral reasoning aimed at securing either personal or collective “happiness” perform the same role as state intervention does for Hayek in the economic sphere.

To secure one’s own happiness is a duty (at least indirectly), because discontent with one’s condition—bundled along by many cares and unmet needs—could easily become a great temptation to transgress against duties. But quite apart from duty, all men have the strongest and deepest desire [Neigung] for happiness, because in the idea of happiness all our desires are brought together in a single sum-total. But the injunction ‘Be happy!’ often takes a form in which it thwarts some desires, so that a person can’t get a clear and secure concept of the sum-total of satisfactions that goes under the name “happiness”. (14-15)

Contra Aristotle the goal of happiness is impossible, because it necessitates that we surrender our “autonomy” as free and rational agents to the attainment of certain enjoyments over which we have absolutely no control.   We thus lose our freedom, while our actions are what Kant terms “heteronomous,” subject to a “law” other than ourselves – in this case, an increasingly tangled calculus on how to achieve happiness.

Morality can never have as its aim anything besides what is right in its own right regardless of the incentives or consequences.   A “mixed” morality, like a mixed economy, unfailingly ensues in the loss of personal freedom.

Carl Raschke is Professor of Religious Studies at the University of Denver, specializing in Continental philosophy, art theory, the philosophy of religion and the theory of religion.   He is an internationally known writer and academic, who has authored numerous books and hundreds of articles on topics ranging from postmodernism to popular religion and culture to technology and society.  Recent books include Critical Theology (IVP Academic, 2016), Force of God: Political Theology and the Crisis of Liberal Democracy (Columbia University Press, 2015) and The Revolution in Religious Theory: Toward a Semiotics of the Event (University of Virginia Press, 2012).  He is current managing editor of Political Theology Today and senior editor for The Journal for Cultural and Religious Theory.  He is also one of the current co-conspirators in the formation of a fledgling initiative known as CRI, which seeks to engage the intellectual and political crisis of our times.