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Rand is a Marxist, and Hayek is a totalitarian

Before I engage in a  polemic against Hayek, I just want to do deal with his hypocrisy that is characteristic of many neoliberal theorists. I will start with Ayn Rand, the anti-altruist, the one who believes that doing things selfishly is the best thing for the individual and for society at large, especially within capitalism, which she termed “the unknown ideal”. I call it ‘Adam Smith on crack’. However, Rand did not live the life she claimed was optimal, she once went against her rational, objectivist mores. A glaring example comes from Anne C. Heller:
When Bennett Cerf, a head of Random House, begged her to cut Galt’s speech, Rand replied with what Heller calls “a comment that became publishing legend”: “Would you cut the Bible?” One can imagine what Cerf thought — he had already told Rand plainly, “I find your political philosophy abhorrent” — but the strange thing is that Rand’s grandiosity turned out to be perfectly justified. In fact, any editor certainly would cut the Bible, if an agent submitted it as a new work of fiction. But Cerf offered Rand an alternative: if she gave up 7 cents per copy in royalties, she could have the extra paper needed to print Galt’s oration. That she agreed is a sign of the great contradiction that haunts her writing and especially her life.*
A sign of a true philosopher is one that isn’t hypocritical, one who would rather die than contradict their own message; that is what is supposed to separate those have “examined” life and those who haven’t. Socrates died, willingly, at the hands of the state for a law that he knew was unjust, but accepted the punishment of the polis because it was the law in which he lived under and accepted; Che died while fighting for the cause of communism in the mountains of Bolivia, fully knowing that he could be killed; and the list goes on.
All this begs the question for Rand, what was her excuse; it was not like the choice was between life and death. She was being totally unselfish—in this context, this is a bad thing—by accepting an ‘irrational’ choice. It was in her instrumental rational, material interest that she accepted the offer presented by Cerf, instead she chose what was in her irrational, emotional interest. Therefore, not only did she make her life worse, she made everyone’s life worse by not accepting more money.--according to Randian logics. Rather ironically, Rand’s ACT proves Marx right: unalienated labour is an expression of the self that becomes part of ones own identity and therefore, is defended more than anything else. It also proves that it is a priori wrong, indeed even if Rand didn’t accept this, to have someone determine—alienate—your labour from yourself, because they have some power that is denied to you, viz., capital. Whether one would like to admit it or not, Rand’s act is an authentically Marxist one.
The contradictions among neoliberal theorists do not end there. Another arch-neoliberal theorist, Fredrich von Hayek, the greatest defender of classical liberal values, actually materially supported the Pinochet regime in Chile. The significance of this cannot be understated. As Frank Cunningham wrote on neoliberal theorists complicity with the Pinochet regime:
Like Friedman and Hayek, they journeyed to Chile after the 1973 coup there to give economic advice to the military government. Indeed, General Pinochet held a personal meeting with Hayek, and Buchanan gave a talk at the headquarters of the Admiralty in Vena del Mar where the coup (proximately) originated. 
No one can deny that the Pinochet regime was totalitarian with a level of repression that surpassed that of any socialist state at the time. Hayek aruges in ‘The Road to Serfdom’ that in an economy characterized by economic planning, it is inevitable that dictatorship arises:
The cry for an economic dictator is a characteristic stage in the movement towards planning, not unfamiliar in this country...I think you would find this common feature - you would find them all agreeing to say: 'We are living i n economic chaos and we cannot get out of it except under some kind of dictatorial leadership'.
This is exactly what economic liberals, the infamous Chicago Boys, were demanding in Chile, and throughout Latin America, during the 1960s and 1970s. It was they who were calling for dictatorship to stop the form of planning they didn’t like. Indeed, it is a myth that the ‘free market’ capitalist system is not planned, as if it were some spontaneous system that is inherent in human relations. Polanyi’s famous rebuke to Hayek was proven in Chile, “[The] lassiez-faire economy was the product of deliberate State action...lassiez-faire was planned.” (147). In order to plan for the free market, they had to overthrow democracy, which had definitively moved against the free-market in that era. What occurred in Chile was an authentic 'counter-revolution' and like all revolutions it requires violence. Hayek's work warns about the inherent violence and terror embedded in socialism, but the reality is that in order to establish liberalism, 'democracy has to be liberalized', as C.B. Macpherson wrote, and that takes foundational violence, dispossession and the destruction of the alternative orders. The purpose of the regime was simple to Hayek, to re-establish liberal hegemony, and what does liberal hegemony mean? Hayek provides an answer:

...and it is the great merit of the liberal creed that it reduced the range of subjects on which agreement was necessary to one which it was likely to exist in a society of free men.

This is hegemony, and here Hayek is making clear that liberalism is a hegemonic order, meaning it is a contingent one. A hegemonic order also determines the limits of discourse, and Hayek argues that first liberalism must be established before democracy can function as a 'utilitarian' system of governmetn that is should be. The result, a ‘democratic’-neoliberal Chile where its government essentially became a rubber-stamp for the policies enacted by Pinochet and forced in the democratic era, via Pinochetismo. Which accords with Hayek’s criticism against planning:

Parliamentary discussion maybe retained as a useful safety valve, and even more as a convenient medium through which the official answers to complaints are disseminated. It may even prevent some flagrant abuses and successfully insist on particular shortcomings being remedied. But it cannot direct. It will at best be reduced to choosing t he persons who are to have practically absolute power.

Ironically, Hayek became the same sort of person he was warning against. This is the irony of history and the hypocrisy of liberal theory.



  1. And because of Pinochet, Chile is now 8 years away from becoming a first world country.

  2. Developed for whom? Those have benefited from the reforms yes, but Chile retains one of the world's most unequal distributions of income. It has one of the worst records in the region--among its peers--in terms of educational enrollment and literacy, issues that brought a lot of trouble for Bachelet. Secondly, the "free market" in Chile is more unpopular than in other parts of the region, especially if one compares it to social-democratic Uruguay--that has a GDP per capita expected to far surpass "free-market" Chile in the aforementioned time-frame.

  3. In addition, may I mention that Mexico is in the OECD. You know that country that is currently engaged in a drug-war that has more casualties per day than Iraq...need I say more?

  4. To Mark, I fear what you are saying is an example of a post hoc fallacy (happened after E, therefore caused by E). The fact that Chile's GDP has risen in the post-Pinochet environment doesn't entail that it was caused by Pinochet's regime, something else may account for it so your position would require arguments. To the blogger, I don't get how Rand's actions are inconsistent. The action seems perfectly selfish & individualistic, moreso, it is a misunderstanding of capitalism to suppose that material gains are all that matter. If that were so captialism would be inconsistent with spending money on food (for pleasure not survival), entertainment, art, or research, things which may not yield any material gains. But economics 101 is clearly consistent with that sort of expenses. What is paramount in such a worldview is the acquisition of utility, which is subjective. It is perfectly rational & selfish to forego money in a situation where doing so raises the utility of the person. Analogously, if a person maximises utility by acquiring wealth, then, where wealth cannot be acquired without relinquishing other pleasures like art, or food, it is incumbent on that person, if she is rational, to abstain from spending on that which doesn't maximise her utility. All of this is perfectly consistent.

    On the issue of Mexico, (being mexican it cannot but interest me). Take into account that, though the casualties in places like Cd. Juarez have risen significantly, that is not so for every city or town in the country. Remember that Mexico has an area of approximately two million square kilometers. Mexico City remains mostly removed from the violence in the northern regions & it is the place where most wealth in the country is generated.

  5. @Moises

    Rand's act is inconsistent with her theories, because it was not a rational response. Food, etc., are inelastic goods, therefore opting for them is rational and necessary, the point is to reduce the amount of income that goes to pay these essential goods to maximize utility elsewhere. However, here Rand was presented with a choice between the instrumental rationality of the market, viz., maximizing utility so as to maximizing income to get more utility later on--this is "economics 101", it should be remembered that this is 'neoclassical' economics 101; indeed, this is the logic of capitalism, maximizing 'utility' or in Marxist terms 'accumulation'. Problematically, her act was one of 'species life' and was thus poorer for it in material terms and therefore was not acting as a the ideal of homo economicus and thus irrational. If the "market" found Rand's work to be bad, then it is "bad", according to the free market logic; however, as Rand shows this market logic actually prevents her from actualizing her human potential, due to the power of someone who retains capital (power) and this is unjust--as Marx points out. Capitalism is about material gains, otherwise why have capitalism? Capitalism is about the increasing commodificaiton of typically non-market relations to increase "utility", "efficiency" and therefore "accumulation", which in theory "lifts all boats". Capitalism without growth isn't capitalism, by definition.

    On Mexico, it doesn't matter where the violence is occurring, the fact is that Mexico is on the verge of failed, narco-state. Nevermind that the central government doesn't control all of the territory, i.e. Chiapas. I don't think anyone would characterize Mexico as a developed state with a straight face.

  6. @Uru

    I am not satisfied with your response, but what Rand did is in fact maximse utility, which again, is a subjective notion, just whatever brings satisfaction to the person. Suppose her choices are, sacrificing x quantity of money for n expected utility, or not sacrificing money for m utility in the future, however, subjectively for her n is larger than m, therefore the rational choice for her in that scenario was sacrificing the money for more utility. My point is that obviously capitalism, as a philosophy, wouldn't be so absurd as to consider all non-material acquisitions detrimental to the utility of the consumer. I feel you are not using the principle of charity (present the opponent's best case), and instead you are attacking a straw man. My point about economics 101 is that current economic theory is worked out ina capitalistic framework of mixed economomies (all current capitalistic societies are mixed economies, there are no free market economies through & through). But economic theory is clearly consistent with the acquisition of goods for the purpose of purely personal satisfaction, such as art, music, intellectual pursuits, etc. How can this be if capitalism is inconsisten with any of this as you purport? It isn't because utility is subjective, what gives Rand utility may give nothing to you, but as long as her action maximises her satisfaction in that scenario it is both rational (in the economical sense) & consistent with her worldview. (I am nor Randian, nor am a a supporter of capitalism, I am just not persuaded by your argument). Obviously all of this is consistent with there being growth (in the GDP sense). Just consider that whatever money Rand isn't getting from her novel is being used by someone else in his quest for acquiring goods & services, and therefore enters the economy.

    Regarding food being inelastic, I feel you are oversimplifying the issue. Some food might be inelastic, but certainly not all food. Food can be a luxury item as well, as I am sure you know, and certainly the consumption of gourmet food is going to follow market laws. But that doesn't even matter, because even if all food were inelastic, many other items, like music, aren't, yet they are purchased and used by people in capitalistic societies in complete consistency with economic science.

    About Mexico, I wholly agree with you that the country couldn't be characterized as developed in any common-sensical use of that term (I am not nationalistic). The extent of inequality in the distribution of income is staggering between posh places in Mexico City like Santa Fe & marginalized communities in Chiapas & Oaxaca. However, consider that these classifications are based on GDP estimates. Obviously a high GDP doesn't necessarily correlate with a good quality of life for most inhabitants, but there you have it. However, there is something to be said regarding your argument that losing control of some regions means the country is a failed state. Suppose a city in the US falls into utter poverty and crime, say New Orleans or LA, surely you wouldn't go as far as to say that the whole country has become a failed state. Would you say this if there were five cities (among a hundred say)? Surely not. The situation in Mexico is not that different. In Mexico City, where I live, things haven't changed much since Calderon took office. Perhaps you haven't visited Mexico City, but I can assure you that economic activity goes by mostly unhindered (aside from problems that every major city has) and that there is a healthy amount of the population with a middle class income. It is certainly far from Somalia, which I would consider a paradigmatic failed state.

  7. @ Moises

    To neoclassical analysis, utility is in the market-place, non-market relations can have utility, but they do not add anything to the teleos of the market, viz., maximization of social and individual utility. Therefore, whence someone is offered an opportunity to gain in the market, it is a moral imperative to seize that opportunity; if one does not do so, they are being immoral--Rand. This is why capitalism is the "unknown ideal". This the "cunning of reason" for capitalism, to be selfish is, simultaneously, to be unselfish and the more selfish you are, the better. Yes, music, food, etc., are goods that can be had outside of the market and increase individual utility at the immediate moment, but in the long-run the person is worse-off. Capitalism, and liberalism is a system that seeks to commodify and individualize as much as possible in order to bring about "rational" outcomes. Things that 50, 100, 500 years ago no one would ever think of commodifying is now commodified, i.e., family relations, where a son or daughter could sue their parents for damages, etc. There is no straw-man here, this is the whole ideological basis of the system. Economic theory only takes into account those things that can be exchanged, and those that are not, are not taken into consideration and it is best if they can be exchanged so that their "relative" utility can be best known to all, so as to increase overall utility. The idea of utility being subjective is really not important to my argument, because I have never even argued differently. The argument is more metaphysical.

    "Obviously all of this is consistent with there being growth (in the GDP sense). Just consider that whatever money Rand isn't getting from her novel is being used by someone else in his quest for acquiring goods & services, and therefore enters the economy."

    Then why pay workers? That money is lost, because we don't know if they money would have just been saved and not used and therefore reducing welfare. In addition, we have to consider multiplier effects, etc. We have to assume the money disappeared, we can engage in counter-factuals, but what we do know is that money didn't go into the economy.

    "Regarding food being inelastic, I feel you are oversimplifying the issue. Some food might be inelastic, but certainly not all food."

    You brought up food...etc. I merely stated the obvious, food--in the way YOU were using the term food--is inelastic. You are presenting now a red herring argument, which I think is merely being said to argue. I won't continue on this, because I don't see the relevance.

    "Suppose a city in the US falls into utter poverty and crime, say New Orleans or LA, surely you wouldn't go as far as to say that the whole country has become a failed state."

    Of course not, I don't consider most third-world states failed states. Poverty and crime is not the issue, the issue is whether or not the state has "legitimate and sole" authority over said territory. As Weber states: "a state is a human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory". Mexico has its gaps, Chiapas is my prime example, where the state has no legitimacy and no show of authority and force, and it is increasingly losing control of Northern Mexico to the gangs, it is a non-declared civil war there; and by definition a state with a civil war is a failed one.

  8. @Uru,
    Moses has a better argument on Rand. Please accpet.


  9. @MT/Anonymous

    You are entitled to your opinions, but I am not going to accept anything, because you say so; unless I think its justified, I won't concede anything. In addition, I am certain many people disagree with your conclusions, so unless you have some special authority, i.e. God, I will kindly ask you to keep such comments to yourself. I thank Moises for a spirited debate, but that is all.

  10. Nixon went to China, are likewise inferring that he was a communist?

    This is a profoundly shallow analysis, of Rand, Hayek, and liberal economics. Have you actually studied any of this stuff, or are you only repeating opinions you heard from your professors or read in New York literary magazines?

  11. @Seth

    Did Nixon go to China to give Mao advice on how to best implement the Cultural Revolution or planned socialism? No, he went there for reasons purely dedicated to real politik; ergo, your analysis/"critique" not mine is the shallow one. Hayek supported Pinochet, a authoritarian dictator--Nixon didn't support Mao, it was a cynical gesture if anything--materially by going to Chile during the worst of the human rights abuses, fully knowing that these were occurring. Wasn't Hayek's big thing about resisting those who take away people's individuals rights? Hayek masks his pro-capitalist ideology with liberal catchwords, but he really just supports the freedom of exchange and if that comes at the cost of those liberal freedoms, so be it. Ergo, this is why I said: "Hayek became the same sort of person he was warning against. This is the irony of history and the hypocrisy of liberal theory".


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