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.