Economics

Hack away – and smile while doing it, minister

As the silly season comes to an end and the party conferences approach, the coalition government will find it needs to go beyond its deficit-cutting rhetoric to flesh out a wider philosophical basis for its thinking.

So far the central idea has been David Cameron’s vision of a big society — but it has left most commentators bewildered, it being wholly unclear whether Cameron is merely applauding the efforts of the voluntary sector or if he really does have a firm view about how to recalibrate the relationship between the individual and the state. If it’s the latter, the prime minister should use some of his remaining paternity leave to read the works of Friedrich Hayek.

Although one of the most influential thinkers of the 20th century, Hayek has never been a household name. Remarkably, for a man who was born at the tail end of the 19th century, won the Nobel prize for economics in 1974 and died nearly 20 years ago, that may be about to change. Thanks to an extensive feature on the wildly popular Glenn Beck television programme in America, Hayek’s masterpiece The Road to Serfdom zoomed to the top of Amazon’s bestseller charts in June.

This is unusual enough for a philosophical tract, but is astonishing for a book originally published in 1944. The condensed version from the Institute of Economic Affairs has been downloaded from our website tens of thousands of times over the summer.

This year also marks the 50th anniversary of the publication of another great Hayek text, The Constitution of Liberty. Anyone searching for an intellectual basis for a genuinely Liberal-Conservative approach to government should read it.

Hayek argues for strict limits on state activity and intervention. But he offers a very different take on the nature of the individual from that often — if wrongly — associated with free-market capitalism. Hayek sees individuals as intrinsically social beings. His vision of a free society is not one where men and women are trampling over one another in pursuit of narrow, venal self-interest, each using their own freedom of action to exploit others. Hayek believed each individual would benefit as much from the exercise of others’ freedom as their own.

This optimistic view of human nature should be what guides the British government as it grapples with the shocking state of the nation’s public finances and attempts to provide some coherence to its big society agenda. Too often the message appears to be that the upcoming cuts and austerity measures are a practical but unpleasant necessity to prevent the economy falling off the edge of a cliff.

There is undoubtedly a lot of truth in this assertion, but it is hardly an inspiring, grand narrative about the future of our nation. We shouldn’t just be seeking to reduce government expenditure and intervention because we have to, but rather because we want to.

The extension of public sector tentacles into almost every part of our lives is not just wasteful, but has the effect of crowding out more innovative initiatives carried out by individuals, the voluntary sector and community groups. The more the government is providing to your neighbours, friends, work colleagues and relatives, the less obligation you feel to act yourself. We need to rediscover in ourselves a confidence as citizens that we can find the solutions to problems on our own doorsteps.

The government needs to share in this confidence by removing itself entirely from the field of play in a whole range of areas and conducting a full-scale assault on the obscene raft of regulations and red tape that acts as a barrier to an active citizenry.

Supporters of smaller government need to stop being caricatured as mean-spirited scrooges who revel in increasing the suffering of the unfortunate. The truth is that the big government, welfare dependency culture that has been allowed to develop in Britain has ghettoised the poor and failed to improve social mobility. The state doesn’t engender a sense of community, it displaces it.

Of course, Hayek was rightly credited with providing the intellectual basis for much of Margaret Thatcher’s political thinking. She once banged down a copy of The Constitution of Liberty on the table and insisted to her colleagues: “This is what we believe.” But Hayek was adamant he was not a Conservative.

He believed conservatism was too often the enemy of individual freedom. He described himself as a Whig, referring back to the broad-based party that had pressed for free trade and the abolition of slavery.

The coalition government brings together elements of both liberal and Tory thought, but it should also seek to rediscover the best elements of this Whig tradition. The Constitution of Liberty is as relevant today as when it was published 50 years ago and members of the coalition government should embrace its author as their intellectual guide.


The article originally appeared in The Sunday Times on September 5th and can be viewed on The Sunday Times website (subscription required)

To mark the fiftieth anniversary of The Constitution of Liberty, the IEA will be publishing a primer on it by Eugene Miller on September 16th 2010.

Download The Road to Serfdom by Friedrich Hayek.