By S N Misra
In the 1940s, two seminal books, Hayek’s Road to Serfdom (1944) and Mises’s Human Action (1949), profoundly impacted the economic policy architecture in the US and the UK in the 1980s. Hayek was particularly critical of the abandonment of economic freedom when countries like the USSR embraced centralised planning. He considered it inherently undemocratic as it imposes the will of a minuscule minority on the majority. Mises argued that the free market not only outdistances any government-planned system but ultimately serves as a foundation of civilisation itself.
Limited government, free market, and soft taxation on the superrich became the leitmotif of the doctrine of ‘neoliberalism’ practiced by Ronald Reagan in the US and his acolyte Margaret Thatcher in the UK, who was an unabashed admirer of Hayek. She privatised many public enterprises like railways and coal, and turned around the sagging economy of the UK.
The disintegration of the USSR by 1991, the fall of the Berlin wall in 1989, and the end of Cold War spurred Fukuyama to predict the ‘end of history’ of ideological debate, and with each country sipping a cocktail of liberal democracy and free market. Williamson set out the’ Washington Consensus’, which was essentially a road map of a free market in different sectors of the economy. Globalisation became the toast of the world when there would be an ‘end of geography’ as Milton Friedman, a protégé of Hayek, predicted. But Quin Slobodian, an economic historian at Boston University, in his bracingly original new book Hayek’s Bastards brings out how, in the eyes of his supporters, the victory has not been total enough. It has engineered the sinister rise of the far right, both in the academic circle and in the political firmament.
In the eyes of the far right, leftism still enjoys cultural purchase, and there are persistent demands for the redress of inequality at the expense of efficiency. Big states and humungous public spending on welfare persist. According to them, the social movement of the Sixties and Seventies injected the poison of civil rights, feminism, and affirmative action into the veins of the body politic. The cast of right thinkers includes economist Murray Rothbard, the financial writer Peter Brimelow, who founded the anti-immigration website VDARE, the political scientist Charles Murray and the psychologist Richard Hernstein, who wrote the notorious treatise on race and IQ in the book Bell Curve in 1994.
Murray Rothbard is an anarcho-capitalist who is opposed to egalitarianism and civil rights movement and blames women’s voting and activism for the growth of the welfare state. Biology stands like a rock in the face of egalitarian fantasies. Hierarchy and inequality were entirely natural. They point out how the disintegration of Yugoslavia has demonstrated that national heterogeneity does not work. Murray and Hernstein consider affirmative action as “leaking poison into the American soul”. Noam Chomsky, in a stinging riposte, observes that there is almost no evidence of a genetic link and greater evidence that environmental issues are what determine IQ differences.
As against the soft-focus visions of incremental reforms and expanding the growth pie of neoliberals, these thinkers of the far right turn towards three ‘hards’: hard borders, hard-wired human difference, and hard money. Donald Trump’s antagonistic trade war, hard borders, disaffection towards market forces and nation-state replacing globalisation is the reductionist view of this brutal worldview. The neoliberal project of Hayek was considerably anti-statist. What is most disturbing about the far-right viewpoint is the ugly combination of mainstream neoliberal reverence for markets and arguments borrowed from cognitive psychology and genetics. The end game of such noxious politics was to enshrine that racial and gendered inequalities are inevitable. It aspires to replace disagreement in the public sphere with fatalism of genetics.
Hayek was never in favour of hard borders nor did he support the idea of differences in people’s genes, but cultural differences, a notion that “his bastards of the extreme right tried to stretch, warp, and defame”. Hayek, the most influential libertarian economist of the 20th century, weighed in on these matters in a 1976 lecture. He did not lapse into the more extreme form of bigotry that some of his apostate followers would later take up with a vengeance. Surprisingly, he argued that socialism is the state to which humans are most naturally inclined. He believed that the primordial trend towards socialism can and must be supported by way of cultural intervention.
Hayek’s seminal ideas in the book Road to Serfdom, where he strongly argues for economic freedom and limited powers of the government, have met with a contrarian viewpoint of Joseph Stiglitz, the Nobel laureate. In his book, The Road to Freedom (2024), Stiglitz believes that Hayek misunderstood the concept of freedom by equating it with unfettered markets. It ignores the importance of other social goods like equity, justice, well-being, and shared prosperity. On economic freedom, he echoes what Isaiah Berlin had once observed: freedom for the wolves means death to the lambs. Stiglitz advocates a case for progressive capitalism, where government plays an important role in regulating the environment, capital movements, and the banking and financial sector, addressing market failure, promoting social equity, and ensuring a more just and equitable society.
Slobodian takes on the Argentinian President Javier Milei, who brandishes a chainsaw to mimic his evisceration of government spending. At the Conservative Political Action conference in February, he gave a shiny red one to Elon Musk, the hatchet man of Trump to trim down government expenditure. Standing before the world’s elite last year in Davos, he offered soothing assurance to the business people: you are social benefactors, you are heroes. If you make money, it is because you offer a better product at a better price, contributing to the general well-being. He calls Pope Francis a filthy leftist and praises American gangster Al Capone as a hero. The combination of emollient platitudes, economic shock therapy, and strong man authoritarianism is why Milei features prominently in Slobodian’s book as a toxic practitioner of far-right philosophy.
Hayek’s bastards offer an illuminating history to our current bewildering moments as the right-wing population joins forces with billionaire oligarchs to take a chainsaw to the foundation of public life, until there is nothing to stand on. They have Donald Trump as their cheerleader. In this spasmodic sweep of toxic right-wingers and bullies, it was heartening to find Mark Carney, of the Liberal Party, winning the presidential election in Canada, with a call to repulse the Trumpian threat of annexation and trade war. Biology does not stand like a rock in the face of egalitarianism, and that humans are ‘capitalists in the cradle’, as some of the far right believe. Hayek did not subscribe to this nauseating racist view.
India opted for a free market economy in 1991, when Manmohan Singh as Finance Minister, in his budget speech, quoted Victor Hugo, who had said that “no one can stop a moment whose time has come”. Thanks to economic liberalisation, average GDP growth has doubled from a Hindu rate of growth of 3.5 percent to 7 percent, savings have doubled, and there is a humongous growth in the inflow of FDI into India.
India is unique in the sense that despite a change in political dispensation from Congress to the BJP, there is a continuing commitment to economic liberalisation. To be fair to the decade under Modi, there has been a significant spurt in infrastructural investment, a reduction in NPA (non-performing assets), and India today is growing at a faster clip than China. India has interestingly chosen to embrace both the policy of abdicating central planning advocated by Hayek and the philosophy of inclusive growth propounded by Stiglitz. Both efficiency and equity must walk hand in hand in a society wedded to justice and welfare for all. Though there are rumblings about the contours of secularism, India still has not fallen prey to the toxic idea of racial supremacy.
—The writer is formerly Director (Finance) at DRDO.
