Which Liberalism?


Tyler Cowen is a postdoctoral fellow at the Center for the Study of Market Processes. George Mason University, Fairfax, Virginia.

Friedrich A. Hayek, in his famous essay “Individualism: True and False” (Hayek, 1948), draws a distinction between two differing strands in Western thought: skeptical individualism and rationalist constructivism. As Hayek points out, at one time in history or another, each strand has claimed to be spokesman for liberal principles. Hayek argues that the two strands are irreconcilable, as rationalist constructivism will almost invariably lead to centralized planning and state domination. If the prevalent philosophy of an era grants man the ability to consciously redesign institutions in accordance with a priori principles, it is only a matter of time before such “rationalist” dictates are enforced through the state. Since the state is the “planner” par excellence, a belief in planning usually leads to a belief in extensive state power. Constructivist doctrines are primarily attributed to the French rationalists and are traced back to early seven- teenth-century Cartesianism.

According to Hayek, skeptical individualism allows each person to pursue his own self-interest in light of the fact that the “best alternative” for this individual is unknown. Self-seeking behavior within a market framework will ultimately result in socially desirable outcomes. Hayek attributes this tradition to the Scottish Enlightenment and several other thinkers from the British Isles (e.g., Burke).

This raises the question: which liberalism? Are the two strands of Western thought that Hayek discusses irreconcilable? If so, which are we to choose? If not, how are they to be integrated?

Hayek makes most of his points with reference to intellectual history—it is in this field that I find a different answer to Hayek’s questions. The two traditions of liberalism (rationalism and skeptical individualism) are related differently than Hayek suggests. For instance, Hayek attributes the idea of spontaneous order almost exclusively to the British Isles (Mandeville, Hume, Burke, Ferguson, Smith, etc.). However, the notion of spontaneous order finds both its roots and its highest development (at least through the nineteenth century) in France—often in the hands of the rationalists.

Hayek attributes the idea of “the result of human action and not of human design” to Mandeville’s “Fable of the Bees” (1705). As Hayek would admit, these notions are ultimately rooted in Judaic, Christian, Hellenic, and Roman culture. However, their more proximate origins can be traced back to sixteenth-century France, before Mandeville’s time.

French Individualism

Nannerl Keohane (1980, p. 83) has noted that “Individualism dominated French ethics and psychology from the end of the sixteenth century well into the seventeenth . . .” Keo-hane documents this statement not by examining Hayek’s “false individualists” (the rationalists) but rather the skeptical French civic humanist tradition that descended from the Roman Stoics. (See chapters 3-13 of Keohane.) Montaigne is portrayed as the leader of this tra-dition-not only does he glorify freedom and individual virtue throughout his Essays but he also has a critique of “rationalist constructi-vism” that resembles Hayek’s argument. Montaigne ascribes the ills of the world to man’s attempt to know more than he is capable of—“If it is true, that man alone of all the animals has this freedom of imagination and this unruliness of thought . . . it is an advantage that is sold him very dear, and in which he has little cause to glory, for from it spring the principal source of the ills that oppress him: sin, disease, irresolution, confusion, despair.” (Montaigne, vol. II, 12, p. 336)

Montaigne argues that reason is only a private guide to action (not a public guide) and should be tempered with extreme skepticism in order to avoid forcing one’s will upon other people through coercion. (Essays, vol. III, 11, pp. 786-790) Instead, we should rely upon custom and accident for men are like “. . . ill-matched objects, put in a bag without order, find of themselves a way to unite and fall into place together, often better than they could have been arranged by art.” (Essays, vol. III, 9, p. 730)

Such notions were not a brief episode in French thought which perished with the onslaught of Cartesian rationalism—“In these observations Montaigne inaugurates a long and fruitful tradition in French social theory, fore-shadowing the libertins of the early seventeenth century, the Jansenists, and their English disciples such as Mandeville. Montaigne makes explicit the idea that private vices knit society together, that selfish motives lead men to serve the public good.” (Keohane, p. 112)

A strong interest in spontaneous order characterized post-Reformation French thought—especially such thinkers as Pierre Nicole and Pierre Boisguillebert. Even before the Enlightenment this tradition was fairly well entrenched. Under Louis XIV, such thinkers as the Marquis d’Argenson developed ideas quite similar to Hayek’s. (See Ogle on d’Argenson.) Not only was d’Argenson a strong critic of mercantilism and an advocate of laissez-faire but he also predated Hayek’s later work oncompetition as a discovery process• Since overall or general political truths cannot always be immediately known, d’Argenson argues that the monarch should allow each individual to pursue his own interests in the hope that the resulting patterns of interaction will disclose or “contain” the sought truths. (See d’Ar-genson’s Considerations sur le gouvernment

. . .)

Despite the growing sophistication of French thought, there was still a serious weakness in French liberalism—the lack of a well-developed theory of natural law. However, with the growth of science, rationalism, and the oncoming of the Enlightenment this defect was remedied. Such thinkers as Gournay, Turgot, and Condorcet constituted the apogee of eigh-teenth-century liberalism• These intellectuals and their disciples combined an understanding of the spontaneous development of free institutions and a belief in the ability of reason to know that liberty is the only moral and practical alternative.

British Thinkers

While the British Isles produced many notable liberals during the eighteenth century as well, many of these thinkers were plagued by a sense of overall skepticism that moderated their liberal beliefs. Hume, for instance, thought that reason was incapable of judging the efficacy of legal institutions; therefore a free society was to be justified on the grounds that it had evolved through time and exhibited strong survival traits. This notion may have been plausible in Hume’s day when liberalism was advancing, but it is far more difficult to justify in the twentieth century. Edmund Burke had the same problem—after having rejected natural law he was forced to fall back upon tradition for his justification of a liberal order.

Of course, the British had many thinkers who did not adhere to such views. Richard Price, Joseph Priestley, Thomas Paine, and James Macintosh were all strong advocates of natural law and laissez faire. Yet, almost as a rule, these individuals had direct links to the French, considered themselves rationalists, and were strong opponents of Burke. While another group of English rationalists, the Benthamites, did eventually become collectivists, this outcome can just as easily be attributed to the form of utilitarianism they advocated, rather than to their rationalism.

It was the nineteenth century that saw the full flowering of the French spontaneous order tradition in such liberals as DeStutt de Tracy, Charles Comte, Jean-Baptiste Say, Frederic Bastiat, and Gustav de Molinari. These figures found the proper mix of rationalism and a belief in the spontaneous order. Most of the nineteenth-century French liberals were consistent opponents of state power and defenders of inalienable rights. The case against state interference was explicitly grounded in a rationalist conception of the benefits of human freedom.

Yet, at the same time such rationalists were developing the theory of spontaneous order. For instance, the French economist Jean-Bap-tiste Say had fairly sophisticated notions of the spontaneous origin of money, money as a market institution, and the dangers of state interference with the money supply (see Say, 1855). Say and his followers had a theory of the market which was far richer and detailed than the arid Ricardianism of the British Isles. Bastiat—with his explanation of the “economic harmonies” of a market economy—was perhaps the leading spokesman for the spontaneous order. When asked how the market could manage to feed all of Paris, Bastiat simply replied that it was only necessary that each man attempt to feed himself.

Eighteenth- and nineteenth-century French rationalism led to laissez-faire liberalism. While many nineteenth-century totalitarians were also inspired by rationalism, Hayek overestimates the importance of this connection. The more critical intellectual relationship that Hayek does not examine is the intertwining of socialist and feudalist thought. For instance, nearly all of the nineteenth-century socialist critique of capitalism and the industrial revolution is taken directly from conservative, feudalist-inspired thinkers. In England, these feudal, anticapitalist thinkers included not only Southey and Coleridge, but go at least as far back as the Bolingbroke circle of the early eighteenth century. In addition, there were numerous sixteenth- and seventeenth-century critics of the market economy who argued that it disrupted the order, harmony, and justice of the feudalist system.

The situation in France was similar, as Kingsley Martin (1962, p. 236) has noted that “Eighteenth-century socialism sprang from a moral objection to the theory that luxury is socially beneficial. It was in origin a Puritan attack on economic hedonism.” For instance, Morelly, the first French socialist to outline his collectivist utopia in detail, explicitly envisioned a feudal conception of society.

Hayek’s thesis does not square with this evidence. To the extent that socialism springs from feudalism, the rationalist attitude must be viewed as strongly antisocialist since the rationalists were stringent opponents of feudalism. While many later socialists were strongly imbued with a rationalistic spirit, this is simply another aspect of the liberal tradition that socialism borrowed (and perverted). European socialists such as Saint-Simon, Auguste Comte, and Marx altered liberal rationalism in the same manner that they twisted the classical liberal concepts of class analysis, progress, and industrialism. It is not rationalism but lingering feudalism—the belief that the market economy is inherently unjust and inharmonious—that is at fault for this transformation.

Both rationalism and an understanding of spontaneous order are an integral part of the liberal tradition. Just as rationalism finds its sphere in choosing the legal order for a society, spontaneous order finds its sphere within this legal order. If the rules we choose are just, then free institutions will develop in an orderly, harmonious way which is conducive to peace and prosperity. This view can be considered the central message of Ludwig von Mises’s Human Action. Mises, one of the greatest classical liberals of the twentieth century, embraced the best of both the British and French traditions.
d’Argenson, Marquis, Considerations sur le gouvernment . . . Amsterdam, 1765.

Hayek, F. A. Individualism and Economic Order. New York, 1948.

Keohane, N. Philosophy and the State in France. Princeton, 1980.

Martin, .Kingsley. French Liberal Thought in the Eighteenth Century. New York, 1962.

Montaigne, Michel de. Complete Essays. Stanford, 1958.

Ogle, Arthur. The Marquis d’Argenson. London, 1893.

Say, J. B. Treatise On Political Economy. New York, 1855.


August 1987

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November 2014

It's been 40 years since F. A. Hayek received his Nobel Prize. His insights, particularly on the distribution of knowledge and the impossibility of economic planning, remain hugely important today. In this issue, we look back on the influence of his work. Max Borders and Craig Biddle debate whether liberty must be defended from one absolute foundation, further reflections on Scottish secession, and how technology is already changing our world for the better--including how robots, despite the unease they cause, will only accelerate this process.
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