Herostratus laid fire to the temple in Ephesus in order to become famous, and only became notorious. A few students at the LSE now seem to seek Herostratic fame...
Some, probably only a handful, of students at the London School of Economics have now launched a campaign called LSE Class War, with a radical manifesto. One of their demands is, unbelievably, to ban the LSE Hayek Society, named after one of the most distinguished scholars who has ever worked at the LSE, Friedrich August von Hayek. Their words have to be read to be believed: ‘The dissolution of HayekSoc and all other societies that call for the oppression of working class people from the LSESU. We believe in a no platform policy for those who discuss ideas which promote ideologies that are harmful to marginalised students. LSESU HayekSoc promotes free market fundamentalist views which outwardly call for the oppression of working class people. These kind of ideas have no place on campus. We also want other societies that promote these views to also be dissolved from the LSESU.’
I know of no thinker who is farther from promoting a political view ‘harmful to marginalised students’ or from calling ‘for the oppression of working class people’ than Hayek. He was a thoughtful, erudite economic liberal who, as Joseph Schumpeter once observed, was polite to a fault in that he never attributed ulterior motives to his opponents, but tried to reason with them on the merits of their case. It is true that he presented a powerful argument against socialism but it was about the intellectual shortcomings of the socialist project and not about any personal flaws in those supporting it. Indeed, his argument showed why he should be considered the most inclusive of thinkers, whereas his opponents such as this small, aggressive and undoubtedly unrepresentative group of LSE students simply want to exclude from campus anyone who does not agree with them.
Briefly, Hayek’s argument was that socialism could not take into account the knowledge dispersed among all the individuals in society, for example their personal skills and abilities and the special knowledge of time and space which people possess in virtue of when and where they find themselves participating in the economy. The only way to utilise all this dispersed knowledge was by defining protected domains for individuals, such as private property rights, thus allowing them to act themselves on their knowledge, not at the discretion of a superior. The dispersal of knowledge—an inevitable condition of life in complex societies—required the devolution of power. Thus, Hayek’s complaint about socialism was in effect that it was not inclusive enough. It did not allow the knowledge of all to enter into the economic process, only the knowledge of the socialist decision-makers. In particular, socialism did not recognise the important role in a progressive society of entrepreneurs and venture capitalists seeking for new and more efficient ways to make things, using less to produce more.
Thus, Hayek’s message is particularly relevant to ‘marginalised’ people because it recognises that everybody can make a contribution: everybody has something, a knowledge how or a knowledge that, which others do not have, and their special knowledge can only enter the productive process under a system of free trade and private property, or in what is somewhat misleadingly called capitalism. Hayek’s vision extends to the whole of mankind, to the seamstress in Hong Kong as well as to the car maker in Japan, to the travel agent in Spain as well as to the wine grower in New Zealand. They can all be contributors (even if in extreme cases they are only selling cheap labour in the day, building houses for their families at night and saving money for years to better their children’s futures through education and training). But it is not given and has to be found out which are their special capacities, and this can only be discovered in the competitive process. Hayek’s insight is not only that the dispersal of knowledge requires the devolution of power, but also that competition is first and foremost a discovery procedure—a way of informing you what you should do if your goal is to satisfy the needs of other people, as expressed in the free market. Moreover, the discovery of your capacities enables you to develop them, and you gain a more fulfilling life. You become a person, not a cog in a wheel.
This is not only a theory. It has been the practice, however incompletely and imperfectly, over the last two centuries where poverty, drudgery and oppression, once the lot in life for most, have been radically reduced. In the West, slavery was abolished in the nineteenth century, not least through the operations of the British Royal Navy on the seven seas, although in the twentieth century it was reintroduced in Russia and China after the victory of communism when millions were enslaved in labour camps, the Russian Gulags and the Chinese Laogais. In those two large countries, many more perished in famines, including Mao’s Great Leap Forward in 1958–1962 when 45 million people starved to death. Both the Russian and the Chinese leaders have however retreated somewhat from their former positions, recognising the force of Hayek’s knowledge argument and allowing their subjects some economic freedom, although in both countries opponents of the present regimes are denied any platforms, just as the LSE socialists now want to deny any platform for those who want to discuss, develop and apply Hayek’s profound ideas.
Perhaps the two most remarkable and striking events in my lifetime have been, first, the peaceful return of Central and Eastern Europe to normalcy, in the last decade of the twentieth century, a process firmly led by Hayek’s disciples such as Mart Laar in Estonia, Leszek Balcerowicz in Poland and Václav Klaus in the Czech Republic, and, second, the great, global reduction of poverty, induced by the extension of free trade and private property. Previously marginalised people in Asia, Latin America and Africa have suddenly found themselves able to participate in the productive and creative process of global markets. The numbers are staggering. It is estimated that in 1820 84 per cent of the world’s population lived in extreme poverty. In 1910, the proportion had gone down to 66 per cent, in 1950 to 55 per cent, and in 1981 to 42 per cent. The latest assessment (by the World Bank) is that in 2018 the proportion is 8.6 per cent. This has happened, moreover, at the same time as the world’s population has dramatically increased.
But what about inequality? the LSE militants undoubtedly ask. While global income inequality has actually decreased, not least because hundreds of millions have produced themselves out of poverty in China, India and other Asian countries, it is true that income inequality has increased somewhat in the West, not because any group has become poorer, but because some groups have become quite a bit richer. One reason is that people with special skills, such as artists, entertainers and entrepreneurs, now can sell these skills all over the world, whereas previously they were confined to local markets. Today’s rich have mostly created their wealth, not inherited it. It is a telling fact that in 1984 when the American business magazine Forbes published its first list of the 400 richest people in the world, less than half of the people on the list were self-made. Most had inherited their wealth. But in 2018, two thirds had created their own fortunes. The poor have become richer, and the rich have become richer.
While the LSE extremists demand a ban on the discussion of Hayek’s ideas, in their hearts working men and women agree with him, even if they may never have heard of him. Ordinary people want to move from socialism to capitalism, in the old days from East to West Germany and from China to Hong Kong, and now from Nicaragua to Texas, from Cuba to Florida, and from Venezuela to almost any other country in the Americas. Unfortunately, Western universities, under the influence of Marxist teachers who refuse to learn the lessons of history, have to some extent become publicly-funded enclaves of alienated, embittered pseudo-intellectuals. But as is demonstrated by the existence of the Hayek Societies at the LSE and Oxford (I helped to found the Oxford one in 1983), and of the vigorous international Students for Liberty movement, and of the many vibrant free-market think tanks around the world, many young people are attracted to the ideals of freedom, opportunity and human flourishing. Hayek’s ideas are still relevant, not least his ringing words in a seminal essay in 1949 on the intellectuals and socialism: ‘ We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a programme which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible.’
In Western societies, the old may be motivated by fear of what they have to lose. But the young are motivated by hope of what they can gain. Indeed, the young should dream. And under capitalism many such individual dreams may come true because they need not be about coercing other people, rather about developing your own capacities, tending your own garden. The socialist dream is on the other hand bound to turn into a nightmare because it is about forcing people to march in one direction and to one tune, and to exclude all those unwilling to go along, silencing them (or in socialistese, denying them of a platform), starving them or killing them. Capitalism is inclusive, socialism is exclusive.