Did I ruffle a few feathers? :)

jones/bhandari djones at uclink.berkeley.edu
Wed Sep 20 15:13:46 MDT 1995

I have not done the study  to respond to Chris' Hayekian challenge (though
I have been looking through the Counter-Revolution of Science and A Tiger
By the Tail: The Keynesian Legacy of Inflation); I have been working
through the Schumpeterian challenge to Marxism. And one foray out of ethnic
studies into the world of challenging reactionary economists is all I can

By the way, in Wolfgang Stolper's recent biography of his teacher (Joseph
Alois Schumpeter: public life of a private man. Princeton) the author
argues at several points that Hayek's dynamics are impoverished compared to
Schumpeter's: "Hayek is right in fearing and disliking the end of a
beautiful era.  But Schumpeter, who shared this like and dislike of what he
saw coming, is right: Hayek basically wants to preserve this state of
affairs, particularly the individual freedom it seems to guarantee. He
fails to see how this state of affairs has arisen and what its inherent
tendencies foreshadow.  But NO state of affairs can be preserved forever,
not even for a long time.  Even the very learned and (to me) attractive
Constitution of Liberty has a very time-less ahistoric aura." (369)

>From his seeming defense of Gladstonian liberalism, one gets  the sense
that Hayek did not fully explore the difference and relation between a pure
theory of capitalism and an evolutionary  theory of its stages
(mercantalism, liberalism, monopolism). Or as Stolper seems to be  arguing,
Hayek does not explore how capitalism *necessarily* undermines via its own
dyanmics the institutions and dispositions from one period of capitalism
which then continue to serve as a positive ideal in the Hayekian critique.
Hence, the ahistorical aura of Hayek's work.

  (It is also  true that while Grossmann and Dobb do refer to the
importance of stage analysis [the former to the differences between an
early and late Malthusianism; the latter to early and late imperialism],
Marxism has only recently developed it.  I refer to the Japanese school of
Uno/Sekine, especially as summarized by Robert Albritton, A Japanese
Reconstruction of Marxist Theory. London.)

I also have serious doubts about Chris S' explanation for the Great
Depression.  He seems to express a great faith in market forces if not
undermined by external monetary manipulation.  Chris S understanding of the
causes of the Great Depression is controversial, to say the least, though
he seems content to assert it.

Moreover, Chris S argument that the welfare state was fascist or
corporativist belies an inability to recognize historical context.  It is
probably true that many welfare programmes in the 30s were intended to
deflect revolutionary energies.  But such cuts today have a different
meaning. To join in the criticism of them today may hardly clear room for a
more revolutionary transformation.  It may well aid in the enshrinement of
social darwinism which of course many people equate with revolutionary

 And this opens up the question of whether Hayek is indeed a social
darwinist.  I believe that the radical institutionalist Geoff Hodgson
argues that he was not.  We will see. I don't think the case is closed.

And then there is this:

>.  In case you haven't
>heard, central planning collapsed in the 20th century.
>Something went wrong.

Well, Chris, I haven't heard that.  I quote from an unpublished paper of
Riccardo Bellofiore's "it is striking how much of the economic policy
blueprint put forward in Schumpeter's writings of the twenties--with his
stress on credit rationing and selection, industrial policy, state support
of foreign competition--reminds us of the Japanese and South Korean
economic miracles."
Are not the latter examples of central planning?


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