“There are no possible rules of a just distribution in a system where the distribution is not deliberately the result of people bringing it about. Justice is an attribute of individual action. I can be just or unjust towards my fellow men; but the conception of social justice to expect from an impersonal process, which nobody can control, to bring about a just result is not only a meaningless conception, it’s completely impossible”.
These words were pronounced by the economist Friedrich A. Hayek in 1977, when he was interviewed in the TV show Firing Line. As an intellectual leader of the Austrian School of economic thought, Mr. Hayek defended free market and individual action. This statement gives an idea of his staunch opposition to the notion of social justice, which he considers nothing more than a “mirage”. Hayek was awarded in 1974 with the Nobel Prize, among other contributions, for his “penetrating analysis of the interdependence of economic, social and institutional phenomena”. His libertarian thought exerted a tremendous influence in economics.
Nonetheless, in his early twenties surprisingly he considered himself a democratic socialist. Hayek flirted with this philosophy through his sympathy with the Fabian Society, a British socialist organization that has taken part in the ideological foundation of the British Labour Party. Democratic socialism is defined as the confluence of socialist principles with a democratic system. In contrast to social democracy, its goal is not to reform capitalism, but to achieve the social ownership of the means of production in a decentralized way, such as for instance the market.
Everything changed, though, after Mises published Socialism in 1922. Although he was not “completely satisfied by his arguments”, the critique of socialism made Hayek abandon his young ideals towards classical liberalism. In the 1920’s, Hayek joined the debate against socialism that Mises had started, known as the economic calculation problem. In their view, economic efficiency could only be granted in a purely market system, where prices reflect individual subjective values. Therefore, the only reliable information about the economy is what market prices say, and not what Marxists believed, such as costs. According to Hayek, Marxists did not understand how the market actually works; prices determine costs and not the other way around.
Throughout his entire work, Hayek builds an argument against social-planning systems and in favor of pure market institutions. In a nutshell, he claimed that social institutions, take markets as an example, are not designed; they are the result of the interaction of uncountable circumstances. Unlike the eighteenth century’s idea that social institutions can and must be designed in our pleasure, central authorities are unable to deal with the amount of information to account for all the circumstances. As a result, he states the libertarian principle that government must keep off the economy, and never interfere in it.
Like Hayek, there are many cases of influential economists that have shifted from a heterodoxy socialist ideology (such as Marxism or anarchism) towards classical liberalism. Simply by looking at the ideological profiles of the Nobel laureates in Economics, we encounter several names. Most of them were raised in the First or the Second World War; others, during the Great Depression. In those extraordinary periods, socialism was still alive and vibrant in a large part of the globe, challenging the capitalist order. Interestingly, most of these economists also shared the academic institutions where they learned and taught, most notably the Chicago School of Economics, under the auspices of the great Milton Friedman.
Just to mention their names, some of those Nobel Prizes that used to be socialists but shifted to classical liberalism are: the aforementioned Friedrich Hayek, Tjalling Koopmans, James Buchanan, Robert Solow (from anarchism), Ronald Coase, Gary Becker, Robert Fogel, Douglass North, Robert Lucas Jr., Vernon Smith and Edward Prescott.
As an anecdote, it is remarkable the case of the economic historian Robert Fogel. He decided to abandon the Communist Party where he had been actively engaged after his father advised him to work in his family business of meat packaging to earn a higher salary. Fogel’s initial idea was to hire an employee to replace him and, thus, work full-time on the socialist cause, but soon he ended up “disillusioned” and stepped aside. Years later, after studying at the Columbia University, and also influenced by Friedman’s thought, he would welcome liberalist tenets, claiming that the principal role of government should be to create circumstances for a smooth rate of change in technology.
After this evidence, it is natural to wonder what they have in common. How is it that they all shifted from socialist views towards, to a greater or lesser extent, liberal doctrines -and why not the other way around? Well, in those times central-planning governments were seen as tyrannies. The USSR and other Communist regimes used totalitarian and repressive methods to exercise power. Understandably, they were afraid of power concentration. Moreover, socialist ideals were vindicated dogmatically in some intellectual circles. This, altogether with the perception of negative results from efforts of regulation, led to reasonable disaffection with and distrust of government intervention.
Another characteristic they all share is the young age they had while supporting socialism. For different reasons, they had supported socialist principles, but those lasted only until their twenties. Thereafter, a certain reason suddenly changed their mind. The explanations above certainly play a role. Besides, every case is special, and personal circumstances need calibrating. However, the age factor requires additional consideration.
In the last decades, heterodoxy socialism is too often considered a youth ideology. Between the mid-nineteenth century and the beginning of the twentieth, this was not the case whatsoever. Back in those times, a socialist society was not a mere utopia. Working class movements really challenged the capitalist system, and there was a chance for a systematic transformation. The fall of the USSR in 1991 quashed these aspirations. Ever since, increasingly marginalized socialists were associated with childish or immature behavior.
The argument goes as follows. When you are young and optimistic, you want to change the world. Lacking a bit of rationality, you adopt certain ideologies without thinking too much, because you want to satisfy no matter what naïf objective. As time goes by, you grow up, and life teaches you a bitter lesson: things are not as easy as they looked like. In a similar fashion, economists also end up resigning to the only system that provides with acceptable results; that one is backed by science. After all, its outcomes do not seem as bad as before; they are the only ones, and even start to result appealing.
Along this path to science, individuals do not evolve alone. As Thomas Kuhn would state, society and the institutional background make the individual adopt a certain paradigm. Obviously, this paradigm in economics is the free market. While the paradigm stands, alternative theories and systems are systematically defeated. As we have seen, none of the Nobel laureates could resist to the paradigm, and once they adopted liberal ideology they did not dare to retract.
Perhaps the socialist challenge is still irrelevant today. However, according to last week’s edition of The Economist, leftist ideas are catching on young people. They call this the rise of millennial socialism. Recent Conservative disasters -Trumps deliria and the Brexit nonsense- have driven millennials to socialist postulates. Even though both Bernie Sanders and Jeremy Corbyn reach the seventies, they have become idols for the young generation. A more recent hype affects the 28 years old US congresswoman Alexandria Ocasio-Cortez (AOC), who has earned a large popularity. The magazine asserts that they are not the answer to capitalism’s problems. Indeed, The Economist is neither a millennials’ magazine nor a socialist pamphlet.
Many students of economics engage in the field because they have feelings about inequality, social justice, poverty, human development, etc. After some years of study, they might probably shift ideologically towards liberalism. Liberalist principles are not usually inherent to young economists; they rather appear throughout their studies. By chance, do you imagine someone who is about to join economics saying: “I love efficiency and optimization. I believe in the perfect allocation of resources”? At least to me, it sounds really absurd.
The association of socialism with a youthful and dogmatic ideology amounts to the one of liberalism with a mature and serious science. One must be aware that values and ideologies also exist in economic science. In this case, regarding socialism as a childish doctrine clearly reveals value judgments. To make the best science in our possibilities, we need to leave behind all sorts of dogmas and articulate a true discussion of ideas. Conformism rejects the possibility of change or denies its convenience, starting by science. Of course, if nobody believes in change, this is not going to happen.