Hayek's prophetic scepticism.

"People are fully alive to the superstition in priests" Lord Salisbury once remarked. "In time they will find out that professors may be just as bad." Salisbury was a Conservative prime minister of Britain in the late nineteenth century, and his scepticism was to be sorely missed during the twentieth century, when religious superstition in the West gave way to the academic and political kind. And it is with a notable example of such folly that Alan Ebenstein introduces his new biography of F. A. Hayek, the economist and social philosopher who won the Nobel Prize in 1974. (1) The Soviet Union, wrote Paul Samuelson of Harvard, also a Nobel Prize winner, "is proof that contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive." "Proof" is not a word economists should use lightly, but the sentence still features in his textbook in 1989, during a decade in which the Soviet system was collapsing, and no less than 364 academic economists in Britain joined together in a letter to The Times to tell Margaret Thatcher, wrongly as it turned out, that her economic policies could not work. The moral to be learned from this example is that if you see a herd of academics advancing on you with proof of something, run for your lives. And preferably, don't argue. The casuistry won't be worth the candle.

A talent for undermining common academic superstitions certainly marked Hayek, who spent his life in universities but became an international celebrity. He is that unusual thing: a sceptic who became a prophet. In a world full of people convinced that handing control of many departments of human life over to experts would make a better society, Hayek revived and developed the sceptical side of eighteenth-century social theory. Drawing upon Austrian economic theory, he was able to demonstrate a rare general truth about public policy: running economies by central command is the high road to impoverishment. This sceptical truth made him the prophet of a liberal social order. But his essence was combat, and the best place to begin understanding him is with the illusion he spent his life combating.

The illusion consisted in the belief that after millennia of blundering, mankind had at last progressed to the point when it could take its destiny into its own hands. The problem in the past had been the lack of knowledge and of a unified will to use it. Such a belief assumed that "mankind" could become a single agent, a will that could adequately act for the benefit of us all. In the mild form of evolutionary socialism, democratically elected governments might set themselves up as the agents of this coming perfection, but the idea often acquired sharp teeth and abrasive claws. Revolutionary vanguards of various kinds could declare that they stood for mankind, seize power in unstable states, and embark upon murderous projects of social engineering. Lenin was the first successful exponent of this politico-religious enthusiasm, but salvation could also take racial or nationalist forms, as with Hitler and Mussolini.

In an important sense, these figures were all socialists (Mussolini, for example, learned his politics as a socialist agitator), and only the theories generated by the tactical situation of German communists facing a more successful collectivist competitor in the 1930s have locked us into thinking there is an essential difference between "left" and "right" totalitarianisms. Hayek certainly thought they were all birds of a feather, and I have no doubt he was right. But his main focus was on the economic essence of this phenomenon: central economic planning. His career as a prophet was to emerge from his early concerns as a professional economist.

The illusion is, then, that the blundering indirections of history out of which science, industry, and the wonders of modern civilization had come were about to be superseded by a new era of progressive justice guided by those who had the correct understanding of history. I am inclined to call this view "the Bolshevik illusion" in testimony to its triumph in 1917. The fact that the Bolsheviks subjected the Soviet peoples to an incompetent modernizing program that left them, three generations on, hopelessly behind the free societies of the West makes it pretty clear that whatever may be the truths of human progress (if there are any), these truths are certainly not to be found in grand abstract systems such as Marxism. Despotic elites have been remarkably consistent in their record of failure, irrespective of culture or level of economic development. But Hayek believed, and again rightly, ...