Fukuyama, Hayek, Sen - and a Cop

Francis Fukuyama, who once wrote a book arguing that liberal democracy is the "end of history," has reviewed a new edition of Friedrich Hayek's The Constitution of Liberty for the New York Times, in which he has pitted Amartya Sen against Hayek. Fukuyama writes:

There have always been two major critiques of Hayek’s arguments, neither of which are fully answered by a re­reading of “The Constitution of Liberty.” The first comes from the left. Hayek provides a very minimalist definition of freedom as freedom from coercion, and particularly coercion by a central government. But as the economist Amartya Sen has argued, the ability to actually take advantage of freedom depends on other things like resources, health and education that many people in a typical society do not possess.

Fukuyama does well to categorise Amartya Sen's critique of Hayek as "coming from the left." Sen is a "welfarist" – he won the 1998 Nobel prize for his work on “welfare economics” - and it is he who has championed and supported the "right to free and compulsory education" as well as the "right to food" and the "right to work." These are all disastrous ideas that merely serve the bureaucracy by giving them very big budgets to spend. All this big government spending does nothing for the poor - indeed, it actually hurts them by consuming precious capital and causing inflation.

Today, in India, we are suffering because Chacha Manmohan S Gandhi has followed Sen's ideas - as expressed in his Development as Freedom (1999) and its sequel Rationality and Freedom (2003). Sen's acolyte, the professor of sociology Jean Dreze, is a senior member of the National Advisory Council attached to Sonia Gandhi. In that position, Dreze supported all kinds of rights - except the Right to Property!

Fukuyama notes that:

Hayek always had problems getting the respect he deserved; even when he was awarded the Nobel in economic science in 1974, the awards committee paired him with the left-leaning economist Gunnar Myrdal.

Actually, Myrdal and Sen are more or less identical in their thinking: both believe that the masses are stupid - without "the ability to actually take advantage of freedom" - and that the baboos of our The State are an "intellectual-moral elite" who must plan the economy and take "collective decisions" on behalf of these dumb masses. These baboos must impart "education" to them, too.

It was Peter Bauer who demolished these nonsensical ideas – so contemptuous of the poor, and so much in praise of The State. And Bauer was a “development economist” who had studied the Third World - and the “informal sector” in which the poor operate - very closely.

Fukuyama therefore treads dangerous ground when he pits Sen against Hayek by writing in support of Sen’s claim that “the ability to actually take advantage of freedom depends on other things like resources, health and education that many people in a typical society do not possess.”

Did the bar dancers of Bombay lack “resources, health and education”? Do ganja farmers need freedom or welfare? Is Sen’s welfarism going to “help the poor”? Or do they need Freedom from the Centralised State? What about the Right to Property – the only solution to the “mystery of capital.”

Think things over – but I am on Peter Bauer’s side, opposed to both Myrdal as well as Sen. You can read my (unfavourable) review of Sen’s Rationality and Freedom, published in the New York Sun, here.


As far as the critique of Hayek that "comes from the right" - the charge of "moral relativism" that Fukuyama mentions - the philosopher Tibor Machan rebuts it roundly here. Machan concludes:

The relationship between objective personal morality and the principles of politics which are basic to a constitution such as Hayek's constitution of liberty is a challenging aspect of political philosophy. It does not help to casually dismiss Hayek's approach by caricaturing it as moral relativism.

After writing The Constitution of Liberty (1960), Hayek published three volumes on Law, Legislation & Liberty between 1973-79, and then The Fatal Conceit: The Errors of Socialism in 1988. He died in 1992 – at the age of 92. So it cannot be said that The Constitution of Liberty was his last word on the subject. Indeed, in Law, Legislation & Liberty he outlined the respective spheres of “private law” and “public law” – the latter being legislation. These pioneering ideas have been carried forward by many since then: you can read Hans-Hermann Hoppe arguing very strongly in favour of a private law society here. I have also written a brief column on this subject, available here.

Fukuyama concludes his review by saying that Hayek “proves himself to be far more of a hubristic Cartesian than a true Hayekian.” Actually, it is in the first volume of Law, Legislation & Liberty – titled “Rules and Order” – that Hayek demolished Cartesian rationalism and “legal positivism.” Fukuyama ought to read this too. Also, the Hayekian insight that when we buy and sell in the market we do so “between instinct and reason” – the opening chapter of The Fatal Conceit – proves that Fukuyama’s assessment of Hayek is totally unfounded.

To conclude: Here in Goa, the people suffer from various repressive pieces of legislation passed by the Central State – from the Coastal Zone Regulation Act to the Narcotics & Psychotropic Substances Act. Both are in violation of the Right to Property – a right not guaranteed to us by the socialist Constitution of India.

The other day I had a chance to interact with a Goan cop. I told him to resign from service – pointing out that he was doing “bad work” and not “good work.” There were quite a few Goan people listening in on our discussions – and they all agreed with me. In the end, the cop agreed too!

This itself is proof of the fact that our The State is repressive – and that the people need Freedom and Property. It was a vindication of Hayek’s contention that “liberty, property and law are an inseparable trinity.” So much for Amartya Sen and his “welfarism.” This welfarism funded by Keynesianism is the bane of India, detrimental to the poor. It must give way to Liberty and Sound Money.