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CHAPTER 20: Ethics on The Road to Serfdom and Beyond * - Paul Heyne, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion 
“Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion, edited and with an Introduction by Geoffrey Brennan and A.M.C. Waterman (Indianapolis: Liberty Fund, 2008).
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Ethics on The Road to Serfdom and Beyond*
Friedrich Hayek began The Road to Serfdom with a confession and a promise.
The original preface opens with the following admission:
When a professional student of social affairs writes a political book, his first duty is plainly to say so. This is a political book. I do not wish to disguise this by describing it, as I might perhaps have done, by the more elegant and ambitious name of an essay in social philosophy. But, whatever the name, the essential point remains that all I shall have to say is derived from certain ultimate values.1
That is the confession. The promise follows immediately:
I hope I have adequately discharged in the book itself a second and no less important duty: to make it clear beyond doubt what these ultimate values are on which the whole argument depends. (Ibid.)
I have deliberately chosen the word confession to describe Hayek’s discharge of his “first duty.” His language strongly suggests that, in his own judgment, a “professional student of social affairs” violates a rule of the guild when he writes a “political book.” That is because political books, unlike scientific books dealing with social affairs, depend upon the author’s values. When Hayek informs the reader that “all I shall have to say” is derived from “certain ultimate values,” he is confessing to a lapse: he has left the realm of science. He has also, in part, abandoned the realm of reasoned argument. As the word “ultimate” indicates, his values, indispensable though they are for such a book, cannot and therefore will not be defended or argued for. Because they are ultimate, there is nothing beyond or beneath to which one might point to make a rational or empirical case for them.
That explains the author’s duty to make clear to the reader “beyond doubt” what the ultimate values are on which the entire argument depends. Clarity and candor are all that can be demanded from the social scientist who introduces value judgments into his work. Hayek intends to satisfy that demand by making his value judgments unmistakably clear.
As it turns out, he does not fulfill his promise. Two readings of the book in its 50th anniversary year, including one reading with just this question in mind, have not enabled me to discover “the ultimate values . . . on which the whole argument depends.” Readers will gain frequent insight into Hayek’s values and ideals while reading The Road to Serfdom, but Hayek has certainly not made it “clear beyond doubt” what the ultimate values are.
He passes up a chance to do so in the first paragraph of Chapter I when he refers to “some of our most cherished ideals” without indicating what they are, and he passes up another chance in the next paragraph when he mentions “the values for which we are now fighting [World War II]” without stating them. He seems to place a high value on that “individualism” which grew out of Christianity and ancient classical philosophy, was first fully developed during the Renaissance, and subsequently grew into what we call “Western civilization” but he does not identify this individualism as one of his ultimate values. He complains that “ ‘[f]reedom’ and ‘liberty’ are now words so worn with use and abuse that one must hesitate to employ them to express the ideals for which they stood” during the post-Renaissance development of Western civilization. He suggests that the word “tolerance” might still preserve the full meaning of the principle which was in the ascendant during this period, but he does not pause to clarify or elaborate the concept, and he does not say that it is one of his ultimate values.
Hayek speculates that the “marvelous growth of science” might be “the greatest result of the unchaining of individual energies . . . which followed the march of individual liberty from Italy to England and beyond.” But the growth of knowledge is also not identified as an ultimate value. One could make a good case that the rule of law, discussed especially in Chapter VI, is the central concept around which the entire argument of The Road to Serfdom revolves. But Hayek does not put the rule of law forward as an ultimate value, and for excellent reasons. Its value for him derives from its consequences which must therefore be more ultimate than the rule of law itself.
Every student of Hayek knows how much he valued freedom from the arbitrary power of others, “release from the ties which left the individual no choice but obedience to the orders of a superior to whom he was attached.” This, he tells us, was what the word had meant “to the great apostles of freedom.” The connotations of the word “apostles” suggest the high value Hayek assigned to emancipation of individuals from the arbitrary power of others. But if this is the ultimate value upon which everything else depends, why did he not say so at this point? An extended discussion of freedom or liberty, defined as emancipation from the will of others, does not appear until Chapter IX. At the end of this chapter Hayek asserts that freedom or liberty can only be had at a price and that “we must be prepared to make severe material sacrifices to preserve our liberty.” But if this is one of the ultimate values on which the entire argument depends, it certainly has not been identified as such “beyond doubt.”
Hayek comes closest to so identifying it when he quotes Lord Acton, who “truly said of liberty” (emphasis added) that it “is not a means to a higher political end. It is itself the highest political end.” But the quotation continues:
It is not for the sake of a good public administration that [liberty] is required, but for the security in the pursuit of the highest objects of civil society, and of private life.
The last part of the quotation seems to make liberty, which is the highest political end, a means to the achievement of yet higher ends that are not political. Had Hayek identified this liberty as one of his ultimate values, he would not have been vulnerable to George Stigler’s argument2 that wealth does more than the absence of coercion to advance the values that Hayek cherishes.
We know that democracy is not an ultimate value for Hayek. He states clearly that it is a mere means, and he warns against what he calls “[t]he fashionable concentration on democracy as the main value.”
What about respect for truth? Is this one of Hayek’s ultimate values? He states that “the sense of and respect for truth” is “one of the foundations of all morals,” and he warns against the corruption of science that occurs when “science has to serve, not truth, but the interests of a class, a community, or a state.” A plausible case can be made from arguments in his later books that respect for truth was indeed one of the deeper values informing Hayek’s thought. In Chapter III of The Constitution of Liberty Hayek seems to suggest that we fulfill ourselves in the process of learning something new, and that we desire to accumulate additional knowledge because it makes us wiser, even if it also makes us sadder or worse off in all other ways. But that respect for truth is an ultimate value is not “clear beyond doubt” even in later works, much less in The Road to Serfdom.
Why does Hayek tell the reader that he will state clearly the ultimate values on which his argument depends and then fail to do so? The contradiction points to what I believe is a significant characteristic of Hayek’s thought. He was always troubled by the suspicion that he had no adequate grounds for his own most important convictions. Hayek craved foundations for his legal, political, and economic philosophy, but he was never able to find any that were capable, in his own judgment, of bearing the weight he wanted to put on them.
In The Road to Serfdom, Hayek is a good positivist, as we would expect of one who had reached intellectual maturity in the 1920s and 1930s. He knows that he is making policy recommendations; he believes that policy recommendations must rest in part upon value judgments; he knows that he must therefore introduce his value judgments into the argument. But value judgments, he also believes, have no rational foundation. “Surely we have learned,” he writes,
that knowledge cannot create new ethical values. . . . It is not rational conviction but the acceptance of a creed which is required to justify a particular plan.
In the course of discussing the moral consequences of totalitarian propaganda, he distinguishes between questions about values, which are “questions of opinion,” and “questions of fact where human intelligence is involved in a different way.” What exactly is that difference? He does not say. Is there some other way to exercise human intelligence than the way in which we exercise it to arrive at conclusions about “questions of fact”? Can intelligence be employed to arrive at opinions about “questions of value”? Or are we using some less respectable or less reliable faculty? How can we argue on behalf of our values if neither reason nor facts are relevant to their acceptance? Our ultimate values would appear to be especially immune to any kind of rational or empirical test; precisely because they are ultimate, they rest on nothing beyond themselves.
This is not a satisfactory position for someone who wants to persuade. And why else write a book, especially a political book? So Hayek simply ignores his positivist principles and argues on behalf of his values and against antithetical values, employing both reason and facts.
Democracy, for example, is not an ultimate value, he insists, despite what many people think. They are thinking wrongly. They have failed to see what democracy can and cannot accomplish and how ineffective it is as a means to other goods that they value more highly.
People have placed excessively high value on equality, security, and the “rational” organization of production. Their valuations are misplaced, Hayek tries to show, because they lead to consequences whose negative value exceeds whatever positive value they might have.
The single-minded idealists who have united under the banner of planning will alter their ideals when they come to see that they have adopted a very limited view of society. The socialists who so value “the deliberate organization of the labors of society for a definite social goal” will cease to do so once they have discovered that this presupposes something not available to them, namely, a comprehensive scale of values or a complete ethical code. Those whose moral ideals have led them to support collectivism will adjust their ideals when they learn that the implementation of these ideals will eventually undermine them. Values can be criticized and defended, as Hayek shows by doing it.
Consider also some of his remarks about morality in The Road to Serfdom. A genuine morality, he maintains, must leave the conscience free and must acknowledge some general rules that the individual is always required to observe. The sense of and the respect for truth is one of the foundations of all morals. Moral principles must be seriously upheld against the expediencies and exigencies of social machinery. Responsibility not to a superior but to one’s own conscience is “the very essence of any morals which deserve the name.” We must have “moral courage” to defend stoutly the traditional ideals that our enemies attack. These are not the sort of comments one would expect from a thinker who deemed morality entirely a matter of values that have no rational foundation.
Milton Friedman claimed in his well-known essay on “The Methodology of Positive Economics” that most differences about economic policy among disinterested citizens derived from different readings of the facts rather than “from fundamental differences in basic values,” and that this was a good thing because the former can, in principle at least, be eliminated by the growth of knowledge, whereas the latter are “differences about which men can ultimately only fight.”3 But that is surely not the case. Even if it is true that men can ultimately only fight about fundamental differences in basic values, value disagreements almost never produce violence among disinterested citizens. They do not reach that ultimate recourse because discussion provides so many better options along the way. If citizens cannot resolve fundamental differences in basic values, they also have a hard time discovering truly fundamental differences in truly basic values. It is not inability so much as impatience that prevents us from engaging in productive dialogue about conflicting values.
The insistence that there is no “truth” about values usually reflects a realization that we cannot find an ultimate proof for any value judgment, along with a failure to recognize that we also cannot find an ultimate proof for any other kind of judgment, including the conclusions of science. We do not so much prove as persuade, as Donald McCloskey has been arguing (persuasively) for the last decade or so. Fundamentalists (or foundationalists) lust for sure and certain foundations upon which they can construct knockdown arguments—arguments so powerful, as Robert Nozick once put it, that “they set up reverberations in the brain: if the person refuses to accept the conclusion, he dies. How’s that for a powerful argument?”4 Fortunately or unfortunately, we do not command any arguments with that kind of persuasive power.
It is ironic that Hayek, whose writings over the years demonstrated so effectively that rational arguments and the careful use of evidence can persuade people to alter their ethical positions, apparently never fully persuaded himself that this was the case. In Rules and Order, the first volume of his Law, Legislation and Liberty trilogy, Hayek repeatedly shows that the fact-value dichotomy is not fatal to rational discussion of ethical questions. He weaves together facts and norms in highly instructive ways, and shows in the course of doing so that David Hume, usually cited by those who claim there is an unbridgeable gulf between “is” and “ought,” actually offers valuable instruction on how to go back and forth across that alleged chasm.
The rule of law, arguably the pivotal concept in Hayek’s entire legal philosophy, has often been criticized on the grounds that it cannot be stated in an unambiguous way. That did not stop Hayek from employing the concept to formulate highly instructive criticisms of various tendencies in political theory and practice. What economists like to call rigorous arguments, arguments proceeding from clearly-defined postulates through formal logic to precise conclusions, are by no means the only kind of persuasive argument. Most of the published work by Hayek that eventually flowed from The Road to Serfdom reveals the power of arguments that persuade not by means of rigorous demonstration, but by highlighting the inadequacy of widely-held opinions and revealing the explanatory potential of novel organizing conceptions.
That is how he proceeded in The Road to Serfdom. His practice was superior to his profession. He never managed to make his ultimate values clear beyond doubt because he in fact had no ultimate values, which is to say, no values from which all other values were derived and which could themselves not be strengthened or weakened by arguments and evidence. His formal position, taken over uncritically from the intellectual milieu, might even be described as “constructivist rationalism,” the term he himself liked to use to describe those who exaggerated the power of the human mind to grasp the world whole and control it. His actual practice rejected the dogmas of constructivist rationalism in favor of a procedure much closer to what his friend Karl Popper called critical rationalism.
It is odd that a thinker who had so often demonstrated the folly of trying to construct completely comprehensive systems, capable of answering all questions in advance, nonetheless spent the final years of his career trying to construct an argument that would once and for all compel all socialist thinkers to forswear forever their attachment to central planning, social justice, and all the related mirages of constructivist rationalism. His last book, The Fatal Conceit, expresses this—may we say it?—fatal conceit. To make matters worse, Hayek ended up constructing the knockdown argument in a form that undermined his own repeated demonstrations in the course of a long career that ethics was a rational enterprise.
The argument first appeared in “The Three Sources of Human Values,” the Epilogue appended to The Political Order of a Free People, the third volume of Law, Legislation and Liberty. Here Hayek argued that there are not two but three kinds of human values: those that are “genetically ordered and therefore innate”; those that are “products of rational thought”; and values that had triumphed in the course of cultural evolution by demonstrating their suitability to the successful organization of social life. Values of this third sort are the values that have made possible the finest achievements of Western civilization, including science, the rule of law, and commercial society with all its miraculous creative and productive powers. While these values are not the product of rational thought, they are not for that reason arbitrary. They are a cultural inheritance, survivors of a competitive struggle, and essential conditions for the successful evolution of our society.
The discovery of this third source of values seemed to provide the foundations for which Hayek had so long been searching. These were the ultimate values upon which all his political arguments might be made to depend. There was indeed no way to establish them rationally. But they reigned nonetheless. Those who chose to reject them committed cultural suicide by sawing off the very branch on which they were sitting in order to saw. The knockdown argument lay at hand.
Hayek grew so fond of this argument, unfortunately, that at the end he came to revel in the nonrational and even irrational character of the ethical beliefs that have created Western civilization. In the last chapter of The Fatal Conceit, for example, he almost gleefully gives substantial credit to the mystical and religious beliefs of the principal monotheistic religions that he himself does not accept and cannot even understand. And the final appendix to the book—the last word of the last word—announces with great excitement and intense satisfaction Hayek’s discovery of a 1909 study by Sir James Frazer arguing that superstitions have often been of immense value. The last paragraph is worth quoting in its entirety.
Frazer also concluded that “superstition rendered a great service to humanity. It supplied multitudes with a motive, a wrong motive it is true, for right action; and surely it is better for the world that men should be right from wrong motives than that they would do wrong with the best intentions. What concerns society is conduct, not opinion: if only our actions are just and good, it matters not a straw to others whether our opinions are mistaken.”
This is surely a strange epitaph to the career of a thinker who did so much to show the enormous damage that mistaken opinions had done in the century spanned by his life.
[* ] Unpublished typescript, provenance unknown, reprinted by permission of Mrs. Juliana Heyne.
[1. ] Friedrich Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1972), xvii. Citations are to the edition with a new, 1976 preface by the author.
[2. ] George J. Stigler, “Wealth, and Possibly Liberty,” Journal of Legal Studies, Volume VII, no. 2 (June 1978): 213-17.
[3. ] Milton Friedman, Essays in Positive Economics (Chicago: University of Chicago Press, 1953), 5.
[4. ] Robert Nozick, Philosophical Explanations (Cambridge, Mass.: Harvard University Press, 1981), 4.