Liberty Matters

On Hayek’s Notion of True and False Individualism

Another important point which Matt raises which I think is worth pursuing further is Hayek’s argument about “true and false individualism” (1945)[1], where he argues that “true individualism” is represented by the British tradition (namely Locke, Hume, Smith, Burke, Lord Acton) and “false individualism” is represented by the French (namely the Encyclopedists, Rousseau, and the Physiocrats). This distinction has always baffled me for a number of reasons. Firstly, why does he talk about “individualism” and not “liberalism” per se? Individualism is only one aspect of the schools of thought he discusses and it makes much more sense to refer to the broader package of beliefs which make up the “theory of liberty.” I would include is this broader package of ideas things like individual liberty, property rights, support for free markets (especially the policy of laissez-faire), spontaneous orders (or “harmony”), free trade, limited government (or even no government), peace, opposition to slavery, and so on. If we were to try to describe what ideas and beliefs constitute what Walter Grinder calls “real liberalism” and Ralph Raico “true liberalism” [2] we would have to include things from at least four main areas, namely political liberties, economic liberties, legal liberties, and social liberties in order to show liberalism’s true breadth and depth. On nearly all these things Hayek seems to have nothing much to say in this essay.[3]
Second, he very narrowly defines both the British and French traditions to exclude what I believe is the much larger and more radical traditions of classical liberalism which existed in both countries. For example from the mid-17th century onwards we can see groups like the Levellers (John Lilburne and Richard Overton among others) advocating many of these ideas, and as we move forward in time there is the Commonwealthman tradition in in England in the early 18th century; Thomas Jefferson and his radical followers in America; John Price, John Priestly, and Thomas Paine in England in the late 18th century; the Physiocrats , Voltaire, and Condorcet in the late 18th century in France;  J.B. Say, Benjamin Constant, Destutt de Tracy, Charles Comte and Charles Dunoyer in the early 19th century in France; the Philosophic Radicals like Jeremy Bentham and James Mill in early 19th century England; Richard Cobden and John Bright in mid-19th century England; Frédéric Bastiat, Gustave de Molinari, and the Économiste school in mid-19th century France; the radical individualists Auberon Herbert and Herbert Spencer in late-19th century England; and radical individualists like Lysander Spooner in late 19th century America. This list is incomplete of course and I make no mention of other classical liberals who lived in Germany or Italy or Austria-Hungary. However, the point should be clear that Hayek’s discussion of the scope of “individualism/liberalism” is scandalously inadequate. The narrowness of Hayek's discussion of individualism (liberalism) is hard to explain as one of the works upon which he bases much of his understanding of the history of individualism, Albert Schatz, L’individualisme économique et social (1907),[4] contains lengthy discussions of the work of Charles Dunoyer, Frédéric Bastiat, and Herbert Spencer none of whom are mentioned in Hayek's essay. Perhaps Ralph Raico’s witty description of Hayek as suffering from “terminal Anglophilia” [5] is truer than one might think.
Third, he makes some absurd arguments about how “rationalistic individualism” (also called “rationalistic pseudo-liberalism”) tends inevitably to end up in some form of “socialism or collectivism” (p. 4) which leads him to prefer an “antirationalistic approach” in which one “conform(s) to seemingly irrational traditions and conventions” (pp. 24, 26). (Hayek also believes that “false individualism” leads to “anarchism”.) The very great danger of this Burkean “anti-rationalistic” respect for existing institutions is, as many liberals in the late 18th and early 19th centuries clearly recognized, that many existing institutions are unjust because they came into existence and maintain themselves through coercion and the theft of the property of others, which is a clear violation of liberal principles regarding individual liberty and property. The anger and sense of outrage which the institutions of the established church, aristocratic land ownership, aristocratic and mercantile control of Parliament, slavery, and tariff protection produced in the hearts and minds of classical liberals of the time was a major factor in motivating them to seek radical reform of their societies. This makes Hayek’s view of existing institutions and traditions look quite complacent and uncaring of the rights and liberties of ordinary people.
Fourth, Hayek’s view that “True individualism is, or course, not anarchism, which is but another product of the rationalistic pseudo-individualism to which it is opposed.” (p. 16) is a misunderstanding of what anarchism was and is. Leaving aside for the moment “left” or “socialist” anarchism of the Proudhon and Bakunin variety, it is clear that there has been almost from the beginnings of liberal though an anarchist current which has coexisted with the main-stream limited government position. Think of perhaps even the young Edmund Burke (A Vindication of Natural Society (1756)), William Godwin Enquiry Concerning Political Justice (1793), Thomas Paine (The Rights of Man (1791)), J.B. Say (Cours complet d’économie politique (1828)), Charles Dunoyer (L’Industrie et la morale (1825)), Gustave de Molinari himself, and Lysander Spooner and Benjamin Tucker. Whether one accepts this liberal form of anarchism or not one has to at least acknowledge that it has existed and has been an important part of liberalism’s history. When the Political Economy Society discussed Molinari’s ideas at a meeting in 1849 Dunoyer gave the Hayekian criticism that, in Hayek’s terminology, it was a “rationalistic search for logical consistency”, or as Dunoyer put it on behalf the members of the Society, Molinari had been carried away by “illusions of logic.” Molinari no doubt would have defended himself by saying that he was just pursuing the principles of property rights and free markets to their logical conclusion just as liberal political economists had always done and that it was up to the advocates of an exception to liberal principles to show otherwise. If you like, you could phrase it terms of “the presumption of liberty” (like the presumption of innocence in court proceedings), that if we are in doubt on any given issue the presumption should always be in favour of liberty and not state control and regulation. I think that this is a sound principle to which we should adhere unless there are overwhelming reasons to believe otherwise. Matt may have those reasons and these we can discuss.
In conclusion, in my view a better way to distinguish between the different schools of liberal thought is to focus on their attitude towards individual liberty vis-à-vis the power of the state. When one does this one sees that in both France and England there was a stream of conservative liberals who were in favour of some liberties for some individuals  (a kind of “crony liberalism” perhaps?) but who also saw an important role for the state and the establishment in creating a kind of “ordered liberty” because unfettered and democratic liberty would be destabilising and might lead to revolution (to be avoided at all costs, unless you are American); and a stream of radical liberals who wanted to maximise individual liberty by doing away with all social and political privileges of the establishment, abolishing entire branches of the state (especially the imperial army and the colonies), and allowing a space for ordinary people to voice their concerns in Parliament and in the press.
My conclusion is that what Hayek refers to as “true individualism” (or rather true liberalism) is in fact the aristocratic bastard form of liberalism which was adopted by sections of the British ruling elite in the late 18th and early 19th century (the Whigs). His “false individualism” (false liberalism) is in fact the more radical liberalism which emerged both in France and England at this time. Therefore , I believe Hayek has the entire history of liberalism back to front. Perhaps he should have called the postscript to The Constitution of Liberty “Why am neither a Conservative nor a True Liberal” in order to reflect this fact. [6]
[1] Friedrich Hayek, "Individualism: True and False," Individualism and Economic Order (Chicago: Henry Regnery Gateway Edition, 1972), pp. 1-32. The essay was first given as a lecture at University College, Dublin in December 1945.
[2] Ralph Raico, “Liberalism: True and False”, Classical Liberalism and the Austrian School, Forward by Jörg Guido Hülsmann, Preface by David Gordon (Auburn, Alabama: Ludwig von Mises Institute, 2012), pp. 67-110.
[3] I would also argue that by the time Hayek came to write The Constitution of Liberty in 1960 he was even more confused about what liberalism is. F.A. Hayek, The Constitution of Liberty (Chicago: Henry Regnery Gateway Edition, 1960).
[4] Albert Schatz, L’individualisme économique et social: ses origines - son évolution - ses formes contemporaines (Paris: A. Colin, 1907). <> . See his acknowledgement to Schatz in footnote 6, p. 6. Unfortunately, it seems that Hayek only had time to read Part I of the book and not Part II where the latter are discussed at some length.
[5]“The Centrality of French liberalism,” p. 221.
[6] “Postscript: Why I Am Not a Conservative,” The Constitution of Liberty, pp. 397-411.