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The Road to Freedom by Joseph Stiglitz review – against Hayek

The Road to Freedom by Joseph Stiglitz review – against Hayek

In 1944 the Austrian-born economist Friedrich Hayek, displaced to Britain, was disquieted by his leftwing academic peers. As Hayek saw it, their political philosophy committed the same error as the fascism that was ravaging his homeland. He wrote that the desire to plan an economy centrally was – in what became the title of his most famous book – The Road to Serfdom: “many who sincerely hate all of nazism’s manifestations are working for ideals whose realisation would lead straight to the abhorred tyranny”. Hayek cast fascism not as a reaction to progressive success, but as its natural endpoint.

Joseph Stiglitz, a former chief economist of the World Bank and adviser to Bill Clinton, tackles this idea head on in The Road to Freedom, his rejoinder to Hayek’s work and that of his libertarian fellow traveller Milton Friedman. As Stiglitz sees it, rather than too much government leading to tyranny, the shift to neoliberalism has reduced freedom and “provided fertile ground for populists”. Social democracy, with its greater role for the state, generates freer, robust societies that are resilient to authoritarians like former president Donald Trump.

The mistake Hayek and Friedman made, repeated by their latter day fans on the right – Stiglitz lumps them all together in a basket of climate-denying, Covid-rubbishing, Fox-News-watching ignoramuses – was in not truly understanding freedom. Freedom for one person can come at the expense of another – indeed a certain amount of coercion can expand the total amount of freedom, Stiglitz argues. Hayek and Friedman understood this principle when it came to national defence and the protection of private property, but it should be expanded to include the environment, public health and investments in infrastructure that make us all richer.

Stiglitz takes this a bit too far. Criticising the lack of urban planning in Houston, for example, he points to a sex toy shop located in the car park of a mall that also hosts a private school. The laissez-faire approach, he says, creates negative externalities – the phrase economists use to label harms imposed on third parties. In this instance, the freedom to buy products for use by consenting adults comes at the expense of others’ freedom not to be made aware of those activities. Stiglitz is clearly trying to address market excesses, but risks justifying a world of curtain-twitching puritanism.

At the same time, he points out the psychological constraints the market imposes on freedom. Advertising and social media limit our perspectives, reducing our ability to make choices just as much as laws and the power of the state do. Liberating us from these restrictions requires regulating others’ freedom, curbing their power to deceive us or to promote their polarising and distorted version of reality.

The supposedly freedom-enhancing role for coercion that he establishes in the first few chapters is, however, gradually forgotten, as the book becomes a recitation of familiar arguments in favour of social democracy and the role of government in mitigating market failure. There is little novel or surprising in this analysis.

Ultimately Hayek’s predictions were almost exactly wrong. The postwar welfare states did not lead to tyranny: the latter half of the 20th century saw freedom’s frontiers expand. Not only did censorship diminish – obscenity and blasphemy laws were overturned, for instance – but the civil rights movement, feminism and gay liberation all ensured more people were able to access traditional liberal rights. The most troubling feature of Stiglitz’s analysis, on the other hand, is that he may well be right. The neoliberal period has paved the way for the ascendancy of illiberal democrats, authoritarians like Trump, who have undermined or attempted to overthrow democracy. But do these people, with their apparent distaste for rules and restrictions, really not understand freedom? Or do they simply not care, seeing it as just another inconvenience standing in their way?

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Source: theguardian.com