Chapter 1c

German Ideals

Father of Neoliberalism

Hayek Hayek
5 min read
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Because of the growing impatience with the slow advance of liberal policy, the just irritation with those who used liberal phraseology in defence of anti-social privileges, and the boundless ambition seemingly justified by the material improvements already achieved, it came to pass that toward the turn of the century the belief in the basic tenets of liberalism was more and more relinquished. What had been achieved came to be regarded as a secure and imperishable possession, acquired once and for all. The eyes of the people became fixed on the new demands, the rapid satisfaction ofwhich seemed to be barred by the adherence to the old principles. It became more and more widely accepted that further advance could not be expected along the old lines within the general framework which had made past progress pOSSible, but only by a complete remodelling ofsociety. It was no longer a question of adding to or improving the existing machinery, but of completely scrapping and replaCing it. And as the hope of the new generation came to be centred on something completely new, interest in, and understanding of, the functioning of the existing society rapidly declined; and with the decline of the understanding of the way in which the free system worked our awareness of what depended on its existence also decreased.

This is not the place to discuss how this change in outlook was fostered by the uncritical transfer to the problems ofsociety of habits of thought engendered by the preoccupation with technological problems, the habits of thought of the natural scientist and the engineer, how these at the same time tended to discredit the results of the past study of society which did not conform to their prejudices, and to impose ideals of organisation on a sphere to which they are not appropriate. 1 All we are here concerned to show is how completely, though gradually and by almost imperceptible steps, our attitude towards society has changed. What at every stage of this process of change had appeared a difference of degree only, has in its cumulative effect already brought about a fundamental difference between the older liberal attitude towards society and the present approach to social problems. The change amounts to a complete reversal of the trend we have sketched, an entire abandonment of the individualist tradition which has created Western civilisation. 1 The author has made an attempt to trace the beginning ofthis development in two series of articles on “Scientism and the Study of Society” and “The Counter-Revolution of Science” which appeared in Economica, 1941-4.

According to the views now dominant the question is no longer how we can make the best use of the spontaneous forces found in a free society. We have in effect undertaken to dispense with the forces which produced unforeseen results and to replace the impersonal and anonymous mechanism of the market by collective and “conscious” direction of all social forces to deliberately chosen goals. The difference cannot be better illustrated than by the extreme position taken in a widely acclaimed book on whose programme ofso-called “planning for freedom” we shall have to comment yet more than once. We have never had to set up and direct [writes Dr. Karl Mannheim] the entire system of nature as we are forced to do to-day with society…. Mankind is tending more and more to regulate the whole of its social life, although it has never attempted to create a second nature.1


It is significant that this change in the trend of ideas has coincided with a reversal of the direction in which ideas have travelled in space. For over two hundred years English ideas had been spreading eastwards. The rule of freedom which had been achieved in England seemed destined to spread throughout the world. By about 1870 the reign of these ideas had probably reached its easternmost expansion. From then onwards it began to retreat and a different set ofideas, not really new but very old, began to advance from the East. England lost her intellectual leadership in the political and social sphere and became an importer of ideas. For the next sixty years Germany became the centre from which the ideas destined to govern the world in the twentieth century spread east and west. Whether it was Hegel or Marx, List or Schmoller, Sombart or Mannheim, whether it was I Man and Society in an Age of Reconstruction, 1940, p. 175.

socialism in its more radical form or merely “organisation” or “planning” of a less radical kind, German ideas were everywhere readily imported and German institutions imitated. Although most ofthe new ideas, and particularly socialism, did not originate in Germany, it was in Germany that they were perfected and during the last quarter of the nineteenth and the first quarter of the twentieth century they reached their fullest development. It is now often forgotten how very considerable was the lead which Germany had during this period in the development of the theory and practice of socialism, that a generation before socialism became a serious issue in this country, Germany had a large socialist party in her parliament, and that till not very long ago the doctrinal development of socialism was almost entirely carried on in Germany and Austria, so that even to-day Russian discussion largely carries on where the Germans left off; most English socialists are still unaware that the majority of the problems they begin to discover were thoroughly discussed by German socialists long ago.

The intellectual influence which German thinkers were able to exercise during this period on the whole world was supported not merely by the great mat’erial progress of Germany but even more by the extraordinary reputation which German thinkers and scientists had earned during the preceding hundred years when Germany had once more become an integral and even leading member of the common European civilisation. But it soon served to assist the spreading from Germany of ideas directed against the foundations of that civilisation. The Germans themselves-or at least those among them who spread these ideas-were fully aware of the conflict: what had been the common heritage of European civilisation became to them, long before the Nazis, “Western” civilisation-where “Western” was no longer used in the old sense of Occident but had come to mean west of the Rhine. “Western” in this sense was Liberalism and Democracy, Capitalism and Individualism, Free Trade and any form of Internationalism or love of peace.

But in spite of the ill-concealed contempt of an everincreasing number of Germans for those “shallow” Western ideals, or perhaps because ofit, the people ofthe West continued to import German ideas and were even induced to believe that their own former convictions had merely been rationalisations of selfish interests, that Free Trade was a doctrine invented to further British interests, and that the political ideals England had given to the world were hopelessly outmoded and a thing to be ashamed of.

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