Why Do So Many Intellectuals Hate Free Markets?

[This article is excerpted from chapter 3 of Classical Liberalism and the Austrian School. Footnote numbering differs from the original.]

Hayek on the Intellectuals and Socialism

F.A. Hayek was acutely concerned with our problem, since he, too, was wholly convinced of the importance of the intellectuals: “They are the organs which modern society has developed for spreading knowledge and ideas,” he declares in his essay “The Intellectuals and Socialism” (Hayek 1967). The intellectuals—whom Hayek characterizes as “the professional secondhand dealers in ideas”1 —exercise their power through their domination of public opinion: “There is little that the ordinary man of today learns about events or ideas except through the medium of this class.” Among other things, they often virtually manufacture professional reputations in the minds of the general population; and through their domination of the news media, they color and shape the information that people in each country have of events and trends in foreign nations. Once an idea is adopted by the intellectuals, its acceptance by the masses is “almost automatic and irresistible.” Ultimately, the intellectuals are the legislators of mankind (178–80, 182).

With all this, Hayek’s view of the intellectuals is flatteringly benign: their ideas are determined by and large by “honest convictions and good intentions” (184).2 In “The Intellectuals and Socialism,” Hayek does mention in passing the intellectuals’ egalitarian bias; the analysis, however, is basically in terms of their “scientism.” With his characteristic emphasis on epistemology, Hayek sees the revolt against the market economy as stemming from the methodological errors he identified and investigated at length in his brilliant study of the rise of French positivism, The Counter-Revolution of Science (1955).

Thus, in Hayek’s view, the chief influence on the intellectuals has been the example of the natural sciences and their applications. As man has come to understand and then control the forces of nature, intellectuals have grown infatuated with the idea that an analogous mastery of social forces could produce similar benefits for mankind. They are under the sway of “such beliefs as that deliberate control or conscious organization is also in social affairs always superior to the results of spontaneous processes which are not directed by a human mind, or that any order based on a plan beforehand must be better than one formed by the balancing of opposing forces” (186–87). Hayek even makes the following astonishing statement (187):

That, with the application of engineering techniques, the direction of all forms of human activity according to a single coherent plan should prove to be as successful in society as it has been in innumerable engineering tasks is too plausible a conclusion not to seduce most of those who are elated by the achievements of the natural sciences. It must indeed be admitted both that it would require powerful arguments to counter the strong presumption in favor of such a conclusion and that these arguments have not yet been adequately stated….The argument will not lose its force until it has been conclusively shown why what has proved so eminently successful in producing advances in so many fields should have limits to its usefulness and become positively harmful if extended beyond those limits.

It is exceedingly difficult to follow Hayek’s reasoning here. He appears to be saying that because the natural sciences have made great advances and because innumerable particular engineering projects have succeeded, it is quite understandable that many intellectuals should conclude that “the direction of all forms of human activity according to a single coherent plan” will be similarly successful.

But, in the first place, the advances of the natural sciences were not brought about in accordance with any overall central plan; rather, they were the product of many separate decentralized but coordinated researchers (produced analogously in some respects to the market process; see Baker 1945 and Polanyi 19513 ). Second, from the fact that many particular engineering projects have succeeded it does not follow that a single vast engineering project, one subsuming all particular projects, is likely to succeed; nor does it seem likely that most people will find such a claim plausible.

Why, then, is it natural, or logical, or easily comprehensible that intellectuals should reason from the triumphs of decentralized scientific research and of individual engineering projects to the success of a plan undertaking to direct “all forms of human activity”?4

In his review of Hayek’s The Road to Serfdom, Joseph Schumpeter (1946: 269) remarks that Hayek was “polite to a fault” towards his opponents, in that he hardly ever attributed to them “anything beyond intellectual error.” But not all the points that must be made can be made without more “plain speaking,” Schumpeter declares.5

Schumpeter here implies an important distinction. Civility in debate, including the formal presumption of good faith on the part of one’s adversaries, is always in order. But there is also a place for the attempt to explain the attitudes, for instance, of anti-market intellectuals (a form of the sociology of knowledge). In this endeavor, “politeness” is not precisely what is most called for. As regards the positivist intellectuals who argued from the successes of natural science to the need for central planning: it may well be that this false inference was no simple intellectual error, but was facilitated by their prejudices and resentments, or perhaps their own will to power.6

In any case, Hayek’s gentlemanly deference to anti-market intellectuals can sometimes be downright misleading. Consider his statement (1967: 193):

Orthodoxy of any kind, any pretense that a system of ideas is final and must be unquestioningly accepted as a whole, is the one view which of necessity antagonizes all intellectuals, whatever their views on particular issues.

This, of a category of persons that in the twentieth century has notoriously included thousands of prominent apologists for Soviet Communism in all western countries, is indeed politeness “to a fault.”7 There was, after all, good reason, as late as the 1950s, for Raymond Aron (1957) to have written on The Opium of the Intellectuals and for H.B. Acton (1955) to have entitled what is probably the best philosophical critique of Marxism-Leninism The Illusion of the Epoch.8

Nor was Communism the only nefarious orthodoxy to claim the loyalty of numerous intellectuals, as is shown by the cases of Martin Heidegger, Robert Brasillach, Giovanni Gentile, Ezra Pound, and many others. For a less complimentary but more realistic view of the integrity of modern intellectuals we may turn to the memoirs of the German historian Golo Mann (1991: 534), who quotes from his diary of 1933: “18 May. [Josef] Goebbels in front of a writers’ meeting in the Hotel Kaiserhof: ‘We [Nazis] have been reproached with not being concerned with the intellectuals. That was not necessary for us. We knew quite well: if we first have power, then the intellectuals will come on their own.’ Thunderous applause—from the intellectuals.”9

Schumpeter on the Intellectual Proletariat

In chiding Hayek, Schumpeter suggested (1946: 269) that he might have learned a useful lesson from Karl Marx. Schumpeter’s own interpretation reflects his lifelong engagement with Marxism. Like Marx, he offered a highly pessimistic prognosis for the capitalist system, though for mainly different reasons (1950: 131–45). But while Schumpeter holds that intellectuals will play a key role in capitalism’s demise, he in no way relies on the scenario set forth in the Communist Manifesto.

There, Marx and Engels (1976: 494) announced that as the final revolution approaches, a section of the “bourgeois ideologists” will go over to the side of the proletariat. These will be the ideologists “who have worked their way up to a theoretical understanding of the historical movement as a whole.”10 Such a laughably self-serving description could hardly appeal to an inveterate skeptic like Schumpeter. Instead, his “Marxism” consisted in examining capitalism as a system with certain attendant sociological traits, and exposing the class interests of the intellectuals within that system.11

Compared to previous social orders, capitalism is especially vulnerable to attack:

unlike any other type of society, capitalism inevitably and by virtue of the very logic of its civilization creates, educates, and subsidizes a vested interest in social unrest. (1950: 146)

In particular, it brings forth and nurtures a class of secular intellectuals who wield the power of words over the general mind. The capitalist wealth machine makes possible cheap books, pamphlets, newspapers, and the ever-widening public that reads them. Freedom of speech and of the press enshrined in liberal constitutions entails also “freedom to nibble at the foundations of capitalist society”—a constant gnawing away that is promoted by the critical rationalism inherent in that form of society. Moreover, in contrast to earlier regimes, a capitalist state finds it difficult, except under exceptional circumstances, to suppress dissident intellectuals: such a procedure would conflict with the general principles of the rule of law and the limits to the police power dear to the bourgeoisie itself (1950: 148–51).

The key to the hostility of intellectuals to capitalism is the expansion of education, particularly higher education.12 This creates unemployment, or underemployment, of the university-schooled classes; many become “psychically unemployable in manual occupations without necessarily acquiring employability in, say, professional work.” The tenuous social position of these intellectuals breeds discontent and resentment, which are often rationalized as objective social criticism. This emotional malaise, Schumpeter asserts,

will much more realistically account for hostility to the capitalist order than could the theory—itself a rationalization in the psychological sense—according to which the intellectual’s righteous indignation about the wrongs of capitalism simply represents the logical inference from outrageous facts… (1950: 152–53)13

A major merit of Schumpeter’s argument is that it elucidates an abiding feature of the sociology of radicalism and revolution: the hunt for government jobs. The interconnection between over-education, an expanding reservoir of unemployable intellectuals, the pressure for more bureaucratic positions, and political turmoil was a commonplace among European observers in the nineteenth century.14 In 1850, the conservative author Wilhelm Heinrich Riehl (1976: 227–38) offered a remarkable analysis, in many ways anticipating Schumpeter, of the “intellectual proletariat” (Geistesproletariat). Even then Germany was producing each year much more “intellectual product” than it could use or pay for, testifying to an “unnatural” division of national labor. This was a general phenomenon in advanced countries, Riehl maintains, resulting from the enormous industrial growth that was taking place. But the impoverished intellectual workers experience a contradiction between their income and their perceived needs, between their own haughty conception of their rightful social position and the true one, a contradiction which is far more irreconcilable than in the case of the manual laborers. Because they cannot “reform” their own meager salaries, they try to reform society. It is these intellectual proletarians who have taken the lead in social revolutionary movements in Germany. “These literati see the world’s salvation in the gospel of socialism and communism, because it contains their own salvation,” through domination of the masses.15 Later revolutionary movements, whether of the left or the right, can be understood to a large extent as the ideologically camouflaged raid on the great state employment office. Carl Levy (1987: 180) has linked the expansion of the state from the later nineteenth century on to the growth in the numbers of the university-educated, who sought government jobs and utilized positivism as a facilitating ideology. Positivism

stressed the need for expertise, special training, and trained intelligence…[fortified by] a desacralizing of tradition and the rapid expansion of the public sphere…[there proliferated] schemes for the organization of society which substituted for traditional elites and capitalist entrepreneurs a stratum of experts and/or the lay clerisy. Examples can be found among the Fabians and the ILP [Independent Labor Party], [Edward] Bellamy and other American authoritarian utopia builders, the Italian socialist professors, and the French socialist elites.

From this perspective, we obtain a deeper understanding of the claim that the welfare state “saved capitalism.” What the welfare state has actually accomplished is to furnish a never-ending source of state jobs for the (mainly middle-class) products of what is still referred to as university education, without, as in the nineteenth century, requiring a revolutionary assault.16

While there is doubtless a great deal of truth in Schumpeter’s identification of the systemic surplus of intellectuals as a source of anti-capitalism, it also presents certain difficulties.

Such an overproduction—and consequent un- or under-employment—is a feature of non-capitalist societies, as well. Its effect is the general destabilization of regimes, as occurs from time to time in underdeveloped countries. A more detailed knowledge of the situation in former Communist societies might show that it was also implicated in their subversion and final overthrow.

More to the point: it is not so much the unemployed intellectuals who are the problem but the ones who are employed. Intellectuals unable to find suitable jobs may well provide a receptive subculture as well as occasional cannon fodder for revolutionary movements: among communist anarchists in the late nineteenth century, or in some third world countries more recently. In Germany after the First World War, artists and writers frozen out of the avant-garde culture of Weimar were prominent among the early National Socialists.

But Schumpeter’s thesis does not hold for many other cases, probably the historically most significant ones. Émile Zola and Anatole France, Gerhart Hauptmann and Bertold Brecht, H.G. Wells and Bernard Shaw, John Dewey and Upton Sinclair were scarcely “unemployables” in the intellectual world. Today the “stars” of the mass news media of all the advanced countries—you would know their names in your own country; one could mention American “newspersons” who earn a million dollars a year or more, such being the savage inequalities of capitalism—are typically constant “nibblers” at the system of private enterprise. The question is rather why so many successful and highly influential intellectuals become carping critics of the free economy.17

• 1This definition by Hayek is somewhat idiosyncratic, in that it excludes the originators of ideas, e.g., among socialists, Saint-Simon and Marx.
• 2At one point (182) Hayek does suggest that selfish personal interests might play a part in the intellectuals’ attitude; he refers, without naming him, to Karl Mannheim and “the curious claim…that [the intellectual class] was the only one whose views were not decidedly influenced by its own economic interests.” But he does not indicate why he considers this claim “curious.”
• 3These are both works with which Hayek was quite familiar, which makes his argument at this point more perplexing.
• 4In another essay, on “Socialism and Science,” 1978: 295, Hayek refers to “the undeniable propensity of minds trained in the physical sciences, as well as of engineers, to prefer a deliberately created orderly arrangement to the results of spontaneous growth—an influential and common attitude, which frequently attracts intellectuals to socialist schemes. This is a widespread and important phenomenon which has had a profound effect on the development of political thought.” It seems highly doubtful that surveys of political opinion among university professors in the United States, western Europe, or elsewhere, would find socialist opinions more common among physical scientists and engineers than in the humanities and social science faculties.
• 5Hayek 1973: 161n. 18, 70, rebutted Schumpeter’s criticism, asserting that it was not “‘politeness to a fault’ but profound conviction about what are the decisive factors” for his having attributed merely intellectual error to his opponents in The Road to Serfdom. Hayek reaffirmed that: “It is necessary to realize that the sources of many of the most harmful agents in this world are often not evil men but highminded idealists, and that in particular the foundations of totalitarian barbarism have been laid by honorable and well-meaning scholars who never recognized the offspring they produced.” One wonders how Hayek could know this about the character of those who “laid the foundations of totalitarian barbarism.”
• 6Cf. the comment by George Stigler 1989: 6: “a central reason for the dissatisfaction of the intellectuals with the enterprise system” is that “it does not give them a mechanism to coerce changes in the behavior of individuals.” Cf. also Robert Skidelsky 1978: 83, who mentions, as one factor in the conversion of the younger American economists to Keynesianism, that, in the version propagated by Alvin Hansen, it provided a “rationale for the permanent direction of economic life by an élite of economists….In the Keynesian political economy, public policy would be handed over to the professional economists, who alone would understand what needed to be done.” Robert Higgs 1987a: 116 observes that American Progressives around 1900 found state intervention appealing because it implied a social organization supervised and directed by engineers, planners, technicians, and trained bureaucrats, and thus put “a wise minority in the saddle.”
• 7There is by now a substantial literature on the subject; see, for instance, Caute 1973. Richard Pipes 1993: 202 makes the interesting comment that: “The Bolshevik regime, for all its objectionable features, attracted them [intellectuals] because it was the first government since the French Revolution to vest power in people of their own kind. In Soviet Russia, intellectuals could expropriate capitalists, execute political opponents, and muzzle reactionary ideas.” See also the challenge issued by Eugene D. Genovese (1994) to his fellow intellectuals to testify publicly on what they knew of the crimes of Soviet Communism and when they knew it.
• 8Cf. O’Brien 1994: 344, who notes that “the overwhelming majority of [his] academic colleagues adopted an attitude of judicious agnosticism and relativism towards the horrors of the Stalinist and other Marxist regimes.”
• 9Benjamin Constant 1988: 137–38, in criticizing the French writers of the Revolutionary and Napoleonic period, described the intellectuals’ penchant to identify with arbitrary power: “all the great developments of extrajudicial force, all the examples of recourse to illegal measures in dangerous circumstances have from century to century been recounted with respect and described with complacency. The author, sitting comfortably at his desk, hurls arbitrary measures in every direction….For a moment, he believes himself invested with power just because he is preaching its abuse…in this way he gives himself something of the pleasure of authority; he repeats as loud as he can the great words of public safety, supreme law, public interest….Poor imbecile! He talks to those who are only too glad to listen to him and who, at the first opportunity, will test out his own theories upon him.” Constant’s words may be viewed as a prescient gloss on Stalin’s treatment of many of the Bolshevik intellectuals who had lent their aid to the creation of the Soviet terror state.
• 10The critique of Marxism as the camouflaged ideology of an intellectual would-be “new class” is part of the communist anarchist tradition, begun by Bakunin and continued by Machajski and others; see Dolgoff 1971 and Szelenyi and Martin 1991.
• 11This approach, however, like the Marxist analysis of historical change in terms of class conflict, had numerous precursors among classical liberal thinkers; see the essay on “The Conflict of Classes: Liberal vs. Marxist Theories,” in the present work.
• 12Cf. Raymond Ruyer 1969: 155–56, who indicates the social and psychological problems resulting from prolonged state instruction (including “adult education”) and the diffusion of “culture” under the aegis of the state. He concludes: “It is typical that the greatest progress that has come about in ‘the democratic extension of culture’ has been produced by private enterprise in the form of paperback books, in which the state did not involve itself, except to impose its usual taxes.” A third of a century later, the same could be said of compact discs and computers. Ruyer’s work, quite unduly neglected, is a profound and elegant dissection of the intellectual’s persistent resentment of the free market economy and capitalist society. In this respect, it stands in contrast to the recent book of Raymond Boudon (2004). Despite its promising title (Why the Intellectuals Do Not Like Liberalism) and occasional insights, Boudon’s book proves to be superficial, e.g., in dating the intellectuals’ turn against a liberal order from around 1950.
• 13Schumpeter 1950: 155 highlights an important channel of the intellectuals’ influence, by means of the state bureaucracies, which are “open to conversion by the modern intellectual with whom, through a similar education, they have much in common.”
• 14See O’Boyle 1970; also Levy 1987: 160, who writes of “the state-created intelligentsias of post-Restoration Europe [i.e., after 1815] which, outpacing economic growth, faced serious underemployment and played important roles in the revolutions of 1830 and 1848.” In the Reichstag, Chancellor Otto von Bismarck (Raico 1999: 100) claimed that social revolutionaries in Russia consisted of the “diploma-proletariat,” an excess produced by higher education which society could not absorb. The leaders were not workers, but consisted “in part of people of genteel education, many half-educated people…dissipated students and unsullied dreamers…”
• 15Schumpeter does not mention Riehl in Capitalism, Socialism, and Democracy and refers to him once in his History of Economic Analysis (1954: 427 and 427 n. 20), but only in connection with Riehl’s work in Kulturgeschichte (cultural history).
• 16Cf. Mises (1974: 47–48): “In dealing with the ascent of modern statism, socialism, and interventionism, one must not neglect the preponderant role played by pressure groups and lobbies of civil servants and those university graduates who longed for government jobs.” In this connection, Mises mentions the Fabian Society in Britain and the Verein für Sozialpolitik (Association for Social Policy) in Imperial Germany.
• 17Doubt is cast on Schumpeter’s fundamental analysis by Paul A. Samuelson 1981: 10, who points out that in Japan for decades “the continued omnipresence of Marxist terminology among journalists and teachers” has had no discernible effect on Japanese politics.