Freedom, the Common Good, and the Rule of Law: Lippmann and Hayek on Economic Planning1

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INTRODUCTION

Friedrich Hayek was an Austrian economist. But his theoretical interests and political commitments took him progressively beyond the parameters of the discipline of economics until his work also spanned the fields of philosophy, politics, history, and psychology. The complexity of Hayek's intellectual journey is bewitching, and has lured numerous scholars into mapping his trail. Yet amid the many illuminating historical discussions of Hayek's thinking, surprisingly little work has focused on the emergence of his political ideas. Hayek's "transformation" in the late 1930s, from a technical economic theorist into an interdisciplinary scholar and public intellectual, has been chiefly discussed in relation to his views on the methodology of economics, such as his shift from Misesian a priorism to Popperian falsificationism and his increasing skepticism about the concept of equilibrium.2 Hayek's work as an institution-builder, who played a decisive role in promoting the international network of intellectuals committed to advancing neo-liberal ideas, has also been the subject of lively historical debate.3 However, his political thought has for the most part remained the province of those interested in analysing its philosophical architecture or its influence on public policy rather than its historical development.4

This article contributes to a historical account of Hayek's turn to political theory in the 1930s by tracing the emergence of his powerful critique of economic planning as destructive of liberty (as opposed to economic efficiency), which culminated in the publication of his seminal polemic, The Road to Serfdom (1944). While some valuable first steps in this direction have already been taken,5 there are further Unes of enquiry that must be pursued if we are to obtain a comprehensive understanding of the development of Hayek's mature political thought. The Une of enquiry that I take up in this article concerns Hayek's relationship in this period with the sometime American progressive, Walter Lippmann. It will be my contention that Hayek's engagement with Lippmann's work sheds new light on the evolution of the argument that Hayek eventually unveiled in The Road to Serfdomi and helps us to grasp more precisely the case that Hayek sought to make in that text. While it is well-known that, after the publication of The Road to Serfdom, Hayek had a major impact on political debate in the United States,6 we are less familiar with the idea, elaborated in the rest of this article, that Hayek himself was already in dialogue with American political thought while writing The Road to Serfdom. But on closer investigation, Walter Lippmann's case against economic planning, formed in response to certain aspects of the New Deal, provided a striking first approximation of key arguments that Hayek would later articulate in his own work: the objection to economic planning on the grounds that it would destroy not just valued economic liberties but also civil and political freedoms; an emphasis on the importance of a certain form of legal order for the preservation of liberty; and the need for critics of planning to offer a positive liberal reform agenda that was compatible with this understanding of the law.

LIPPMANN'S JOURNEY

At first glance, Lippmann may seem an unlikely ally of a nascent neoliberalism. By the 1930s, he had cemented his position as one of the leading public intellectuals and political commentators in the United States. Boasting excellent contacts with politicians, policy-makers and other leading figures, Lippmann was as central to public affairs as Hayek was marginal.7 Yet in addition to his journalistic immersion in day-to-day political struggles, Lippmann was also a political theorist of some renown. His earliest work as a philosopher of progressivism had gradually given way over the course of the 1920s and 1930s to an increasingly strident criticism of the dangers posed by the untamed populism of democratic government and the bureaucratic collectivist state. …