Tuesday, August 23, 2011

Rethinking Marx, the market and Hayek

Above: David McKnight

In this article David McKnight takes another look at Eric Aarons's analysis of the work and belief systems of Karl Marx and Friedrich Hayek;  McKnight was a long-time member of the Communist Party of Australia; but more recently has promoted an agenda which - in is own words - attempts to venture 'Beyond Right and Left'.   This article will also be published at a dedicated website on 'Hayek versus Marx'; and an earlier review - written by the blog publisher Tristan Ewins - can also be found here:


By David McKnight*

 Most people who reach 90 years of age would be enjoying their retirement, perhaps reminiscing, probably relaxing. Instead, veteran political activist Eric Aarons has spent the last five years researching the conservative philosopher and economist Friedrich Hayek and re-reading Karl Marx. While Marx is familiar to many people, Hayek is less well known. Yet Hayek’s ideas have provided the intellectual foundation for the neo-liberal Right which has been so globally influential for the last 30 years. In Australia Hayek’s influence is now better known thanks to Kevin Rudd’s various essays attacking neo-liberalism. Occasionally, Hayek is discussed and defended in the columns of The Australian.

Eric Aarons’ reason for researching these two towering figures has been to produce a substantial book Hayek vs Marx which not only explores their work but also suggests  vital theoretical tools to deal with today’s challenges. The central challenge facing the world, he argues, is climate change but this is merely the earliest manifestation of a profound crisis of sustainability for a planet with seven billion people  and growing.

His book, produced by a major British publisher, appears at an auspicious time. The free market and the dogma of deregulation have been discredited, and in the mass media  there has been talk of ‘the crisis of capitalism’ and references to Marx. As a consequence  of the global financial crisis many hope that the radical decline of the left will now go into reverse. Eric Aarons doesn’t comment on such hopes but it is clear that he thinks that a profound theoretical re-thinking is necessary rather than any movement ‘back to Marx’.

In some ways the book’s title is misleading. The framework of ‘Hayek versus Marx’ suggests that the author (and readers) will fall on one side or the other. In Eric Aarons’ view, both thinkers have deep flaws in their theories as well as valuable insights. The great strength of Hayek was to explain why market mechanisms have virtues which are indispensable in a complex economy and society. He saw markets as a device for the rapid sending of information via prices through a network. On this level, compared to alternatives such as a central planning, they are useful and flexible devices for signaling to producers what their buyers wanted and in what quantity. On this insight Hayek erected a vast intellectual system in which all other social, moral and cultural values had to be subordinated or discarded in favour the market and its central value: freedom.

Marx’s great strength was something about which Marx himself said little but which imbued all his writing. Marx’s ethical values lead him to see the extraordinary injustices that flowed from inequalities of wealth and the 19th century system of industry. Yet these values are buried within his work and instead Marx tried to erect a scientific theory of social development and to discover the laws of history.

The flaws in Marx’s world view were not simply wrong predictions but go deeply to his methodology.  Marx argued in Capital that history changed according to ‘natural laws’ and tendencies which worked ‘with iron necessity towards inevitable results’. On this basis he predicted the immiserisation of the working class. The labour theory of value and his concept of the falling rate of profit have also been shown to simply be wrong, according to Eric Aarons.

Hayek’s methodology is also flawed. Hayek posited the existence of sets of rules which, if followed by societies, enabled them to flourish. As Eric Aarons points out Hayek never simply and clearly identified these rules but they tend to be those commercially based rules which allow markets to function with little restraint. Interference to shape the spontaneous evolution of markets thus becomes the philosophical equivalent of sacrilegious acts ‘against nature’.

Hayek’s proof of this idea was to assert that it was analogous to Darwinian evolution through natural selection. One of the consequences of this approach is that if society has ‘evolved’ then it becomes meaningless to talk about whether that social order is just or unjust; it simply is. Hence one of Hayek’s pet hates -- the notion of ‘social justice’.  But as Aarons says this is pure assertion and not backed by any factual evidence.

As his introduction suggests, this book represents the latest stage of a personal quest that began in the early 1970s when Eric Aarons realized that the theoretical apparatus inherited from Marx and Lenin was inadequate and flawed. His conclusions about these flaws are remarkable considering that he was a leading figure for decades in the Communist Party of Australia. Today his commitment is to rethinking a social philosophy in which traditional Left concerns find a place within a framework dominated by the political need to forestall an impending ecological crisis.  

Like a number of other contemporary thinkers Eric Aarons also sees the need to discuss questions such as: what does it mean to be human, and is there a human nature.  These take us back to the long time span before capitalism, indeed back to the evolution of humans from more ape-like creatures. And then to varieties of human society from the hunter gatherer society to agricultural and to modern industrial society.  Like the philosopher Peter Singer, Eric Aarons rejects the widespread Marxist view that no human nature exists and that humans behavior, needs and outlook are entirely formed  by their social and cultural circumstances. Such assumptions, apart from being factually wrong, he argues, fed the mistaken belief that a perfect economic system could lead to a perfect society.

The central assumption of the book is that relevant and useful theories arise from the problems posed by the objective circumstances. That expresses it rather formally. But what it means is that just as Marx responded to the objective circumstances of cataclysmic changes wrought by industrial capitalism, so we must now develop new theories in the face of the slow but relentless crisis developing around climate and sustainability. This is not to ignore the enormous concentration of wealth and the social power it brings but to acknowledge that the struggle for social equality will take place within a framework dictated by the ecological crisis.

The scope of the book is sometimes frustratingly limited. As Eric Aarons says, neither Marx nor Hayek had a developed notion of politics and both minimised its importance. Democracy was barely mentioned by either of them.  This is something which will strike even adherents as surprising even staggering. Yet to understand the implications of this absence in their theories requires deeper discussion of what occurred when Marxists and neo-liberals actually gained government. Also useful would have been references to the debate on the strengths and flaws of Marx’s ideas that emerged when the Left revived in the 1970s and 80s. A whole generation of Left intellectuals revived Marxism but then abandoned it in favour of other radical analyses of oppression, racism and sexism. Addressing this experience may have gained significant readers for the book.

The book takes up a number of themes which Eric Aarons has explored in recent years. One of the centrality of values and morality as the foundation of a progressive world view. The significance of this is that it implies that a comprehensive ‘theory of everything’ is not the foundation. Trying to ground a radical analysis in yet another creative revision of Marxism is a road to nowhere. That may sound obvious but all over the world such attempts are being made and most are not even creative re-thinkings of Marxism but rather the re-affirmation of eternal truths said to be found in orthodox Marxism.

Eric Aaron’s own view that so far, no ‘internally coherent and viable alterative to capitalist society’ has yet been found. He believes that the single most important step ‘is for every society to reverse the priority capitalism gives to individual material betterment and gain and give that priority instead to social needs’. 


David McKnight works at the Arts Faculty at the University of New South Wales. He is the author of Beyond Right and Left: New Politics and the Culture War. He can be reached on

Hayek vs. Marx and today’s challenges

Routledge, London and New York, 2009.

above:  Eric Aarons's 'Hayek versus Marx'

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