That is the conclusion of Robert M. Solow in a fascinating review of Angus Burgin’s book The Great Persuasion: Reinventing Free Markets since the Depression.
Hayek was right to point out that central planning was doomed, since the centralisation of decisions is bound to generate errors and then fail to correct them. But today’s neoliberals are reluctant to acknowledge that Hayek also rejected unrestricted laissez-faire as unworkable, and was keen to identify ethical constraints on market forces.
The interesting angle for Liberal Democrats is that the basic problems with the market fundamentalists on the right-wing fringe of their party are prefigured in the early years of the neoliberal intellectual movement.
Then as now, neoliberals insist that economic theory and policy are a Manichean struggle between free markets and collectivism. In the early years of neoliberalism, we were told we must make a stark choice between unrestrained markets and Soviet communism. Today, the neoliberal fringe in the Liberal Democrats insists the only choice is between unrestrained markets and Fabian-style social democracy. They deny the existence of radical/social liberalism, and dismiss pragmatic policies in favour of ideological dogmatism.
As Solow points out:
...for those of us trying to live on this planet, the issue is not between free markets and socialism/collectivism; it is between an extreme version of free markets and effective regulation of the shadow banking system, or between an extreme version of free markets and the level and progressivity of the personal income tax. The metaphor of the slippery slope is largely an invention to scare off pragmatic exploration of the policy landscape.and:
...the temptation to frame the intellectual issue as Free Markets v. Communism more or less guarantees that all the important practical questions about economic policy and social policy will disappear from view.Neoliberals junked Hayek’s moral concerns long ago. Thanks to Friedman, the dogmatic insistance on laissez-faire, regardless of the human consequences, suggests that neoliberals today are unburdened by any ethical concerns.
And that is the fundamental problem with neoliberalism. Like all other rigid political dogmas, it insists that ideological constructs come before human welfare or human values.
It is no accident that most of the neoliberals in the Liberal Democrats today are single young men who spend most of their lives in front of a computer screen, often lost in a virtual world of violent computer games. They should try moving to this planet, meeting real people and engaging with some real world policy concerns. Then they might realise that politics is not primarily an individual quest to refine your ideological purity regardless of the human cost.