Though he's been dead for more than 20 years, Friedrich Hayek is the darling of the free market, practically a saint. But as Bill Black explains, Hayek's predictions -- used to justify and glorify unlimited enrichment of the ruling class -- never came true, and the states that followed his prescriptions most closely ended up the barbaric situation that he warned about in re-distributive democracies.
As the gap between the rich and the poor widens, as the proportion of GDP that goes to "guard labor" in our militarized police forces and our bulging private prisons, as the most corrupt captains of industry grow richer while the rest of us are faced with an old age in poverty -- and a working life dominated by caring for our own sick and elderly relations -- it's worth reviewing Hayek's record, and the greedy, selfish, corrupt world it produced.
It is telling that libertarians’ economic hero, writing what they claim was his single best chapter, “Why the Worst Get on Top,” invariably proved wholly and grotesquely incorrect about the certainty of tyranny and mass murder. Worse, since the time von Hayek wrote his chapter, the democratic governments he demonized have ceased the worst abuses against their own citizens, such as forced sterilizations. The worst abuses – mass torture and murder – have been committed by fascist regimes that von Hayek supported such as Pinochet in Chile. When we ask why von Hayek receives a Nobel Prize and remains Glenn Beck’s hero we cannot explain the results based on facts and predictive success (failure). Instead, we must look outside the realm of reality and enter into the realms that von Hayek glorified – ideology and greed.
Von Hayek received his Nobel Prize because he was so willing to be so wrong about so many things. His blood libel about the democratic governments of “the West” was useful to another group in which “the worst get on top” in far too many cases – “imperial” CEOs. Von Hayek legitimizes that which cannot be legitimized through real economics, reality, ethics, or logic – plutocracy. Von Hayek and Milton Friedman are the patron saints of plutocracy.
Von Hayek argues that there are three reasons why democratic government inherently leads to the elevation of the “worst” to the “top” – and by the “worst” he means murderous tyrants. Von Hayek begins Chapter 10 with the famous quotation from Lord Acton: “Power tends to corrupt, and absolute power corrupts absolutely.” Democratic government, of course, is consciously designed to prevent the creation of “absolute power” by the state or private entities. Von Hayek, therefore, has to argue that a democratic system of government designed to prevent the creation of absolute power will invariably produce absolute power.
Bill Black: How Hayek Helped the Worst Get to the Top in Economics and as CEOs [Bill Black/Naked Capitalism]