By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives
Libertarians are profoundly anti-democratic. The folks at Cato that I debate make no bones about their disdain for and fear of democracy. Friedrich von Hayek is so popular among libertarians because of his denial of the legitimacy of democratic government and his claims that it is inherently monstrous and murderous to its own citizens. Here’s an example from a libertarian professor based in Maryland.
[W]hen government uses its legal monopoly on coercion to confiscate one person’s property and give it to another, it is engaging in what would normally be called theft. Calling this immoral act “democracy,” “majority rule” or “progressive taxation” does not make it moral. Under democracy, rulers confiscate the income of productive members of society and redistribute it to various supporters in order to keep themselves in power.
In order to finance a campaign, a politician must promise to steal (i.e., tax) money from those who earned it and give it to others who have no legal or moral right to it. There are (very) few exceptions, but politicians must also make promises that they know they can never keep (i.e., lie). This is why so few moral people are elected to political office. The most successful politicians are those who are the least hindered by strong moral principles. They have the least qualms about confiscating other peoples’ property in order to maintain their own power, perks, and income. In his bestselling 1944 book, ‘The Road to Serfdom,’ Nobel laureate economist F.A. Hayek described this phenomenon in a chapter  entitled “Why the Worst Get on Top.”
But von Hayek’s critique of democratic government has proven to be the most monstrous blood libel of the post-World War II era – falsely declaring that democratic government must end in tyranny and the mass murder of its own people.
The political scientist Herman Finer … denounced [The Road to Serfdom] as “the most sinister offensive against democracy to emerge from a democratic country for many years.”
The economist Paul Samuelson, in a reminiscence of Hayek published last December, was more dismissive still. “Where are their horror camps?’ he asked, referring to right-wing bugaboos like Sweden, with its generous welfare spending. Almost 70 years after Hayek sounded his alarm, ‘hindsight confirms how inaccurate its innuendo about the future turned out to be.”
Why the Worst Get on Top – in Economics
Economists claim that their work should be evaluated based on predictive success. Von Hayek was made a Nobel Laureate in 1974, three decades after his prediction that democratic states were headed to tyranny and mass murder of their own citizens. In those three decades of experience in the nations he focused on (Western Europe, the U.S., Canada, Australia, and New Zealand) – and the forty years since his award – this happened in zero nations. He is batting zero for 70 years in roughly 30 nations with, collectively, thousands of elections. What he claimed was inevitable has never occurred.
Wesley Marshall and I are writing a book about why, disproportionately, economics bestows its top honors on those who fail their own purported test of success (predictive ability). This is the only field of academic study in which this occurs. We are trying to answer von Hayek’s question, but it his own field – “why the worst get on top.” Why do the von Hayeks of the world, the very worst of economists, “get on top?”
I recently wrote a piece about the spectacularly bad timing of a libertarian who chose the 70th anniversary of D-Day (a product of exceptionally competent government planning) to denounce democratic government as incapable of planning and invariably leading to tyranny and the mass execution of its own workers and CEOs. As “support” for this claim the columnist presented the cartoon version of The Road to Serfdom that General Motors spread via pamphlet – this the day after General Motor’s admissions about the quality of its cars and the indifference to the safety of everyone on the roads by its senior managers and attorneys.
Why von Hayek and Milton Friedman are the Patron Saints of Plutocracy
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’s Denunciation of Democracy Rests on His Disdain for the Poor
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.
Here is von Hayek’s explanation of the three reasons why democracy is inherently perverse.
There are three main reasons why such a numerous and strong group with fairly homogenous views is not likely to formed by the best but rather by the worst elements of any society. By our accepted moral standards, the principles on which such a group would be selected will be almost entirely negative.
In the first instance, it is probably true that the higher education and intelligence of individuals become, the more their views and tastes are differentiated and the less likely they are to agree on a particular hierarchy of values.
It is a corollary of this that if we wish to find a high degree of uniformity and similarity of outlook, we have to descend to the regions of lower moral and intellectual standards where the more primitive and “common” instincts and tastes prevail.
This does not mean that the majority of people have low moral standards; it merely means that the largest group of people whose values are very similar are the people with low standards.
It is, as it were, the lowest common denominator which unites the largest number of a numerous group is needed, strong enough to impose their views on the values of life on all the rest, it will never be those with highly differentiated and developed tastes it will be those who form the “mass” in the derogatory sense of the term, the least original and independent, who will be able to put the weight of their numbers behind their particular ideals.
If, however, a potential dictator had to rely entirely on those whose uncomplicated and primitive instincts happen to be very similar, their number would scarcely give sufficient weight to their endeavors. He will have to increase their numbers by converting more to the same simple creed.
Here comes in the second negative principle of selection: he will be able to obtain the support of all the docile and gullible, who have no strong convictions of their own but are prepared to accept a ready-made system of values if it is only drummed into their ears sufficiently loudly and frequently.
It will be those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will thus swell the ranks of the totalitarian party.
It is in connection with the deliberate effort of the skillful demagogue to weld together a closely coherent and homogeneous body of supporters that the third and perhaps most important negative element of selection enters.
It seems to be almost a law of human nature that it is easier for people to agree on a negative program — on the hatred of an enemy, on the envy of those better off than on any positive task.
Yes, you read that correctly: democratic government invariably leads to the rule by “demagogues” who manipulate the most immoral segments of society. The core of this immoral coalition consists of “the lowest common denominator” – the “‘mass[es]’ in the derogatory sense of the term.” The masses consist of the least “educated” and least “intelligent” driven by “primitive instincts.”
The unethical leaders add to this core the “docile and gullible.” They are easily manipulated by propaganda that creates “a ready-made system of values if it is only drummed into their ears sufficiently loudly and frequently.” Their “passions and emotions are readily aroused” by demagogues “who will thus swell the ranks of the totalitarian party.”
The third component of the totalitarian troika is the “most important negative element.” These are the murderous bigots motivated by “hatred of an enemy … the envy of those better off.”
Von Hayek is Blighted by his Bigotry
What we are reading, of course, is the class hatred and bigotry common to minor Austrian aristocrats like von Hayek who were born in the 19th century. (The “von” was removed from all Austrian family names by statute when he was a young adult.) The idea of democratic rule by what he viewed as his inferiors appalled von Hayek. The fact that this kind of naked bigotry in this passage that I have quoted at length is viewed by his libertarian devotees as von Hayek’s finest work reveals the depths of libertarian hate for and fear of democratic government.
Von Hayek’s Other Predictive Failures
Under von Hayek’s theories, progressive and socialist candidates should be the great enemies of public education, for education would dramatically reduce their core “uneducated” group. For the same reasons, they should avoid at all costs teaching students how to engage in critical thinking and should instead spread nationalism/patriotism memes (such as American “exceptionalism” and flag pins) and spread racist propaganda attacking racial and ethnic minorities. The opposite is true. They should oppose legal protections, e.g., against job and housing discrimination. It is conservatives and European-style “liberals” who fought against public elementary and secondary education and the land grant colleges. It is conservatives who wear flag pins and claim that any acknowledgement of U.S. misconduct is unpatriotic. It is U.S. conservatives who to this day adopt variants of the racist “Southern strategy,” engage in state-sponsored homophobia, and oppose anti-discrimination laws. Von Hayek predicted that progressives would deny science. The cartoon version of his book portrays the government as preaching that the earth is flat. The reality is that it is corporate CEOs who lead the anti-science campaigns such as global climate change denial.
If You Object to an Economic System in Which “The Worst Get on Top” You are not “Envious”
Von Hayek tips his hand and dogmas when he uses the phrase “envy of those better off” and conflates it with virulent racism. Von Hayek assumes away the reality that all too often in business “the worst get on top” by the foulest means. Opposing their becoming “better off” through leading “control frauds” is not “envy” – it is justice, and it is essential to a well-functioning economy, society, and polity.
Von Hayek implicitly assumes that corrupt CEOs will not control and abuse any political system. Assume solely for purpose of analysis that von Hayek were correct that it demagogues can manipulate the three unethical groups he identifies and seize control of government. Under his own logic CEOs can use the seeming legitimacy, power, and wealth of “their” corporations to serve directly as these demagogues or fund and control proxy demagogues that will serve their interests. They have vastly greater economic resources and they have the expertise that comes from advertising to run propaganda campaigns. They also had tremendous expertise in the era von Hayek was describing in “divide and conquer” strategies in the colonies that would be easily translated into efforts to split workers along ethnic lines. The alliance of elite and poor whites in the U.S. South against the freed slaves is a classic example of how such a coalition can provide dominant political power for roughly a century. Under von Hayek’s own assumptions the “inevitable” result should be plutocracy through crony capitalism with anyone who complains about the resultant inequality denounced for being “envious” of his moral and intellectual superiors.
Why the Worst (CEOs) Get on Top: Accounting Control Fraud is a “Sure Thing”
I have explained this point enough times that I will simply direct any new readers to the scores of articles that explain why this is true. I also stress how important the “Gresham’s” dynamic is in explaining why such frauds can become epidemic and why such epidemics drive our recurrent, intensifying financial crises. The least ethical CEOs “get on top” in such a world and they produce plutocracy, massive inequality, and crony capitalism. Von Hayek wants progressives to declare unilateral political disarmament while the most corrupt CEOs dominate our economies and our political systems. Von Hayek’s blood libel about progressive, democratic government is a classic example of Frédéric Bastiat’s warning:
When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.
What a wondrous irony it is that three ultra-rightists, Lord Acton, Bastiat and von Hayek, should combine so perfectly to explain our current plight in which plunder by elite CEOs has become “a way of life.” CEOs do not yet have “absolute” political power, but their power and corruption is rising steadily and has become so great that they are able to “plunder” with impunity. That impunity arose because von Hayek’s disciples were able to use his anti-democratic bigotry and failed economic dogmas to “create for themselves in the course of time a legal system that authorizes [plunder] and a moral code that glorifies it.” Von Hayek was one the principal framers of that immoral moral code that glorifies plunder by CEOs. Libertarians glorify von Hayek’s bigoted glorification of elites as our moral superiors who have a right to rule and plunder our Nation. Tyler Cowen calls plutocracy and pervasive plunder a “hyper-meritocracy,” but it is a rule by the most unethical for the most venal of purposes and it is the greatest enemy of merit and justice.