Do Libertarians Dream of a Hayekian Network?

I was recently at a conference where the issue of network neutrality/broadband discrimination was discussed. Both sides argued that Friedrich von Hayek would support their proposals. Those in favor of regulation said that Ma Bell had returned and needed to be broken up to promote innovation; deregulationists said that Schumpeterian creative destruction would eventually break up any stranglehold that carriers managed to achieve. Both claimed to be on the side of decentralization and distributed knowledge. I was reminded of Cass Sunstein’s invocation of Hayek in Infotopia (118 ff.), where he suggested that the Austrian economist’s paper “The Use of Knowledge in Society” foreshadowed the vitality of prediction markets by explicating the “marvel” of the pricing system.

I just wanted to raise a few notes of caution about the invocation of Hayek, based on some critical commentary on the digerati’s appropriation of his work.

In an essay on Wired writer Kevin Kelly, Best and Kellner comment on a “network ideology” that promises maximum freedom via a new individualism:

Following neo-liberal economist Frederick Hayek, Kelly attacks “top down” economic management and centralized attempts to regulate the economy on the grounds that the economy is too complex to rationally control, that prices and market mechanisms provide the most efficacious feedback loops, and that “spontaneous order” emerges from a market economy. Hence, the ideological implications of Kelly’s scientific-cum-economic theory are transparent: the anarchic system of capitalism is the only economy that can bring growth, progress, and prosperity to citizens.

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[W]hereas Kelly is correct to see unity in all complex systems, there are also differences that he collapses; e.g., capitalism is something of a self-organizing system, but its dynamics are also shaped by class struggle, competition between major economic units, and complex interaction between economic and political institutions, unlike any natural system. Kelly’s chapters on the economy are wholly uncritical and say nothing about such things as exploitation or monopoly control, and not much about ecological problems. He has little sense of how power operates and of how big organizations manipulate the economy and polity for their own ends. It is indeed not clear to us how an economic system can be self-organizing when it is shaped by giant corporations, quasi-monopoly control of key technologies, and the state.

The libertarian solution often focuses on getting rid of the state actors that distort the market, and sometimes this is clearly the right thing to do. But to the extent they hope the state will “wither away,” libertarians may end up the unlikely bedfellows of those on the opposite end of the ideological spectrum.

Hat tip: Critiques of Libertarianism.