Pluralism and Economic Institutions

In a series of papers in Economica between 1941 and 1944 (Hayek 1941, 1942-1944) Hayek’s criticisms of socialist planning were directed at a set of assumptions about the social world and social science that he took to partly underpin the socialist project. Hayek’s epistemic arguments against planning and in defence of the market are deployed against the claims of ‘scientism’, ‘objectivism’ and ‘physicalism’ in the social sciences. These assumptions illustrate a pervasive version of the rationalist errors underlying socialist planning. They foster a form of social engineering which promises to achieve an optimal technical outcome through planning in which monetary calculation in the market place is replaced by in natura calculation in kind. One of the main objects of criticism was Neurath in whom, for Hayek, all these errors are gathered in one person. Neurath responded to those criticisms in a series of notes and letters to Hayek in 1945 which he hoped would form the basis for a public exchange between them (Neurath 1945a, b). Neurath’s response focused on what he took to be shared epistemological assumptions and their common commitment to a pluralist alternative to totalitarianism. The response was in some ways an attempt to answer a question he formulated in his generous review of Hayek’s Road to Serfdom: ‘What would Professor Hayek answer if the tables were turned on him?’ (Neurath 1945c, p. 121). Elsewhere I have looked in more detail at the epistemic arguments in this debate (O’Neill 1996, 2004, 2006). In this paper while I touch upon these arguments, I focus on the discussion of pluralism and its social and economic preconditions. I will argue that while there are internal problems with Neurath’s arguments, (as someone put it to me in discussion of an early version of this paper, if Neurath is out to ‘over-Hayek’ Hayek, then there is also scope for ‘over-Neurathing’ Neurath) his defence of non-market institutional orders in the modern world raises significant problems with Hayek’s position.