Seventh and last Observation
“Economists have a singular method of procedure. There are only two kinds of institutions for them, artificial and natural. The institutions of feudalism are artificial institutions, those of the bourgeoisie are natural institutions. In this, they resemble the theologians, who likewise establish two kinds of religion. Every religion which is not theirs is an invention of men, while their own is an emanation from God.” (p 112)
Bourgeois economics sets up the idea of free competition, and a minimalist state as the “ideal type” of capitalism. Th emergence, once more, of monopolies, therefore, must be an anomaly that can either be ignored as a minor exception to the rule, or else requires corrective action to restore the natural order, but the corrective action itself requires the involvement of the state in the economic life of society, and in the property rights of the individual.
As competition, and the laws of capital led, not only to the re-emergence of monopolies/oligopolies, in the 19th century, but to their domination of the economy, the bourgeois economists essentially split into two camps. One camp of Liberals, or what, today, are called Libertarians/Anarcho-capitalists, generally supporters of the Austrian School of Mises and Hayek, continued to see this ideal type of capitalism as natural. They abhorred the capitalist monopolies almost as much as they abhorred the monopolies that workers tried to establish, in the form of trades unions, to defend their wages. But, they continued to see the development of these monopolies as aberrations, derived from the interference of the state in the economy,, just as the old feudal trading monopolies had been created by royal patronage. They represent the interests of the petty-bourgeoisie.
The natural order of things, for this school, was essentially that of a world of small, independent, peasant, commodity producers, each engaged in free competition with each other. In many ways, it is the world the Narodniks envisaged in Russia, or that Proudhon envisaged, but without the “bad” side of Tsarism/feudalism, and landlordism. Not that they saw the political regime of feudalism as necessarily worse than that of bourgeois-democracy, because , in large part, they saw the latter, and particularly its form as social-democracy, following workers gaining the vote, as the basis of the increasing role of the state, and its distortion of the natural order. As Hayek says, in his 1940 book, The Road To Serfdom,
"We have no intention, however, of making a fetish of democracy. It may well be true that our generation talks and thinks too much of democracy and too little of the values which it serves. It cannot be said of democracy, as Lord Acton truly said of liberty that it ' is not a means to a higher political end. It is itself the highest political end. It is not for the sake of a good public administration that it is required, but for the security in the pursuit of the highest objects of civil society, and of private life.' Democracy is essentially a means, a utilitarian device for safeguarding peace and individual freedom. As such it is by no means infallible or certain. Nor must we forget that there has often been much more cultural and spiritual freedom under an autocratic rule than under some democracies – and it is at least conceivable that under the government of a very homogeneous and doctrinaire majority democratic government might be as oppressive as the worst dictatorship.” (p 52)
One reason that Mises, Hayek and the other Classical Liberals/Libertarians saw this perversion of the natural order was the separation of ownership and control that arose when firms expanded in size, so that the owners had to employ professional managers. Hayek, in the above work, points to the development of this new, middle-class of bureaucrats, and notes its existence across the globe from the USSR to Nazi Germany, to the huge corporations of the US and Britain. Not surprisingly, he quotes approvingly from the contemporaneous work of the US, petty-bourgeois Third Campist, James Burnham, “The Managerial Revolution”, in which the same idea of the development of a new, bureaucratic-collectivist, ruling-class is established. The same idea continued to be purveyed, in later years, both by the Third Camp disciples of Burnham, but also by those of Hayek and his contemporaries at the LSE, such as Ralf Dahrendorf.
Rather like Sismondi, or the Narodniks, what Mises and Hayek et al saw was a real change in material conditions, but one which contradicted their view of what capitalism (or, for the Third Campists, Socialism) should be, i.e. their ideal type of free market capitalism, and so concluded it was a distortion, an aberration caused by exogenous factors that had to be corrected and reversed. Its the same thing that drives their disciples, like Rees-Mogg, to oppose the EU, and promote Brexit. Similarly, its what drives Burnham and the Third Camp to view the deformed workers' states as an aberration to be opposed and reversed. In each case, be it Sismondi, the Narodniks, Hayek or Burnham and the Third Camp, the analysis is subjective and superficial, it is moralistic, and the solution reactionary.
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