The “iron cages” of capitalism

Submitted by AWL on 23 November, 2022 - 4:17 Author: Martin Thomas
Kwarteng and Truss

Andrew Gamble titled his book on Friedrich Hayek The Iron Cage of Liberty. Hayek (1889-1992) was a theorist of ruthlessly free-market capitalism, influential with Thatcher.

The “iron cage” image came from Max Weber: “Fate decreed that the cloak… [of] care for external goods… should become an iron cage... Since asceticism undertook to remodel the world and to work out its ideals in the world, material goods have gained an increasing and finally an inexorable power over the lives of men as at no previous period in history. Today... victorious capitalism, since it rests on mechanical foundations, needs its support [i.e. of asceticism] no longer”.

Weber (1864-1920), today considered a founder of sociological theory, was in politics a sort of bourgeois liberal, though very hostile to revolutionary socialism. Amidst the red-baiting which led to the murder of Karl Liebknecht and Rosa Luxemburg, he wrote: “[Karl] Liebknecht belongs in the madhouse and Rosa Luxemburg in the zoological gardens”.

Weber and Hayek shared a view that socialism was an older moral value which capitalism had made inoperative. Capitalism had prevailed because of its superior productive capacity. It imposed an “iron cage”: for Weber, of rationalisation, bureaucracy (hierarchical, rationalised administration), and “disenchantment of the world”; for Hayek, of market constraints.

For Hayek, free markets were the only means with the capacities for creating and processing social information adequate to run complex modern societies. The only morality workable was the individual-responsibility morality of the market participant. He saw values such as solidarity and altruism as rooted in an archaic past, not in the modern conditions of the working class. They could lead only to totalitarianism (driven by the attempt to do the impossible) and to economic decay. For Hayek, in contrast to Rosa Luxemburg, the alternatives were (as Gamble puts it), (free-market) “capitalism or barbarism”.

The Tories are now introducing a more specific “iron cage”, mediated through financial rather than goods-and-services markets: the “iron cage” which limits public policy to what gains the confidence of “the markets” on the basis of the predictions of the Office for Budgetary Responsibility.

Both Weber and Hayek were defenders of capitalism, but, paradoxically, overstated the bleakness. Capitalism is a cage on humanity, but not as “iron” as that. Karl Marx in Capital already showed that workers under capitalism can win elements of the “political economy of the working class” such as shortening of the working day, and to win better wages than those of the supposed “iron law” of subsistence-level.

Even if free markets cannot foreseeably be dispensed with entirely — and Hayek’s arguments on that score, against Oskar Lange and others in the 1930s, have force — we know it is possible to modify them and to remove them from large areas of social life such as schooling and health care. Not only possible, but necessary, for ecological survival.

The true limit to the flexibility of the “cage” is the capitalist class adapting to every gain of the working class by more sophisticated methods of clawback (also sketched in Capital). We can break out of the cage by overthrowing and expropriating that class.

Comments

Submitted by AlanJohnson (not verified) on Thu, 24/11/2022 - 11:18

Martin Thomas 2022

Even if free markets cannot foreseeably be dispensed with entirely — and Hayek’s arguments on that score, against Oskar Lange and others in the 1930s, have force — we know it is possible to modify them and to remove them from large areas of social life such as schooling and health care. Not only possible, but necessary, for ecological survival.

 

Me, 2007 (at normblog)

I no longer want to get rid of markets as to do so would produce economic stagnation and political tyranny. I want to regulate, humanize, counter-balance and embed markets, and keep them out of some tracts of human endeavour.

Submitted by martin on Mon, 27/02/2023 - 11:55

It's a pity Alan didn't read my polemic against David Marsland in 1991, when I wrote, more flatly in fact than in 2022, that "In the dispute which David Marsland cites between Hayek and the maverick socialist economist Oskar Lange, I think Hayek was right". Pity, too, that Alan did not register that point until after his flirtation with the SWP and until he combined it (unnecessarily) with his rebound into "let-Blair-be-Blair"-ism.

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