Abstract
Recent studies of Friedrich Hayek have focused on his theorization of spontaneous order and its relationship to his views on freedom and market individualism. For many scholars, the impersonal nature of Hayek’s spontaneous order, which optimally coordinates human action without human coordination, and/or Hayek’s contention that freedom consists of the exercise of individual choice in a market, reveals Hayek’s neoliberal project to replace or erase the social domain of human life and activity. This article makes the claim that two different, but related, versions of the social exist in Hayek’s writings. The logic of his first and prominent view of social order as spontaneous order depends, I argue, upon a second account of the social, found in Hayek’s writings on money, which consists of forms of conscious and collective social integration and subject formation that the first view requires but cannot account for. In this way, Hayek’s social order is sustained not spontaneously but by money-based collective activities and social(ized) subjectivities that make it possible, and his neoliberal project thus depends on fundamental, if disavowed, connections between the social and the political.
Introduction
Recent interest in Friedrich Hayek as a key figure of twentieth-century postwar economic and political thought has sparked a renewed focus on the importance of his social theory and conceptualization of spontaneous order for understanding Hayek’s own thinking, how it shaped the emergence of neoliberalism, and the impact of neoliberalism on contemporary life. For some scholars, Hayek’s arguments against social justice, his attacks on the idea that collective human action has a meaningful and beneficial impact on the constitution of social life, and his contention that freedom consists of the exercise of individual choice in a market all demonstrate that he did not believe in any such thing as society. 1 To them, Hayek’s social theory is antisocial, and its impact is nowhere clearer than in the individualism of homo oeconomicus, who finds freedom neither in society nor social change but in individualistic participation in neoliberal institutions and practices, especially the market.
Other scholars argue, by contrast, that Hayek does in fact believe in something called society, viewing it as a spontaneous order that optimally coordinates human action without human coordination. 2 For such scholars, insofar as what distinguishes Hayek’s idea of society is that it comes about without its participants knowingly or intentionally contributing to and constructing it, his social theory is not so much antisocial but asocial. The freedom of homo oeconomicus, from this perspective, is rooted in and contingent upon the operation of a transcendent and self-directed social order buttressed by neoliberal institutions, laws, and norms. While these approaches differ on the nature of Hayek’s social theory, they nonetheless share the broader view that Hayek understands the social to be in no way intentionally and substantively shaped by collective or coordinated human action and that his social theory severs all connections between the social and the political.
This article argues that Hayek’s theory of spontaneous order depends on a view of how social coordination and organization come about that has been undertheorized by scholars and also by Hayek himself. In my view, Hayek’s theory of spontaneous order, or what I will call Social-1 (S-1), especially salient in his writings from his “epistemological turn” in 1937 onward, 3 depends on a second set of conceptions about the social that appear in his writings about money. Despite its textual presence, however, Hayek does not acknowledge this second social. To illuminate it and understand its relationship to Social-1, I develop a distinction between Social-1 and the set of social dynamics I find in his monetary writings, which collectively I call Social-2 (S-2). 4
In short, I will show that S-2 consists of forms of monetary integration and coordination that scholars have not addressed and that Hayek’s social theory cannot account for. Yet I also show that Hayek’s social theory requires them; indeed, they make it possible for Hayek to theorize social order as spontaneous order. In Hayek’s writings, then, I argue that we find the elaboration of set of monetary social dynamics (S-2) that he does not avow, but that he theoretically depends upon to construct his vision of spontaneous social order (S-1).
To make this argument, I show that Hayek’s writings about money articulate surprisingly different ideas about the nature of money and its role in individual and social life than scholars have previously considered. Thus, when I read Hayek’s writings about money across his work, the monetary social dynamics I refer to as S-2 disclose individuals as possessing collective beliefs about, and inhabiting shared orientations and practices toward, society as a domain constituted by actions they jointly undertake. Individuals may undertake those actions based on economic, self-interested choice and not with the intention of acting collectively, but the actions themselves are the product of conscious and intentional monetary practices among people that are informed by their collective beliefs. In this way, I maintain that Hayek’s overt theory of social order, S-1, is sustained not spontaneously (as he claims) but rather by collective and monetary practices and social subjectivities that make it possible. Against the scholarly consensus, I argue, moreover, that Hayek’s social theory depends on fundamental, if underacknowledged, connections between the social and the political.
One of Hayek’s chief aims as an economic/political/social theorist is to embed and circumscribe subjectivity and individual action so as to best realize normative social-systemic results. That is, as numerous other scholars have explored, 5 Hayek is, first and foremost, a systems theorist who deploys arguments in multiple registers (economic, political-philosophical, social) in the service of shaping human action and thinking so that they best align with and catalyze his conception of self-directed social order. In short, he seeks to design “subjects for the operational capacity of a system instead of a system for the production of certain subjects.” 6 Building on this insight, I interrogate the ways in which Hayek conceptualizes subjectivity and relations between subjects as features of a prescribed social system and show that his writings about those subjectivities—in particular, those produced in and through the use of money—belie his claim that S-1 is a systems-level-only social domain. Hayek’s vision of S-1 presents subjects’ submersion into an optimally performing whole. But S-1, I show, is theoretically rooted in a set of monetary social dynamics—S-2—that forms subjects so that they have shared orientations toward the social world and act in ways that Hayek’s spontaneous social order requires of them in order to operate.
I make this case by bringing to light what I call Hayek’s “social work,” by which I refer to the features of S-2 underwriting S-1. Many scholars maintain that Hayek actively sought to design and ideologically justify transnational institutions and laws that would best enable a global free market to flourish. 7 I argue that Hayek’s often unavowed 8 social work is another of his attempts at design and ideological justification, but this time of forms of monetary sociality that produce and sustain his view of spontaneous order. To demonstrate this social work at work in Hayek’s texts, I theorize it in the context of a policy proposal he offered late in his career. This was his proposal to denationalize currency, which was aimed at realizing and optimizing his concept of spontaneous order. As we will see, Hayek’s social work becomes most visible precisely where one might expect his purest account of spontaneous order, that is, in his treatment of money. This is because, as I will show, money interconnects individuals across private spheres, thereby weaving a web of socializing and subjectifying relations in and among its users. The use of money is thus a constitutive element of S-2, describing and making legible experiential interrelations that emerge as individuals link themselves in a market.
My argument proceeds as follows: in section two, I evaluate some of the rich literature on Hayek’s social theory, defined exclusively in S-1 terms. I focus on political theorists who read Hayek as an antisocial proponent of market individualism, and on other scholars, including philosophers and intellectual historians, who view him as a systems thinker who conceptualized individuals as inextricably embedded within asocial, spontaneously evolving social systems. Engaging with these different appreciations of Hayek, section three analyzes Hayek’s proposal to denationalize currency in order to show how it relies on a view of the relationship between money and society that S-1 cannot accommodate. I then reread Hayek’s social theory as offering two different, but related, accounts of the social: S-1 and S-2. To unpack S-2 and consider its relationship to S-1, I turn, in section four, to Hayek’s treatment of money, particularly in The Road to Serfdom, The Constitution of Liberty, and Denationalization of Money. I investigate money as an interface between individuals and the market, a practice by which individuals constitute desire, and medium through which individuals realize freedom. I conclude by elaborating on how S-2 and its connection to money contributes to our understanding of Hayek as social theorist, to critiques of contemporary neoliberalism, and to the relationship between the social and the political.
Social-1
In recent studies, Wendy Brown, Jessica Whyte, and Daniel Luban underscore that Hayek’s thought attacks the very idea of a social that can be augmented or transformed by political action. 9 Hayek admits that concerted collective action can change social conditions. 10 What he objects to, as Whyte and Luban emphasize, is the idea that social order, or, perhaps better put, good social order, is or can be the result of intentional human plans. Instead, for social order to be good it needs to come about as a byproduct of unplanned action. This does not mean that political action cannot augment social order, but that, for Hayek, such action—including planned interventions—will always make society worse off by detrimentally interfering with the spontaneous processes that produce good social order.
Hayek’s claim about the superiority of spontaneous social orders is a political and moral claim about what constitutes a good society, with familiar roots tracing back to Plato, although Hayek goes to great lengths to emphasize that his view is rooted in historically driven comparative social theory. 11 How does he make this case? In 1937, Hayek formally questioned the epistemological foundations of neoclassical economics and its assumptions about individual rationality and equilibrium. This was followed, in 1945, by his well-known article, “The Use of Knowledge in Society” (whose title mine mimes), which made the case that the price mechanism in free markets enables individuals to coordinate without centralized planning. Defined as a domain of economic transactions, society, in that article, is seemingly infinitely complex, well beyond the threshold of human understanding. For this reason, Hayek concluded that human planning at the level of society would only hinder efficient coordinating processes like the price mechanism. 12
As Naomi Beck has recently demonstrated, Hayek came to underwrite and expand these claims about social order with insights from evolutionary theory. 13 In later works like Law, Legislation and Liberty, Volume 3: The Political Order of a Free People and a lecture entitled “The Origins and Effects of Our Morals: A Problem for Science,” Hayek argued that prior to modernity humans lived in small groups guided by collectivist social norms because these norms were the best means of group survival. Modern mass societies, in his view, need other norms. 14 Characterized by large populations, a more advanced division of labor, and greater scientific and technical knowledge, modern mass societies require a “new morality . . . one better suited to expansion and to the coordination of the actions of many individuals with different goals and aims”—a morality, in Beck’s words, “geared towards growth.” 15 Societies flourish when they possess and are able to draw on traditions, norms, and institutions 16 that best enable the large-scale growth of social order. Others, gradually or not, are weeded out.
That growth, specifically economic growth, is the criterion of a good society, and that the political and prescriptive imposition of social teleology contradicts Hayek’s claims to social scientific neutrality have been well-documented elsewhere. 17 What I want to highlight is that the locus of Hayek’s work on the social, along with the foundation of his claim that he is undertaking comparative social theory, is his assertion that modern societies are systems of traditions, institutions, laws, and norms (features Hayek often collects together as “rules”) that integrate humans together and discipline them and their interactions to produce order, and are more or less effective at doing so depending on a particular system’s support of conditions of growth. As such, modern societies can be formally compared in terms of their capacity to generate levels of (chiefly economic) growth that best sustain and improve them. Markets are the core feature of such societies and thus “free” markets an indication of likely success. This way of understanding the social dominates Hayek’s later works, from his examination of rules and constitutionalism in the 1960s, particularly in The Constitution of Liberty, through his evaluation of “cultural evolution” in the 1970s, particularly in the three volumes of Law, Legislation and Liberty and The Fatal Conceit. In sum, Hayek’s theory of the social, which I am calling S-1, is always an evolutionarily derived system that integrates and coordinates participants spontaneously by means of various rules.
Most essential to grasp about Hayek’s contention that S-1 social order is spontaneously organized is that social systems yield emergent properties that are not reducible to any of a system’s specific features. S-1 systems have their own functional, higher-order ontology, even reality, than the one occupied by humans and orienting their plans. 18 Displaying “characteristics their component elements do not display,” 19 S-1 systems differ from social aggregations. Hayek theorizes human consciousness in these terms: when the right component parts of the brain are in place and relating properly, something else, irreducible to any of these parts yet reliant upon their interrelations—namely, consciousness—comes about. 20 For S-1 orders, what “comes about” is mass coordination. Epistemologically speaking, society (or social order) as a whole can only be grasped by humans in terms of certain principles by which this higher-level S-1 system operates (on us). Thus, Hayek’s point is not just that S-1 order is too complicated for planning to be effective. Much more than that, he claims that the very reality of spontaneous social orders is in almost all relevant ways ontologically inaccessible to people living within them. That is, S-1 is simply unavailable for intervention and improvement by concerted human action. This is why, as noted above, Hayek says that such action will always make society worse off.
This point brings us back to individualism: for Hayek, the “essential characteristics of individualism” involve “a theory of society, an attempt to understand the forces which determine the social life of man.” 21 Individuals, in Hayek’s vision, are products of (and analogous to) social systems, so much so that Paul Lewis, in an influential interpretation of Hayek, calls human beings “intrinsically social” and “thoroughly social beings.” 22 It is as actors constrained within S-1 that individuals, as Alex Gourevitch and Cory Robin and Jessica Whyte explore, act freely. 23 In this way, individual freedom is defined in terms of the systemic functionality of the individual (unit), 24 and individualism is cast as functionary, which is to say, systemically produced, self-interested action.
Strictly speaking, then, Hayekian individualism is not an account of individuals per se but an account of what individuals are relative to certain social systems and how they must act to ensure the optimalization of those systems. 25 To be sure, in Hayek’s view individuals exercise agency as they pursue and shape their desires, selves, and relationships, often by way of using money in markets. Still, or therefore, from the perspective of the individual, the overall mood of S-1 is, as Hayek sometimes admits, 26 tragic. Resisting our premodern collectivist instincts and submitting 27 to modern impersonal order, we must endure it and our growth, or risk “terminating our own evolution.” 28 Put another way, the cost of group growth and freedom within S-1 is existential fulfillment and an experience of freedom that is not systematically and spontaneously determined. 29 In this impersonal way, Hayekian individualism is intrinsically and necessarily social in the distinctive sense that individuals are products of, and operate (mostly nonrationally) within, an evolving, social-systemic structure.
It is here that Hayek’s arguments against social justice come into focus. For Hayek, to view the social as a domain of activity to which claims of justice apply is to make a category mistake, to misunderstand the nature of social order. Leftover human instincts and emotions may make us wish for collectivist responses to social problems, like social justice. However, it is only by repressing this instinctual morality and replacing it with market morality that modern social order is possible. 30 This order—S-1—requires that prior moral codes and their affective responses be curtailed, resisted, and actively suppressed for the greater good. 31 Thus, we can think of Hayekian morality as a kind of evolution-driven, adaptive programming code. There needs to be a different code for each software system, and old codes not only won’t work in new systems but will impede them. Overwriting old codes with new ones is essential and systemically necessary. Hayek’s overall intellectual project may be seen as a case for precisely this kind of overwriting as well as the functional and normative superiority of the system that the new code produces. Such overwriting is one example of Hayek’s social work.
Hayek’s overwritings are most apparent in his discussions of “society.” In a brief genealogy of the word in Law, Legislation and Liberty, Vol. 2: The Mirage of Social Justice, he claims that it eventually “came to mean that ‘society’ ought to hold itself responsible for the particular material position of all its members, and for assuring that each received what was ‘due’ to him.” 32 Likewise, in The Fatal Conceit: The Errors of Socialism, his last book, 33 he explains that the word social “has increasingly been turned into an exhortation, a sort of guide-word for rationalist morals . . . and now increasingly supplants the word ‘good’ as a designation of what is morally right.” 34 Here, in his arguments that the language people use to make claims about social reality cannot and does not apply to that reality, scholars rightly see Hayek as attacking concepts of the social that take it to be a source of political claims-making, insofar as such claims assume that the social can be transformed by political action.
But they also miss something crucial. For Hayek, social justice means, as Jacob Levy puts it, fruitlessly “trying to undo the results of impersonal processes.” 35 It is the impersonality of S-1 as an organization of irreducible components (rules, actors, traditions, and so on) giving rise to an ontologically distinct coordinative system that makes social justice nonviable for Hayek. 36 As we have seen, humans act freely within this system. As we have also seen, its reality is other than their own. 37 Social justice claims are claims about human experiences, but, as the result of impersonal, spontaneous processes, S-1 comes together above or beyond human experiences.
The key element, then, to Hayek’s overwriting of the social as it is usually understood is S-1, the systems-level order operating beyond the reach of human capacity, which, at the same time, creates, top-down, that very capacity. In relation to S-1, politics can only take on what Hayek calls a “tinkering” role, or what Quinn Slobodian has referred to as “care,” in which certain evolved norms and traditions, like property rights or the law of contract, are legally and institutionally reinforced. 38 S-1 is the social domain defined in terms of, and in language informed by, systemic order. In it, human intentionality, relationality, and sociality are characterized in terms of an inhuman/impersonal system that no human (except, it seems, Hayek 39 ) can access, yet holds all people together.
Seen this way, S-1 is both antisocial and asocial. But, as I show next, it also depends on a set of social practices—the other social in Hayek’s writings, which I call S-2—that are neither alienated nor inhuman but shared, relational, personal, experiential, lived. S-2, articulated by Hayek’s treatment of money, poses problems for some of the foundational commitments underwriting Hayek’s thought.
The Denationalization of Money
Hayek’s most famous—or perhaps infamous 40 —monetary proposal crystallizes the relationship that I find in his texts between money and society. Accordingly, it also helps us to grasp the relationship between S-1 and S-2. This proposal was to denationalize currency, by which Hayek meant to delink the issuance and control of money from the state and place it in the market-conforming hands of private banks and other private firms and institutions. This would occur through a currency competition between private institutions, which would result in the gradual adoption of particular currencies as primary mediums of exchange. 41 Writing late in his career in the 1970s, Hayek’s proposal stemmed in large part from his worry about rising inflation, which he hoped denationalization would curtail by wedding the quantity of money in the economy to decisions made by the market—that is, private banks and firms within the market. 42
Such an idea reflected a change in Hayek’s own thinking about money, even as it was generally in line with his longstanding concern about state/public involvement in the money supply and monetary decision-making. 43 Hayek notes in Denationalization that he previously believed central banks were required because money was special, a “loose joint” in the market process, which required some form of centralized organization until social order (S-1) evolved to the point where that was no longer necessary. 44 By the 1970s, Hayek still insisted on the specialness of money, but his view on what to do about it had evolved, or, rather, accelerated. He now argued that the market process should be made to discipline the unique unruliness of money. In other words, planned human intervention should accelerate the evolution of S-1 by taking money from the hands of central bankers and placing it in the spontaneous hand of the market. Since the market process is the core feature of S-1, accelerating its evolution would accelerate the development of social order as well.
Why, then, did Hayek propose denationalization, given that according to S-1 money is an emergent property of impersonal social order? 45 Why did he seek to alter and accelerate, by human means, money’s role within society? Further, why did he propose such a radical transformation in the social and political organization of money—denationalization—as opposed to, say, calling for particular policies by central banks, as he had done in the late 1920s and early 1930s? 46 That he makes the proposal suggests either that he knowingly contradicts himself about the relationship between money and society or that there’s something else going on here that deserves interrogation.
Hayek himself attributed great importance to this change in his thinking. He broke off his work on the third volume of Law, Legislation and Liberty to write Denationalization. 47 In a note appended to the second edition, he displayed his awareness of both the radicality of his proposal and the need to generate the political will to make it a viable possibility, writing “I strongly feel that the chief task of the economic theorist or political philosopher should be to operate on public opinion to make politically possible what today may be politically impossible.” 48 Faced with the serious challenge posed to S-1 by inflation and the lack of price stability—that is, the unruliness of money —Hayek suggested not “tinkering” but a fundamental change in the social organization of an element of society, money, that he had previously claimed was and should be organized and developed impersonally and spontaneously at the social-system level.
In this moment of interventionary action, we catch Hayek, as it were, disclosing both the need for human planning and, even more importantly, the need to appeal to something beyond S-1 in order to make S-1 possible. To put it another way, in this proposal Hayek’s dependence on another nonacknowledged set of monetary social dynamics comes into view. I elaborate on the work money does that S-1 cannot accommodate but nonetheless requires in the next section. Before doing so, it is important to underscore that I see Hayek’s denationalization proposal as going beyond what Slobodian calls a neoliberal “encasement” strategy, by which thinkers like Hayek design political interventionist measures as a means of cultivating what they consider to be the optimal economic order. 49 In this vein, Stefan Eich has demonstrated how Hayek’s proposal anticipated cryptocurrencies like Bitcoin. 50 Bitcoin’s promise, according to the pseudonymous Satoshi Nakamoto’s whitepaper, was that it would do away with the need for social trust, especially as it is mediated by third (state) parties. 51 Its users do not need a bank or any other institution to conduct a transaction; they do it themselves, party-to-party, using a cryptocurrency public ledger to keep records.
As Frances Ferguson argues, however, Bitcoin does not do away with social trust as much as reroute it away from public institutions to private ones (or to structures of decentralization, like the ledger). 52 Transposed back to Hayek’s proposal, the mediation and legitimation of social trust would shift to private firms, who would thereby gain (greater) control over the formation of the populations and social relations generated by the use of money. In my view, even more is involved in Hayek’s proposal than a shift in the locus of social trust. Because denationalization encompasses social transformation via the restructuring of money, it also involves a restructuring of the production and reproduction of social trust, insofar as it is connected to money. In other words, if money is an emergent property of S-1, then the social trust linked to it must be an impersonal, unplanned result. But Hayek’s denationalization proposal portrays money as something else, something alterable by human plans, and it follows that the social trust linked to money must also be producible by means other than S-1’s spontaneous operation. Even more crucially, though, Hayek’s proposal reveals his presumption that monetary practices can and will constitute new social relations. What we see here is his theoretical dependence on money to accomplish tasks that generate and sustain his vision of spontaneous order and its development.
Note that my claim here both intersects with but also goes beyond those of scholars like Slobodian and Philip Mirowski, who have argued that Hayek’s approach to neoliberal institutions and laws contradicts his assertion that social order comes about spontaneously. 53 They claim—convincingly, in my view—that Hayek sought to create and sustain the very types of markets and forms of social order he asserted were organically and evolutionarily generated. In other words, Hayek, the arch-critic of social constructivism, was in fact (or, indeed) a social constructivist. Thus, such scholars might see my interpretation of Hayek’s denationalization proposal in a similar light. However, my intervention here is in the register of Hayek’s theory construction, rather than (important, to be sure) debates about whether or not Hayek contradicts himself by wittingly or unwittingly being a social constructivist. What I see in Hayek’s use of money in his writings about denationalization (and elsewhere) is his dependence on a set of nonacknowledged monetary social practices that make it possible for him to theorize social order the way he does.
In my view, then, Hayek’s proposal suggests both that money and the social relations it (re)produces can be shaped by human planning, and further, that such money-based social relations are required for a Hayekian spontaneous order to operate. This shows the essential role of a field of social relations, social trust and sociality, articulated by money, which Hayek refuses in his elaboration of S-1 even as his denationalization proposal reveals his dependence upon it. Encasement strategies aim at carefully nurturing the economic aspects of an extant spontaneous social order, and thereby presuppose S-1. Hayek’s denationalization proposal, however, involves a significant social transformation of money, one that makes it possible for there to be an S-1 in the first place.
Social-2
Hayek’s money—which figures as a key concern across his oeuvre, from his first two books of the Depression-era late 1920s and early 1930s to Denationalization in the mid-1970s—is Austrian School money. Following one of his teachers, Ludwig von Mises, who followed Carl Menger, Hayek views money as a universally accepted medium of exchange that emerged spontaneously from barter transactions. 54 Money evolved—likely first as a “most desired” commodity and later as money proper (gold or paper)—as a solution to the problem of tracking down someone who happened to want exactly the commodity you were selling and was themself selling exactly what you wanted (known as the “double coincidence of wants” scenario). 55 It is worth noting that this view of money and its origins is highly contested, eliding the ways in which politics has played an essential role throughout the history of money. 56
Reflecting on money late in his career, Hayek wrote in Denationalization that money was best understood as an attribute that various objects (like commodities) could possess. 57 In other words, objects can have “varying degrees” of what Hayek calls “money-ness,” a quality of objects that (can) function as a valuable medium of exchange. For example, if everyone accepted a determinate number of lead pencils in exchange for their own object of sale, and if they knew lead pencils would hold their value in the future, then lead pencils would possess the quality of moneyness and could function as money—as could anything else. For Hayek, no specific object can be made into money by fiat, for only those objects selected spontaneously by market processes come to have moneyness. It is in this way that, for him, money has apolitical origins in markets, spontaneously evolving out of barter transactions. There is an instructive tension here that mirrors the one that we will see exists between S-1 and S-2: from one perspective, defined in terms of its origins, money is an emergent property of social structure; from another, defined by its concrete operation in the world, money is the quality an object “takes on” as human beings use it.
Given Hayek’s S-1 view, we would expect that the effects of money use that appear in his texts would be unintentional, unplanned, and noncollective results that emerge spontaneously as individuals act alone and out of self-interest. But this is not what we see. In three interrelated ways, Hayek’s treatment of money brings to light shared forms of sociality that his account of S-1 refuses even as it depends upon them.
The Freedom of Money
First, the use of money in the market reproduces collective beliefs about a market society as a site, and generator, of freedom. Freedom, for Hayek, “presupposes that the individual has some assured private sphere” that cannot be interfered with, and further, that free action “must be based on data which cannot be shaped by the will of another,” an “impersonal” and abstract flow of information that enables individuals in their private spheres to “pursue [their] own aims by the means indicated by [their] own knowledge.” 58 A free society is one that allows for the unmanipulated circulation of data across personal spheres. Money is a vitally important tool for impersonally communicating information and thereby enabling individuals to be “free” by making decisions about their own interests that are rooted in uncoerced, free-flowing information. Money therefore connects individuals and facilitates their free, uncoerced action.
Money thus mediates subjective and intersubjective experiences of a free and interdependent world that Hayek maintains is held together only by S-1 self-organizing processes that transcend comprehension. But it also does more. By relating individuals to the market process, the work of money is to disconnect individuals socially in one way even as it brings them together socially in another.
Consider that individuals have in common S-1, an abstracted set of processes no one can know, which reconfigures, desocializes, and alienates creativity, innovation, interrelation, order. Moreover, in Hayek’s own terms, the use of money is a constituent component of individuals’ ability to experience and secure a free and good life for themselves and others. In this way, money is, in Hayek’s words, “one of greatest instruments of freedom ever invented by man.” 59 By using it, individuals are able to experience the freedom of making choices about their property and goods they may want, input information about themselves into the market, and in so doing ensure the peak performance of the system as a whole. By consistently (inter)acting in this way, individuals thereby maintain the market as a site of freedom for all.
This means, in turn, that individuals share a set of collective beliefs about society as a domain that is optimized by their individualized actions with money, such that it is in everyone’s best interest to jointly act alone. In other words, it is taken on faith that decisions made as a part of the everyday business of a contemporary capitalist economy, irrespective of one’s position within it, accrue to one’s own and everyone else’s benefit. Your freedom pays it forward, such that by exercising your freedom in this way you participate in and catalyze the impersonal coordinative process of S-1 that cares (most optimally and most freely) for all. This is an odd form of social connectedness, to be sure, but it is one nonetheless, for it involves shared beliefs about the nature of society and how each person’s actions can, taken alone and then processed together, make it and them better off.
The actions that individuals must take to reproduce and sustain S-1 social order are thus constitutively informed by collectively held beliefs about the nature and ends of their actions and society. This is S-2, a social domain in which such collective forms of sociality exist. We can see how vital these collective beliefs are to the operation of S-1. Without S-2 reproducing these collective beliefs about S-1, beliefs that S-1 on its own terms must refuse (insofar as it does not allow for collective beliefs or modes of action to meaningfully shape society), there could be no S-1 at all. It is for this reason that I claim that S-1 is underwritten by, or depends on, S-2.
At the same time, the social connection and sociality of S-2 happen as individuals act alone, and social comfort, security, and responsibility thus get linked to atomism as individual action becomes a way for each person to assure the greatest overall results for the greatest number of people in virtue of their own self-interested actions, usually involving money. Thus, the interrelational and concerted sociality we find in S-2 is often harnessed in Hayek’s work to a normative understanding of the social as systemic and/or individualist action. Critical but unacknowledged, S-2 gets folded into Hayek’s thought to produce a perplexing, albeit influential, social ethos: together, each acts alone for the greater good.
S-1 depends on S-2 freedom in another way as well. For, as we have seen, S-1’s story about freedom is ephemeral, describing not agency exercised in and on society, among other people like and unlike us, but our uniform, functional role in a higher-order social process. This is freedom detached from meaningful individual or group agency; it is little more than (re)active, atomistic participation in a process over which, if we want to realize the best results of it, we have no control (no free choice). In S-1, our freedom is bound by a social teleology entirely alien to us. This picture of freedom is grim, deterministic, and indeed unlike freedom as Hayek himself often describes it. In The Constitution of Liberty, freedom (for the most part, he uses “freedom” and “liberty” interchangeably) is essentially freedom as market noninterference. 60 When, in The Road to Serfdom, he describes freedom as realized by money use, Hayek highlights individual, agential choice as a part of a life unconstrained by any but core market limitations (i.e., everyone is subject to competition). 61
As has been explored by other scholars, Hayek’s S-1 social theory cannot reconcile these two pictures of freedom. In her critique of Hayek, Brown, for example, sketches the changing shape of freedom as it is unpaired from more robust conceptions of society and social power and recast in terms of markets and morality. 62 Whyte shows that Hayek’s concept of spontaneous order entails subjects’ submission to unknowable market forces. 63 In my view, both are right: individuals are hardly oriented toward their collective beliefs as potentially political, as Brown argues, and they certainly (must) submit to market forces, as Whyte explains. Yet central to Hayekian freedom, I argue, is that individuals’ submissive attitudes toward the market are intertwined with a shared commitment to it as a site of (their) freedom. And this makes Hayekian freedom also collective.
Viewing Hayekian freedom in this dual way opens the door to a different critical picture of Hayek’s broader neoliberal and normative vision. S-2, when it appears in Hayek’s texts, contextualizes and gives meaning to human (inter)connection, including even submission to market forces, which can be understood by those who experience it as participation in not-exactly-planned collective action that invariably leads to greater good and more freedom for all. Individuals possess, that is, a shared commitment to society as a site of freedom that is improved by way of their jointly atomistic actions.
The Practice(s) of Money
The collective beliefs individuals hold about market society are, as we have seen, tied to the things they do with money. Yet, the things individuals do with money they mainly do alone and to realize their own self-interest. By examining Hayek’s discussion of money as the interface between individuals and the market process, we can shed light on this complicated relationship between collective beliefs and individual monetary practices. For, on the one hand, these shared beliefs inform individualistic practice; on the other, such practices must in some way be able to accommodate the reproduction of shared—thus, nonindividualistic—beliefs.
In S-1, as we saw, money does necessary and constitutive work, connecting individuals and enabling the market process to operate. For Hayek, as Slobodian usefully puts it, the “world economy” (consisting broadly of property, money, and markets) is a “sacred” and “sublime” space, for it takes shape and evolves through a self-organizing process that supercoordinates individual knowledge and action far beyond the means of human planning. 64 The unknowability of S-1, explained above, becomes key when Hayek turns to the social role of money. Markets not only make money. They also generate and catalyze spontaneous human interaction, order, creativity, and innovation, providing the conditions of possibility for emergent properties to arise, for civilization to develop, and for freedom to exist. As noted, the market dynamics of S-1, which individuals experience, including trading, buying and selling, and using money, as well as market outcomes like prices, are, for Hayek, all the result of processes that are unknowable and beyond intentional control. Thus, any of these activities, whether using money or conducting a business transaction, involves acting in relation to broader (and ontologically distinct) coordinating processes. Hayek’s economic theory condenses all such human activities to their functions within these processes.
In this way, money acts as an interface between individuals and the unknowable, self-organizing processes of the market. Hayek’s price system generates “signals leading to efficient behavior and thus tending towards optimal output,” providing localized information that individuals need to plan and act in their self-interest. 65 No one can grasp the operations of the market process, but they can grasp prices and behave accordingly, which, in Hayek’s view, occurs most efficiently as long as the quantity of money in the economy is appropriate. 66
Money is therefore used by individuals to think about and achieve their own ends. Precisely because individuals contribute information about their subjective preferences and desires via their use of money, it is the means by which they make themselves known to the market and to others. Needs, desires, and selves are rendered legible through monetary communication. In these ways, money wires Hayek’s marketized world, mediating individual interests and communicating them to the unknowable market process that is so essential to S-1, which spontaneously coordinates them toward maximal overall output.
And yet, again we find that Hayek’s writings about money reveal more. Money’s vital role as an interface between individuals and the market points to the personal dimension of the social domain enacted through money. S-1, we have seen, is impersonal. By contrast, the interfacing mechanism that the use of money sets in motion develops a personal domain in which individuals create and sustain social ties and relationship with one another and, in so doing, become connected to others who are doing the same. Hence, Hayek’s account of monetary interfacing presupposes, and also discloses, the necessity of the construction of beliefs and practices that accommodate forms of sociality in and between individuals. The use of money shapes and contours the social world of individuals, links them personally and informationally 67 to social structure, and organizes their behavior and their relationships with others. In depicting this person-to-person building of sociality, the use of money as Hayek describes it constructs another social order. This is S-2.
Put another way, Hayek’s portrayal of what money does shows us that monetary activities and practices underwrite collective beliefs in market society and entail the exercise of precisely the form of agency that S-1 refuses, namely, agential action and interaction undertaken in relation to a society—S-2—that is at least partially shaped by shared human activities. What everyone shares, that is, is a set of beliefs about society (as a progressing entity, given that individuals act/interface appropriately) and a set of interrelated practices that consist of actions based upon and aimed at realizing such beliefs. And this means, in turn, that Hayek’s S-1 theory must rely upon the very kind of money-based practices of individuals he also elaborates. Once again, this is a strange form of collective action, to be sure; by acting alone, something is accomplished together. Nonetheless, insofar as the activities/practices and experiences of individuals are shaped and informed by their collectively held beliefs, these activities/practices/experiences constitute a mode of collective action that constructs and cultivates social order. The S-2 through-line linking people together is their belief-informed activities with money.
Against this backdrop, the relation between S-2 and S-1 can be brought even more clearly into view. First, as I just noted, S-2 accounts for forms of social connectedness and shared beliefs about the nature of the social that inform individual action. In this way, there could be no S-1 social system, as Hayek understands it, with only the top-down spontaneity of S-1. It is the shared beliefs generated in and by S-2 practices that condition the possibility of S-1. Moreover, insofar as S-1’s price mechanism hinges upon social relations generated through people’s actions with money, there could be no S-1 without the actions/practices of S-2.
Thus, S-1 is viable only insofar as S-2 creates, as it were, the conditions for its possibility and only insofar as it refuses to acknowledge those conditions. S-2 not only underwrites economic behavior and practice. It also overlays human social relations with meanings, construing, in particular, sociability and social responsibility in individualist terms. If the S-2 that emerges from Hayek’s treatment of money represents people’s relational social lives and (inter)actions and the ways these (inter)actions build a social world between them, the rest of Hayek’s work presupposes, then reclassifies, those interactions as individual self-interested action with ripple effects coded as products of a higher-order impersonal social system.
This doubled social theory made visible by Hayek’s treatment of money alters interpretations of Hayekian neoliberalism. Hayek’s general explanations of the nature of social order use the language of S-1, yet his descriptions of money disclose another kind of social connectivity. This means that those who buy into or are influenced by Hayek’s view of things will experience S-2—as will anyone who uses money as Hayek understands it—but without having a language to think or talk about it in non-S-1 terms. In this way, as a theory of the way the S-1 is and works, Hayekian social theory ideologically estranges people from key aspects of their everyday experiences and intentionality while relying on those same experiences and intentions for the very viability and coherence of its propositions.
The Subject(s) of Money
Hayek’s treatment of money discloses the close relation between money-based practices/activities and beliefs about society. What is left in this analysis is to bring these together and investigate how this reciprocal relationship constitutes social(ized) subjectivities.
In 1944, writing about money in The Road to Serfdom, Hayek remarks that many people dislike money because (the lack of) it makes people feel the limitations of their ability to attain their goals and desires. Yet this view of money is wrong, he says, because thinking that money is what prohibits our achievements “is to mistake for the cause the medium through which a force makes itself felt . . . it would be much truer to say that money is one of the greatest instruments of freedom ever invented by man.” 68
As Corey Robin glosses Hayek’s statement, “money in a capitalist economy . . . could best be understood and defended in Nietzschean terms: as ‘the medium through which a force’ — the subject’s ‘desire for power to achieve unspecified ends’ — ‘makes itself felt.’” 69 To the extent that money simultaneously represents many distinct desires and, when possessed, offers the power to fulfill those desires, Robin is certainly right to point to the internal, subject-shaping process involved in money’s use. By using money, subjects work to make concrete and act on—mediate—their desires. In other words, because it represents the market value of objects/experiences of desire and can be used to attain those objects/experiences, money, as it were, carries the desires of subjects and continually mediates their desires in relation to material reality through its use. Further, as subjects articulate their desires to themselves and mediate those desires through their uses of money, they constitute themselves in particular ways, shaping how they understand and practice their desires, goals, selves, and relations with others. In its dual role, then, money as a medium for “a force making itself felt” is a medium through which subjects constitute themselves in relation to their desires and also to the material world.
Here Hayek gives us a serious, if nonacknowledged, account of money’s connection to subjectivity: money is not simply a tool that is used instrumentally to achieve economic ends, but something that constitutes subjectivities as it is used to mediate lives in relation to the exterior world and used to (inter)mediate across relationships between people. The subjectivizing effect of money use as seen here is not merely, as an S-1 formulation would have it, a functional change in the social landscape, like the impact, say, that Hayek’s denationalization proposal would have on how people get and use currency. There is a deeper effect: the activities and interactions of subjects with money are productive of those subjects. An ethical relationship of desire mediation is practiced with oneself by way of money use, resulting in an altered subjectivity, including internal dispositions and external behavior.
In addition, money use mediates a subject’s property use, and property use has social consequences. Indeed, in Hayek’s view money is necessary to the proper and efficient use of one’s private property; it is how signals about the market are read, exchanges occur, more wealth is created, and—crucially—it is how our desires about what we have and want are and can be translated into action, reaction, and interaction. In other words, one’s relations to what one owns, to one’s things, and even to new things that one desires—all of these personal relationships, which have social consequences that stretch beyond the personal sphere, are relationships navigated and constituted through money use.
Bringing this account of money’s connection to subjectivities together with the elucidation, in S-2, of the role of collective beliefs and shared monetary practices, we can see that S-2 is the site of the production of individuals whose subjectivities accommodate collective mentalities, experiences, orientations, and actions toward and about society. In other words, S-2 is where subjects are produced and reproduced who practice forms of sociality without which S-1 could not operate, but which, despite this reliance, S-1 must, by its own terms, refuse. If using money is, for Hayek, a subjectivizing and constitutive activity in the senses I’ve just considered, then it also constitutes society, S-1 and S-2 both. In this way, Hayek might say that money, through its use, writes its own constitution.
Conclusion
Hayek’s treatment of money, and in particular what happens to and among people when and as they use money, makes visible a social world, S-2, that is woven together by way of that use. In rereading Hayek to explicate S-2, I’ve brought to light two accounts of the social that exist in Hayek’s thought, showing as well that Hayek, for his part, explicitly acknowledges only one of them. As discussed in section one, the extensive literature on Hayek’s social theory is vital for understanding the central, indeed preeminent, role of S-1 in Hayek’s thought, and the crucial place of the idea of cultural or social evolution in how Hayek theorized markets, social change, and system-level social order. This literature offers a different emphasis in its general approach to Hayek than, for example, political theorists like Wendy Brown, who valuably diagnoses the consequences of Hayek’s social theory for the relationship between the social domain of human experience and democratic politics.
Building on the systems-theory scholarship as well as on political theoretical concerns with the implications of Hayek’s social theory for how we think about and understand the politics of our social lives, this article has sought to demonstrate the presence of a second, money-based social domain in his work. S-2 is important because it adds to what we know about Hayek and also because of the essential work it does for his S-1 social theory. By showing that Hayek’s asocial S-1 constantly and constitutively depends upon forms—elaborated in terms of interrelated beliefs, practices, and subjectivities—of sociality found in S-2, I have brought to light the ways in which Hayek’s theory of normative social order is conditioned by his unavowed social work. Since Hayek doesn’t avow S-2, and, moreover, by S-1 refuses its key terms, he cannot avow the tensions between S-1 and S-2. Yet it is worth considering what it means for understandings of Hayekian neoliberalism, and related normative neoliberal accounts of social order, that his own work harbors this tension over what gets to count as social and why. It means, first, that Hayekian neoliberalism may succeed at making the connections between human agency and sociality largely invisible and/or unintelligible, but it does not and cannot dismantle them. It also means that at the core of Hayekian neoliberalism lies, in contradiction with Hayek’s own overt claims, a need of shared social practices, connections and attachments that shape and motivate both individual action and individuals’ orientations toward society.
Hayek’s social work does double work for him, underwriting his concept of spontaneous order while simultaneously obscuring and insulating from ethical and political critique and examination a form of sociality and subject formation, the use of money, that is irreducible to the S-1 spontaneous order Hayek describes. Money, to be sure, often brings about sociality and subjectivities unintentionally, yet, not in Hayek’s sense. As his own denationalization proposal indicates, Hayek’s elaboration of and reliance upon the social practice of money reveals it to be—at once and contrary to his aims—unintended in an individual action sense but concerted with respect to shared beliefs about and practices of the constitutive power of money, as well as capable of being transformed by organized human action, hence political.
By considering how Hayek’s writings on money work to make possible his theory of spontaneous order, I have also sought to contribute to debates about whether or not Hayek was, contradictorily, a social constructivist. But rather than argue, as others have, that Hayek’s theory per se should be characterized as constructivist, I have instead demonstrated that Hayek’s construction of that theory is itself dependent on a set of monetary social dynamics that are elaborated in his writings. Focusing on Hayek’s theory construction, rather than the constructivist character of his theory, has allowed me to illuminate crucial ideas and assumptions in Hayek’s thought about the power of money in relation to subjects and social relations and to highlight the political stakes of these ideas and assumptions.
At the same time, I have also shown that Hayek’s constructivism includes monetary practices that shape social order at the level of subject-and-social formation. Thus, his constructivism extends beyond the elite-driven, top-down institutional and legal cultivation of the world economy to a reliance on practices that produce individuals bottom-up, as it were, who can and will behave in ways that work to construct a neoliberal economic order. In this way, my argument dovetails with the work of scholars focused on the production of forms of neoliberal subjectivity. 70
In addition to disclosing new features of Hayek’s social theory, then, this article also proposes a different and perhaps surprising way to view the politics of money, at least in relation to Hayekian neoliberalism. On the one hand, I’ve shown that the neoliberal nexus of homo oeconomicus, monetary exchange, and the spontaneous integration of social order rests in part on a set of nonacknowledged and/or undertheorized monetary practices. Only against the backdrop of ongoing, collective, and agential monetary practices can such an order seem possible or actual. Seen this way, these S-2 monetary practices do a crucial kind of political theoretical work by underwriting any attempt to explain the social world in S-1 terms. They are, so to speak, political conditions of S-1’s possibility. By bringing to light this constitutive work that money does in Hayek’s formulation of neoliberal social order, then, I have likewise sought to indicate how social theories like Hayek’s and beyond undertheorize money and, in so doing, erase from political deliberation and theoretical consideration key practices by which we are always already undertaking to make the world we live in.
To be sure, the use of money in capitalist economies produces alienating and transactional modes of interpersonal relations. But as Hayek’s own account reveals, it simultaneously produces deep, complex, subjectifying, and collectivizing social relations. Arguments, ideas, and practices concerning money thus always involve a range of ongoing, politically charged ethical and social decisions, some more and some less friendly to democratic politics. Insofar as money per se is considered only as a problem for democratic politics, or the work that it does to produce subjectivities and socialities gets theorized away, however, we miss the chance to politicize all of the myriad ways that money’s use constitutes us in and through our relations to others and makes our social order.
Footnotes
Acknowledgements
For her tireless faith in and feedback on this essay, as well as our many conversations, my deepest thanks go to Jill Frank. Patchen Markell helped me see it anew and make this version possible. For comments and conversations, I am very grateful to Aziz Rana, Jason Frank, Jonathan Kirshner, Mary Katzenstein, Peter Katzenstein, Ken Roberts, Richard Bensel, Chris Way, and Debak Das. An earlier version of this essay was presented at the 2019 meeting of the American Political Science Association; my thanks go to Stefan Eich, the other panelists, and the audience for their questions and suggestions. I’m indebted to Pauliina Patana for her contributions and encouragement, and to Nazli Konya for conversations from the first draft to the last. Finally, great thanks to Lawrie Balfour and two anonymous reviewers at Political Theory for their invaluable feedback, criticisms, and guidance.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
