A Letter of Critique to Frederich Hayek

Anyi Li

Hello dear Dr. Hayek,

After learning about your philosophies in class, I first want to express my respect to you for formulating your neoliberal school of thoughts and provoking so many intellectually intensive debates throughout the decades. However, I must say I have lingering doubts about a few of your stances.

According to Dr. Matthew Sparke’s book Introducing Globalization: Ties, Tensions, and Uneven Integration, you argue from the world’s painful experience of Nazism and Fascism before and during WWII that “all government planning had authoritarian tendencies,” and therefore we must limit all sorts of government regulations on the market in your book The Road to Serfdom (Sparke 239). 

However, I do not see how an economy can naturally work toward prosperity without government guidance. For instance, the United States in the 1920s mostly followed laissez-faire capitalist economic policies, but the United States still fell into recession after a period of economic boom. When the United States first entered the economic downturn at the end of the 1920s, the relative inaction and lack of monetary and fiscal corrections from the federal government only deepened the recession to a Great Depression. Based on what I have read from Dr. Sparke’s book, even Margaret Thatcher, who abundantly admires your philosophies, chose to utilize monetary policies of “reducing the money supply, pushing up interest rates, and imposing fiscal austerity in order to restore price stability” (Sparke 240). Though you could say that recessions are the market’s self-correcting methods, I believe that a government has the responsibility to ease the people’s suffering and misery in times of hardships, which involves enacting policies to kick-start a depressed economy as Keynesian doctrines suggest.

Nor do I think economic policies have any singular, causational relations to whether a government is democratic or authoritarian. As Dr. Sparke has pointed out, the Chilean style of “Chicago shock therapy” of instantly transforming a nation from socialist policies to pro-market neoliberal structures that you favored and suggested to former British Prime Minister Margaret Thatcher was actually achieved by a dictator who overthrew a democratically-elected socialist government.

Moreover, the privatization of public services and deregulation of the market, which you support, is causing severe issues in the Global South. As stated in an article by Earth.org, after Guinea privatized its water services in 1989 and later on faded its subsidies to the industry, the private sector that held water services contracts soon became monopolies, and the water price skyrocketed sevenfold (“Water Privatisation in the Global South: Lessons From Guinea”). This left many poor citizens unable to afford their water bills, subsequently punished by water disconnection or evicted out of their home due to debt accumulations resulting from borrowing to pay their water bills (“Water Privatisation in the Global South: Lessons From Guinea”). Dr. Hayek, would you not think that government intervention or market regulation would have helped these low-income families in cases such as this? Or the question may become: should water, the essential item to human survival, be privatized from public services and sold as commodities?

Thank you!

Blessings,

Anyi

Work Cited

Sparke, Matthew. Introducing Globalization: Ties, Tensions, and Uneven Integration. 

1st ed., Wiley-Blackwell, 2013. 

“Water Privatisation in the Global South: Lessons From Guinea.” Impakter, 

Editorial Board - Earth.org, 17 Dec. 2020, impakter.com/water-privatisation-global-

south-guinea/. Accessed 28 Feb. 2021.