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This page was originally conceived as a response to 'Hayek Versus Marx - and Today's Challenges' - a book by Australian socialist, Eric Aarons. It is also intended as a Left forum for critiques of economic liberalism and neo-liberalism. Finally: it is a website for debate of related issues, including the work of Eric Aarons. The blog-publisher, Tristan Ewins, will also be publishing some of his own work here. Our sister sites are the "Movement for a Democratic Mixed Economy' site, and the blogs 'Left Focus' and 'ALP Socialist Left Forum'. Constructive debate is welcome!

Tuesday, July 19, 2011

Responding to Eric Aarons - Hayek Versus Marx : and today’s challenges

above - Karl Marx and Friedrich Hayek

for more information on Eric Aarons see:  http://en.wikipedia.org/wiki/Eric_Aarons

Reivew Essay by Dr Tristan Vaughan Ewins of a book by Eric Aarons 'Hayek versus Marx and today's challenges'; Tristan Ewins background: BA Social Science LaTrobe Bundoora (First Class Hons); Grad Dip Ed; Monash; PhD Graduate from RMIT, Melbourne, Australia

nb:  if you find this material interesting feel welcome to visit the 'ALP Socialist Left Forum' and 'Left Focus' blogs and join the 'Left Focus group' at Facebook;  Also feel welcome to join the 'Movement for a Democratic Mixed Economy' group at Facebook...  ALP members on the Left should consider joining the ALP Socialist Left Forum Facebook group.

“Hayek versus Marx” is the culmination of over a decade of study – and a lifetime of practical experience.  Eric Aarons - the former National Secretary of the Communist Party of Australia – and the author of several important books - has taken upon himself an imposing task.  This task is that of interrogating the work of Hayek and Marx rigorously and open-mindedly: taking from each, exposing each to searching criticism, and ultimately urging a new social, economic and political paradigm.

 Considering in depth the life’s work of both these giants of social theory, Aarons urges what is ultimately a synthesis of socialism and economic liberalism.  While recognising the necessity of markets and competition; the author is also insistent of the indispensability of co-operation, the struggle against alienation, and the fight for economic empowerment and social justice. 

Firstly, we will summarise Aarons’ account of  Hayek.  From there we will consider his account of Marx.  Thereafter we will consider both the ideas of Marx and Hayek in further depth, and in light of Aarons’ own ideas and criticisms. 

In the process, we will consider such themes as economic democracy, alienation, markets and planning, and the ‘clash’ of free markets and nature.

 To conclude we will consider  the consequences of Aarons’s analysis and conclusions for a Left that has been grappling with its very identity, and its core values since the collapse of “really-existing socialism”. 

Exploring Hayek..

Aarons reminds us: both Marx and Hayek saw abundance as the key in optimising social outcomes: for the betterment of all, and ultimately of a sustainable social peace.

Hayek especially saw the

“better satisfaction of…material needs [as] the sole objective on which people could possibly agree and live peacefully together, with each then aiming at their own further individual ends.”   (Aarons pp 1-2)

 To this end Hayek opposed all forms of intervention in the ‘free market’: whether it came from organised labour, or social democracy, or anti-competitive practices from corporations.  Government, meanwhile, was to play a minimalist role: mainly concerned with maintaining a ‘timeless’ constitution – as designed by Hayek himself to forever enshrine the ‘free market utopia’   (Aarons pp 1-2)

 In support of these ambitions, Hayek developed a social and economic theory which was highly critical of any supposed capacity to refashion society – for rational or moral purposes – through the application of will and reason.   Instead he held that economic order was

“an organism in which every part performs a necessary function for the continuance of the whole”….    (Aarons p 17)

 Further, Hayek experienced what to him was a  ‘conscious realisation that the spontaneous and uncontrolled efforts of individuals”  “are capable of producing a complex order of economic activities…” (Aarons P 18)

 In certain ways, though,  Hayek took his social and economic philosophy to extremes.

 Marx criticised the resolution of social relationships into a “cash nexus”  leaving nothing more than “naked self-interest”;  “callous 'cash payment'”.

But for Hayek, the “craving” of the “majority”  “for a more humane and personal morals” could “quite likely…destroy the Open Society”.  (Aarons P 19) 

No moral principle and practical moral imperative was to interfere with the spontaneous economic order.  Refusing to consider the moral implications of any such order: for Hayek this was a purely ‘practical’ matter.   Even a ‘mixed economy’, by this reckoning, could result in political  and economic disaster. 

At one stage, Hayek wrote:    

“Once politics becomes a ‘tug-of-war’ for shares in the income pie, decent government is impossible.”   “Middle ways” also  “give license to the politicians to interfere  in the spontaneous order of the market”… (Aarons P 156)

In the name of this order thus – for the sake of the practical self interest of individuals – the worst of social ills were to be tolerated – or even seen as functional: exploitation, homelessness, poverty.   

On the basis of these assumptions, therefore, Hayek has it that “justice” does not have anything to do with “booms and busts”.  For him the spontaneous order is beyond our means to control: and so ‘no one is to blame’.  This is convenient for a ruling stratum who wish to evade all responsibility for the ruination they bring upon the innocent.  (45-46)

Important in Hayek’s reasoning was his assertion of the extremely limited range of understanding each individual might be able to hold in comparison to the complex ‘organic’ entity that is the economy.  Rather than trusting in overt planning, Hayek claimed:

“[Thus] we trust the independent and competitive efforts of many to induce the emergence of what we shall want”…   (Aarons P 20)

To quote Hayek in greater depth; here he is referring to

“the way the market works in arriving at the prices of commodities through the interaction of thousands or millions of buyers and sellers, in a way that cannot be matched by planning, because the necessary data is too diffuse to be collected, yet is readily processed and made available with little cost through the market mechanism…”  (Aarons p 39)

And further:

This adjustment also affects the “division of labour” “Within and between sectors.”  So “the mix of commodities” “corresponds at least roughly to the requirements of the population”.. (Aarons P 40)

Aarons, here, is sceptical of Hayek’s claims regarding the ‘all reaching’ power of spontaneous harmony and development – and the supposed redundancy of planning.    

 He insists:  “people still act consciously with intentions or purposes, possibly amending their plan as new facts come to their attention…”  (Aarons p 40)

The deliberate, widespread and systematic use of market research by corporations also flies in the face of Hayek’s ideology.  Further: imperialist policies ensuring ‘spheres of interest’ and control of global markets – involve extensive planning not only by monopoly capital, but also by their allies in government and the State.

Underlying  Hayek’s reverence for “organic spontaneity”, however, was a deeply-held individualism and liberalism.  


 “only the individualist approach to social phenomena makes us recognise the super-individual forces which guide the growth of reason.  Individualism is thus an attitude of humility before this social process.  (Aarons p 19) 

Despite Hayek’s disdain for social solidarity, however, the Austrian thinker nevertheless saw the need for refuge in our most “intimate groupings”.  Hayek contends:  Were we to apply the rules of the extended order to our more intimate groupings we “would crush them.”  Therefore, “we must learn to live in two sorts of world at once.”  (Aarons pp 35-36)

Beyond our most intimate circles, though, for Hayek the aim of the law is simply to provide the framework for this extreme economically liberal order.  Thus, in ‘The Fatal Conceit’ Hayek spells out certain ‘commercial rules’:  “honesty, contract, exchange, trade, competition, gain and privacy”. (Aarons p 109)

Another aspect of Hayek’s philosophy is his “instrumental” approach to nature.

 For him – astoundingly - “most consumption of irreplaceable resources rests on an act of faith.”

 To continue, Hayek claimed:

“We are generally confident that, by the time the resource is exhausted, something new will have been discovered…”    

“To use up a free gift of nature once and for all is [as in cases of land deterioration] no more wasteful or reprehensible than a similar exploitation of a stock resource.”   (Aarons p 52)

And furthermore: 

“Step by step momentary impediments to further population increase are penetrated”.. (Aarons p 54)

Hayek’s ‘article of faith’ here – in regard to exponential increases in population, and exhaustion of natural resources - seems beyond all rational supposition.   At the very least one might expect: humanity ought ration its use of resources until such a time as alternatives emerge.  And further – in the interim – we ought co-operate and plan in the search for sustainability.

As Aarons notes:

The ‘Club or Rome’ concluded in “Beyond the Limits’ (in 1972) that “the sustainable human –carrying capacity of the Earth had already been exceeded by about 20 per cent”… Between 1970 and 2008 “world population increased from 3.7 billion  to 6.7 billion.”  (an increase by “about 80 per cent” with GDP growth of   “about 370 per cent”.   (Aarons P 57)

The danger signs were already glaring in Hayek’s lifetime: but never did he confront the impending environmental crisis: a crisis of such magnitude no ‘spontaneous’ organic economic process can overcome.

 To conclude: for Hayek “private property”, with “universal rules of just individual conduct” “in which the market system dominated” “was in effect the peak of social development”.   Hayek’s much vaunted ‘Open Society’, therefore, was forever to be closed to future change.  Instead, perhaps, we would be better advised to call it the ‘arrested society’. (Aarons P 152)   

Exploring Marx-

i)  Materialism, dialectics, history

 Marx was notable amongst radicals of his time in that he did not provide unqualified worship of Reason “characteristic of much of Enlightenment thought.”  (Aarons P 63) 

 Aarons contends that these radical philosophes and revolutionaries” “exaggerated and distorted Reason’s power; divorcing it from other conditions of the times such as the absence of the economic and ideological conditions necessary for full implementation of the revolutionary slogan of the day: Liberty, Equality, Fraternity.” (Aarons Pp 62-63) 

Both for Marx; and for Hegel and the radical Young Hegelians who followed: all had to be considered in historical context.

Marx, however,  resolved to ‘correct’ Hegel’s Idealist conception of history: ‘placing it on its feet’. 

Hegel had held that the dialectic of history [was]…subordinate to the development of the Idea in art, religion and philosophy…”  Thus “individuality, the element of subjectivity, is inherently eternal and divine as an intrinsic part of the Absolute Idea.  (Aarons P 69)

For Marx, “the dialectic of history had no such superstructure” no “systematic support for the principle of subjectivity.”

Like Feurbach, Marx emphasised the importance of “reality” and “sensuousness”.

 Yet he went further, emphasising the “practice”, [of real] “human sensuous activity”.  (Aarons pp 69-70)  

 While Feurbach’s materialism was “contemplative”, though, Marx insisted on the need to “carry ideas into the area of real life.”  Hence Marx’s famous quote:

"The philosophers have only interpreted the world, in various ways; the point, however, is to change it.” (Aarons P 9)

This was at the heart of Marx’s materialism: combined with his identification of class struggle, as arising as consequence of the mode of production,  as the ‘engine of history’. 

But Marx’s position was deeper and more nuanced than pure materialist determinism.

In the Eighteenth Brumaire of Louis Bonaparte, Marx observes: 

Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.   http://www.marxists.org/archive/marx/works/1852/18th-brumaire/ch01.htm

Hence Aarons concludes: “it cannot be denied that the tension in Marx’s orientation remained, and neither he nor most of his followers were able to satisfactorily resolve it.   (Aarons pp 69-70)

 Antonio Gramsci was one crucially important 20th Century Marxist intellectual who resolved to address the tension in Marxism: between subjectivism and pure materialism;

 For Gramsci – “The central point was indeed the dialectical relationship between two ‘opposites’ – the processes of production being ‘objective’ in Marx’s understanding, and the attitudes or consciousness of people being ‘subjective’.

 Gramsci held that each “historical moment”  [comprised] “a fusion of all the objective and subjective elements involved, for which he used the term immanentism.”   (P 69)   

 Again – this reintroduction of subjectivity into radical and Marxist discourse – was an essential correction to the ‘pure materialism’ of some professed Marxists.

 Meanwhile: “By ‘hegemony’ Gramsci meant the domination of a culture, a set of ideas , or a common way of thinking and even to some extent, feeling and emotion, over the majority of people in a country, which included the complicity of the oppressed in their own oppression.”

Radicals had to work “on all fronts” “involving ideas and ethical values”… to contest the prevailing “common sense”… to achieve a new “common sense” raising it to a hegemonic position…. (Aarons P 71)

 Ultimately – after dedicating most of his lifetime to the communist movement,  Aarons appears to draw the conclusion that Marx – and professed ‘Marxists’ - placed too much emphasis upon what was material and objective.  

 Thus he asks:  “Would [Marx], instead of turning Hegel upside down, of ‘inverting’ him by replacing the spiritual by the material, have done better to have stopped halfway and turned Hegel on his side, leaving a greater theoretical space and role for subjectivity?” (p 69) 

Even here Aarons himself inverts the famous statement of Marx: where Marx spoke of ‘turning Hegel on his feet’ by adopting a materialist conception.  Instead, Aarons argues that – in fact – Marx did the opposite.  (ie: that he turned Hegel upside down)   ‘Turning Hegel on his side’, therefore, is something of a Gramscian gesture itself: placing as much emphasis upon culture as material conditions.

As Aarons concludes:  “Without its consciousness, including speech, reason and imagination - what would remain to differentiate the human species from all others? (Aarons p 68)

Exploring Marx ii)  Class Struggle, Revolution,  Communism

 As already noted, Marx also looked to abundance to help people fulfil “their full potential”.  This was to be “achieved by building a society of co-operating members based on common property”. 

 For Marx, capitalism played a revolutionary role in developing the means of production, and expanding “intercourse in every direction, universal interdependence of nations”. (Aarons p10)  (a truly global economy – long before anyone had heard of ‘globalisation’) . 

But the capitalist economic system was also deeply flawed.  These flaws included “booms and busts of the business cycle”, “development of monopolies” “and their authoritarian, exploitative relationship with the workers”.  (Aarons p 1)

 In the process of bringing together legions of working people under conditions of mass production and emiseration, though, Marx supposed the system developed within itself the social class who would bring about its own negation.  (Aarons p 11)

 Again: Marx disavowed the Enlightenment notion that Reason alone could lead to the elevation of humanity regardless of material circumstance.  On the other hand, though, he did seem to suppose that full human potential could and would be achieved with Communist society, made possible through the utmost development of the means of production. 

The transition to communism, therefore, would have many stages.  From the ‘Dictatorship of the Proletariat’ – whereby the working class established itself as ruling class – through democratic process – this path of change would lead through socialism with the development of the means of production and the advent of a classless society.

With abundance communist society would overcome past contradictions, and social maladies associated with alienation, exploitation, the division of labour. 

There would arise “an association in which the free development of each is the condition for the free development of all.”  (Aarons P 86)

 With this development of the productive forces “on the basis of co-operation”…  “government…as a coercive instrument, “would [eventually] ‘die out’ or wither away.  (Aarons p1)  

Here we turn to Marx’s own imaginings on the content of future communist society:   

 “in a higher phase of communist society, after the enslaving subordination of the individual to the division of labour, and therefore also the antithesis between mental and physical labour, has vanished; after labour has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-round development of the individual, and all the springs of cooperative wealth flow more abundantly – only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs.”   (Aarons p 95) 

Exploring Marx iii)  Marx and Alienation

As considered above in Marx’s vision for future communist society, another crucial element of Marx’s social criticism was his account of ‘alienation’: a phenomenon of many dimensions and causes. 

 Firstly, Marx  observes the condition of workers under 19th century capitalism:

These human beings were  “separated from and dominated by their own product because it belongs to another – their employer.”   And further:   “Their work [was] coerced rather than voluntary – to obtain the necessities of life, not to express and develop their human capacities." 

Marx continues:

“The capitalist system, based on a division of labour, exchange, buying and selling  -including the buying and selling of labour power – separates people from each other rather than bringing them together in harmonious community…:”  (Aarons p 12)

Marx’s account of alienation, here, is crucial – for as Aarons explains:  

“Hayek gave overwhelming priority to “the better satisfaction of material needs’, not the maximum development of the human individual’s inborn powers.    (Aarons, p 52)

Marx’s deeper appreciation of the human condition thus sets him apart from Hayek: who thinks only of maximising material gain.  

 But earnest as he was, Marx’s analysis of alienation – and the means of fighting it -  was not without its flaws.  We will consider this once we move on to a deeper exposition and response to Aarons’  critique.

Aarons Responds to Marx and Hayek

Building on his criticism, exposition and interpretation of Marx and Hayek, Aarons draws many conclusions that are instructive or provocative in today’s context. 

To advance our consideration of Aarons’ position, though, we will return for now to the issue of markets and alienation: in its practical and moral dimensions.


As we have already considered, Marx identified alienation as a multi-faceted social phenomenon impacting upon the human condition: often such as to dehumanise working people – rather than enabling them to fulfil their full potential

Aarons, however, believes that Marx’s rage against alienation led him to err: to make assumptions, sometimes, that for the immediate future might even be considered utopian.

 Aarons explains:

 “Marx opposed the exchange relationships involved in commodity production because it alienated the participants from the social dimensions of human life.” (Aarons P 23)

This critique of alienation helped highlight and entrench the opposition of many socialists to ‘the market’.   Indeed, Marx had written in the ‘Communist Manifesto’: that “buying and selling” “had to be replaced with planning  by the associated (and collectively owning) producers, if alienation was to be transcended.”(Aarons p 23) 

Reflecting upon this, Aarons affirms: that :

“Markets can “to a considerable extent, spontaneously arrange and re-arrange the quantitative division of …resources (capital equipment, labour, raw materials…) devoted to each item among the mix of enormous numbers of different items (‘use values’)…  (Aarons p 25)    

Continuing in this vein he notes: 

“Profit-seeking is also a motivation, in competition, to economise on capital and raw materials as well as labour…”  “thus reducing prices to the consumer…”

And finally he explains

“It is also a stimulus to making new innovations, both in means of production and consumer goods… (Aarons p 25)

 Sadly, though, many of Marx’s followers equated socialism with ‘blanket’ central planning, and the elimination of markets.   This led to disastrous consequences for the socialist project: the conclusion amongst many – based on experience - that it was anathema to innovation and responsiveness to needs.   

As writers from the so-called ‘Budapest school’ – students of Georg Lukacs - conclude in ‘Dictatorship over Needs’::

“The very idea of control from below demands the overcoming of this rigid alternative choice between planning or market…”  (Aarons p 74)

Aarons also expresses his disappointment with so-called ‘really existing socialism’.  To him: “regimes” built supposedly in Marx’s name were “repulsive”.  They “savaged the democracy he fought for”  and “greatly increased, rather than diminished, the alienation he had dedicated himself to overcome.”  (Aarons p 74) 

Further, Aarons also observes:   “The administrative determination of the prices of consumption goods…along with the failure to increase supply to meet even the effective demand, created a centralised ‘dictatorship over needs’ concurrent with political repression and ideological control.”

Importantly – and regardless of this, Aarons doesn’t think Marx identified the market exclusively with “the totality of the capitalist system”.   (Aarons p 23) 

 As Aarons explains: “[Marx] sought to outline the emotional and ethical need to establish a society suited to, and capable of fostering, the un-alienated individual.  (Aarons p 12)   

Alienation, according to Marx, is not necessarily “eternal”.   Indeed -  Marx’s view was that  “capitalism, while intensifying alienation, laid the material basis for its ending”   (Aarons P 15) 

Alienation and the Democratic Mixed Economy

 It may be utopian to suppose it is within our immediate grasp – to fully overcome those aspects of alienation stemming from the division of labour. 

Neither is it within our reach to do without all forms of work which are menial, monotonous, and anathema to the free and full human development of each individual.  Even assuming public or co-operative ownership and control – there are some occupations that nonetheless could involve conditions of deep alienation,.

 Further – it does not seem rational to centralise all planning when, in fact, a democratic mixed economy: including markets – and where appropriate, competition – can better respond to market signals – and provide for human need. 

What we can do is to set a course so as to minimise alienation as best we can  – and maximise the opportunity for workers, citizens, human beings – to develop their human potential.

To begin with, there is the need to establish a fairer system of industrial relations: including tax credits and a higher minimum wages for the most vulnerable of workers. 

This, in turn, could enable these workers – child care workers, cleaners, hospitality workers, textiles workers, retail workers, call centre workers, some clerical workers  – to ‘make ends meet’ even while allowing for a shorter working week.  

Justice, here, is not the capitalist norm: where workers are compensated in line with their market power to demand higher wages.  Where workers suffer as a consequence of menial work: it is fair for society to compensate for such undesirable – but socially necessary labour.

 For other workers, also,  developing a better ‘life/work’ balance could allow more time not only for family; but to develop social networks; engage in active citizenship, partake in community education; partake in the breadth and range of cultural expression.  By this I mean to infer the desirability of a shorter working week.

 And critically – in the ‘democratic mixed economy’ there are places where markets should not go: and where different forms of democratic ownership and control ought prevail.

According to Aarons, thus,  preference for markets - is “not universally applicable”.  Aarons p 31)    

The same could be said for private enterprise.

Instances of: private involvement in infrastructure – including Public Private Partnerships (PPPs) are to Aarons a “new and disturbing trend”. “Services formerly provided to people cheaply or even free by governments are now priced high enough (road tolls for example) to include private profit. (p 159)  Commercial in confidence” arrangements guarantee profits.” And “in addition to what can be squeezed from the workers directly involved, profits now come directly out of consumer’s pockets…”
(Aarons p 189)  

 The world over, Public Private Partnerships have become ‘an invitation to corruption’: the fleecing of citizens and taxpayers, even where public debt finance who be – by far – a more efficient means of paying for anything from telecommunications networks, to roads and rail, to desalination plants, energy and water infrastructure etc.

Aarons warns:  “Privatisation “has already removed governments from many of the social infrastructure institutions”  “It has also created a worrying gap between government and much of the often complex knowledge and expertise involved in these areas.”  (Aarons P 191)

 Instead he seems to hint at a return to the kind of mixed economy that used to comprise the norm during the so-called ‘Keynesian Golden Age’  before the rise of neo-liberalism from the 1970s and onwards:

“society’s infrastructure…is not spontaneously financed by capital flowing to where most profit is to be made, nor should it be.  Schools, hospitals, prisons, ports, roads, public transport, postal services, old and new communications systems, water supply and sewerage systems, facilities for the aged and infirm, child care… are areas becoming daily more important in the full social picture…” (Aarons p 31)

This is a good start, comprising solid ground from which to launch a deeper ‘counter-offensive’.   

In ways it suggests a return to a “social market” model – as embraced by the German Christian Democrats in 1950s, and the German Social Democrats “after 1959” (pp 33-34)  This ‘social market model’ suggested “a social vision couched in moral as well as economic terms…”, and “recognition of the fundamentally social nature of organised production”.  Further, it implied a “moral community” “required to legitimate the social order…” , and the“[prevention]  of the emergence of a ‘two-tier’ society” including a layer of permanently poor.  (Aarons pp 33-34)

Finally – and importantly – that model involved:

“recognition that desirable public ownership should not be seen as a bridgehead to full public ownership and a traditional socialist society”.  (Aarons pp 33-34)

 Assuming that the alternative, here, is a ‘democratic mixed economy’, though: of what would this consist?  Marx may have disdained the ‘mentality of the blue-printer’: but surely concrete visions of an alternative economy and society – could spur the imagination.  Surely we need such a vision to inspire a new generation of progressives and radicals to action.

 Aarons does not go into detail as to what form socialism may take in the context of a mixed economy. However he does suggest a role for Government Business Enterprises (GBEs), public authorities and public infrastructure.  (in addition to those areas already considered by Aarons, we could add banking, airports, public bodies – maybe even international bodies - for scientific research,  and public broadcasting and media)   

For reasons not made clear in the book, though, Aarons also neglects to mention forms of collective capital formation: through wage earner, community investment or pension funds.  Here the vision of Rudolph Meidner still inspires – although the problems of implementation remain where even in light of saturation unionisation levels voters took fright at such radicalism.

But what of co-operatives and mutual societies? 

And if we concede the need for competition in some fields; what forms of public and democratic ownership and control could be reconciled with this? 

Hypothetically,  for instance, mining enterprises could be socialised in the Australian context: while still being spurred by international competitive markets.

Furthermore: co-operative and mutualist enterprises in areas as diverse as credit, insurance, agriculture, small business, and many other fields - could compete in local and international markets while providing fuller remuneration for workers, and a measure of collective control.  

Similar projects may be publicly subsidised in the field of democratic, alternative,

community-based, and participatory media.  Such enterprises could be crucial for the health of liberal and participatory democracy – such as to justify subsidy beyond the normal scope of competitive markets. 

Notably, though: even in such instances it is not within our means to overcome the division of labour.  (But it would certainly be a marked improvement.)

Democratic enterprise, here, could be further supported through cheap credit, tax rebates, and free advice on investment and management. 

The viability of co-operative and democratic enterprise of this sort demonstrated by such instances as:

·         the Mondragon co-operative in Spain: a worker-owned co-op which runs over 150 manufacturing, finance, and retail enterprises employing over 80,000 people; 

·        Rabobank in the Netherlands: a Co-operative bank, employing 55,000 staff, 600 billion Euros in assets; and focused on lending for clean technologies;

·        The Recovered companies’ in Argentina: these comprise about 200 factories, employing 10,000 people, seized by workers following the 2001 economic crisis, and now operating on a ‘non for profit’ basis (Stanford, p 329).

These are not merely ‘experiments behind society’s back’ – but comprise imposing and significant inroads for the cause of economic democracy.  

Aarons concludes at one point:  

“corporatisation and privatisation has generally failed”.  “consumers of these services, embracing a major part of the population, now have to pay for and, through taxes, guarantee the profit as well as the capital, on top of the profit squeezed out of the workers employed.”  (Aarons, P 31)

Despite the recognised need for markets, therefore, markets can also “[foster] self-interest” “to the detriment of socially oriented values.” (Aarons P 44)

Markets can be so corrupted as to involve oligopoly or private monopoly, collusion, built-in-obsolescence, staggered release of new technology, over-provision of unnecessary services (eg: medical) and exploitation of workers. 

 Here, while Hayek’s vision was of a ‘pure market’ –  where  “all participants are individual or small-group buyers”,  and there are “no monopolies”, the tendency towards monopoly, as envisaged by Marx, has more closely approximated to the reality. (Aarons  P 54)

 Also: The profit motive – as expressed in the quest to maximise share value – leads to such severe rationalisation as to disqualify some economic activity – even where it has a  genuine use value – and is moderately profitable.  For instance: the closure of rural and regional bank branches, and the outsourcing of call centre work to India and elsewhere – maximising the rate of exploitation, and circumventing potential solidarity and resistance from the working class.   

 Further, markets mediate the power of wealth: in such concentration as to warp the democratic process, the media, and the broader public sphere.  This can extend to provision of Ideological cover for oppression and exploitation, and ‘doublethink’.

 And while Stalinist societies often could not meet real demand, capitalist society as we know it often involves terrible waste.   This has critical implications for the cause of environmental sustainability – one of Aarons’s chief passions.

 Take the example of Automatic Teller Machines. (ATMs)  Where two or three of these might be able to provide to a legitimate need; instead in an average shopping centre there may be twelve.  Such duplication adds significantly to underlying cost structures – and finds expression in onerous banking fees.  

 To this we could add the staggered release of technology in the case of computer hardware; or the duplication of infrastructure in the field of communications technology in Australia.  (eg: mobile telephony infrastructure)

 What we need, now, is a clear vision of what will actually take the place of the neo-liberal order.

Aarons and the search for a ‘new paradigm’

While Aarons views attempts to actually implement communism a “greater failure”, he mentions the Great Depression; and Communist victories in Russia, China etc as  “[putting] the capitalist system and its ideologues on the defensive”  (Aarons Pp 197-198) 

Stalinism warped Marx’s vision cruelly – discrediting socialism in the eyes of many. To put this in perspective, however: we should consider that successive wars; from World War One to Vietnam, to the Iraq conflicts; were at least partly the consequence of Imperialism.  This is without considering atrocities in Guatemala, Indonesia, Chile and elsewhere: brutality and murder for the sake of geo-political ‘realpolitik’.  Seen in that context, the failures of world capitalism are also glaring.

In particular, while conceding the failure of many attempted ‘grand narratives’ of history, Aarons “[supposes that a] more modest term ‘social philosophy’ indicates that some overall view of the totality of social relationships is still required”  He further contends: “we badly need an alternative to the prevailing [overall view]: one especially tailored to cope with our present circumstances.”   (Aarons P 198)

 Surely if we abandon ‘meta-narratives’ entirely (eg: analysis of world economic systems) , as some post-modern theorists would have us do, the very terrain of global political economy would be vacated to instead be occupied by the neo-liberals.   While some celebrate the identity they find for themselves “at the margins”, the majority of those oppressed, exploited and starving could be forgiven for ‘not seeing the point.’  

 Aarons considers: ”When the two paradigms of social theory usually described as ‘left’ or ‘right’ can no longer deal with the facts, our minds  may be, even should be, more open than they normally are…”  And while Aarons says he is not personally providing this ‘paradigm shift’’, he contends his is a mission “to convince others that we must widen the search… starting from now.”

On one hand, it is true that Marx insisted:

The tradition of all dead generations weighs like a nightmare on the brains of the living”.   http://www.marxists.org/archive/marx/works/1852/18th-brumaire/ch01.htm

But others have just as insistently asserted that there is “nothing new under the sun”.

Perhaps it is best to ‘strike a balance’ between what is new, and the wisdom of tradition.

 ‘Left and Right’ are social constructs: constructs which are even sometimes contradictory when considering their treatment of their liberal and egalitarian axes. 

A ‘conservative socialism’ or ‘authoritarian socialism’ is just as possible to conceive as “economically neo-liberal authoritarianism” or “classical liberalism – economic and social”. 

Such titles as these provide a deeper and more-nuanced picture of the social, philosophical and political values and agendas of their adherents.

Left traditions, though, have been developed in the course of decades – even centuries - of struggle.  They have been further enriched by the struggle of vulnerable and oppressed groups: workers, the most poor and marginal (ie: the underclass), women, indigenous peoples, ethnic minorities, those of queer sexuality, nations oppressed and exploited under the heel of imperialism and colonialism.   

The identity – the sense of moral strength and purpose – that has developed in the course of these struggles – ought not be abandoned.

On the other hand, there is a danger – and in some senses an opportunity – that the fusion of ‘green’ and ‘red’ politics may come undone if the politics of environmental sustainability become hegemonic – across both the traditional Left and Right.  This would have to  involve the abandonment of the kind of ‘hands off’ approach preferred by the adherents of Hayek, Rand and other ‘intellectual giants’ of economic liberalism. And it would require the realisation by sections of the capitalist class that environmental catastrophe – ‘posed the greater danger’ – giving rise to divisions within the ruling elite. But concession that planning and intervention are needed to “save capitalism from itself” –  is alone not enough to provide justice to the poor, the exploited and the oppressed.

 In Australia, the Greens have filled the vacuum on the Left – a vacuum created by the Australian Labor Party’s (ALP) adoption of economic neo-liberalism, and its failure to provide for either a democratic mixed economy, or some of the most basic workers’ rights. 

In some countries – eg: in Sweden, Holland, Denmark – there are alliances between the ‘Red’ Left and the ‘Green’ Left.   This complementary diversity is a strength in itself: appealing to a broader cultural and electoral bloc. Strategic cultural position is part of the process of forming a counter-hegemonic historic bloc.  

In a sense, though: the Left cannot continue to ‘live in the past’ – to the extent that old battles: disasters and victories – remain the main focus to the expense of responding to new circumstances.  But in Australia – and elsewhere  there is a need to conserve, renew and adapt aspects of ‘red Left’ culture: a purpose that can be fought for both within the governing Labor Party – or with more ‘room to move’ by the formation of a new party. 

Australian Labor – like many other social democratic parties – is torn in its need to carry the relative centre.  As such Labor will continue to compromise in ways that are populist and opportunistic – until such a day that progressive social forces win the struggle for hegemony. 

 But with parties of the Left leading debate and contributing to the formation of a victorious electoral bloc – this would provide leverage in the process of policy implementation. 

 And with the development of a strong and independent Left – well organised outside confines of the ALP – there arises the possibility of waging struggles – and enjoying victories – beyond the confines of purely electoral politics.

Aarons’s vision  I:  Reason, Human Nature, and the “Clash of Spontaneous Orders’

This paper has explored and responded to  a great deal of the content of ‘Hayek versus Marx’: an important title which certainly deserves more exposure than it has enjoyed to date.  However, there are some other very important aspects of Aarons’s analysis that deserve exposition and criticism.

 Here, we will consider Aaron’s account of neuro-biology: its role in the formation of values, and the application of reason.

 Aarons – who graduated in his youth first in Science: notes that

“The cortex or thin covering layer of the frontal lobes of the brain is the focal point for our reasoning capacity.”   (Aarons p 107)    

He further notes:

Damasio’s “revelation” that “secondary” emotions…have to go through the cortical reasoning centre to activate the body..”

Thus he concludes there is a:  “connection between emotion, reason and action…”

For Aarons, this is corroborated by Damasio’s work in the case study of “Elliot’:

Here an “orange-size tumor” was “removed from the right frontal lobe of his brain…” When tested [he] did well in moral judgment – and in providing solutions to social problems… But thereafter he remarked “And after all this, I still wouldn’t know what to do!”  Damasio realised “the connections between the emotional and the reasoning centres of Elliot’s brain had been severed by the operation to remove the tumour from his right frontal lobe…

For Aarons, this substantiates David Hume’s contention that emotion is active, while reason is (at least relatively) passive.  (Aarons, pp 107-108)

Thus, in light of this analysis, we are provided with a rationale as to why:

moral sentiments spurred action more strongly than reason”… 

Reason and moral sentiments (partly emotional in origin), thus, ought be taken together: the entirety of the human psyche directed towards the tasks of justice, solidarity, kindness,  progress and survival. 

This especially calls for the application of our reason – animated by emotion – to confront environmental crises: the threat of global warming, and the potential disaster caused by disruption to the natural order, with the elimination of crucial species.   

Aarons considers the extent to which economic activity can, indeed, be a ‘spontaneous’ process.  Thereafter he considers the spontaneous processes of nature. 

Aarons further observes to the effect that:

The ‘market’ “cannot see” anything “not tagged with a price.”   Greenhouse gases so far had no price.  “But can growth, in the nature of things, go on forever, Hayek’s ‘act of faith’ notwithstanding?  (Aarons p 53)

Continuing in this line of thought he asserts that there is a “clash of spontaneous processes’  ( ‘Market versus Nature’): one which requires the application of Reason: of deliberate foresight and planning – to resolve.

In conclusion, there remains the question of whether there is any such thing as objective morality: or whether morality is but the elevation of our emotional instincts – mediated through the filter of our reason.  

For the  author of this critique (Ewins),  meanwhile, our passion for ‘right’ is not just a practical compromise, but is the expression of some of the highest aspirations and inclinations of humanity: the love of one’s fellow human beings beyond self-interest– and a spur to justice.

And for some sentient life is objectively  sacred: each life a unique living soul unto itself; animated by free will and consciousness – mysteries which we can observe, but cannot fully understand even with the full armoury of science brought to bear. While science can observe and note laws of causation: ‘first cause’ is impenetrable: as is “the cause without cause”.

Aarons’s vision II

Again – we are moving to summarise material which is treated in great detail in Aarons’ ‘Hayek versus Marx’.   Other areas which receive treatment in this title include: the human values of Marx;  the nature of economic cycles and of the more recent financial disaster (we speak here of the Global Financial Crisis of 2008); the sheer scale of the environmental challenge; and the power of people to demand – and achieve change. 

We will consider Aarons’ account of the current economic cycle.

Aarons suggests that the current financial crisis could have been predicted: following after a pattern which is not new.

He explains how financial institutions and banks…sought maximum expansion in shortest time… These… multiplied, “particularly in the housing mortgage and other loan markets.”  “with little Government or central bank oversight or regulation”   

In accordance with the economic cycle….“the value of “existing assets” “[began]  to rise”… “Financial institutions [were] eager to lend in order to participate in prospective profits.  [Further], the rise in the value of existing assets becomes the security for still further loans, and so it proceeds in a self-reinforcing manner.” 

“The [resultant] euphoria created can last for a considerable length of time…”    But ultimately: “shortcuts” are taken… regardless of rigorous “scrutiny of…actual/potential income” and evaluation of “assets”…

In the United States, and in a fashion recognised by Marx as part of the economic cycle -  “[deferral] of increases in the interest rate on home loans for two years” was a “carrot”.. 

“[But] As that deferral time expired, panic set in…” This then spread to the “real economy” despite assurances it would not…(Aarons Pp 46-47)

Aarons holds that we really ought to have known better: and suggests that Marx’s analysis is still useful in comprehending the business cycle.

For Marx, Aarons explains,   

“The last cause of all real crises remains the poverty and restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces in such a way, that only the absolute power of consumption of the entire society would be their limit.”
(P 202)        

Further, he holds that: 

Poverty in many countries needs to be addressed…  “So does the underclass which comprises about 20 per cent of even the richest countries today…”  (Aarons p 202)  

 In light of such reasoning, it is well worth considering whether or not investment in quality social housing might at least have spared the more vulnerable from the ensuing catastrophe of the ‘sub-prime’ debacle.

But crucially, Aarons considers: 

“With proper planning any surplus production capacity could be absorbed by diverting a great deal of production in the direction of the poor and needy.”  (Aarons p 202)

This in itself suggests a move beyond the market, involving some measures of direct redistribution.  Further, it could be applied systematically on an international basis.  Questions remain, though, about the potential abuse of such a system, and work would need to be directed to planning its implementation.  Nationalist resistance would also arise in the face of even modest and tentative international redistribution.

Such measures, then, would be accompanied by shift to renewable and sustainable energy… “and the further development of the infrastructure on which the rest of production ultimately depends.”  (Aarons p 202)

Ultimately, this would  “feed into a significant further expansion of social justice measures, particularly in education, health and caring.”  To this we could add social participation and information.


Aarons draws to his conclusion: noting the need to abandon ‘two ideologies’.

Firstly: “Marx’s proposition that there is a known destination towards which humanity is inexorably tending”  

Secondly: “the Hayekian contention that we are on the verge or arriving at a desirable point and that all will be well with the world as long as we accept that the best way to get there is to rely on the spontaneous forces of the market and of society as a whole.”

He notes: “The pressures we face are great “because, within less than fifty years, it is likely that global warming will have reached the critical point.”  (Aarons P 184) 

That said: what options are open to us to contend the shape of things to come?

Earlier in the 20th Century, thinkers such as Herbert Marcuse and Theodore Adorno theorised the failure of the working class to emerge at the key historic moment as ‘revolutionary historic subject.’  

Marcuse, for instance, referred to ‘One Dimensional Man’: where the revolutionary potential of the working class was smothered by pervasive Ideology.  This Ideology affirmed rather than negated the social order: implicating workers in a culture of unbridled consumerism which rationalised unnecessary labour, and the relentless logic of capitalist accumulation.

Marcuse made a clarion call for a “Great Refusal’: by which the most marginal and oppressed elements of society provided resistance.  Liberal inroads against oppression based on gender, race, ethnicity and sexuality, however, have nullified much of this resistance.

To an extent, this has left organised labour, and a socio-economic underclass, isolated.

In the United States, it is notable for instance, that there is mutual intolerance amongst some of the most exploited and oppressed.   If  we are not careful, a similar scenario may develop in Australia as well.

 Aspects of this tragedy are  detailed in Joe Bageant’s  Deer Hunting with Jesus: Dispatches from America’s Class War”.  

One blogger reviews the title as follows:

“Ghettoized and economically oppressed in a manner that often defies widely held beliefs regarding race and class, “redneck” workers--ignorant, angry, and propagandized--have become the populist backbone of the conservative political resurgence, repeatedly voting against their own economic interests, and recreating the very causes of their anger driven, irrational political behavior…”

And further:

“ I am sensitive to terms like “white trash,” “hick,” and “redneck” as class based put-downs. I have as little use for middle class whites who mock lower class whites as I do for racism.”
(   http://goffchile-asiplease.blogspot.com/2007/12/book-review-deer-hunting-with-jesus-by.html  )

The reviewer’s identification of Christianity with reaction is disappointing: but that is not to deny that there are those who employ Christian rhetoric as a veil for prejudice, war and oppression.   

 Importantly: the failure of the liberal left in the United States to organise workers  – black workers, white workers, Hispanic workers – on the basis of shared class interest: has provided a ‘wedge’ for the apologists of the system.  And contempt in the United States for a burgeoning underclass – divided even within itself by racism - is debasing and dehumanising.

Against the weight of history, however, there is still cause to hold to hope. The ideology of consumerism and neo-liberalism is smothering: debilitating.  But the rise of the internet is providing ‘openings’ for the self organisation of workers and progressives.  

There is also a feeling – recognised by many – that for many  workers, consumerism is approaching its limits in how it can legitimise overwork in the midst of plenty.  There are some for whom full-time work or overtime itself seems redundant.  Thinkers like Barbara Pocock speak of a ‘Work/Life’ collision.  And Clive Hamilton writes of a ‘Growth Fetish’: whereby endless acquisition of ‘things’ distracts us from the opportunity for fuller social and individual growth.   These writers – and others – appeal to a growing sentiment: of today’s ‘historic moment’.    

Meanwhile environmental crisis signals the death knell for that Ideology that held the growth in consumerism would be unimpeded and exponential.  

Further: that crisis invalidates the Hayekian vision of fully spontaneous capitalism. Only concerted planning and deliberate intervention, now, can prevent catastrophe. 

Finally there is the question: assuming free will, what possibilities are there for the rise of a collective ‘historic subject’ – to become a force for change?

Perhaps – in a way – the pessimism of  the ‘New Left’ movement regarding the working class helped fulfil its own premises, contributing to the process of demobilisation. 

Yet again, though : hope persists 

In economically advanced countries at least – the material foundations have been laid for what could be a substantially more just, fulfilling and humane order.  Some suppose a ‘bad totality with no way out’: but Aarons’ analysis supposes an active element of the human psyche - working in tandem with human reason.  This in turn gives weight to voluntarist claims: which, if believed, would reinforce hope.

Returning again to Marx:

“Men make their own history, but they do not make it as they please…”

The past, though, is more than a ‘nightmare’ ‘weighing upon our minds’.  It is a storehouse of lessons and the wisdom of experience.  While we ought not become ‘trapped in the past’, neither ought we forget.   

Through the measures outlined in this paper, we have already considered means by which alienation might be significantly ameliorated: especially in the economically advanced democracies.  The material basis for such measures is within our grasp.  But still the struggle is political and well as economic. Certainly there are many vested interests who would resist the construction of a ‘democratic mixed economy’.

Again: the spread  of liberal education for active citizenship is one important step in re-energising the self-organisation and critical faculties of ordinary people.  In many countries the number of citizens partaking in higher education is greater than ever before.  But at the same time there are those who seek to marginalise liberal educational culture: reducing it to a vehicle for corporate interests.

Earlier in “Hayek versus Marx”,  Aarons contends that the challenge before us:

”will require a radically new ‘mix’ of free and planned markets, of spontaneity and reason, competition and co-operation, self-interest and altruism, individualism and collectivity, citizen and government activity, national and international action – indeed a new ‘mix’ of all the aspects of humanity that enter into our social existence.”  (Aarons p 4)

‘Hayek versus Marx’ is an important title: an honest and thorough interrogation of two giants of social theory.  But while drawing deeply from Marx and Hayek, the author also provides a broader analysis - formed by an entire life time of study, AND practical experience. 

The ‘new mix’ Aarons mentions provides some important ‘signposts’ for  a Left which has become disorientated with its relative decline.  Nevertheless – if anything – Aarons overestimates this decline – sometimes seeming to suggest it is final and irreversible.   

The ‘new paradigm’ Aarons suggests – if it is to form the basis of a new counter-hegemonic historic bloc – must promote co-operation and mutual discourse between the ‘green’ left and the ‘red’ left.  And it must draw upon other traditions: building bridges between diverse social forces.  The German ‘social market’ model, and the ‘Historic Compromise” in Italy between Christian Democrats and Communists -  for instance, show the potential of broad alliances.

Through will, reason, love, and passion for justice: hope persists. 

This authoritative title deserves to be read by all who are interested in the future of the Left; the tasks of thorough theoretical synthesis and reorientation; and the possibility of a ‘new paradigm’.


Aarons, Eric; Hayek versus Marx And Today’s Challenges; Routledge. New York, 2009
Stanford, Jim; Economics for Everyone – a Short Guide to the Economics of Capitalism, Pluto Press,  London, 2008


  1. Tristan,

    I have not read Aarons' book, but your summary seems to indicate that he doesn't really get Marx at all (not surprising given his education in a Stalinised version). I'll just give one example, which you quote above:

    Marx opposed the exchange relationships involved in commodity production because it alienated the participants from the social dimensions of human life.

    For Marx alienation was the result of the capital relation, which is a social relation of production and not exchange. For him markets were a product the capitalist organisation of production, not its cause. Yes he had a powerful critique of markets, but because they were an expression of how all social life was organised around the production and accumulation of surplus value.

    Thus, eliminating formal markets doesn't automatically get rid of the capital relation, but overturning the capital relation would create a tendency for the elimination of markets (which, as Marx points out, are predicated on the separation between those who work and control of the means of production, which is the basis for exploitation and alienation).

    From your summary Aarons seems to be reading Marx through the eyes of someone who has only a moral critique of Stalinism rather than a scientific one. This leads him to get confused about Marx's categories, and so he's tilting at windmills. Disappointing.

  2. Ok - to start with I've just made comments 'open' so anyone can comment. I just realised comments weren't open. Fixed now!!!

    Tad; though as I understand it exchange relationships involve the loss of creative control over production which creates a kind of alienation; and also the loss of control over the process of exchange itself. As I understand it alienation also refers to the nature of work under capitalism: drudgery, repetition, ruination of body of mind. And in this context also a lack of meaning; and a lack of diversity and human/cultural fulfilment. The problem is that the alienation stemming from the division of labour, and the content of that division of labour, cannot be fully remedied - or at least not yet - as the menial, repetitive, unrewarding jobs still need to be done by someone. Hence the importance of compensating these people - with a shorter working week and more holidays for a start; and perhaps with favourable taxation to make this viable. And also with state support for cultural engagement and personal development outside the context of alienating labour.

    Tristan Ewins

  3. Another important point is that even if "separation between those who work and control of the means of production" is overcome alienation would persist. In call centres, textiles factories, fast food outlets - work would continue to be demanding, dull, repetitive, unfulfilling. And so many would only feel 'at home' outside of work altogether. Which leads to the conclusions I made in the earlier comment... It's a problem with the division of labour - and even with some form of rotation - someone has to do the work... But the hope is that with abundance such kinds of work could be minimised, and people could 'find themselves' with other forms of creativity and voluntary work - such work becoming 'life's prime want'.

  4. BTW - I thought I should clarify that when I suggested 'rotation' I did not mean to suggest compulsion. Rather I wanted to suggest a more 'affirmative' agenda; not to force people into menial jobs; But positive action to give people who have been stuck in those kind of jobs diversity and fulfilment in their lives.

  5. I think Eric's work is very disappointing - especially for a former Marxist. I haven't read this book but I have read Eric 2 previous attempts - 'What's Left?' and 'Whats Right?' as well 'Philosophy for an Exploding World' (from the 70s) which are all in one form or another moral critiques and not very good ones.

    Hayek was writing after WW2 which demonstrated that the State could, in fact, coordinate the economy to, at least, war-time goals. It was clear I think to working people that the state could be used to such ends and perhaps to ends that might benefit the vast majority. So it was up to ideologues like Hayek (ignored for 50 years) to argue that No! the state control of the economy would lead to fascism and the only way an economy could be run was via markets. This was such patent non-sense in the 1940s that he was ignored until the 70s when the various forms of social democracy went into crisis as profits fell.

    If one wants to defend left wing social democracy - and argue that markets need to be regulated in some form - thats fine but its hardly a new idea. That is purports to come from some goldilocks position between Hayek and Marx is pretty depressing.

  6. I've noticed we've had no more comments in a long while; But we're getting quite a few readers here. So this is just to say debate is still welcome here. If you have an opinion on Eric Aarons' book, or my take on it - feel welcome to give your opinion. :)