Brown vs Hayek

Yet another complaint I have about Moving Britain Forward is its ignorance of both Hayek and the possibility of government failure. This comes across in a chapter based upon this speech, on the question of what should be the relative roles of market and government provision of public services.
He devotes lots of attention to market failures such as imperfect information and barriers to entry. These failures, he says, justify state provision of health services.
There are two possibilities he doesn’t mention:
1. Markets are not merely technical devices for maximizing welfare, in the Arrow-Debreu sense. Instead, as Hayek emphasized, they are discovery mechanisms (pdf via here), devices for discovering facts that would previously be unknown. This means we simply can’t predict the consequences of introducing markets into public services – because the point of markets is that they find out new things.
2. Governments fail as well as markets. Brown tells us that there’s a risk of abuse of monopoly power in the private. But there’s also this risk in the public sector. This leads to an obvious absurdity. Brown says:

Because the costs of treatment and of drugs are now much higher than ever, and the risks to family finances now much higher than ever…the need for comprehensive insurance cover of healthcare is much stronger than ever.

Brown thinks this is an argument against private insurance. What he fails to say is that the state itself sometimes refuses to pay for costly treatments.
His juxtaposition of failing markets versus perfect state provision is just a fiction; the question is one of imperfect markets versus imperfect governments.
What’s annoying here is that Brown just doesn’t even consider Hayek’s view of markets or the possibility of state failure. He’s as ignorant of Hayek as he is of Oakeshott.
This matters, because Hayek provides probably the strongest arguments of all against Brown’s centralizing tendency.
That Brown fails to even show any awareness of his thinking suggests that he is scared to have his own ideas challenged. As I said, his supposed erudition is merely the search for support for his own prejudices.

 

Comments

[dearieme]

Brown was a bright schoolboy who, alas, went on to immerse himself in those intellectual stagnant ponds, labour history and the History of Labour. So why your surprise that his book is limp?

[james higham]

What’s annoying here is that Brown just doesn’t even consider Hayek’s view of markets or the possibility of state failure. He’s as ignorant of Hayek as he is of Oakeshott.

Pretty simple Chris - it's the amateur versus the professional.

[Meh]

Your point would be stronger if existing markets in social provision had actually discovered new things. The empirical fact that they haven't points us to the idea that Hayek's theory of markets as "discoverers" can be both true and irrelevant in this case.

Funny that, eh?

[IVA Advice UK]

Does it always get structured in this way or only under these specific circumstances? - Thanks, Kyle