Hayek remains important in large part because of his defense of free markets and attacks on the state for interfering with a natural process. Progressives are often saying free markets fail . But markets are not allowed by corporations to operate as free markets but as rules set up by monopolies. Free markets would be hard to achieve (requiring legal framework to function, such as dependence on banks and contracts). The spirit of a corporation is not that of being a member of a happy community of equals, but a drive for a spirit of monopoly that makes losers of the others.
In Hayek’s view there is government and the market. But civil society is a third source of power and ideas, and corporations which so far as I can see he ignores, are a fourth (media make a fifth). But Hayek makes civil society nothing more than the preferences of isolated individuals. Meanwhile he attacked (and the popularity today of Hayekian ideas are because they can still be used to attack governments) as being a planning machine, too abstract and bureaucratic to respond to real signals in the economy, in society.
But many corporations today are larger than any country was at the time Hayek wrote his criticism of governments. He fails to be critical of the planning processes within corporations, even though Adam Smith was super clear that monopolization ruined markets. There are thirteen references to corporations in Wealth of Nations, all critical, all claiming that corporations were inherently monopoly seeking. The spirit of corporations is not to create a happy community of satisfied citizens but a competitive arena which spawns meanness and creates losers.
Hayek might be forgiven as reacting to the soviet reality, but that is long gone. Yet the neoliberal corporate wing still relies of Hayek’s anti planning critique without turning it on themselves.
Lots of progressives remain critical of markets and “market failures” even though we have never had a free market and that corporate interference, through paid politicians, is clearly creating those market failures.
Why does economics seem to allow the Hayekian attack on soviet style planning by governments but fail to turn that analysis to corporations?
Having just written this,I came across a review of a new biography of Karl Polanyi – The Great Transformation New York Review of Books.
http://www.nybooks.com/articles/2017/12/21/karl-polanyi-man-from-red-vienna/ Review by Robert Kuttner.