Being now more than halfway through Keynes' General Theory, and having read some of Hayek's work (Constitution of Liberty, Road to Serfdom, The Use of Knowledge in Society), I am starting to form a more substantive understanding of the discursive relation between the two authors' bodies of work. Naturally, I am inclined to take a dialectical approach, largely in terms of individual liberty and collective welfare, along the lines I initially sketched out in [[Prospectus of the Reconciliation of Individual Liberty and Collective Welfare]].
So far, there are central aspects of their work which conflict in certain respects but which don't altogether seem necessarily antagonistic. Keynes seems to be arguing that the classical school tends to inaccurately assume that markets are self-correcting and that this self-correction tends to lead to optimal employment arrangements, when in reality markets are prone to destabilization and suboptimal employment arrangements, thus warranting intervention by the state (qua fiscal and monetary authority) to promote national income and employment. Hayek, on the other hand, at least in the works of his I've read, seems to primarily be arguing on a philosophic basis for minimal state intervention and for empowering markets as distributed knowledge mechanisms for economic self-organization.
One of the major points Hayek makes is that the state, as a human-led institution, is fallible and subjective in it judgement of economic affairs and promotion of pro-social values. He argues that a free market is a better determining mechanism than the state for most economic affairs, except for certain matters (such as certain infrastructure and other public goods) which do not lend themselves to private return on investment.
Keynes, according to my present understanding, is arguing that markets, by their nature, are not optimally self-correcting and are (if I may extrapolate) somewhat agnostic as to the welfare of citizens, thus warranting an activistic state to strategically intervene in the economy on behalf of public welfare.
In respect to the above details of the lines of inquiry perforating the select discourses of Hayek and Keynes, it seems their central (ostensible) point of contention is the degree to which, or at least the particular capacities in which, the state should involve itself in what would otherwise be considered "natural" or "spontaneous" market phenomena.
One may, at the risk of taking a hermeneutic liberty, assume that Hayek's reservations about empowering the state to proactively control key aspects of the economy may, to some extent, be quelled, provided that the agency of the state was rendered more neutral in its subjectivity and more holistic in its comprehension of economic data and phenomena. That is, if there were a more "impersonal" (or non-institutional) method of strategically intervening in the market to counter otherwise destructive tendencies, a method which entailed less risk of totalitarian capture of the economy at the expense of individual economic liberty, Hayek (as a proxy for the larger liberal and neoliberal schools of thought) may conceivably be less opposed to such intervention.
In other words, if the forces of strategic economic intervention were more programmatic, qua more deterministic and foreseeable than the discretionary judgement of human institutions, such an arrangement may constitute something of a reconciliation between the prosocial statism of Keynes and the pluralistic market-based liberalism of Hayek. Specifically, at least based on my working understanding of the pertinent discourse, it seems Hayek is less opposed to welfare-oriented intervention as such, and more to the subjective fallibility of the institutions tasked with such intervention.
In his defense of the rule of law, as a framework constraining the state monopoly on legal coercion such that the circumstances of this coercion are well-defined and predictable, Hayek demonstrates an aversion to unchecked discretionary authority, an aversion arguably generalizable to political and economic liberalism at large. In light of this, it would seem amenable to classically liberal beliefs to suggest that democratically decided prosocial measures can be taken to ensure collective welfare, so long as the mode of economic intervention involved minimal institutional discretion, especially if said discretion enjoys the privilege of the monopoly on legal coercion.
What implications might this supposed reconciliation have in respect to the potential utilization of peer-to-peer protocols for financial settlement and fiscal authority?
Given the advent of peer-to-peer financial settlement via globally networked virtual machines, we face some vague yet promising prospects regarding not only the elevation of economics to a properly experimental science, but also the implementation of impersonal protocol-based economic infrastructure.
Indeed, what is exciting about these prospects is the potential for peer-to-peer protocols to supplant some portion of the state's role as a fiscal authority, thus conceivably satisfying certain Keynesian imperatives of prosocial and strategic economic intervention, while also minimizing the degree of discretion entailed by this new programmatic authority, thus also appeasing certain fundamental values of classical liberalism.
In other words, given an economy built on a shared virtual machine capable of peer-to-peer financial settlement, say a fiat-backed stablecoin economy, we may be able to democratically implement a programmatic fiscal protocol to automatically and efficiently collect taxes and programmatically appropriate said funds to pre-determined expenses in a completely transparent manner, thus lessening the degree to which such fiscal operations depend on the discretionary judgment of institutions.
What is less apparent to me at present is how, or if, such technology may similarly function in the capacities of a monetary authority. It is conceivable that a state monetary authority may, in lieu of an adequate protocol-based alternative, subsist in its present institutional form even while the fiscal authority of the state is sublimated into a peer-to-peer protocol. In other words, this technology may more naturally lend itself to fiscal authority than to monetary authority.
In addition to potentially functioning in a central fiscal capacity, this technology can also operate in a plurality of parafiscal capacities. Indeed there is already one example, namely [Optimism](https://optimism.mirror.xyz/ciJzgxmb_fJU8wgiqrEXG_XYnAkuBrdG1biVk0BseiU), of a planned private (qua non-state) implementation of this technology to collect usage fees in a [parafiscal](https://en.wikipedia.org/wiki/Parafiscal_tax) manner. Based on examples like this, one can imagine a heterogeneous patchwork of parafiscal programs built upon common peer-to-peer economic infrastructure, each with their own particular algorithmic fiscal policies. For example, there may be one sub-network where transactions are taxed and overseen by a private institution to fund additional software development for the underlying infrastructure, and another sub-network where taxes are allocated to a common treasury for participatory budgeting by network participants.
Technically speaking, these sub-networks can allow users to opt in and exit at their discretion, enabling a novel paradigm of fiscal pluralism. Even with some degree of variance as to how these fees are collected and allocated, there can still be an underlying unity with respect to macroeconomic state policy. In other words, there can be an arrangement whereby new sub-networks comply with macroeconomic policy determined by some state legislature, and within the constraints of this compliance, enjoy some measure of fiscal freedom.
While any implementation of such technology toward such ends seems, to my awareness, quite remote in its potential, there are already various such experiments underway, albeit in niche prototype capacities.
Spencer Saar Cavanaugh
Over 100 subscribers