Alienation and rationality—The retreat of postwar socialism


Postwar socialist thought, such as the Frankfurt School, retreated from the Social Sciences due to its theoretical and empirical failures, as well as the discovery of Marx’ Paris Manuscripts. It shifted its emphasis away from exploitation. Instead, it dealt with human alienation in a prosperous world and other more philosophical concerns, such as the nature of rationality. We show that the Frankfurt School is not unique in dealing with these topics. The writings of F.A. Hayek, and, to a lesser extent, James Buchanan, focus on surprisingly similar observations but arrive at different conclusions. We also argue that the modern version of socialism is flawed.

Prelude—the old and the new left

Four events changed the intellectual landscape of socialism in the 20th century, the socialist calculation debate, a continually increasing material living standard, the collapse of the Soviet bloc, and finally, the discovery of manuscripts of the early Marx. The Austrian economists von Mises (1947[1920]) and later Hayek (1948) famously critiqued central planning on the basis of the unique knowledge generating properties of the market order. Since all knowledge exists in dispersed form, within the minds of the individuals that comprise society, no single planning entity can have access to it in its totality. Instead, only by relying on the free interplay of market prices can the dispersed and fragmented bits of knowledge become coordinated. That is, the rise and fall of prices communicate relevant knowledge to individuals, who, driven by their self-interest, will expand their purchases, curtail them, use substitutes, pursue a discovery process toward alternate technologies and so forth.

Even though the logic of this argument is widely regarded as an important contribution to economics (see Arrow et al. 2011), and appreciated by some contemporary proponents of socialist thought (Burzcak 2006; Cumbers and McMaster 2010; Wainwright 1994) it suffered from a Cassandra-like existence until well into the 1980s. As Levy and Peart (2011) have shown, economic textbooks proclaimed the superiority of central planning due to its higher forced savings rates, and therefore investment generating properties without considering knowledge problem arguments. Many proponents of the postwar left (Marcuse 1964; Fromm 1965; Pollock 1978) advocated partial or full nationalization of the economy without showing any understanding of the previous debate. Marcuse (1964) wrote “If the productive apparatus could be organized and directed toward the satisfaction of vital need, its control might well be centralized; such control would not prevent individual autonomy, but render it possible” (Marcuse 1964, p.2) and he mentions the “greater rationality of industrialization” in the Soviet Union, in which it can “proceed [..] without the restrictions on productivity imposed by the interests of private profit” (Marcuse 1964, p.39). Similarly, Fromm wrote “the irrational and planless character of society must be replaced by planned economy that represents the planned and concerted effort of society as such” (Fromm 1965, p.270). It must be noted that these early Frankfurt School writers cannot be categorized neatly into one coherent school of thought. Their ideas were sometimes conflicting. Fromm, for example, stands out because of his emphasis on democratic forms of planning. Pollock, on the other hand, must be regarded as an outlier as he was the only fairly uncritical proponent of Soviet style planning. This paper focuses on the common ideas instead, most importantly the danger of the instrumental rationality bred in markets and the support for some form of comprehensive central planning.

The second blow to socialism came in the form of an empirical realization. Rising living standards in western Europe and North America represented a more immediate critique than the slowly unfolding Austrian argument. It directly undermined the Marxian prediction of material misery (but not the alienation one) and demanded theoretical reflection. Despite the Second World War, the 1950s saw a return to a surpassing of previous levels of prosperity in most countries. Although many conventional macroeconomic aggregates such as GDP per capita did not indicate the widening gap between the largely market-oriented economies of the West and the Soviet-style economies, one look at the actual consumption possibilities of the average person in each system made the difference clear (Schroeder 1991). North Americans and Western Europeans had more and better material goods, as well as a cleaner environment and healthier lives (see Brainerd 2010; Medvedev 1990), than did their nominally socialist counterparts.

Thirdly, as more and more details of Soviet reality became known, the popular support for central planning in its original form collapsed. Even if these countries had generated the economic growth they appeared to at first glance, the political repression that accompanied that growth was becoming increasingly intolerable. Soviet industrialization came at the price of an unprecedented human tragedy, which shocked many Marxists in the West.

Finally, the discovery of the Paris Manuscripts from 1844 greatly changed the interpretation of Marx. The documents revealed more philosophical and emotional, rather than economic avenues of reasoning (See Tucker 1961).

As the ideas of Mises and Hayek became more prevalent in academia, and as increasing living standards and the knowledge of Soviet brutality put at least the material prediction of Marxism in question, two separate intellectual branches appeared. First, most social scientists abandoned the socialist project and entered the discussion of market failure and state intervention, an ongoing debate that is exemplified by environmental problems, macroeconomic interventions, redistribution policies and others. Distinct from these ongoing social science debates, a smaller intellectual current developed, loosely known as the New Left, and featured most prominently by the shared ideas of the Frankfurt School. As its existence is founded upon philosophical and psychological ideas and not economics, it remained untouched by the Socialist Calculation Debate, but not by the more immediate empirical realization of increasing material wealth in market economies. Since the increase in per capita wealth had to be incorporated into a theoretical Socialist construction, the New Left re-examined the more complex and difficult concepts, such as alienation and the nature of rationality in Marx, in order to justify their rejection of capitalism.

What is fascinating about the Frankfurt School is that, on an analytical level, they had a number of things in common with modern classical liberals such as F.A. Hayek and, to a lesser extent, James Buchanan. Both groups describe the uneasiness felt by individuals in a modern society despite increasing prosperity. In addition, both of them show concern over the rationalism commonly associated with the Enlightenment, yet they arrive at vastly different conclusions to its implications. We argue that the modern version of socialism suffers from a number of problems and is ultimately less satisfying than the liberal defense of markets. Despite their attempt to distance themselves from orthodox Soviet Marxism their ideas lead back to totalitarianism and poverty.

Two conceptions of rationality

The problems associated with the ongoing project of enlightenment, first conceived of in the 18th century, represents a common theme for the Frankfurt School and modern liberal thought. Both schools acknowledge the link between rationalization and the conquest of the physical world through technology. At the same time they warn about the improper application of rationalism in the social realm. As we will see below, like their position on alienation, the details of their criticisms of the Enlightenment differ, but are still surprisingly close.

Hayek’s writings emphasize the use of knowledge in society, as the essay with the same title suggests (Hayek 1948). He envisions society as a spontaneous process that continually unfolds as millions of participants interact, where knowledge is dispersed among millions of participants and partially incommunicable, and he warns of the temptation to plan society from a central point, such as a Politburo or a democratically elected government. Given the human condition of dispersed, partial, and often inarticulate knowledge, we require institutional processes by which we can make that knowledge available to others so that they can make use of it in their own planning. Rather than the traditional division of labor that economists emphasize, Hayek began by noting the division of knowledge and explained that it was only markets that could overcome that divide by making our inchoate knowledge socially available through freely determined market prices. Hayek’s argument built off the earlier work of Mises (1920), who argued that only a system in which there was private property in the means of production could resources be allocated rationally, thanks to the role of prices in facilitating comparisons of value. Mises’s argument directly contradicted the Marxian claim that capitalism was irrational and that socialism/communism would, through planning, impose rationality on economic activity. For both Mises and Hayek, the profit and loss system driven by market prices provides the incentive to use the knowledge prices make available entrepreneurially, which creates mutually beneficial trades and thereby increases wealth and human well-being

In the philosophic backdrop to this argument Hayek differentiates between two types of enlightenment, of which only the first one recognizes the limits the human mind. This first strand is based on thinkers such as Bernard Mandeville, David Hume, Adam Smith, and Adam Ferguson. It was further developed by the German legal theorist Savigny, but also Wilhelm von Humboldt. The second, and arguably more dangerous strand of enlightenment, is based on thinkers such as Lagrange, D’alambert, Condorcet, Comte and St. Simon. The latter tradition does not emphasize the limits to human reason but reason’s potential. It attempts to copy the methods that proved to be successful in the natural sciences and apply them to social problems. As the causal relationships of social life are thought of as completely analyzable in principle, these relationships can also be rationally planned, if not optimized.

It is the hubris of social science that ultimately leads the attempted re-construction of society through legislation or direct command. While the constructivist dictatorship is equivalent to totalitarianism (Hayek 1944), the democratic version also “necessarily leads to a gradual transformation of the spontaneous order of a free society into a totalitarian system” (Hayek 1973, p.2). If political rationality is not harnessed, but allowed to expand without checks, it prohibits flourishing of individual wellbeing in the open society. Hayek is also critical of naïve positivism. Hayek’s worries about the application of simple mathematical laws to complex social phenomena, a point which can be well illustrated by the simplifications undertaken in the attempt at total collectivization and planning in the Soviet Union and other countries (Hayek 1952a, 1988).

On the side of the Frankfurt School, Adorno’s and Horkheimer’s Dialectic of Enlightenment presents the theme of an enlightenment-gone-astray most emphatically. In their treatment, the pre-rational stage is characterized by mimesis, a difficult concept that has been described as “a world that has not yet been divided into human subjects, on the one hand, and separate objects, on the other” (Morgan 2001). The term has strong anthropological undertones as it suggests a tribal co-existence in which magical beliefs allows people to experience the connection with nature.

As this connection is broken by the realization of a subject-object divide, matter starts to be the object of domination, and the process of enlightenment has begun. The expansion of rational faculties allows for greater productive capacities. Mythology stands at the beginning of this continuing process of increasing instrumental rationality. Whereas the pre-mythological stage is characterized by a “unity of nature” (Adorno and Horkheimer 1944, p.10), the mythological starts to abstract from concrete events. In a mythological rendering the advent of spring is no longer a unique event, but a necessary and recurring part of the cycle of seasons, and thereby starts to regard “every event as repetition” (Adorno and Horkheimer 1944, p.12). It thus treats the concrete event no longer as unique but generalizes its essential features, and thus “perpetuates existence as a schema” (Adorno and Horkheimer 1944, p.27). Enlightenment in its modern form represents the progression of this process. Abstraction is taken to a new level of sophistication with the mathematization of thinking and empirical falisifcations: “For the Enlightenment, whatever does not conform to the rule of computation and utility is suspect. [..] To the enlightenment, that which does not reduce to numbers, and ultimately to the one, becomes illusion, modern positivism writes it off as literature” (Adorno and Horkheimer 1944, p.6–7). The objects themselves become mere tokens of general principles.

This can be illustrated by the use of frequencies in statistics. Entities become countable only when they lose their unique characteristics. They fall into certain categories, which makes them the same, as for example when people are sorted into income or preference categories. “Abstraction, the tool of enlightenment, treats its objects as did fate [.]: it liquidates them” (Adorno and Horkheimer 1944, p.13). Entities, objects and individuals thus become leveled; they become repeatable. The rise of the modern period of state capitalism is the result of an increasing rationalization and planning: “Now any person signifies only those attributes by which he can replace everybody else: he is interchangeable, a copy. As an individual he is completely expendable and utterly insignificant.” (Adorno and Horkheimer 1944, p.145–146).

As instrumental rationality, which flourishes in market societies, becomes over-powering, enlightenment turns into destruction: “the old bourgeois guardian state returns in the force of the Fascist collective.” The individual is destroyed but only exists as anonymous token within the whole (‘Das Volk’). Adorno and Horkheimer suggest that the Jew becomes a metaphor, the embodiment of this economic rationalization. The suppressed anger against the system is directed toward the Jew as a symbol for the enlightened bourgeois society. People are “gripped by a holy anger over the retarded commercial attitudes of the Jews” (Adorno and Horkheimer 1944, p.173), they become the “scapegoats [..] inasmuch as the economic injustice of the whole is attributed to them” (Adorno and Horkheimer 1944, p.174).Footnote 1 Thus, rationality, science and planning become a tool for mechanization and standardization of human existence. Marcuse illustrates this point by pointing to the modern car traveler. The route organizes his trip, signs tell him what to think about and do. The person who accepts this rational domination is the one who benefits as the system creates maximum comfort and safety (see Marcuse 1964). He exists “as an instrument, as a thing” (Marcuse 1964, p.33). Enlightenment leads from the free market stage into a stage of totalitarian political control, bureaucratization and state capitalism (Marcuse 1964; Pollock 1978), and possibly fascism (Adorno and Horkheimer 1944; Pollock 1975). Increasing efficiency due to increasing rationality drives the integration of the public and the market sphere. “Vastly increased government spending and direction, planning on a national and international scope, an enlarged foreign aid program, comprehensive social security, public works on a grand scale, perhaps even partial nationalization” represent building blocks for a “more effective power” (Marcuse 1964, p.38).

Both Hayek and the members of the Frankfurt School reflected upon the methodological foundations of social science and wrote on epistemological problems. In fact, Hayek’s methodological critique in The Counter Revolution of Science (1952a) and Horkheimer’s Traditional and Critical Theory (1972) can be profitably read alongside each other because of the number of parallel arguments. They both describe the historical ascent of naïve positivism in the wake of enlightenment, a process that was initiated by the natural sciences, and later followed by the social sciences, which seek to imitate the rigor of the former. Hayek and Horkheimer are critical of empiricism and they, in fact, make the same argument: As human sense perception is selective, it is necessarily guided by some mental model which was previously acquired (with or without being conscious of this fact). Thus, their life history materialistically affects their sense perception (see Horkheimer 1972, p.200–2001; Hayek 1952a, ch.3; Hayek 1952b). Data never speaks for themselves but must be interpreted.

For Hayek, this idea directly flows out of the Methodenstreit, a debate between Austrian economist Carl Menger, and the empiricists of the German historical school, which distinguished the Austrian School of Economics as a separate stream of thought. For Horkheimer, on the other hand, it is the capitalist mode of production which guides individual sense perception, and thereby renders the individual content with what is, as opposed to criticize this realty and to construct an alternative one: “No independent thinking must be expected from the audience, the product prescribes every reaction” (1944, p.137). Thus, both the Frankfurt as well as the Austrian tradition warn us of the dangers of rationalism. They are critical of a naïve form of empiricism because they understand that a selective perception of facts always depends on prior beliefs; scientific inquiry can therefore never be a-theoretical.

The critical junction between Hayek and the Frankfurt School thinkers pertains to the split between the usage of substantive rationality of governments and the instrumental rationality in the private sphere. While the former is mostly concerned with the misuse of reason by the organs of the state, the latter see increasing instrumental rationality as an encompassing problem. Why does Hayek restrict his warnings about rationality to the public sector whereas the Frankfurt School does not? Adorno, Horkheimer, Marcuse and others start from the presumption that state planning can be efficiently executed. “Since the development and utilization of all available resources for the universal satisfaction of vital needs is the prerequisite of pacification, it is incompatible with the prevalence of particular interests which stand in the way of attaining this goal. Qualitative change is conditional upon planning for the whole against these interests and a free and rational society can emerge only on this basis” (Marcuse 1964, p.251). Similarly, in a private note, Horkheimer expresses his hope that humanity would replace “the struggle between capitalist companies with a classless, planned economy.” (see Wiggershaus 1994). The increase in planning and the integration of public and private sector are driving the advancement of material living standardsFootnote 2. Their critique of rationality is directed at alienation and totalitarianism, which are seen as inherent tendencies of the market system.

Hayek’s familiarity with the socialist calculation debate, on the other hand, moves the failure of state planning in providing goods and services into the center of analysis. Whereas Marcuse, like many postwar economists (Levy and Peart 2011), describes the USSR as more efficient than the west, albeit more terroristic (Marcuse 1964), we now know that living standards in the eastern bloc lagged far behind western standards. Individual planning guided by profit and loss signals, although beset by uncertainty and frequent disruption, appears to be the type of rationality which improves the material conditions. As Vernon Smith (2003) argued in his Nobel Prize Lecture, the rationality of the market is not a rationality of individual actors, but instead an “ecological rationality” in which the system of institutions generally rewards the effective use of resources and punishes the opposite, with the result being that even less than rational actors can learn how to allocate resources more effectively. In other words, Hayek’s point was that humans were always less than perfectly rational but that the difference between market and political institutions consist of the market’s superior ability to generate knowledge and thereby facilitate human learning. Markets are epistemological ecosystems in ways that political institutions are not.

The Frankfurt School hypothesis of an uncontrollable instrumental rationality can be traced back to the unfamiliarity with the socialist calculation debate. This author could only track down one brief reference to the calculation debate in the early FS literature, Pollock’s essay State Capitalism—Its Possibilities and Limitations (1978): “We think that anyone who seriously studies the modern literature on planning must come to the conclusion, that whatever his objections to the social consequences of planning, these argument against its economic efficiency no longer hold” (Pollock 1978, p.85–86). Pollock’s earlier study of the first 10 years of Soviet planning refers to von Mises, and summarizes his arguments briefly. However, nowhere does he provide counterarguments. Instead he fills his almost 400 page book with Soviet statistics which he himself judges to be “very unreliable” (Pollock 1929, VI), describes the difficulties and errors of the planning commission in detail [chapter 5], and weakly concludes: “Where it [Soviet planning] will lead history will show” (Pollock 1929, p.389). His ideological commitment is reflected by his visit to the Soviet Union during the 10 year anniversary and his remark that “more than a few amongst the highest officials deserve the title [..] ‘heroes and martyrs of the command economy’” (Pollock 1929, p.382). As far as we know, none of the subsequent Frankfurt School writings deal with the major counterarguments against central planning, which suggests that these authors were either unaware of the debate, or did not deem it important enough.

It should be briefly noted that some members of the Frankfurt School were not uncritical of real-existing state socialism. In fact, Marcuse (1964) describes it as terroristic. The horror, in his view however, is efficient at delivering the goods, and it is not a result of the political economy of hierarchical planning. It is linked to the ever more encompassing instrumental rationality.

To summarize, Hayek and the members of the Frankfurt School warn against the totalitarian and terroristic tendencies of substantive rationality of governments. Yet Hayek endorses modern instrumental rationality in individual and firm decisions whereas the Frankfurt School sees instrumental rationality’s inherent tendency to undermine the unique by treating it as repeatable instances of abstract categories. The concern of the Frankfurt School seems to speak to the use of the scientific method within managerial decision making. Statistics are employed in modern production, marketing, human resources and organization studies. Hayekians do not share this concern as long as these methods reside inside the market sphere. As long as the private ordering process is competitive, individuals have exit options. A worker might be subject to methods of scientific management and a consumer might be enticed by psychologically designed messages, but exit options exist. Public ordering through the state directly, or indirectly through grants of monopoly or privilege to nominally private actors, replaces consent with command and thereby removes, or at least significantly loosens, the constraints on instrumental rationality. Command relationships without exit option allow the substantive rationality of governments to reign over abstract individuals in order to further the goals that emerged within the public sphere, may they be utilitarian or the outcome of a competition of political interest groups.

Excessive rationality may arise in both public and private sphere because the same fallible human actors occupy each realm. As the checks imposed by contractual relationships are absent in the case of command and control, scientific methods of operation develop according to different parameters. In contrast to the purchase of laundry detergent, national security measures such as the storage of fingerprint information cannot be put back on the shelf. The application of the methods of the social sciences may enter into both the public and the private sphere, but its further progression is affected by contractual constraints in the private sphere and publicly determined commands in the public sphere. Hayek argues from a position of methodological individualism: he does not question individual judgments in contractual relationship even though there is room for error. A Hayekian individualism does not stem from the rationalistic tradition of Descartes, the French enlightenment, St. Simon and Comte. Hayekian individualism is rooted within the Scottish enlightenment, which emphasizes the limits to human reason. The private sphere is thus not the driving force behind the excesses of rationality. In contrast, an order based on contractual relationship, i.e., a society which is the result of human interaction but not of central design, represents the very mechanism by which rationality is kept in check through competition and the decentralization of decision-making power and channeled toward the subjectively perceived improvement of the human condition.

Alienation, psychology and culture

According to Marcuse, needs are being manipulated in order to safeguard the smooth functioning of the capitalistic process. He distinguishes “both true and false needs. ‘False’ are those which are superimposed upon the individual by particular social interests in this repression” (Marcuse 1964, 4–5). The now wealthy proletariat finds themselves consuming the same products as their bosses, and the antagonism between classes is abolished, “they find their souls in their automobiles” (Marcuse 1964, p.9). Both, masters and servants are trapped in the struggle for mutual recognition, within the same vicious cultural circle (Marcuse 1964, p.34). “It is a good way of life—much better than before” and therefore “militates against qualitative change” (Marcuse 1964, p.12). “Free choice between brands and gadgets (..) free election of masters” (Marcuse 1964, p.7) is not to be confused with true freedom if “goods and services sustain social control over a life of toil and fear—that is, if they sustain alienation” (Marcuse 1964, p.9). In this view, modern human existence is defined by a new and more severe form of alienation: Individuals lose their agency, their power to criticize and to independently direct their lives. But they do not even know that the bourgeois society estranges them from their true nature. Instead they are dulled by a wide selection of satisfying commodities.

The process of de-sublimation, in which critical feelings and thoughts are being redirected toward socially acceptable expression through commodification, illustrates how the antagonism between classes is replaced by a one-dimensional personality that refrains from seeking change. In art, everything that was formerly subversive and incompatible with established society, e.g. the disruptive characters of 19th century bourgeois novels, prostitutes, criminals, etc. is now safely absorbed into a harmless, commercialized and ‘fun’ [p.75] culture. The tragic conflicts of previous novel characters are institutionalized, as when the romantically tormented individual is diagnosed with depression. They are “deprived of their antagonistic force, of the estrangement, which was the very dimension of their truth” (Marcuse 1964, p64). The new cultural accessibility, the cultural center as part of the shopping center, transforms subversive potential into comfort and excitement. It is this one-dimensionality of man, his life as a “cog within a cultural machine” (Marcuse 1964, p.65), that renders any true attempt of refusal impossible within a totalitarian and repressive society. According to Marcuse, other dimensions of life, such as language, science, and philosophic thought are distorted as well, and prevent the individual from realizing the extent of its enslavement and alienation.

Fromm (1965) on the other hand, regards the process of increasing civilization in general, but especially under capitalism, as one of increasing individuation and growing aloneness. Similar to Marcuse, he believes that the welfare state has alleviated the tendencies toward exploitation and ensured increasing wealth, even for the members of the proletariat. The cog-in-the-machine metaphor describes the existence of modern man. The individual, removed from communal ties and tossed into the anonymity of impersonal economic forces, becomes increasingly alone, powerless and anxiety ridden (Fromm 1965, p.33–35, 101). Again, similar to Marcuse, Fromm sees the individual as laboring in this web of alienation, seeking after prestige and power through the means of accumulating private property, unable to see the true extent of his dependence and misery (Fromm 1965, p.120). Emotional advertisement and shopping malls serve as distractions from their alienation. It “is nothing the average normal person is aware of. It is too frightening for that. It is covered by the daily routine of his activities, by the assurance and approval he finds in his private or social relations, by success in business, by a number of distractions, by ‘having fun’, ‘going places’. But whistling in the dark does not bring light.” (Fromm 1965, p.133).

The Frankfurt School deviates from the strong subjectivism/individualism of modern economics.Footnote 3 Individuals distract themselves with the superficial and non-antagonistic pleasures of modern civilization and cover up the awareness of their underlying enslavement, which is a source of latent or actually experienced un-happiness. The individual is not capable of seeing what the theorist sees, who, presumably stands outside the societal process of submission and fear. Marcuse states that defending the benefits of capitalism is “natural only to a mode of thought and behavior which is still unwilling and perhaps even incapable of comprehending what is happening and why it is happening” (Marcuse 1964, p.145).

Consumption is stupefying even though it is experienced as gratification. The expansion of commercialization into leisure activities and sexual experiences account for the voluntary compliance with the regime. As long as it is “delivering the goods” there is no requirement for terroristic methods to keep the individuals in place (Marcuse 1964).

Interestingly, modern thinkers within the classical liberal tradition have explored a strikingly similar theme. They have pointed to what may be called a general tendency of people to emotionally dislike the market order. The feelings of depression and loneliness, as described by the New Left and the emotional discomfort with markets as described by F. A. Hayek and James Buchanan are parallel concepts. If individuals do indeed experience an emotional dislike of markets, a non-empirical theory that resonates with these fears might be the natural habitat for a new kind of socialism in an age of prosperity.

Buchanan’s term “parental socialism” denotes an “attitudes of persons who seek to have values imposed on them” (Buchanan 2005). He states that this source of motivation will be “more important in shaping the patterns of development during the first half of the new century than any of the other, and more familiar, sources” and that “many people are, indeed afraid to be free”. Furthermore, “They seek order, rather than uncertainty, and order comes at an opportunity cost they seem willing to bear” (Buchanan 2005). He claims that very few people can bear the responsibility of living in a liberal society without relying on some kind of substitute for parental security such as religion, or, to a lesser extent, organized community. The spontaneous order of the market, he says, is “not naturally understood by those who have not been exposed to teachings of economists” (Buchanan 2005).

Likewise, Hayek discusses this theme crisply in The Fatal Conceit (1988). “One can hardly expect people to like an extended order that runs counter to some of their strongest instincts, or readily to understand that it brings them the material comforts they also want” (Hayek 1988, p.19). In his view, the dislike stems from the biological evolution of homo sapiens—specifically its adaptation to life in small-group environments. The evolved instincts must have fostered cooperation among well-known individuals. Solidarity and altruism were crucial in order to maintain group cohesion (Hayek 1988, p.11–12). The crucial distinction here is that humans evolved in social orders characterized by intimacy among individuals who all knew each other face-to-face, and now that biological creature finds itself in a world largely characterized by anonymity and instrumental rationality, in which most of our dealings are indirect, through the market, with millions of people we do not know personally.

Indeed, anthropologists have found that there are a core set of commonalities between small-band foraging societies that correspond to this description. Wealth inequality is minimal and trusting behavior and honesty is encouraged in children (Konner 2010; Shott 1992; Smith et al. 2011). As a consequence our moral instincts having been honed in a world of intimacy, but finding ourselves in a world of anonymity, “the greater part of our daily [contemporary] lives and the pursuit of most occupations give little satisfaction to deep-seated ‘altruistic’ desires to do visible good” (Hayek 1988, p.19). Furthermore Hayek writes “one revealing mark of how poorly the ordering principle of the market is understood is the common notion that ‘cooperation is better than competition’ “(Hayek 1988, p.19), and “to become aware that we depend heavily on human efforts that we cannot know about or control is indeed unnerving” (Hayek 1988, p.89).

This emotional burden can be compared to Fromm (1965), Marcuse (1964) and Horkheimer (1972). Fromm writes man “has been turned into a cog, sometimes small, sometimes larger, of a machinery which forces its tempo upon him, which he cannot control, and in comparison with which he is utterly insignificant” (Fromm 1965, p.125). Similarly, Marcuse states “the decisions over life and death, over personal and national security are made at places over which the individuals have no control” and later “This is the pure form of servitude: to exist as an instrument, as a thing” (Marcuse 1964, p.32–33). Fromm also describes this phenomenon as the “insignificance of the individual in our era” (Fromm 1965, p.126). Underneath the superficial distraction, unhappiness remains an existential problem, a “general sense of helplessness” (Horkheimer 1972, p.237).

The extent to which the Frankfurt School’s observation overlap with those of the proponents of the market order is striking, despite the fact that they draw nearly opposite political conclusions from their observations. Hayek and Buchanan acknowledge the market’s inability to satisfy instinctual desires, such as small group solidarity. As subjectivists, they would readily recognize this to be a real decline in individual wellbeing.

While both camps recognize the phenomenon of alienation, one important difference should be noted. The Frankfurt School philosophers present alienation as a deviation from a true self, i.e. an almost metaphysical assumption. They might therefore disregard the more mundane concepts of scarcity and calculation. Akin to Christian theology, the corresponding salvation of man’s soul could only be achieved by overcoming alienation in a hypothetical socialist state (see Tucker 1961). In this view, man is thus alienated from his potential to rationally plan and control society (see Roberts and Stephenson 1973). On the other hand, Buchanan and Hayek suggest that the dislike of capitalism is a product of biological evolution. It is a practical problem, not rooted in metaphysics. Despite these tendencies, people might still favor a market based economic system if they understand the coordinating function of prices.

The main tension between the two schools derives from the philosophical or moral commitment (shared by the majority of the economics profession) of Hayek and Buchannan to individualism on the one hand, and the willingness to question individual choices, and to distinguish true and false needs by the Frankfurt School on the other.

Hayek assumes that people are simply unaware of the consequences of their instinctual dislike of the market order, but they can be swayed by argument. Buchanan criticizes economists for their failure to communicate these arguments: “…in their zeal for working out the intricacies of complex models, [they] have neglected their primary didactic purpose” (Buchanan 2005, 0.27). Marcuse’s, Fromm’s, and Horkheimer’s agents are not only ignorant, but their preferences themselves are false, and they are deeply entwined in their views. They would be happier and self-determined if they saw their enslavement in commercial culture, language, philosophy and science, but they are trapped within.

Similar to Marx’s original works that were written at about the time when market economies started to solve the very problem of poverty, one could argue that this sort of alienation is being alleviated by wealthy market societies. Do the emancipation of women, sexual liberation and tolerance, more meaningful and less repetitive work lives, the acceptance and possibility of alternative lifestyles, higher education and free time represent the very dimension of development toward more human freedom? Or is it merely a thin veil of comfort that hides the anxious striving and the emptiness of commercial culture?

Conclusion: is critical theory open to criticism?

The debate outlined above cannot be held on empirical grounds alone but represent a conflict of paradigms. The truth of the argument has to be accepted on faith. If Herbert Marcuse tells John that his act of purchasing an iPhone is a way of channeling his antagonistic tendencies away from true change due to its delusive gratifying power, and if John says ‘it ain’t so’, and that he, in fact, experiences true happiness, the debate comes to a halt, unless we trust in either of the two parties. This required trust is, of course, susceptible to emotional appeal.

Any argumentative practice, whether empirical or theoretical, does accept certain primary pieces of information on faith, emotion, and tradition. Trusting assumptions, is therefore always a necessary component of argumentation as we could always go back one more step and ask what is the basis for these assumptions, and the ones before that, ad infinitum (Polanyi 1958). The problem with the Frankfurt School is that they cut off the discussion at its starting point, that they make an ultimately closed argument where it should be open to a dialectical process that allows for the possibility of disagreement. As stated, it is thus, non-falsifiable. A continuing conversation is the only possible way to advance knowledge and to ultimately convince.

Defining one’s project as “the unfolding of a single existential judgment” (Horkheimer 1972, p.227, 229) creates a treacherous elitism. As soon as one does not adhere to the normative existential judgment, the fundamental critique and rejection of the market order, one is excluded from the debate as one follows one’s “own atomistic and therefore untrue interests”, one acts as “mere functions of the economic machine” (Horkheimer 1972, p.237), surrenders to irrationalism. The individual cannot trust his or her own judgment as to what activities are pleasurable, fulfilling etc. but has to refer back to the theorist for salvation because only the theorist can see through the veil of commodity fetishism. The discarding of individualism is therefore accompanied by hierarchical tendencies within the theoretical sphere that will eventually translate into institutionalized political hierarchies (i.e. despotism), which undermines the Frankfurt School project. Once one accepts that the theorist knows something the actor doesn’t, one is implicitly accepting actual political power of some over others as a solution for the imagined power of objects or structure to dominate humans, neither of which can create gulags. Whatever damage that things like commodity fetishism might do to human autonomy and psychology, it pales in comparison to the very real and very visceral damage and death done by what Adam Smith called “the men of system” who think their superior insight over reality entitles them to move others around like pieces on a chessboard (Smith 1982 (1759): 233–34). There is no greater denial of human agency than being at the mercy of political power without an option to exit.

Since the theory closes the discussion right at the beginning, the only way to choose between acceptance or rejection, and conversely, the only way to convince is by relying on introspection, emotional appeal or, potentially, force. “The unscientific, speculative character of critical theory” (Marcuse 1964, p.189) represents a distinct rhetorical strategy. For example, Fromm writes that the only hope is “Solidarity with all man” (Fromm 1965, p.35). Marcuse states that true analysis, as opposed to false analysis that cannot see behind the veil of the deceiving technological rationality, transcends—“it opens up a qualitatively different universe” (Marcuse 1964, p.177). According to him, the experienced bizarreness of the contemporary reality (1950s and 1960s) is evidence for the enslavement of the individual in a totalitarian destructive society:

“…this real empirical world, today is still that of the gas chambers and concentration camps, of Hiroshima and Nagasaki, of American Cadillacs and German Mercedes, of Pentagon and the Kremlin, of the nuclear cities and the Chinese communes, of Cuba, of brainwashing and massacres. But the real empirical world is also that in which all these things are taken for granted or forgotten or repressed or unknown, in which people are free. It is a world in which the broom in the corner or the taste of pineapple are quite important, in which the daily toil and the daily comforts are perhaps the only items that make up all experience. And this second, restricted empirical universe is part of the first; the powers that rule the first also shape restricted experience” (Marcuse 1964, p.180).

It is hard to evade the sense of contradiction that ensues while reading this passage and it summons a number of associations such as the ‘duck and cover’ videos in conjunction with product advertisements from the 1950s. Putting the gas chambers, concentration camps, and atomic bomb attacks in with the products of commercial society might well have the opposite effect than what is intended. Rather than making everything seem like a horror of modernity, it might temper our reactions to the real horror of millions murdered as if that is not all the much different from the alienation experienced in commercial society. We are not denying the bizarre emotional experience of reflecting such contradictions. The Frankfurt School’s fault lies with the non-debatable theoretical explanation that is offered, and explanation that excludes any social scientific alternative a priori. Ironically, Critical Theory closes itself to criticism.

The proponents of the market order assume that the lives enjoyed by individuals in market societies are ultimately worth living. Although the New Left also acknowledges that “it is a good life—much better than before” (Marcuse 1964, p.12) they ultimately envision a better one once “the masses have been dissolved into individuals liberated from all propaganda, indoctrination and manipulation”, once there exists a new “historical subject” (Marcuse 1964, p.252). It is this new subject that would, by means of economic planning, accomplish the “reduction of physical and mental toil. In this realm, central control is rational if it establishes the preconditions for meaningful self-determination” (Marcuse 1964, p.252). He relies on an unspecified form of democratically directed planning: “Technological rationality, freed from its exploitative features, determines social production, the more will it become dependent on political direction—on a collective effort to attain a pacified existence” (Marcuse 1964, p.235). Fromm writes about decentralized, democratic socialism (Fromm 1965, p.270).

The Frankfurt School’s affinity for central planning reveals that they are unaware of the Socialist Calculation Debate. They consequently fail to formulate a response to the well- known knowledge problem, and their speculative sketches of policy proposals remain unconvincing. As subjectivism is rejected, the threat of elitism is lurking in their well-intentioned strive for human freedom and happiness beyond narrow commodity fetishism, and it is likely to lead into a despotic form of government.


  1. 1.

    In similar fashion, Hayek writes in The Road to Serdom (1944): “The fact that German anti-Semitism and anti-capitilism spring from the same root is of great importance” (p.154)

  2. 2.

    Distinct from of comprehensive planning must not be conflated. Especially Fromm emphasizes democratic and potentially more decentralized forms of planning. While these types of planning are distinct, they suffer from the same problems of socialist calculation (Prychitko 1994)

  3. 3.

    It also deviates from traditional Marxism in seeing alienation as more psychological than purely structural. In Marx, alienation is rooted directly in commodity production and the anonymity of market exchanges. The only solution for alienation for Marx is to replace capitalism’s “production for exchange” with conscious economic planning and collective “production for use.” See Roberts and Stephenson (1973).


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Runst, P., Horwitz, S. Alienation and rationality—The retreat of postwar socialism. Rev Austrian Econ 28, 123–137 (2015).

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  • Frankfurt School
  • Socialist thought
  • Classical liberalism

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