Comparative study of Lippmann’s and Hayek’s

liberalisms (or neo-liberalisms)

Francis Clavé
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1. Introduction
In 1937, Walter Lippmann published a book entitled The Good Society in
order to reshape liberalism so as to deal with the problem of the Great
Society of his time and make it good. Following the publication of this
book in French, the Colloque Lippmann was organised in Paris in 1938.
Different kinds of liberalism were represented at that meeting: German
liberalism by Wilhelm R€opke and Alexander R€ ustow, the Austrian School
of Economics by Friedrich von Hayek and Ludwig von Mises, and French
liberalism by Jacques Rueff.1 Since this meeting has often been considered
as the first step towards the foundation of the Mont Pelerin Society
(Audier 2008, p. 7), the name of Lippmann is nowadays often associated
with Hayek as one of the thinkers of neo-liberalism (Dardot and Christian
2009, Audier 2012). In the past, Hayek tended to occult this filiation, as he
wanted to rejuvenate liberalism along different lines of thought (Audier
2008, p. 218). Recently, Jackson (2012, p. 55), in a study on the relation-
ship between Hayek and Lippmann in the late 1930s and the early 1940s,
emphasised the influence of Lippmann’s book The Good Society (1937) on
Hayek’s thinking, especially on his Road of Serfdom (1944). It seems, there-
fore, important to gain a better understanding of the proximities and dif-
ferences between these men’s ideas. This article aims to show that, as
Jackson (2012, p. 67) pointed out, the two authors’ reflections were based
on the importance of the rule of law, on economic regulation and free-
dom and let us also add on the importance of the information but
that they addressed these issues in a radically different manner. Perhaps,

Address for correspondence

University Paris II, Centre Vaugirard, 391, rue de Vaugirard, 75015 Paris, France;
e-mail: Clave_f@yahoo.fr
1 Perhaps, those nearest to Lippmann’s thought among the French were industri-
alists educated at the French Ecole Polytechnique: Louis Detoeuf, Louis Marlio and
Ernest Mercier.
 Francis Clavé

Lippmann was aware of this when he refused to write a preface to the

American edition of Hayek’s Road of Serfdom. Anyway, both were concerned
with institutions but had a different vision of them and of the philosophi-
cal structure supporting liberalism. In this study, the context of both
Lippmann’s and Hayek’s thinking will be analysed in the first part, setting
the focus on the foundations of the former’s ideas. In the subsequent sec-
tions, their different approaches will be analysed with regard to four key
themes: information and knowledge, economics, law, government, and
politics.

2. The authors in their context

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Although Walter Lippmann (1889–1974) was only 10 years older than

Friedrich Hayek (1899–1992), they belonged to two different worlds.
Lippmann’s work was marked by the issues of the period between 1870
and 1914, notably his notion of the Great Society, on which he started to
work when he was about 20 years old. He made his major contributions
during the inter-war years. During that period, Goodwin (2014, p. 49) noti-
ces, “the thinking of Lippmann and Keynes is remarkably congruent” as
“they are both very concerned to save democracy and free market”. After
World War II, Lippmann was roughly in line with the new economic system
of the West when Hayek became more and more critical of it. At that time,
Lippmann was more interested in “diplomatic, strategic, and military”
affairs than in economic issues, but he supported Keynesian policies advo-
cated by Samuelson and Heller and the War On Poverty, a part of the
Great Society’s programme of President Lyndon B. Johnson in the 1960s
(Goodwin, 2014, pp. 317 9, 349). In contrast, Hayek made many of his
major contributions after World War II, in opposition to the Keynesians
and partly also to Lippmann’s liberalism. When Hayek utilised the concept
of the Great Society in the 1960s, he linked it to the notion of spontaneous
order to remove all the social aspects found in Lippmann’s vision.

2.1 Lippmann and the Great Society

Lippmann was deeply influenced by his encounter at Harvard in 1910 with
Graham Wallas, a professor of political science at the London School of
Economics who was about to write his book The Great Society (1914 [1967]).
Both men had the same starting points in their thought, i.e. the emer-
gence of Darwinism and of the Great Society, a large-scale society focused
on large cities, division of labour and trade. These points raised
three major problems. First, men need to adapt to a new environment.
Darwinism showed to Wallas that this adaptation is all the more necessary

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 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

as human reason, even if it remains important, is not almighty, it cannot

impose its will on the world. Second, human reasoning must be fed by the
study of facts, of data. This way of looking at things permeates the Ameri-
can pragmatism and underlies Dewey’s book Logic: The Theory of Enquiry
(1990 [1938]). Third, people need much more information in the Great
Society than in a small society because there are more “unseen facts”,
more things that are not directly visible. All these points nourished the
idea that was so important in the United States then, scholars and politi-
cians had a new world to build, and had to think in terms of the Great
Society. This theme was also present at Harvard with the pragmatism of
James and the Sociological Jurisprudence of Roscoe Pound, who, in 1910,
began his long career as a professor of law at this university. Before him, it
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permeated the work of another great figure of the Harvard School, Oliver
Wendell Holmes Jr., who had a strong influence in his country not only
for his work on the Common Law, but also as a prominent member of the
Supreme Court of the United States. It was also strong in political science
at Harvard, which was engaged in a reflection led by Abbot Lawrence Low-
ell on how to link expertise, public opinion, and government. This reflec-
tion was connected with that of the Fabians, or more exactly that of the ex-
Fabian Graham Wallas, who was invited in 1910 to a series of lectures at
Harvard after the publication in 1908 of his first important book entitled
Human Nature in Politics. Inside the Fabian Society and around, there were
discussions on the role of technocracy. The Webbs, two prominent figures
of this society, had a technocratic vision, unlike Lippmann and his mentor
Graham Wallas who were very critical towards technocracy because it
excluded the average citizen. For them, experts ought to enter into dia-
logue with politicians and both had to take part in the formation of a pub-
lic opinion. That was one of the main themes of the most influential
books of Lippmann Public Opinion (1998 [1922]), in which he treated Wal-
las’ subjects such as thought, knowledge, and information in his own way.
Both Wallas and Lippmann (1985 [1914], p. 13) kept a platonic vision of
the statesman in politics as well as in economics where Lippmann talked
of industrial statesmen.
This issue was topical at the time in view of the programmes of Theo-
dore Roosevelt and Woodrow Wilson. The former offering a more state-
managed modernity, while the latter, under the inspiration of the Har-
vard-trained lawyer Louis Brandeis, a more liberal version. Similar ideas
deeply marked Lippmann’s first books, A Preface to Politics (2005a [1913])
and Drift and Mastery (1885 [1914]). Leuchtenburg (1985, p. 13) observes,
“Indeed, much of the excitement of reading Drift and Mastery today derived
from the fact that Lippmann was so self-consciously aware that he
belonged to a new generation facing for the first time the problems of

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 Francis Clavé

modern America, much the same questions we now confront.” The idea of
a new world to build always inhabited Lippmann’s mind. It nourished the
idea, also recurrent in his work, that liberalism must be given a more posi-
tive aspect in order to make it surpass its simple role of opponent, of
destroyer of the former order. It was in the perspective of reshaping liber-
alism and improving the Great Society of his time that he wrote The Good
Society in 1937 and participated in the Colloque Lippmann organised by
Louis Rougier. Hayek and Mises were also present at this meeting. In the
acknowledgements, at the beginning of the book, he wrote that Mises’ and
Hayek’s critiques of the planned economy were an important element in
his “understanding of the whole problem of collectivism”. Immediately
after that passage, Lippmann (2005b [1937], pp. xli xlii) noticed that he
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was grateful to Keynes “who has done so much to demonstrate to the free
peoples that the modern economy can be regulated without dictatorship”.
Lippmann was aware that Hayek and Mises were not in line with his goal
to give a more positive turn to liberalism. In a letter written in March
1937,2 addressed to Lionel Robbins, who had played a key role in attract-
ing Hayek to the London School of Economics, he noticed about Hayek
and Mises that “they do not, it seems to me, arrive at a positive theory of
liberalism which gives a method of social control consistent with the
exchange economy”.
Lippmann also differs from Hayek in other regards. Hayek was a profes-
sor nearly all his life. Lippmann was a journalist, or more exactly, a colum-
nist. In the 1930s, he received some proposals to become professor,
notably at Chicago University, but this did not work out for various rea-
sons. His columns sometimes seemed to contradict his most “academic
works” Public Opinion, Phantom Public, and The Great Society. For example, in
his columns in the early years of World War II, Lippmann took a mercantil-
ist position, advocating greater centralization in contradiction with his
book The Good Society (Goodwin 2014, pp. 273–4). In his version of liberal-
ism, Lippmann, like Keynes, pleads for the establishment of economic
institutions to regulate the world economic system.

2.2 Hayek, a more Austrian view

The environments in which the two men lived were also completely differ-
ent. Lippmann studied in Boston, lived in New York, and evolved his ideas
in a “liberal” setting in the Anglo-Saxon sense of the term, to which Hayek

2 Lippmann to Robbins, 3-24-1937, Lippmann Papers, Yale University; cited in Best

(2004, xxxi).

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 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

was strongly opposed.3 Lippmann was a prominent member of the liberal

and progressive movement and played an important part in the journal
New Republic until the early 1920s. Around this journal or collaborating
with it, all the progressives could be found, such as Herbert Croly and
John Maynard Keynes, as well as American institutionalists such as Alvin
Johnson (the first director of the New School of Social Research in New
York), or Wesley Mitchell. Lippmann’s economic thinking is not far from
that of the more well-known American institutionalist John R. Commons
(Clavé 2005, p. 105). Lippmann, who had personally known the pragmatic
philosopher William James when he studied at Harvard, was also in contact
with John Dewey, another figure of pragmatism. It was him who reviewed
Lippmann’s book Public Opinion and published The Public and Its Problems
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(1927) partly in response to Lippmann. Nevertheless, Lippmann was more

attracted to “Great Men” than the average liberal, and in his book Drift and
Mastery, he advocated deliberate and scientific governing. This is also one
of the reasons why he supported Theodore Roosevelt during the 1912
presidential election, a man that Hayek (1978 [1963], p. 406) later accused
of Caesaristic paternalism. Moreover, the young Lippmann was born in a
republic in full economic and political development, whereas the young
Hayek grew up in the declining Austro-Hungarian Empire. The environ-
ment was also less democratic and more characterised by “modern free-
doms” in Benjamin Constant’s classification, i.e. more by economic
freedom than by political freedom. Incidentally, two founders of the
Austrian school (Eugen von B€ ohm-Bawerk and Friedrich Wieser, of whom
Hayek was a student) were ministers of the Empire.
If the young Hayek was living in a generally less optimistic atmosphere
compared to the young Lippmann at Harvard, he was nevertheless very
active. He was a member of the Viennese circle called Geistkreis. Among
the members of this group were some economists who would later enter
outstanding careers in the United States, such as Fritz Machlup, Gottfried
Haberler, and Oskar Morgenstern (Caldwell 2004, p. 150). In 1920, Hayek
was a young idealist and, like Lippmann (though 10 years later), he joined
the Fabian Society. Participating in Mises’ famous seminar and reading his
book Socialism made Hayek turn away from idealism. However, he never

3 “Legal positivism has become one of the main forces which have destroyed classi-
cal liberalism because the latter presupposes a conception of justice which is
independent of the expediency for achieving results. Legal positivism, like the
other forms of constructivists pragmatism of a William James or John Dewey or
Wilfredo Pareto, are therefore profoundly anti-liberal in the original meaning of
the word, though their views have become the foundations of that pseudo-liberal-
ism which in the course of the last generation has arrogated the name” (Hayek
1976, p. 44).

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 Francis Clavé

completely adopted Mises’ position and always kept a certain distance

(Caldwell 2004, p. 144).
In the early 1930s, Hayek was appointed professor at the London School of
Economics, a university founded and marked by the Fabians. There he met
followers of the new trends of new liberalism and American liberalism. Thus,
the link between Hayek, Robbins, and Lippmann, as pointed out by
Jackson (2012), seemed quite natural. At the LSE, Lionel Robbins was a
student of Graham Wallas who was also Lippmann’s mentor. In his autobi-
ography, Robbins (1971, p. 83) writes about Wallas in respectful terms.
Moreover, as pointed out by Jackson (2012), the political context was of
importance. Lippmann, Hayek, and Robbins were all liberal opponents of
Communism and Nazism, and it was in their best interest to be united, be
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it only temporarily. This was a realistic and pragmatic position, very much
similar to Lippmann’s design of practical politics.
In 1973, one year before Lippmann’s death, Hayek published Law, Legis-
lation, and Society Liberty, in which he developed his version of the Great
Society that was strictly opposed to that of Lippmann and Wallas in at least
two respects. First, for Lippmann, a Great Society had to be a good society
too, i.e. it had to be open to certain forms of social protection. In contrast,
Hayek introduced the term Great Society also to oppose the Great Society
of Lyndon B. Johnson, which pursued goals similar to those of Lippmann’s
Good Society. It should be noted that Johnson tried to get closer to Lipp-
mann before his election in 1964, even if the influence of Lippmann is
more suggested than documented in the biography of Lippmann written
by Ronald Steel (1999, pp. 575–7). In Law, Legislation, and Liberty, Hayek
(1973, p. 2) established an equivalence between spontaneous order and
the Great Society that is very far from Lippmann’s thought, as will be seen
in the following section.

3. Information and knowledge

Lippmann’s emphasis on information and knowledge stemmed from his
questioning a fundamental point in political science, whereas Hayek called
into question an essential assumption in economic science. In Public Opin-
ion, the American journalist accused the scholars in political science, par-
ticularly those specialised in democracy, of not having defined clearly the
public functions and not having specified from which data, information,
and knowledge the public opinion was formed. Hayek, in his Economics
and Knowledge (1937, p. 48), addressed similar criticism to the economists
for not making clear “how much knowledge the different individuals must
possess in order that we may be able to speak of equilibrium”. Neverthe-
less, besides some similarities, there were some noticeable differences.

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 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

For Boettke (2002, p. 265), what was unique to Hayek and more gener-
ally to the Austrian school “is the recognition of the contextual nature of
the relevant economic knowledge that actors must work with within
an economic system”. On the contextual nature of knowledge, both
Lippmann and the pragmatics agreed. Differences appeared on the way of
how to coordinate knowledge. Since all the knowledge is dispersed and is
not in the possession of one person only, for Hayek, “it’s through the
mutually adjusted efforts of many people that more knowledge is uti-
lized…; and it is through utilization of dispersed knowledge that achieve-
ments are made possible” (1978 [1963], pp. 30 1). Hayek (1978 [1963],
p. 4) claimed that there was a “need for an impersonal mechanism, not
dependent on individual human judgements, which will co-ordinate the
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individual efforts”. For him, the main mechanism of adjustment was the
market, while Lippmann insisted that there was need for individual judge-
ments and that the market had to be regulated. As a result, they all sus-
tained the idea of an institutional mechanism but their conception was
very different, and in Lippmann’s mind it was more political. These differ-
ences marked also the way they considered knowledge.4
Hayek “used the term knowledge, in his 1937 and 1945 essays, to con-
note the use of existing as well as the discovery of new knowledge…, to dis-
cuss the subjective component, the discovery factor, and the tacit domain”
(Boettke 2002, p. 266). In contrast to the objective sense, in which the
term information is usually employed by economists, the subjective sense,
i.e. the way a person interprets the context, was important for Lippmann.
For him, politicians had to revise the legislation, “the rules that govern
the economy, so that improvements could take place spontaneously”
(Goodwin 2014, p. 242). People have to interpret the context with some
degree of freedom. Hayek (1945, p. 521), in The Use of Knowledge in Society,
worried that the knowledge “of suitably chosen experts” was the only one
considered to be scientific and that the “use of new knowledge that comes
into being only because of the context in which actors find themselves
acting” (Boettke 2002, p. 267) was not considered as valuable as it was in
the perspective of the Austrian School. At that time, economic science was
becoming increasingly mathematised, and the two men did not agree to
that trend (Goodwin 2014, pp. 318–9). Lippmann was more focused on
expert knowledge (that of those he called the “insiders”) and objective
knowledge than Hayek was. For Lippmann, expert knowledge had to be
objective and the specialists had to be animated by a strong “political
restraint”, i.e. the experts had to stick to the facts and their conclusions

4 This article sets the focus on Lippmann and Hayek, and not on pragmatism; on
the latter, see Knight and Johnson (2011).

7
 Francis Clavé

were not to be biased by their ideology. A critic of his book Public Opinion
complained that it was “an argument for the omnicompetence of the sci-
entific spirit” (Goodwin 2014, p. 33). In fact, for Lippmann, the academic
knowledge must be related to the political context. When he was a mem-
ber of the Inquiry, a group that was preparing the negotiations of peace at
the end of World War I, he wrote to Colonel House, Woodrow Wilson’s
counsellor:

The greatest weakness of the Inquiry is its divorce from intimate knowledge of cur-
rent affairs… [T]hat a certain objectivity has been gained from this is undeniable,
but the time has come to ask ourselves whether the Inquiry is now in danger of
becoming too academic and out of touch with European ways of thinking (quoted
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after Goodwin 2014, p. 27).

Another point of divergence appeared. For Lippmann, one of the fea-

tures of the Great Society lay in the fact that a lot of data and knowledge
available to the public in a small society became unavailable and had to be
made accessible by new institutions. In a more general way, Lippmann
(1998 [1922], p. 319) opposed the theory that he considered prevalent in
his time, which supposed that all the necessary information would be spon-
taneously available. In a different way, Hayek (1978, p. 30) noticed in The
Constitution of Freedom that:

Compared with the totality of knowledge which is continually utilized in the evolu-
tion of a dynamic civilization, the difference between the knowledge that the wisest
and that which the most ignorant individual can deliberately employ is comparatively
insignificant.

If Lippmann was more voluntarist in the diffusion of knowledge, it is

perhaps because he was a journalist and because he had more
“sensibilité sociale”. In effect, he would tend to argue that these
“insignificant differences” can have important consequences in financial
terms that need to be managed. Hayek is more confident in the individ-
ual than Lippmann, in whom a vague but persistent reminiscence of
the philosopher kings seems always present. This point marks the differ-
ences in the institutional sets that the two authors emphasised, as will
be seen later.
Lippmann believed that people did not have a direct perception of the
true reality. As he stated, there was a “triangular relationship between the
scene of action, the human picture of the scene, and the response to that
picture working itself out upon the scene of action” (1998 [1922], pp.
16 7). He wrote: “assume that what each man does is based not on direct
and certain knowledge but on pictures made by himself or given to him”

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 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

(p. 25). These pictures that he also called stereotypes were “a way of substi-
tuting order for the great blooming, buzzing confusion of reality… it is
the guarantee of our self-respect; it is the projection upon the world of our
own sense, of our own value, our own position and our own rights” (p. 96).
Lippmann reckoned that laisser-faire was a set of stereotypes that “assumes
that men will move by spontaneous combustion toward a pre-established
harmony” (p. 113). Hayek argues in The Counter-Revolution of Science (1952,
p. 23) that “the picture which man has actually formed of the world and
which guides him well enough in his daily life, his perception and con-
cepts, are for science not an object of study but an instrument to be
improved”. With Lippmann, the improvement is more linked to expert
knowledge and politicians than with Hayek. It is the theme of the Socratic
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Dialogue in which politicians are subject to a double constraint. First, they

have to take into consideration the experts’ work, and second, they have
to prove their skill in the domain of the dialogue with the public, let alone
their capacity to explain clearly their decisions making them understand-
able to all.

It is the Socratic dialogue, with all of Socrates’s energy for breaking through words to
meanings and something more than that, because the dialectic in modern life must
be done by men who have explored the environment as well as the human mind.
(Lippmann 1998 [1922] p. 403)

4. Economy
For Lippmann, the Great Society was the result of what he called the Great
Revolution, whose main distinctive trait was the division of labour. He
wrote: “The machine, the corporation, the concentration of economic
control and mass production are secondary phenomena” (Lippmann
2005b [1937], p. 164).

It was the historic mission of liberalism, he further added, to discover the significance
of the division of labour; its uncompleted task is to show how law and public policy
may best be adapted to this mode of production which specializes in men’s work,
and thereby establishes an increasingly elaborate interdependence among individu-
als and their communities throughout the world. (p. 174)

He saw the division of labour as the centre of the process while he gave
equal importance to the market with its role of prime regulator (p. 174).
He considered it “an organic, not a fabricated, synthesis which can be
effected only by the continual matching of bids and offers” (p. 176). By
contrast, Hayek put the market in the first place and did not seem very
interested in the division of labour except in the field of the ideas.

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 Francis Clavé

Lippmann (2005b [1937], p. 191) in the chapter of his book The Good
Society entitled The Fallacy of Laisser-Faire wrote about the notion of laisser-
faire: “Having assumed that there was no law there, but it was a natural
God-given order, they could only teach joyous acceptance or stoic resigna-
tion.” In more than one way, Hayek’s conception of the market is very
close to how Lippmann conceived the laisser-faire idea and Lippmann was
aware of that. To Hayek’s mind (1976, pp. 2 3), “the order of the Great
Society does rest and must rest on constant, undesigned frustrations of
some efforts efforts which ought not to have been made but in free men
can be discouraged only by failure”. He did not consider rewards moral
because they partly depend on the player’s skill (he saw catallaxy as a
game) and chance in a way that the share allocated to the player “by that
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mixed game of luck and skill will be a true maximum”. Lippmann, on the
other hand, thought that such a strict attitude was the major mistake of lib-
eralism and pushed men into the arms of the collectivists. Moreover, for
Lippmann, the markets could expose people to more risk and uncertainty
than they want, and this too is a reason why the market has to be subject to
discipline. He wrote:

It is easy to understand, therefore, why almost all men have felt that they must escape
the ruthless dictation of the open market. The collectivist movement in its many
manifestations is, I believe, precisely that a rebellion against the market economy…
Men begin by seeking protection from a mastery of the market. They end by rejecting
the whole conception of an economy in which the division of labour is regulated in
markets. Instead they adopt the conception of regulation by intelligent authority.
(Lippmann 2005b [1937], p. 172 3)

Furthermore, while Lippmann principally related the market to the divi-

sion of labour, Hayek (1976, pp. 68 9) insisted on the pair of competition
and market. In Law, Legislation, and Liberty, he put emphasis on three
points. First, competition is a discovery process that he compared to exper-
imentation in science. Second, competition drives men to act rationally.
Third, through competition, prices account for an amount of reflected or
crystallised information. So much so that, thanks to market and competi-
tion, “we can best assist to optimum utilization of knowledge that are dis-
persed among thousands of people” (p. 119).
Lippmann before 1914, as well as Hayek in later years, distrusted the reg-
ulation of competition. In his first book, Preface to Politics, Lippmann was
opposed to the Sherman Act, and saw the idea of limiting the size of compa-
nies as specific to the small society. This is why in Drift and Mastery, he
criticised Louis Brandeis (who as a lawyer, adviser to presidents and mem-
ber of the Supreme Court of the United States played an important role in
the regulation of the US economy) and more generally, Woodrow Wilson

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 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

and his programme New Freedom for wanting to make the United States a
nation of villagers. He wrote about Brandeis that “he does not believe that
men can deal efficiently with the scale upon which the modern business
world is organised. He has said quite frankly that economic size is in itself
a danger to democracy” (Lippmann 1985 [1914], p. 40). In 1937, when
Lippmann wrote his book Good Society, he apparently had further evolved
his ideas. As part of the agenda of liberalism, he suggested that markets
should be regulated under the principles of efficiency and honesty.
To understand the evolution in Lippmann’s thinking, one must remem-
ber that among those who gravitated around the Fabian Society in the early
twentieth century, notably H.G. Wells, were strongly in favour of “Platonic”
rulers. In Drift and Mastery, Lippmann spoke of industrial statesmen and
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remarked that the companies’ management was passing from hands of

people motivated only by profits to “the hands of men interested in pro-
duction as a creative art instead of as brute exploitation” (p. 9; see also
Leuchtenberg 1985, p. 9). If the young Lippmann’s confidence in Platonic
leaders largely accounted for his first reluctance towards the regulation of
the markets, the reading of Gardiner’s work in the 1930s “on the relation-
ship between industrial concentration and price inflexibility” (Goodwin
2014, p. 92) may have been the cause that he changed his approach to the
problem. In the 1930s, he also attributed a part of the unemployment to
“some monopolistic price-fixing” arrangement that established prices
higher than the competitive norm, thus constraining demanded quantity
and output (Goodwin 2014, p. 184). In the 1930s, Lippmann came slowly
to realise that perfect competition, “the imaginary world of classical econo-
my”, and the economy directed by a central planning bureau are “two
unreal alternatives”.5
Hayek and Lippmann differed also about the need of macroeconomic
regulations and about Keynesianism. Lippmann had been close to Keynes
since the Paris Peace Conference in 1919 (Clave 2005, p. 86) kept in touch
during the 1920s, but it was not before the Great Depression that a turning
point can be identified in his macroeconomic views. At first, Lippmann
had still stressed the need for a balanced budget in his column in the New
York Herald. By the end of 1932 and the beginning of 1933, his views were
changing, especially after the World Economic Conference in London in
July 1933, where he met Keynes. Lippmann came to defend macroeco-
nomic stabilisation policies and unbalanced budgets. In that period, he
wrote The Method of Freedom where “he was a warm supporter of the use of
counter-cyclical government intervention for Keynesian reasons” (Jackson

5 The two quotations are taken from his column in the Herald Tribune 6/22/33;
cited after Goodwin (2014, p. 12).

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 Francis Clavé

2010, p. 147), in what he called the “system of free collectivism” or

“compensated economy” that aims to “correct the abuses and overcome
the disorders of capitalism” (Lippmann 1934, p. 46). As for Jackson (2012,
p. 50), during the years 1930 1947, Keynesian counter-cyclical interven-
tions were not seen as the main threat by Hayek, as it was for the “full-scale
economic planning”, which Lippmann called “directed economy”, to which
he set the “compensated economy” in contrast. Just after the war, the Bever-
idge Hansen version of the Keynesianism was regarded as leading to “an
irresponsible degree of state control over the economy” (Jackson 2010,
p. 149) and so much more dangerous than the Lippmann version.
In the Agenda of liberalism of his Good Society, Lippmann pursued three
main objectives, aside from his preoccupation with the protection of
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nature. First, make the market honest and efficient. To this end, monopo-
lies and holdings ought to be fought. Second, macroeconomic policies
should be conducted through monetary management and social controls
on investment and savings in order to balance real savings and real invest-
ments. Third, measures of both social and economic nature should be
implemented to balance incomes and to create social insurance systems.
Some experts noticed numerous similarities with the programme of the
new deal (Best 2005, p. xxxiii). In fact, however, Lippmann contested the
New Deal from an institutional point of view. In a letter to the American
historian Henry Steele Commager, he made the case clear:

You are very right in pointing out that it was not the substance of the New Deal, but
the method of the New Deal which I have objected to, and that my constructive pur-
pose was to show a method by which the objects of liberalism and indeed socialism
could be obtained while preserving the essential principles of liberty.
(Lippmann to Commager, 31 May 1947, WLPH F486, quoted after Goodwin 2014,
p. 243)

After reading the Good Society, Hayek was ready “to start a systematic dis-
cussion of the Lippmann’s Agenda of Liberalism” (Best 2005, p. xxxiii).
Yet, Best argues that the attitude was more tactical, even with some disin-
genuousness, than real. Lippmann’s attitude towards Hayek indicated that
he thought in the same way.

5. Law
Lippmann and Hayek addressed the issue of law in their last works,
the former in his books Good Society (1937) and Public Philosopher
(1955), the latter in most of his writings from the 1940s onwards.
Unquestionably, Hayek expanded on the subject more than Lippmann

12
 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

whose creative vein, save for journalism, seems to have dried up at the
time when Hayek experienced his most creative period. Nevertheless,
both authors left enough indications in their works to study their simi-
larities and differences on this point. The following analysis will focus
first on their approach to the concept of law and second on the philo-
sophical framework.

5.1 What is law?

For Lippmann (2005b [1937], p. 342), “in the Petition of Right the law is
conceived as originating in the nature of things, and the relationship of
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the King to his subjects, and of each man to other men, is thought of as
established by impersonal rules binding on everyone”. It is almost word for
word what Montesquieu had written on the subject. Hayek (1973, p. 105)
also underlined the importance of the relationship of law to the nature of
things, should the law not be regarded as a “pure science of norms”.
However, from this common basis differences emerged. Just like Hannah
Arendt (1990 [1963], p. 187), Lippmann insisted on relationship. For her,
law was lex, i.e. “intimate connection or relationship, namely something
which connects two things or two partners whom external circumstances
have brought together”. Hayek, on the contrary, gave law a significance
which showed a more individualistic orientation, more focused on the cre-
ation of a personal space. In his Constitution of Liberty (1978 [1963],
p. 149), he wrote: “Thus a sphere belonging to each individual is deter-
mined not by the demarcation of a concrete boundary, but by the observa-
tion of a rule, a rule, of course, that is not known as such by the
individual but that is honored in action”. Lippmann did not think of
boundaries but of autonomy. He interpreted law as being more spiritual
and moral, linked to the idea of Golden Rule that is “the moral maxim
which establishes itself when men recognize others as autonomous per-
sons, when they acknowledge the inalienable manhood of other men”
(Lippmann 2005b [1937], p. 377). Moreover, Lippmann warned on the
dangers of individualism:

We are in truth members of one another, he wrote, and a philosophy which seeks to
differentiate the community from the persons, who belong to it, treating them as if
they were distinct sovereignties having only diplomatic relations, is contrary to fact
and can only lead to moral bewilderment. (p. 348)

Hayek (1976, p. 39) saw law as being abstract, as a vehicle for informa-
tion, and as “end independent”. “It is as much”, he noted, “because we
lack the knowledge of a common hierarchy of the importance of the

13
 Francis Clavé

particular ends of different individuals, as because we lack the knowledge

of particular facts that the order of the Great Society must be brought
about by the observance of abstract and end independent rules”. Lipp-
mann wrote little or nothing about the information furnished by law or
about the concept of abstraction. For him, quite the opposite, the press
and the books supplied essential information, and the laws were more
moral, more philosophical, more in line with the interiority of man. What
matters is not abstraction but the distance between the realm of essence
and the realm of the world, and one can suppose that Lippmann valued
some sort of divine “inspired utterance”. As it will be seen, Lippmann was
looking for some kind of good, of common good. The only point more or
less connected with abstraction, where Lippmann and Hayek were in
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agreement, was that law must be general. Hayek (1978 [1963],

p. 154) noted: “In the original meaning of the Latin word for laws leges,
that is as opposed to the privi-leges.” To Lippmann, this principle was also
important in order to fight against what he called the Gradual Collectiv-
ism, which in some way, stands for gradually giving privileges to all.
Did Lippmann and Hayek have the same reading of the concept of law
as a “command” that they both were opposed to in principle? Hayek seems
ambiguous. In fact, the idea of command was present in Hayek’s principles
but this command was once-and-for-all addressed to all the people. In
Constitution of Liberty, he wrote: “law in its ideal form might be described as
a ‘once-and-for-all’ command that is directed to unknown people and is
abstracted from all particular circumstances of time and place” (Hayek
1978 [1963], p. 149). Lippmann, for his part, was very much opposed to
the principle of authority and law as a command for two main reasons.
First, to him the law has a strong moral sense and a more positive dimen-
sion than to Hayek. Second, for Hayek, laws have an essentially negative
character, i.e. they were conceived in view of forbidding this or that. This
led him to point out that the laws were not commandments to act, but set-
ting frames for people’s behaviour. He wrote: “when we call them
‘instrumental’, we mean that in obeying them the individual still pursues
his own and not the lawgiver’s end” (p. 152). If Lippmann had not been
against the instrumental character, for him the law would have had a more
positive sense, as it can be seen in the Agenda of Liberalism of his book The
Good Society, where he anticipated some measures of social justice. In fact,
Lippmann’s rejection of law as a command stemmed from his view that
the force of law comes from its spiritual essence. He wrote: “The denial
that men may be arbitrary in human transactions is the higher law” (Lipp-
mann 2005b [1937], p. 346). Moreover, “that is the spiritual essence with-
out which the letter of the law is nothing but the formal trappings of
vested rights or the ceremonial disguise of caprice and wilfulness” (p. 346).

14
 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

5.2 The philosophical framework of law

For Hayek (1973, p. 43), law is inseparable from the spontaneous order
whose emergence is only possible if its components obey certain rules of
conduct, which in some cases may neither be written nor expressed
verbally, but exist de facto as they translate behavioural regularities. Still, do
all rules lead to a spontaneous order? No, but Hayek believed that a
Darwinian selection process picks rules that make social life possible. On
this point, Audier (2013, p. 38) argues that Hayek became more evolution-
ist in the 1960s and 1970s under the influence of Leoni, notably his Free-
dom and the Law (1961). In any case, Hayek’s notion of order includes
predictability and regularity:
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By “order”, Hayek (1973, p. 36) wrote: “we shall throughout describe a state of affairs
in which a multiplicity of elements of various kinds are so related to each other that
we may learn from an acquaintance with some spatial or temporal part of the whole
to form correct expectations concerning the rest, or at least expectations which have
a good chance of proving correct.”

For him, in a modern society, i.e. in a large modern society based on

exchange, the means to acquire the highest possible revenues are the
most important patterns to observe (p. 45). The main regularity must lead
to something highly materialistic.
The notion of order was also discussed by Lippmann (1955, p. 96).
He traced it back to Zeno and the Stoics. However, the approach was
different, more aesthetic, and more spiritual. According to Diggins
(1999, p. xiii), the reason for this was that Lippmann “needed to
believe in principles that transcended the vicissitudes of change” and
because he felt the need to believe in aesthetics “in order to contem-
plate eternal truths and ‘essences’”. That is why in the year of his Pref-
ace to Morals (1999 [1929]), he abandoned pragmatism, which had
marked his youth. Unlike John Dewey and in accordance with the clas-
sical philosophy of Plato and Aristotle, Lippmann distinguished in Pub-
lic Philosophy the realm of existence and the realm of essence. As in
Aristotelian hylomorphism, he found an interaction between the two
in such a way that if a man cannot reach perfection he could nonethe-
less be attracted to it. Lippmann had a thorough knowledge of human
flaws and temptations that Hayek did not show.
As a result, another fundamental difference set in between the two
authors. Hayek’s spontaneous (1973, p. 50) order had no purpose and for
him it was a good thing because he believed that finalised laws would lead
to the outbreak of a war between fractions and ultimately to the disappear-
ance of the spontaneous order. Lippmann, on the other hand, was

15
 Francis Clavé

convinced that legislation should aim at improving things, to come to

something that Hayek called social justice. He wrote “but if, instead of
hanging human dignity on the assumption about self-government, you
insist that man’s dignity requires a standard of living in which his capaci-
ties are properly exercised, the whole problem changes” (Lippmann 1998
[1922], p. 313).6 More globally speaking, this is the complete opposite of
Hayek’s main thesis claiming that only negative laws are good in a free
society. Moreover, Lippmann (1955, p. 93), in his last book Public Philoso-
phy, was in search of a “body of positive principles and precepts which a
good citizen cannot deny or ignore”. By that, he was looking for something
that could help recognise the good, to decide between interests and rival-
ries. Lippmann rhetorically asked the question: “will he use the position
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he has achieved in the system of forces in order to aggrandize his own

power, and to increase his privileges? Or is his chief interest in the order
itself that is to say, in the nation, the commonwealth, the great commu-
nity in its survival and its harmony and in its development?” (p. 142). In
short, while Hayek’s laws were purely negative laying down bans and
restrictions, creating a spontaneous order that leads to economic growth,
resolving conflicts of interest mainly by competition, for Lippmann, it is
men (or some of them) led by “forms” or “essences” who create an
order. In Phantom Public, he wrote that “it is impossible to imagine in
the universe a harmony of all things, each with all the others. The only
harmonies we know or can conceive, outside of what Mr Santayana calls
the realm of essences, are partial adjustments which sacrifice to some
one end all purposes which conflict with it” (Lippmann 1925, p. 95).
For him, conflicts are inevitable and must be overcome. That is the rea-
son why politics and the common good are much more important to
Lippmann than to Hayek.

6. Politics and government

This section will examine the links between law and politics, the discovery
of the law, and, finally, the machinery of State and the government.

6.1 Laws and politics

Hayek claimed that one of the major roles of law was clearly to con-
tain politics. He entitled a chapter of his Law, Legislation, and Liberty,
“The containment of Power and the dethronement of Politics”
(Hayek 1979, p. 128). This choice should not be surprising since, for

6 See also Book XI The Agenda of Liberalism in Lippmann (2005b)

16
 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

Hayek, the great evil of democracy was precisely the fact that legal
constructivism assimilated law and commands from authority follow-
ing Hobbes’ formula non veritas sed auctoritas facit legem (Hayek 1976,
p. 45). Therefore, the law had a purely negative character for him,
implying that beyond it people are allowed to do what they want.
Lippmann believed that there was a tighter link between law and pol-
itics and that politicians had to be judges of various interests. “The
primary task of liberal statesmanship”, he noticed, “is to judge the
claims of particular interests asking a revision of laws, and to endeav-
our amidst these conflicting claims to make equitable decisions”
(2005b [1937], pp. 284 5). Similarly, for him,7 the law must take into
consideration the balance of power to achieve civil peace. Hayek was cer-
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tainly aware of the link between law and civil peace, but he tended to
take it for granted while Lippmann was much more worried about it. In
fine, Lippmann regarded the relationship between law and politics in the
same way as Englishmen had been practising it since the fourteenth cen-
tury. As Pound (1937, p. 17) noted, “the political order is not outside of
the legal order and above it, but rather it is the political side of the legal
order, or the legal order seen from the political side”.

6.2 Discovery of the law

According to Hayek, the discovery of the law depended on the judges, on
the one hand, and on the legislative assemblies, on the other hand. The
former ones, having a more important role than the latter ones, tried prin-
cipally to keep the laws, not with a positive meaning (do something) but with
a negative meaning (do not do this or that). Even if Lippmann felt less con-
cerned about the discovery of the law, some points of divergence are
notable.

6.2.1 Laws and judges. Hayek’s view was that the judges were involved in
the emergence of the general laws that they discovered through specific
cases and had, in return, to improve the existing system. He wrote: “thus,
although the rules of just conduct, like the order of actions they make pos-
sible, will in the first instance be the product of spontaneous growth, their
gradual perfection will require deliberate efforts of judges (or others
learned in the law) who will improve the existing system by laying down
new rules” (Hayek 1973, p. 100). In Hayek’s mind, a judge “serves or tries

7 According to Latour (2008, p. 28), for Lippmann “ en politique on peut mentir

deux fois si on oublie les rapports de force et si on oublie la justesse de
l’arrangement”.

17
 Francis Clavé

to maintain and improve, a going order which nobody has designed”

(1973, p. 119). This subordination of the law to an order built upon eco-
nomic foundations was very disturbing for legal scholars. Hayek regretted
their distrust of the spontaneous order. Lippmann (2005b, p. 259) argued
that legal scholars had invented a “natural law” in the nineteenth century
to block the idea of social justice. It is possible that Hayek advocated a sort
of economic “natural law” with the same goal.
For Hayek (1976, p. 39), people had “to judge actions by the rules and
not by particular results” and that is what “has made the Open Society pos-
sible”. In contrast, according to Latour (2008, p. 16), Lippmann was, above
all, a pragmatist, and had always kept a problem-solving orientation. More-
over, as Latour noticed: Lippmann insisted that judgements must respect
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both the balance of power and the accuracy of the arrangement – a focus
that put him in phase with the sociological jurisprudence theorised by
Pound in The Scope and Purpose of Sociological Jurisprudence.8 By contrast,
Hayek (1973, p. 114) was opposed to Sociological Jurisprudence because, as
he thought, it tended “to direct the attention of the lawyer to the specific
effects of particular measures rather than to the connection between the
rules of law and the overall order”.

6.2.2 Laws, the machinery of State and governmental institutions. Their differ-
ent ways of thinking about law and the relationship between law and poli-
tics can be found in the way of conceiving the legal and legislative
institutions. In Law, Legislation, and Liberty, Hayek framed very strongly the
creation of the law as nomos i.e. Lawyers’ law (1973, p. 95) or general rules
of just conduct (1979, p. 12) by creating a Legislative Assembly composed
of members elected for 15 years by age groups, on the model of the Greek
nomothetes. In front of it, a Governmental Assembly would act with a role
limited to edict commandment laws that had to be kept within the frame-
work outlined by law as nomos. Hayek reacted to the view at the time that
Parliamentary Assemblies performed mostly governmental executive tasks
and not enough legislation. On this point, he cited Sir Courtney Ilbert’s
saying: “the substantial business of Parliament as a legislature [!] is to keep
the machinery of State in working order” (Hayek 1979, p. 28). Hayek
wanted to change that to contain the machinery of State by law as nomos.
Lippmann was not very interested in legislation because his thoughts
were mainly focused on the Executive Power and its relation to the Legisla-
tive Assembly. Regarding the first point, in his Public Philosophy (a book
much appreciated by Charles de Gaulle), he was concerned about the

8 This was a set of three articles published in the Harvard Law Review in June 1911,
December 1911, and April 1912.

18
 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

weaknesses of the Executive: (1) facing the interest groups whose mem-
bers were largely filling the legislative Assembly, and (2) in front of citizens
often badly informed (Lippmann 1955, pp. 49 56). Marked in his youth
by certain trends of political Platonism, the older Lippmann had come to
think that the main driving force should be the Executive. For him, the
public and the legislative Assemblies merely represented the counter-
power, a challenge to established authority.

6.3 Administrative apparatus and government

Hayek (1979, p. 122 3) distinguished five hierarchical levels in the overall
structure of institutions: the Constitution, the Legislative Assembly, the
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Governmental Assembly, the Executive Organ of this Assembly (fourth

level), and the “Administrative Bureaucratic Apparatus” (fifth level). He
did not say that a bureaucratic apparatus was unnecessary, quite the con-
trary. For that he was even criticised by some members of the Austrian
school. He rather tried to keep it within the limits. If Hayek (1979, p. 140)
saw the State as the “organization of the people of a territory under a sin-
gle government”, he did not identify it with the society. The State for him
was rather an organisation like any other that had to serve the society.
For Lippmann (2005b, [1937], p. 299) too, it was necessary to “keep a
powerful bureaucracy under the law”, a very difficult goal because “how
great is its tendency to take to itself the attributes of a Byzantine emperor”.
It was precisely what he feared in 1937, what he called it the Government
of Posterity in his book Good Society. That understood the temptation
of creating an omniscient State with the aim of dictating and imposing its
laws to mankind:

The philosophers, wrote Lippmann, are to be kings; that is to say, the prime ministers
and their parliaments, …are to follow the engineers, biologists, and economists who
will arrange the scheme of things. The men who know are to direct human affairs
and the directors are to listen to those who know. Though the providential state of
the future is to have all the authority of the most absolute state of the past, it is to be
different; consecrated technicians are to replace the courtiers and the courtesans of
the king.… (pp. 22 3)

In fact, Lippmann’s opposition to progressive collectivism and to the Gov-

ernment of Posterity supposedly depended also on the importance he gave
to morality. The Supreme Law, as seen before, was first of all a moral law for
him and he believed that laws had always aimed at humanising the relation-
ship between human beings. This morality was quite ubiquitous in his book
Good Society in the chapter entitled The Gods and the Machine. There, he
criticised both big business and socialists for believing that technological

19
 Francis Clavé

developments required the rejection of the liberal conception in favour of

an authoritarian conception of society, Lippmann concluded:

It is the choice of Satan, offering to sell men the kingdoms of this world for their immor-
tal souls. And as always, when that choice is offered, it will be discovered after much
travail that on those terms not even the kingdoms of the world can be bought. (p. 21)

7. Conclusion
Beginning in 1937, Hayek went out of the narrow framework of economics
and moved to themes close to Lippmann’s main subjects: Information and
Knowledge, Laws, and Links between Law, Politics, and Administration.
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Both of them raised the same question: how can a Great Society deal with a
changing environment while remaining liberal? Their answers to this ques-
tion differ considerably. Regarding knowledge and information, Hayek
emphasised more the subjective aspect of knowledge than Lippmann who
gave more importance to objective knowledge. Both were strongly con-
cerned about institutions in general. Hayek saw them as parts of an imper-
sonal mechanism, whereas they are more dependent on politics in
Lippmann’s perspective. This is indeed the topic of Lippmann’s Socratic
dialogue, understanding that, through a necessary mix of information and
knowledge coming from expertise of political and economic issues, a pub-
lic opinion should be formed which would make decisions good and easily
applicable. As far as economics are concerned, Hayek emphasised compe-
tition, while Lippmann insisted on division of labour. For Hayek, laws had
mainly a negative nature, i.e. laws were to forbid some actions and protect
individuals, whereas Lippmann underlined that law was a link between
people as it established rules of just conduct. The framework within which
law lies is also radically different. For Hayek, laws allowed the emergence
of a spontaneous order based primarily on the economy. For Lippmann,
the order came from the willingness of men to face the material world
while staying connected with the realm of “essences”, like in the classical
Greek philosophy. On politics, if Hayek’s law aimed at limiting constructiv-
ism and restricting the role of politicians, Lippmann gave politics a greater
role in having to take into account the balance of forces and to be in con-
stant search of what is just. The political leaders or entrepreneurs ulti-
mately were to seek the Good, the harmony in the society.

Acknowledgements
This paper was presented at the 18th Annual Conference of the European
Society for the History of Economic Thought, Lausanne, 29–31 May 2014.

20
 Comparative study of Lippmann’ s and Hayek’ s liberalisms (or neo-liberalisms)

I thank the participants in that session for their remarks, particularly

Rapha€ el F
evre. I also thank Maria Knight and Oraby for their help to cor-
rect my English. I am very grateful to the two anonymous referees of the
EJHET for their stimulating comments and to Hans-Michael Trautwein
for his corrections as editor.

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Abstract
Walter Lippmann and Friedrich Hayek were both involved in the
reconstruction of liberalism, or the emergence of neo-liberalism. This
article will show that although the two authors treated similar themes, i.e.
information and knowledge, economy, law, and politics, they addressed
them in a radically different way. Hayek’s approach was more
individualistic, more related to the economy, to the concept of
spontaneous order and to the limitation of politics by the law. In contrast,
Lippmann related information and knowledge to expertise, centred law
around the interactions between individuals and connected harmony
more to the politicians’ actions.

Keywords
Walter Lippmann, Friedrich Hayek, liberalism, neo-liberalism,
Great Society

JEL classification: B15, B25 B52, B53, K00

22