Hayek’s Road (Part 1 – Coercion)

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If socialism is the road to serfdom then liberalism is the road to freedom. Friedrich Hayek is famous for defining freedom in negative terms. A person is free when they are not coerced. Left liberals define freedom in positive terms. A person is free when they have the ability or power to do what they want. At least that’s the conventional distinction. And like many conventional distinctions it conceals as much as it reveals.

At Larvartus Prodeo Anna Winter writes, "’Liberals’ on both sides of this debate would do well to consider the similarities we share, and to focus on the ends that we have in mind." I couldn’t agree more. As I’ve written elsewhere, Hayek’s version of classical liberalism is far closer Rawls’ version of egalitarian liberalism than most people realise. Here’s Hayek’s vision:

…we should regard as the most desirable order of society one which which would choose if we knew that our initial position in it would be decided purely by chance (such as the fact of our being born into a particular family). Since the attraction such chance would possess for any particular adult individual would probably be dependent on the particular skills, capabilities and tastes he has already acquired, a better way of putting this would be to say that the best society would be that in which we would prefer to place our children if we knew that their position in it would be determined by lot (p132).

The Hoover Institution’s Kurt Leube sums up Hayek’s intent in a sentence: “Hayek sees its main task as that of finding rules to enable men with different values and convictions to live together. These rules should be so constructed as to permit each individual to fulfill his aims” (xxv). The sticking point in interpreting Hayek is whether we should say ‘permit’ or ‘enable.’ It seems obvious to me that Hayek’s vision implies a set of rules that maximise every person’s opportunity to live the kind of life that they want to live (p 126).

In a number of places Hayek acknowledges that government has a role in providing services that would enable individuals to achieve their aims. For example, in his 1976 lecture ‘Socialism and Science’ he said:

Strong reasons also exist for wishing government to render outside the market various services which for one reason or another the market cannot supply. But the state certainly ought never to have the monopoly of any such service, especially not of postal services, broadcasting, or the issue of money.

Classical liberals and libertarians like to fudge the distinction between permitting and enabling because it helps maintain the fragile coalition between libertarians and classical liberals like Hayek and James Buchanan. Natural law libertarians like Murray Rothbard value freedom for its own sake. For them, rights are primary. But for Hayek, rights are a means to an end. If we assume than nobody’s aims matter more than anybody else’s then we need to find a system of rights that maximise everyone’s opportunity to achieve their aims.

Returning to Anna’s point about focusing on ends, it seems to me that left liberals and Hayekian liberals have a lot in common. The focus of the dispute between the two groups is economics and social science rather than philosophy. Left liberals worry that freer markets will hurt the chances of the worst off. They want governments to step in and offer services like health and education as well as protecting vulnerable citizens from coercion by employers, landlords and other powerful market players. Hayekian liberals worry that government intervention will cripple markets. The resulting inefficiencies will mean less for everyone — including the worst off. They worry that governments will be captured by powerful interest groups and that democracy will mean one group telling another how to live.

Part of the reason we’re not having this debate is that Hayekian liberals have been captured by their libertarian allies. When socialism was a real threat it made sense for Hayek’s followers to ally themselves with natural law libertarians, conservatives and even Objectivists. But now the tail is wagging the dog. One example of this is the issue of coercion that doesn’t directly involve government.

According to Hayek, coercion doesn’t need to involve threats of force or violence. To coerce somebody all you need to do is manipulate the situation so that the behaviour you want becomes the person’s least painful option. According to Hayek, coercion can include blackmail, harassment, and even nagging. In The Constitution of Liberty he writes that, "a morose husband, a nagging wife, or a hysterical mother may make life intolerable unless their every mood is obeyed (p 138)." Not surprisingly, he believed that it was impossible to completely eliminate coercion. And he certainly didn’t think that the state should do any more than it does already to regulate behaviour within marriage.

Hayek recognised that it wasn’t just government that could engage in coercion. If a business owner has a monopoly on the supply of some essential service like water they may be able to coerce customers. In such extreme cases he suggested that government could step in to prevent the monopolist from acting in an arbitrary way — to insist that they charge everyone the same price and not discriminate (p 136).

Murray Rothbard was appalled by this. He could see quite clearly where it would lead. There’s a good argument for saying that Hayek hadn’t fully realised what his own principles require.

American philosopher Elizabeth Anderson is a particularly incisive critic of Hayek’s work. She argues that "A pure system of natural property rights with unrestricted freedom of contract contains inherent tendencies to revert to feudalism if the state does not limit freedom of contract by restricting property transfers from the desperate to the well-endowed." For example, imagine a single mother whose disabled child needs constant costly care. Imagine also that she has no savings and no real choice of employment. Her employer can treat her however he feels like. For example, he might insist that she flirt with customers, put up with constant humiliation and harassment and perhaps even sleep with him and his friends. Just as citizens in a dictatorship are at the mercy of the good will of their ruler, an employee in a ‘feudal’ relationship is at the mercy of the good will of their employer.

Anderson gets to heart of what is wrong with this kind of relationship:

Feudalism, whether contractual or not, is objectionable because it constitutes a relation of personal subjection, in which one party enjoys arbitrary power over another. Because personal independence is essential for liberty, it should be considered an inalienable right.

Because Hayek argues that coercion is a matter of degree, he has no in-principle defence against claims that governments need to protect vulnerable citizens from coercion from employers and other powerful market players. After all, here’s how he explains the nature of a coercive relationship:

Coercion implies… that I still choose but that my mind is made someone else’s tool, because the alternatives before me have been so manipulated that the conduct that the coercer wants me to choose becomes for me the least painful one (p 133).

The idea here is that one person has become to tool of another. This is against everything that liberalism stands for. For liberals the attraction of markets is that enable people with different goals to work cooperatively together. As Adam Smith saw, the butcher or the baker wants to provide for her family and her customer wants to provide for his. By entering a market relationship both are able to achieve their own goals.

Hayek was right to say that the only road to freedom is through law. The only question is, what those laws should be.

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54 Responses to Hayek’s Road (Part 1 – Coercion)

  1. Don – Philosophical issues aside, in policy terms I think classical liberals have more to do on the libertarian side than the left-liberal side. Government attempts to ‘enable’ individual choices have not just left-liberalism but the instinctive statism of the population driving them ever forward. This trend needs critique and rollback, not encouragement.

  2. Don Arthur says:

    Andrew – So it’s really all about tax cuts, benefits for business and union bashing?

    My Marxist friends always said it was about interests rather than ideas. Were they right?

  3. Don – I was actually thinking of the ever-increasing ‘social’ spending and the familist agenda; but tax cuts are a way to starve the beast.

    Politics is never interests or ideas, but both. But intellectuals focus on ideas.

  4. Jason Soon says:

    Of course most liberals/libertarians are consequentialists. That goes without saying or should by now. But Hayek’s preference for purpose-independent rules makes a strong difference Don. Now as you’re familiar with Hayek you’d be familiar with the consequentialist reasons for this preference. And it’s related to the meta-argument I made in my post that Anna refers to. There are two competing utilitariansms – that of libertarians/classical liberals (still don’t understand why you insist on distinguishing between the two in this way) is of a more modest scope than that of left-liberals – even if it is for a utilitarian reason itself i.e. the more finer grained the utilitarianism, the more scope that brings for simply recreating confliucts over values within the political sphere (e.g. one man’s sexual preference is another man’s negative psychological externality so though there may be a utilitarian case for regulating psychological externalities as well as physical ones, there are utilitarian reasons not to as well).

  5. Don Arthur says:

    Andrew – Yes, you’ve complained about big-government conservatism before.
     
    Gary Becker once said that "an increased demand by different interest groups or constituencies for particular intellectual arguments and conclusions would stimulate an increased supply of these arguments…" In Becker’s terms think tanks would sit at the point where demand and supply meet. There’s always a pool of intellectuals who are eager to have their ideas heard. And there are always individuals and groups who will find these ideas useful to their cause or interests.
     
    So out of all the ideas that are on offer, only some will get taken up by think tanks. The menu of ideas that reaches the public through journalists and politicians will be heavily shaped by interests.

  6. Don – While it is true that the people who call for higher taxes usually work in the public sector, and those who call for lower taxes usually work in the private sector, as I have argued before (against both the public choice critique and the left’s obsession with funding sources) this doesn’t get us very far. Ideas need to stand or fall on their own merits.

  7. Don Arthur says:

    Jason – You’re right, I bypassed the issue of utilitarianism. I have seen your useful distinction between two kinds of utilitarianism and I was hoping you might make a comment.

    It seems to me that there are three separate rationales for taking a libertarian policy stance:

    1. Rights. Some libertarians believe that rights to self-ownership etc trump all other claims — including consequences.

    2. Utilitarianism. As you say, there are different kinds of utilitarians. Some are hedonistic while others emphasise preference satisfaction. Some argue that utility is maximised by rules and procedures while others advocate ad hoc decision making.

    3. Contractarians. Rawls is the most famous recent contract theorist. He’s a strong opponent of utilitarianism. I interpret Hayek as falling within this tradition. But I accept that there are arguments for placing him within the utilitarian tradition.

    There are no convenient labels to distinguish between these positions.

    Part of what makes things more confusing than they need to be is that people who believe in natural rights often think that recognising rights will maximise utility and vice versa.

    Other people realise that the rationales conflict but think that breaking ranks would only encourage the enemy. Solidarity among libertarians is more important than intellectual coherence.

  8. Don Arthur says:

    Andrew – I agree “Ideas need to stand or fall on their own merits.”

    Do you think my interpretation of Hayek has merit?

  9. Jason Soon says:

    It is of course a mistake to try and define freedom or coercion. Both Hayek and Rothbard are guilty of this conceptual error. Words are imperfect and to be called a libertarian doesn’t mean one needs to be obsessed with defining what liberty or coercion is.It just means that one looks askance at governments doing more things than absolutely necessary to keep the peace. There are good and bad reasons for this attitude or presumption or whatever you wish to call it but those thinkers designated as classical liberal or libertarian have formulated a set of related reasons that fit within a particular framework that rests on how the market process works, how the political process works and the application of rational actor models to the political process and the ubiquity of transaction costs. Notice there that there is no need at all for freedom to be defined as one works one’s way around these concepts. It is the rootedness (pun intended) of the English language that leads libertarians/liberals to think that because ‘liberty’ is at the root of their label that they need to be preoccupying themselves with these word games.

  10. Don Arthur says:

    Jason – “It is of course a mistake to try and define freedom or coercion.”

    OK. You do realise that if you stick to this line you can never ask leftists to define terms like social justice or fairness don’t you?

  11. Jason Soon says:

    No I don’t accept that, Don. Because the point is that social justice or fairness in practice already defines itself i.e. as concepts which give unlimited scope for governments to move bits of property around in an open ended manner to achieve a particular pattern of distribution which happens to be aesthetically pleasing to the social democrat.

  12. Jason Soon says:

    The point is this. When left liberals and classical liberals engage in substantive dialogue, they engage in dialogue over consequences. I accept that neither social justice or metaphysical freedom are amenable to this sort of fruitful debate. But in practice the best classical liberal advocates like Milton Friedman haven’t hung their boots on the basis of saying ‘this policy increases freedom’ full stop. Friedman might say – vouchers promote educational choice. But underlying that is the reasoning that this choice is a repressed element that current policies don’t accomodate and is good because it leads to the discovery and evolution of new and better ways of doing this including education. When a social democrat has some objective like this in mind ‘what about the poor?’ then fruitful dialogue occurs. When the social democrat asks ‘but this isn’t enough to promote social justice’ then of course the natural question that’s going to be asked by the classical liberal and legitimately too is ‘what do you mean by social justice? how can we define this so we can weigh up matters in a consequential manner to know if you are just exhaling air or are saying something additional of substance?’

  13. Fred Argy says:

    Don, thank you for another great piece!

    As you imply, given his perception of ‘coercion’, Hayek, if he were alive today, might have found it difficult to endorse a policy which unduly reduced the protection available to “vulnerable citizens from coercion from employers”

  14. Don Arthur says:

    Thanks Fred.

    I won’t make any comment about government policy but I will say something about Hayek.

    I love the way Hayek’s work is full of live ideas. In places it looks like he’s still thinking them through — still puzzling over the best way to understand an issue. And sometimes, if you follow his reasoning through, you’ll end up in a place he himself would never have anticipated.

    When that happens it’s always hard to know what he would have said. Maybe he’d have stuck by the argument and accepted the conclusion. Or maybe, once he saw where it led, he’d say “oh no, that can’t be right” and try a new approach.

    In the end I’m more interested in Hayek’s arguments than I am in his psychology.

  15. Don Arthur says:

    Jason – How would classify James Buchanan’s thought?

  16. Jason Soon says:

    Jason – How would classify James Buchanan’s thought?

    A libertarian of the rule-utilitarian variety. I don’t see any substantive difference between contractarianism and rule-utilitarianism.

  17. Sinclair Davidson says:

    Don, you might want to have a read of Buchanan’s latest book ‘Why I, too, am not a conservative: A normative vision of classical liberalism’. He certainly thinks of himself as a classical liberal.

  18. Sinclair Davidson says:

    it seems to me that left liberals and Hayekian liberals have a lot in common.

    The rest of your paragraph sets out the differences, and I suspect these differences are insumountable.

  19. Jason Soon says:

    The book costs $US75 on Amazon, Sinks. They’re obviously assuming we classical liberals are all as rich as Croesus.

  20. Sinclair Davidson says:

    I ordered it on inter-library loan and read it before buying. Its also only 111 pages long (including index and stuff).

  21. Don Arthur says:

    Jason – “I don’t see any substantive difference between contractarianism and rule-utilitarianism.”

    That’s a problem because there IS a difference. Try starting here:

    http://plato.stanford.edu/entries/contractarianism/

    Sinclair – Thanks for the tip. I’m not as familiar with Buchanan’s work as I should be.

    As for the differences between left liberals and Hayekian liberals — I think it’s easier to argue about the effects of different policies than it is to argue about philosophy… unless you’re arguing with someone who refuses to accept empirical evidence.

    BTW: I read part of an interview with Friedman where he mentioned Mises praxeological approach. He said “I think it’s an utterly nonsensical view. I’ve never been able to understand how anyone could accept it.”

  22. Sinclair Davidson says:

    Sorry to say, Don, the left aren’t very good with empirical evidence IMHO.

  23. Jason Soon says:

    From your link:

    Contractarianism, which stems from the Hobbesian line of social contract thought, holds that persons are primarily self-interested, and that a rational assessment of the best strategy for attaining the maximization of their self-interest will lead them to act morally (where the moral norms are determined by the maximization of joint interest) and to consent to governmental authority

    No difference, as I said, from rule utilitarianism except instead of talking about ‘moral’ talk about ‘what is the best arrangement for living in a society’.

    Buchanan has used the word contractarian to describe himself, and yet everything he says is grounded in efficiency arguments.

  24. Don,

    Like Fred says, thx for another great post.

    Fred,

    I doubt Hayek would be much help to you. I don’t think he’d break ranks much today. Though there’s a fair bit in Hayek which is not particularly right wing, he seems to have had an instinct that that was the side of politics he wished to appeal to – as illustrated in his participation in the founding of the Mont Pelerin Society. There are also other signs.

    Until about mid career Hayek cited Mill in the classical liberal pantheon but was much more critical of him as he got older. Likewise his attitude to market oriented social democracies like Sweden (although Sweden too changed as he got older – with taxes continuing to rise). I wonder if he would have been as forgiving of Pinochet earlier in his career.

  25. Don Arthur says:

    Jason – What would be interesting is to find out what you think about Rawls’ argument.

    For example, the idea of pure procedural justice. Do you know how the argument works or would you need to read up on it?

  26. Gadget says:

    Research reveals that we are really only free to do as we are told to do!

  27. Don,
    I’ve come late to the discussion.

    My understanding is that though Hayek is critical of state power (including the powers of the state based on the sovereignty of the people) and desires to keep it limited so that it sustains the market order rather than supplants it, he is weak on private power of the big corporations. His utopia– a moral community is based on the liberty of property owners—crashes on the realities of contemporary corporate market life.

    Secondly, the reality is that, as a large number of citizens are not property owners, and so ther eneeds to be something put in place to enable those outside the property regime to become property owners. So how do we bring about the kind of liberal regime and liberal way of life that Hayek advocates?

    I think that this needs to be adressed because, as Weber argued re the iron cage of modernity, the structures of modern liberal capitalist life do erode individual freedom and autonomy.

  28. Hayek said that he would prefer to be called a “liberal” but unfortunately that term was becoming confusing in the U.S. and that he philosophy was now more popularly known as “libertarian”.

    Milton Friedman said the same thing.

    If you want to keep up this false dichotomy between classical liberal and libertarian you’re going to have to work out why Friedman, Hayek, Soon et al aren’t both.

  29. Sinclair Davidson says:

    Don, I’m wondering what you think Rawls’ most important lesson is? It seems to me that both Buchanan and Hayek like his idea of the veil of ignorance. In the ‘pre-constitutional’ phase of institutional design what sort of institutions and society would be chosen if people did not know their subsequent place in that institution or society. Hayek writes (at pg 132 of ‘Mirage’), “Very few people would probably in this case prefer a strictly egalitarian order”. Yet I get the impression that many left-liberals would, and rely on Rawls (inter alia) for this result.

    Rawls’ difference princple holds that inequality is only justified when it benefits the most disadvantaged person in society. So wealth redistribution is justified and egalitarianism is justified too. But this is only the case if trade and participation in a market economy is a zero-sum game. If trade and participation is a positive sum game then inequality can lead to benefits to the most disadvantaged. Hayek would most certainly have believed (as did Adam Smith, not not modern welfare economics) that trade etc was a positive sum game and, as we know, was hostile to ‘social justice’, and egalitariansim, and wealth and income redistribution.

    So my reading is that Hayek thought Rawls provided useful tools and input into the debate, and was a careful scholar etc. but would not have supported some of the conculsions that Rawls’ supporters (at least – if not Rawls himself) have claimed.

    (I have to report that I haven’t read Rawls himself, he is on the to-do list, but have read economists treatement of Rawls’ work. So my understanding may be wrong, or ignoring subtleties).

  30. Patrick says:

    Secondly, the reality is that, as a large number of citizens are not property owners, and so ther eneeds to be something put in place to enable those outside the property regime to become property owners.

    Ok, fair point, and something (eg) Bush was very keen on, and Australia’s super reforms over the last 20 years have addressed.

    His utopia

  31. Jason Soon says:

    what’s this business about property owners? what’s the big deal about being a property owner (assuming you mean someone burdened with a mortgage rather than someone who owns stuff in general (which is basically everyone)? I rent, and don’t own any property in that narrow sense. My most important property is human capital – as long as there’s that, you have an income for life. And you can flit around, do a career change on a whim. Property ownership (being a mortgage slave) is so 20th century.

  32. Don Arthur says:

    Sinclair – I agree that "inequality can lead to benefits to the most disadvantaged." It’s not possible for an economy to produce the level of wealth ours does without there being inequality. Hayek was right about this. If you get rid of the inequality you get rid of the wealth.
     
    For me Hayek’s most important lesson is that the price system is a mechanism for communicating information. That’s why a planned economy will never be as productive as a market economy. To make the system work we need a system of institutions and rules — a system of pure procedural justice.
    According to Rawls:

    …pure procedural justice obtains when there is no independent criterion for the right result: instead there is a correct or fair procedure such that the outcome is likewise correct or fair, whatever it is, provided that the procedure has been properly followed (p 86).

    Rawls’ lesson is about how we should choose our basic institutions and the rules that govern them. We need a system of institutions and rules that everyone would agree to from behind the veil of ignorance. It’s not hard to see why this is an egalitarian argument. No individual or group has a privileged role in the original position. And, from this perspective, ‘social justice’ isn’t about giving everyone what they deserve — it’s about whether the system of rules passes the test.
     
    If you accept that the difference principle follows, then we can move from political theory to economics and social science. Instead of looking at GDP per capita or Gini coefficients we can look at the opportunities for the least advantaged under different systems of institutions and rules.

  33. wbb says:

    My most important property is human capital – as long as there’s that, you have an income for life. And you can flit around, do a career change on a whim. Property ownership (being a mortgage slave) is so 20th century.

    Get back to me Jason when you’re human capital is fully depreciated. I don’t see too many octogenarians making much income. They still eat (occasionally) however.

  34. wbb — are you implying that people are incapable of managing their income over their lifetime?

  35. Patrick says:

    Am I stupid for thinking that the emphasis on property these days is on financial property? I don’t have a mortgage nor do I intend on having one for at least another decade.

    Is Jason betraying his age by talking about mortgages?

  36. Patrick, I think Jason was refering to the important change in the relative importance of physical capital vis-a-vis human capital. In the 19th century the most important factors of production were physical capital and labour and the best way to move into the middle class & higher was by acquiring capital.

    Today human capital is significantly more important — perhaps the most important factor of production. Therefore, concentrating on physical capital gives a misleading impression of the mix of wealth and relative economic “power” of people.

  37. Jason Soon says:

    Yes, thanks John, that was precisely what I was alluding to.

  38. Jason Soon says:

    Don
    why should we care if a hypothetical bunch of people would think some arrangement is ‘fair’ or not? What implications does this have for the real world?

    On the other hand, the Hobbesian version of contractarianism makes sense because it’s about what set of rules would be in a sense evolutionarily stable and likely to reduce transaction costs for all parties concerned (as for instance, stabilising property arrangements and enforcing a rule that all further transfers of property have to be subject to some test of consent, and ceding enforcement rights to a Leviathan thus defusing an arms/locks race does).

  39. parkos says:

    It is important for libertarians (left or right, if you can make that distinction) to realise that as soon as their system or lack their of becomes a realised totality for a society, it will simultaneously become a form of totalitarianism. The acheivement of complete or total liberty is therefore a self (def)eating goal in the manner of the ourobouros.

    If someone offers you $250 for catallaxy, you should take it Jason and disregard ideas regarding ownership for the sake of a night out. You can then apply for emancipation and a grant of land.

  40. parkos says:

    The title “road to serfdom” and the image above are symptomatic of the early 21st century disease known as fossil fuel driven political ideologies of the left and right which wiped out the human species.

  41. Jason Soon says:

    Hello Parkos
    do we have to thank the US DEA’s recent interceptions for bringing you out of your stupor?

  42. Don Arthur says:

    Jason – You ask “why should we care if a hypothetical bunch of people would think some arrangement is ‘fair’ or not? What implications does this have for the real world?”

    That’s an odd response from a libertarian.

    Why should any powerful person or group care about transaction costs or social efficiency? Why should they care about what you think your property rights are? Why should they care about anything other than their own values and interests?

    Libertarians are always making up rules and telling everyone else that they have to follow them. “Oh no, you can’t use force! It’s not allowed!” Not allowed by whom?

    Cynics suspect that libertarians choose the rules that best suit their own interests. If you don’t think that’s right then how do you convince them otherwise?

  43. Sinclair Davidson says:

    we can look at the opportunities for the least advantaged under different systems of institutions and rules

    That we can. What puzzles me though is what we can do to implement those ‘different systems’ without violating Hayekian criteria for government intervention. Also as Harold Demsetz has argued we need to avoid the pitfalls of the nirvana approach to policy. In particular, the pitfalls are ‘the fallacy of a free lunch’, ‘the grass is always greener’ and ‘the fallacy that people could be different’.

  44. Don Arthur says:

    Sinclair – What Hayekian criteria are you thinking of?

  45. Jason Soon says:

    Don
    My main arguments have never been based on coercion so I’m immune from that sort of response. No time to write now but a little teaser – think back to why, say, Buchanan thinks that the rule of unanimity is efficient – and you have your answer to my approach.

  46. Sinclair Davidson says:

    On page 202 – 3 of the new Routledge (2006) printing of The Constitution of Liberty, Hayek writes ‘A government which cannot use coersion except in the enforcement of general rules has no power to achieve particular aims that require means other than those explicitly entrusted to its care and, in particular cannot determine the material position of particular people or enforce distributive or “social” justice’.

    See also F.A. Hayek, 1978, ‘Economic freedom and representative government’, in New Studies in Philosophy, Politics, Economics and the History of Ideas, Routledge, pg. 111.

  47. Jason Soon says:

    Why should any powerful person or group care about transaction costs or social efficiency? Why should they care about what you think your property rights are? Why should they care about anything other than their own values and interests?

    Short answer – even thieves would prefer to live in a society where their own possessions are secure. This should be your starting point, not this business about imagining a polity comprised of Harvard philosophers obsessed with fairness.

  48. Sinclair Davidson says:

    Further to what Jason just wrote, there is also a literature on the costs of dictatorship. Mancur Olsen also wrote on this in his last work, and Shleifer and Vishny (reproduced in their book – The Grabbing Hand) have a paper on the contestedness of the English throne through the middle ages.

  49. parkos says:

    “even thieves would prefer to live in a society where their own possessions are secure. This should be your starting point,”

    If you are going to refer to your fellow nth generation Australians (and Americans for that matter) as convicts, then you should join the barmy army on a 747 or Sheik Hilaly in the galley ^^

  50. Don Arthur says:

    Sinclair – I don’t have any strong objections to Hayek’s conditions.
     
    Hayek made it clear that "it is the character rather than the volume of government activity that is important." (p 222). The issue isn’t how high taxes are but whether government activity is compatible with a functioning market.
     
    Hayek distinguishes between the coercive measures of government and "those pure service activities where coercion does not enter or does so only because of the need of financing them by taxation" (p 222). The important issue for decision makers is "whether the benefits are worth the cost."
     
    Benefits to ‘particular people’ are exactly the kind of thing that wouldn’t emerge out of Rawls’ original position. It’s not going to generate rules that give extra benefits to a particular group of farmers or manufacturers while denying them to everyone else. If people did receive benefits it would have to be under some general rule. However, this shouldn’t be interpreted as a prohibition on adapting services to the needs of particular groups. For example, it is not a prohibition on teaching deaf children how to use sign language or blind children how to read braille. Cultural differences might also legitimately shape service delivery.
     
    Governments could not legitimately favour one cultural group’s way of life over another’s. This is one reason why it makes sense for Hayek to favour transfer payments over government funded services.
     
    Hayek’s objection to ‘social justice’ is not an objection to payments and services that would improve the position of the least advantaged. It’s an objection to activities aimed at giving people what they deserve (Hayek calls this ‘social justice’). His objection to ‘redistribution’ is not an in principle objection to income support payments (he advocated those). Instead, it’s an objection to attempts to override the market’s distribution in favour of a distribution determined by ‘social justice’ principles.

  51. Sinclair Davidson says:

    It’s an objection to activities aimed at giving people what they deserve (Hayek calls this ‘social justice’).

    Sorry, Don. Can you expand on this point. Either I’m not following what you’ve said, or I think you’ve misinterpreted Hayek.

    Hayek only advocates income support for the very poor, your argument only holds if you define the most disadvantaged as income-poor. Many observers are forever ‘redefining’ disadvantage.

  52. Don Arthur says:

    Sinclair – OK, there’s two issues here.
    1. Social justice. When Hayek writes about ‘social justice’ he’s talking about the demand “for an assignment of the shares in the material wealth to the different people and groups according to their needs or merits” (p 121). This isn’t what Rawls meant by social justice — a fact that Hayek acknowledged (p 100).
     
    For Hayek, ‘social justice’ was about imposing a patterned distribution on society:

    Our objection is against all attempts to impress upon society a deliberately chosen pattern of distribution, whether it be an order of equality or of inequality. We shall indeed see that many of those who demand an extension of equality do not really demand equality but a distribution that conforms more closely to human conceptions of individual merit…. (p 87)

    Here’s how explained the motivation for ‘social justice’ and why it was a problem:

    Most people will object not to the bare fact of inequality but to the fact that the differences in reward do not correspond to any recognizable differences in the merits of those who receive them. The answer commonly given to this is that a free society on the whole achieves this kind of justice. This, however, is an indefensible contention if by justice is meant proportionality of reward to moral merit (p 93).

    The only way to achieve ‘social justice’ would be through a completely planned economy (p 69). Obviously that would destroy the system which creates wealth in the first place. Obviously this would not benefit the society’s least advantaged.
     
    2. Hayek on income support and primary goods. In a 1945 radio interview Hayek said "I am in favor of a minimum income for every person in the country" (p 114). My understanding is that he saw this minimum as at a bare subsistence level. But whatever the level of this guaranteed minimum, it’s clear that Hayek didn’t see transfer payments as conflicting with his system of procedural justice.
     
    Remember Hayek’s rationale for setting up a system of pure procedural justice — “we should regard as the most desirable order of society one which we would choose if we knew that our initial position in it would be decided purely by chance” (p 132). Obviously you’d want an efficient economy. But you’d also want access to various primary goods (goods that enable you to pursue the goals you value). You’d want to be able to get an education, health care etc. Access doesn’t necessarily mean that the government has to provide them.
     
    It seems clear to me that Hayek’s austere level of support for those who are unable to work is inconsistent with his stated rationale. Most people seem happy to embrace his conclusions while ignoring his arguments.

  53. Don Arthur says:

    Sinclair – OK, there’s two issues here.

    1. Social justice. When Hayek writes about ‘social justice’ he’s talking about the demand “for an assignment of the shares in the material wealth to the different people and groups according to their needs or merits” (p 121). This isn’t what Rawls meant by social justice — a fact that Hayek acknowledged (p 100).

     

    For Hayek, ‘social justice’ was about imposing a patterned distribution on society:

    Our objection is against all attempts to impress upon society a deliberately chosen pattern of distribution, whether it be an order of equality or of inequality. We shall indeed see that many of those who demand an extension of equality do not really demand equality but a distribution that conforms more closely to human conceptions of individual merit…. (p 87)

    Here’s how explained the motivation for ‘social justice’ and why it was a problem:

    Most people will object not to the bare fact of inequality but to the fact that the differences in reward do not correspond to any recognizable differences in the merits of those who receive them. The answer commonly given to this is that a free society on the whole achieves this kind of justice. This, however, is an indefensible contention if by justice is meant proportionality of reward to moral merit (p 93).

    The only way to achieve ‘social justice’ would be through a completely planned economy (p 69). Obviously that would destroy the system which creates wealth in the first place. Obviously this would not benefit the society’s least advantaged.

     

    2. Hayek on income support and primary goods. In a 1945 radio interview Hayek said "I am in favor of a minimum income for every person in the country" (p 114). My understanding is that he saw this minimum as at a bare subsistence level. But whatever the level of this guaranteed minimum, it’s clear that Hayek didn’t see transfer payments as conflicting with his system of procedural justice.

     

    Remember Hayek’s rationale for setting up a system of pure procedural justice — “we should regard as the most desirable order of society one which we would choose if we knew that our initial position in it would be decided purely by chance” (p 132). Obviously you’d want an efficient economy. But you’d also want access to various primary goods (goods that enable you to pursue the goals you value). You’d want to be able to get an education, health care etc. Access doesn’t necessarily mean that the government has to provide them.

     

    It seems clear to me that Hayek’s austere level of support for those who are unable to work is inconsistent with his stated rationale. Most people seem happy to embrace his conclusions while ignoring his arguments.

  54. Pingback: Club Troppo » What is government for? — Paul Ryan’s unanswered question

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