Progressive Libertarianism
Part 2: Hayekian Libertarianism vs. Burkean Conservatism
In this essay, we will look at the progressive libertarianism of F. A. Hayek and examine the ways in which it is at odds with conservatism as well as the ways in which it overlaps with Burkean conservatism. Libertarians are at odds with conservatives on a number of issues. Traditional conservatives were usually religious and, therefore, opposed libertarian values on a number of social issues (e.g. women’s rights, LGBTQ issues, etc.). Nevertheless, the father of modern conservatism, Edmund Burke, was a disciple of Adam Smith. The conservative tradition, like the libertarian tradition, developed out of classical liberalism and, therefore, shares a lot of the same ideas in the realm of economics. Furthermore, several of the core insights of Edmund Burke’s traditional conservatism were integrated into libertarian theory in the early 20th century, resulting in the sort of centrist libertarianism that we find in Albert Jay Nock, H. L. Mencken, F. A. Hayek, and Milton Friedman. Nevertheless, Hayek rejected conservatism and framed libertarianism as something inherently progressive. Indeed, there is even some overlap between the classical neo-liberal libertarianism of Hayek and Friedman and the ideas of moderate social democrats, as we will see towards the end of this essay.
Edmund Burke’s conservatism was not opposed to progress as such but rather to insurrectionary violence and unnecessary revolutions. Political revolutions create instability and often create the sort of power vacuum that allows a totalitarian despot to rise to power. Furthermore, bigots tend to see the chaos and lack of law and order that comes with revolutions and seize the opportunity to do violence to minority groups as soon as the system of law-enforcement collapses. A core insight of conservatism is that stability and security are something that we ought to value and that, as long as you have a democratic system, revolutions ought to be regarded as a last resort option. Furthermore, Burke held that it is unwise to haphazardly overturn existing institutions because some institutions may actually exist for a good reason in spite of the fact that we no longer remember what that reason is. Often, institutions reflect the wisdom of previous generations and were created for a good reason. Hastily abolishing existing institutions without knowing their real purpose and all the various functions that they serve can actually do great damage to society. Burke was also devoutly religious and a believer in Christian natural law theory, the notion that human morality derives from natural laws that God has inscribed on the human heart. And Burke held that religion is the proper basis of civil society. And conservatives have always assumed an apologetic or defensive tone with regard to existing hierarchies and authorities.
Hayek integrated key Burkean insights into his libertarianism but insisted that he was not a conservative. In a postscript to The Constitution of Liberty, Hayek explains why he is not a conservative. He notes that a principled libertarian will defend some of the same liberal institutions as a conservative will, though the conservative defends them for entirely different reasons. Hayek can see the need to be somewhat conservative in regards to “opposition to drastic change” but he also observes that conservatives have a tendency to go too far in their opposition to change. The libertarian, on the other hand, is essentially progressive, though not necessarily a revolutionary. From a libertarian perspective, one ought not to fear change so long as one lives in a liberal democracy, as a sort of spontaneous order will emerge and likely carry us to safe shores.
“Conservatism proper is a legitimate, probably necessary, and certainly widespread attitude of opposition to drastic change….
“Let me now state what seems to me the decisive objection to any conservatism which deserves to be called such. It is that by its very nature it cannot offer an alternative to the direction in which we are moving. It may succeed by its resistance to current tendencies in slowing down undesirable developments, but, since it does not indicate another direction, it cannot prevent their continuance. It has, for this reason, invariably been the fate of conservatism to be dragged along a path not of its own choosing. The tug of war between conservatives and progressives can only affect the speed, not the direction, of contemporary developments. But, though there is need for a ‘brake on the vehicle of progress,’ I personally cannot be content with simply helping to apply the brake. What the liberal must ask, first of all, is not how fast or how far we should move, but where we should move….
“The picture generally given of the relative position of the three parties does more to obscure than to elucidate their true relations. They are usually represented as different positions on a line, with the socialists on the left, the conservatives on the right, and the liberals somewhere in the middle. Nothing could be more misleading. If we want a diagram, it would be more appropriate to arrange them in a triangle with the conservatives occupying one corner, with the socialists pulling toward the second and the liberals toward the third. But, as the socialists have for a long time been able to pull harder, the conservatives have tended to follow the socialist rather than the liberal direction and have adopted at appropriate intervals of time those ideas made respectable by radical propaganda. It has been regularly the conservatives who have compromised with socialism and stolen its thunder. Advocates of the Middle Way with no goal of their own, conservatives have been guided by the belief that the truth must lie somewhere between the extremes — with the result that they have shifted their position every time a more extreme movement appeared on either wing.
“The position which can be rightly described as conservative at any time depends, therefore, on the direction of existing tendencies. Since the development during the last decades has been generally in a socialist direction, it may seem that both conservatives and liberals have been mainly intent on retarding that movement. But the main point about liberalism is that it wants to go elsewhere, not to stand still. Though today the contrary impression may sometimes be caused by the fact that there was a time when liberalism was more widely accepted and some of its objectives closer to being achieved, it has never been a backward-looking doctrine. There has never been a time when liberal ideals were fully realized and when liberalism did not look forward to further improvement of institutions. Liberalism is not averse to evolution and change; and where spontaneous change has been smothered by government control, it wants a great deal of change of policy. So far as much of current governmental action is concerned, there is in the present world very little reason for the liberal to wish to preserve things as they are. It would seem to the liberal, indeed, that what is most urgently needed in most parts of the world is a thorough sweeping-away of the obstacles to free growth. This difference between liberalism and conservatism must not be obscured by the fact that in the United States it is still possible to defend individual liberty by defending long-established institutions. To the liberal they are valuable not mainly because they are long established or because they are American but because they correspond to the ideals which he cherishes….
“As has often been acknowledged by conservative writers, one of the fundamental traits of the conservative attitude is a fear of change, a timid distrust of the new as such, while the liberal position is based on courage and confidence, on a preparedness to let change run its course even if we cannot predict where it will lead. There would not be much to object to if the conservatives merely disliked too rapid change in institutions and public policy; here the case for caution and slow process is indeed strong. But the conservatives are inclined to use the powers of government to prevent change or to limit its rate to whatever appeals to the more timid mind. In looking forward, they lack the faith in the spontaneous forces of adjustment which makes the liberal accept changes without apprehension, even though he does not know how the necessary adaptations will be brought about. It is, indeed, part of the liberal attitude to assume that, especially in the economic field, the self-regulating forces of the market will somehow bring about the required adjustments to new conditions, although no one can foretell how they will do this in a particular instance…. The conservative feels safe and content only if he is assured that some higher wisdom watches and supervises change, only if he knows that some authority is charged with keeping the change ‘orderly.’” — F. A. Hayek, The Constitution of Liberty, Postscript (“Why I Am Not A Conservative”)
Libertarianism, unlike conservatism, is essentially a progressive philosophy. Burke, like Marx, had a deterministic philosophy of history (historicism) and thought that social progress was basically inevitable. While Marx saw social progress as a march towards something much better, Burke saw social progress as degradation. The perfect state was that of man in the Garden of Eden. That perfect state was destroyed by original sin and the progression of history since has been the story of progressively increasing corruption, decay, and degradation as man awaits redemption at the end of days. The conservative, therefore, sees progress as inevitable but undesirable and wishes to slow it down as much as possible. History will march on and things will progressively change and degrade — yet the conservative is a Sisyphusean rebel who nevertheless struggles against the inevitable entropy and decay that will eventually destroy everything we hold dear. The libertarian rejects the whole idea of historicism — social progress is not deterministic and things can develop in different ways depending upon how humans choose to behave and interact. Furthermore, the libertarian welcomes and even fights for change as long as things are progressing in the right direction.
Nevertheless, the goals of classical liberalism (the forerunner of libertarianism), were partially realized in the United States and other countries in the 18th and 19th centuries. Therefore, conservatives often happen to be clinging to liberal institutions and customs that libertarians will also support, such as the market system and freedom of speech. It is for this reason that Hayek says, “I ought to stress that there is much that the liberal might with advantage have learned from the work of some conservative thinkers.”(ibid.) Nevertheless, the conservative rationale for supporting liberal customs and institutions is quite different from the libertarian rationale — the libertarian supports liberty on principle whereas the conservative supports liberal customs and institutions only because liberalism is part of our inherited tradition. The conservative, however, has no real fondness of liberty and liberalism in themselves. Indeed, Hayek notes that conservatism has a certain “fondness for authority” and believes that stability results from giving authority figures the ability to be somewhat arbitrary in their rule. This authoritarian nature of conservatism is why they have historically had a tendency to side with fascists over republicans, libertarians, and social democrats.
“Let me return, however, to the main point, which is the characteristic complacency of the conservative toward the action of established authority and his prime concern that this authority be not weakened rather than that its power be kept within bounds. This is difficult to reconcile with the preservation of liberty. In general, it can probably be said that the conservative does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not to be too much restricted by rigid rules. Since he is essentially opportunist and lacks principles, his main hope must be that the wise and the good will rule — not merely by example, as we all must wish, but by authority given to them and enforced by them. Like the socialist, he is less concerned with the problem of how the powers of government should be limited than with that of who wields them; and, like the socialist, he regards himself as entitled to force the values he holds on other people….
“It is for this reason that to the liberal neither moral nor religious ideals are proper objects of coercion, while both conservatives and socialists recognize no such limits. I sometimes feel that the most conspicuous attribute of liberalism that distinguishes it as much from conservatism as from socialism is the view that moral beliefs concerning matters of conduct which do not directly interfere with the protected sphere of other persons do not justify coercion. This may also explain why it seems to be so much easier for the repentant socialist to find a new spiritual home in the conservative fold than in the liberal.” — ibid.
Hayek’s final line from the passage above deserves reiteration: “This [authoritarian tendency] may also explain why it seems to be so much easier for the repentant socialist to find a new spiritual home in the conservative fold than in the liberal.” Hayek’s observation here sheds light on why almost all of the intellectuals of the neoconservative persuasion, including Irving Kristol himself, were former Trotskyists.
With their belief in hierarchy and authority, the conservative will seek to impose their own moral values upon the rest of society, hence the frequent conservative opposition to women’s suffrage, abortion rights, and LGBTQ rights. In stark contrast to this, the libertarian believes that no one has the right to impose their will on another. A person has the right to do whatever they want, so long as they are not infringing upon anyone else’s rights and liberty. The libertarian wishes “to build a peaceful society with a minimum of force.” This libertarian perspective “permits the coexistence of different sets of values” and requires “that we agree to tolerate much that we dislike.”(ibid.) The conservative wishes to legislate against things that they simply do not like, whereas the libertarian defends the right of all people to do distasteful, disgusting, and offensive things so long as they do not infringe upon the rights of anyone else in the process. Furthermore, the latent authoritarian tendency of conservatism, coupled with “the conservative mistrust of the new and strange,” leads to “its hostility to internationalism and its proneness to a strident nationalism,” whereas libertarianism recognizes “the fact that the ideas which are changing our civilization respect no boundaries.”(ibid.) And the conservatives, in their nationalism, will often advocate protectionist policies and oppose free trade at the international level.
“[I]t is this nationalistic bias which frequently provides the bridge from conservatism to collectivism: to think in terms of ‘our’ industry or resource is only a short step away from demanding that these national assets be directed in the national interest…. Only at first does it seem paradoxical that the anti-internationalism of the conservative is so frequently associated with imperialism. But the more a person dislikes the strange and thinks his own ways superior, the more he tends to regard it as his mission to ‘civilize’ others — not by the voluntary and unhampered intercourse which the liberal favors, but by bringing them the blessings of efficient government.” — ibid.
Additionally, the conservative respect for authority and fear of the new leads conservatives to mistrust democracy, the newest form of governance on the global stage, and leads to an inclination to support unlimited/fascistic government if the faction in power holds the same values and prejudices as conservatives hold.
“Closely connected with this is the usual attitude of the conservative to democracy. I have made it clear earlier that I do not regard majority rule as an end but merely as a means, or perhaps even as the least evil of those forms of government from which we have to choose. But I believe that the conservatives deceive themselves when they blame the evils of our time on democracy. The chief evil is unlimited government, and nobody is qualified to wield unlimited power. The powers which modern democracy possesses would be even more intolerable in the hands of some small elite….
“But it is not democracy but unlimited government that is objectionable, and I do not see why the people should not learn to limit the scope of majority rule as well as that of any other form of government. At any rate, the advantages of democracy as a method of peaceful change and of political education seem to be so great compared with those of any other system that I can have no sympathy with the anti-democratic strain of conservatism. It is not who governs but what government is entitled to do that seems to me the essential problem.” — ibid.
Hayek maintains that libertarians ought to support democracy since it is the form of government that is most likely to foster the maximization of human freedom. Nevertheless, democracy remains necessary but not sufficient to secure liberty. Majority rule can give way to fascism or totalitarianism if the majority of the populace is so inclined, so the rule of the majority must be strictly limited. The libertarian must define the proper scope of government and make clear that there are some things that the government simply does not have the right to do. Hayek’s defense of democracy may serve as a useful corrective to factions on the far-right, such as the ultra-conservative Reconstructionists and the crypto-fascist Hoppeans, who blame democracy for all of our problems.
Hayek also criticizes conservatives for their anti-intellectualism and their tendency to oppose new ideas simply because new scientific and philosophical theories often call into question established wisdom.
“But, from its point of view rightly, conservatism fears new ideas because it has no distinctive principles of its own to oppose to them; and, by its distrust of theory and its lack of imagination concerning anything except that which experience has already proved, it deprives itself of the weapons needed in the struggle of ideas. Unlike liberalism with its fundamental belief in the long-range power of ideas, conservatism is bound by the stock of ideas inherited at a given time. And since it does not really believe in the power of argument, its last resort is generally a claim to superior wisdom, based on some self-arrogated superior quality.
“This difference shows itself most clearly in the different attitudes of the two traditions to the advance of knowledge. Though the liberal certainly does not regard all change as progress, he does regard the advance of knowledge as one of the chief aims of human effort and expects from it the gradual solution of such problems and difficulties as we can hope to solve. Without preferring the new merely because it is new, the liberal is aware that it is of the essence of human achievement that it produces something new; and he is prepared to come to terms with new knowledge, whether he likes its immediate effects or not.
“Personally, I find that the most objectionable feature of the conservative attitude is its propensity to reject well-substantiated new knowledge because it dislikes some of the consequences which seem to follow from it — or, to put it bluntly, its obscurantism…. I can have little patience with those who oppose, for instance, the theory of evolution or what are called ‘mechanistic’ explanations of the phenomena of life simply because of certain moral consequences which at first seem to follow from these theories, and still less with those who regard it as irreverent or impious to ask certain questions at all. By refusing to face the facts, the conservative only weakens his own position. Frequently the conclusions which rationalist presumption draws from new scientific insights do not at all follow from them. But only by actively taking part in the elaboration of the consequences of new discoveries do we learn whether or not they fit into our world picture and, if so, how. Should our moral beliefs really prove to be dependent on factual assumptions shown to be incorrect, it would be hardly moral to defend them by refusing to acknowledge facts.” — ibid.
While Hayek rejects a lot of conservative ideas and principles, it’s important to note that Hayek also accepts a number of Burkean conservative insights and integrates them into his own libertarian theory. Among these Burkean principles is (1) the idea that democracy is the best form of government since it allows for change through peaceful means rather than progress requiring violent revolution — and this is an idea that many modern conservatives disagree with Burke on — and (2) the notion that existing institutions really have evolved over time and, in some sense, often do reflect the wisdom of prior generations.
Edmund Burke not only defends democracy but representative democracy in particular. Burke argues that the French radical ideal of replacing representatives with recallable delegates is a foolish notion. A parliament or congress is a deliberative body. Policies are put forth and debated before the deliberative body and representatives vote only after hearing the arguments for and against said policies. The leftist idea of recallable delegates with an imperative mandate simply puts the cart before the horse! It makes no sense for a representative’s constituents to bind them to vote a particular way prior to hearing the arguments — “government and legislation are matters of reason and judgment, and not of inclination; and what sort of reason is that in which the determination precedes the discussion; in which one set of men deliberate, and another decide; and where those who form the conclusion are perhaps three hundred miles distant from those who hear the arguments?”(Edmund Burke, Speech to the Electors of Bristol) Most of all, Burke argues, representative democracy furnishes us with a means of changing things without having to violently overthrow the government, meaning that we can easily avoid the instability and insecurity that comes with violent revolutions. Such insights as these were incorporated into the centrist libertarianism of men like F. A. Hayek and Milton Friedman. The fact that democracy allows us to see society progress in a manner that is peaceful and non-violent ought to be appealing to all libertarians.
These particular Burkean observations are astutely rephrased and integrated into a “liberal” (libertarian) framework by Hayek’s associate Ludwig von Mises:
“Government by a handful of people — and the rulers are always as much in the minority as against those ruled as the producers of shoes are as against the consumers of shoes — depends on the consent of the governed, i.e., on their acceptance of the existing administration. They may see it only as the lesser evil, or as an unavoidable evil, yet they must be of the opinion that a change in the existing situation would have no purpose. But once the majority of the governed becomes convinced that it is necessary and possible to change the form of government and to replace the old regime and the old personnel with a new regime and new personnel, the days of the former are numbered. The majority will have the power to carry out its wishes by force even against the will of the old regime. In the long run no government can maintain itself in power if it does not have public opinion behind it, i.e., if those governed are not convinced that the government is good. The force to which the government resorts in order to make refractory spirits compliant can be successfully applied only as long as the majority does not stand solidly in opposition.
“There is, therefore, in every form of polity a means for making the government at least ultimately dependent on the will of the governed, viz,, civil war, revolution, insurrection. But it is just this expedient that liberalism wants to avoid. There can be no lasting economic improvement if the peaceful course of affairs is continually interrupted by internal struggles. A political situation such as existed in England at the time of the Wars of the Roses would plunge modern England in a few years into the deepest and most dreadful misery. The present level of economic development would never have been attained if no solution had been found to the problem of preventing the continual outbreak of civil wars. A fratricidal struggle like the French Revolution of 1789 cost a heavy loss in life and property. Our present economy could no longer endure such convulsions. The population of a modern metropolis would have to suffer so frightfully from a revolutionary uprising that could bar the importation of food and coal and cut off the flow of electricity, gas, and water that even the fear that such disturbances might break out would paralyze the life of the city.
“Here is where the social function performed by democracy finds its point of application. Democracy is that form of political constitution which makes possible the adaptation of the government to the wishes of the governed without violent struggles. If in a democratic state the government is no longer being conducted as the majority of the population would have it, no civil war is necessary to put into office those who are willing to work to suit the majority. By means of elections and parliamentary arrangements, the change of government is executed smoothly and without friction, violence, or bloodshed.” — Ludwig von Mises (Liberalism, Ch. 8)
On this point, Hayek is in complete accord with both Edmund Burke and Ludwig von Mises — representative democracy and “liberalism” (i.e. the ideology of free markets) go hand-in-hand. This is an insight that Hayek also shared with his friend Karl Popper, who brilliantly defended liberal democracy in his monumental work The Open Society & Its Enemies. On the question of the role of government and the benefits of representative democracy, Mises and Hayek both could not have been further from the extremist views of propertarians such as Murray Rothbard. This new libertarianism that Rothbard and his ilk espoused was a complete departure from the liberal-republican tradition to which libertarianism properly belongs.
Hayek and Burke both regarded themselves as proponents of the philosophy of the Old Whigs — they were both proponents of a particular form of civic republicanism. The Old Whigs were liberal-republicans.
“The political creed to which Burke and Hayek subscribe — the doctrine of the ‘ancient, constitutional’ or ‘Old’ Whigs — was an offshoot of the conflict that culminated in the so-called Glorious Revolution of 1688. The Whigs were united by a common passion — the hatred of arbitrary power — and the prevention of arbitrary action by government ever remained the guiding aim of their political practice.’” — Linda C. Reader (The Liberalism/Conservatism Of Edmund Burke and F. A. Hayek: A Critical Comparison)
Philip Pettit, a historian of the philosophy of civic republicanism, explains that republicans defined liberty as the absence of domination (rather than the absence of coercion or interference). Law and order entails a certain type of coercion. If you steal, there will be consequences — some type of intervention and coercion is entailed. Law and order does not necessarily infringe upon one’s liberty in the republican sense. On the contrary, rules are needed to guarantee and secure freedom for everyone. Freedom as non-domination is the concern here.
“Non-domination in the sense that concerns us, then, is the position that someone enjoys when they live in the presence of other people and when, by virtue of social design, none of those others dominates them. Such a status, as we shall see, may come in one or another degree, but it will often be convenient to speak as if it were an on-off matter. Someone enjoys non-domination, we can say, when they live among others and when no other satisfies the conditions discussed in the last section; no other has the capacity to interfere on an arbitrary basis in their choices.” — Philip Pettit (Republicanism: A Theory of Freedom and Government)
As a libertarian proponent of the Whig republican conception of liberty, Hayek endorses the ideal of isonomy, the notion that laws ought to be general rules that apply equally to all, leaving no room for special privileges or different sets of rules for different classes of people. A libertarian society, in Hayek’s view, entails “a system in which all coercive action of government is confined to the execution of general abstract rules.”(The Constitution of Liberty, Ch. 10, § 4)
“It is not to be denied that even general, abstract rules, equally applicable to all, may possibly constitute severe restrictions on liberty. But when we reflect on it, we see how very unlikely this is. The chief safeguard is that the rules must apply to those who lay them down and those who apply them — that is, to the government as well as the governed — and that nobody has the power to grant exeptions. If all that is prohibited and enjoined is prohibited and enjoined for all without exception (unless such exception follows from another general rule) and if even authority has no special powers except that of enforcing the law, little that anybody may reasonably wish to do is likely to be prohibited.” — F. A. Hayek (The Constitution of Liberty, Ch. 10, § 5)
Unlike Misesians and Rothbardians, who regard every law imposed by government as an infringement upon liberty, Hayek views the rule of law as being compatible with freedom and a necessary component of a free society. This does not mean, however, that democracy cannot go awry. It should also be noted that Hayek’s principle of isonomy does not prevent the application of certain general rules that would only be applicable to certain people, conditional upon their situation, so long as the rule would apply to all other people if they found themselves in that same situation. “The requirement that the rules of true law be general does not mean that sometimes special rules may not apply to different classes of people if they refer to properties that only some people possess.”(ibid. § 4) Thus, the principle of isonomy does not prohibit government from giving some form of relief to the poor, such as a minimum income guarantee. The relief may be contingent upon their situation, and consequently only go to certain people, but would automatically be granted to anyone else in society if they happened to ever find themselves in that same situation, so the principle of isonomy is not violated. I would argue also that a system of progressive taxation would not violate Hayek’s principle of isonomy, in spite of Hayek’s protestations to the contrary, because differential rates on higher tax brackets would apply equally to anyone who happened to find themself in a situation where they were making that same amount of money.
Hayek’s republican conception of liberty leaves much more room for government intervention than the modern right-libertarian conception does. Hayek rejected laissez-faire and strongly opposed market fundamentalism. Hayek holds that the task of government is “[t]o create conditions in which competition will be as effective as possible” but also “to supplement it where it cannot be made effective.”(The Road to Serfdom, Ch. 3) Hayek observes, “The successful use of competition as the principle of social organization precludes certain types of coercive interference with economic life, but it admits of others which sometimes may very considerably assist its work and even requires certain kinds of government action.”(ibid.) His main concern is that government ought not to intervene in the market in a manner that undermines the market system or renders the pricing mechanism totally ineffectual, such as state-socialist and fascist approaches to central planning do. The goal of government intervention ought to be to (1) supply the framework of rules which will allow markets to function efficiently and (2) to correct market failures. The government ought not to intervene in a manner that undermines markets altogether and should not seek to replace markets with central planning.
“Any attempt to control prices or quantities of particular commodities deprives competition of its power of bringing about an efficient coordination of individual efforts, because price changes then cease to register all the relevant changes in circumstances and no longer provide a reliable guide for the individual’s actions.
“This is not necessarily true, however, of measures merely restricting the allowed methods of production, so long as these restrictions affect all potential producers equally and are not used as an indirect way of controlling prices and quantities. Though all such controls of the methods of production impose extra costs (i.e., make it necessary to use more resources to produce a given output), they may be well worth while. To prohibit the use of certain poisonous substances or to require special precautions in their use, to limit working hours or to require certain sanitary arrangements, is fully compatible with the preservation of competition. The only question here is whether in the particular instance the advantages gained is greater than the social cost which they impose. Nor is the preservation of competition incompatible with an extensive system of social services — so long as the organization of the services is not designed in such a way as to make competition ineffective over wide fields….
“The functioning of competition not only requires adequate organization of certain institutions like money, markets, and channels of information — some of which can never be adequately provided by private enterprise — but it depends, above all, on the existence of an appropriate legal system, a legal system designed both to preserve competition and to make it operate as beneficially as possible. It is by no means sufficient that the law should recognize the principle of private property and freedom of contract; much depends on the precise definition of the right of property as applied to different things….
“There are, finally, undoubted fields where no legal arrangements can create the main condition on which the usefulness of the system of competition and private property depends: namely, that the owner benefits from all the useful services rendered by his property and suffers for all the damages caused to others by its use. Where, for example, it is impracticable to make the enjoyment of certain services depend on the payment of a price, competition will not produce the services; and the price system becomes similarly ineffective when the damage caused to others by certain uses of property cannot be effectively charged to the owner of that property. In all these instances there is a divergence between the items which enter into private calculation and those which affect social welfare; and, whenever this divergence becomes important, some method other than competition may have to be found to supply the services in question. Thus neither the provision of signposts on the roads nor, in most circumstances, that of the roads themselves can be paid for by every individual user. Nor can certain harmful effects of deforestation, of some methods of farming, or of the smoke and noise of factories be confined to the owner of the property in question or to those who are willing to submit to the damage for an agreed compensation. In such instances we must find some substitute for the regulation by the price mechanism. But the fact that we have to resort to the substitution of direct regulation by authority where the conditions for the proper working of competition cannot be created does not prove that we should suppress competition where it can be made to function.” — ibid.
Hayek rejects the classical liberal notion of laissez-faire and, therefore, holds that government regulations of various kinds are beneficial. He also holds that the provision of welfare and alleviation of poverty is an appropriate task for government. On both of these points, Burke would strongly disagree. Though Hayek has rightly emphasized that true libertarianism is progressive rather than conservative in nature, he does agree with Burkean conservatism on the benefits of representative democracy, the justice of equality before the law, and, as we shall discuss shortly, the belief that moral traditions and social institutions embody the wisdom of prior generations. Hayek, like Burke, holds that moral traditions and social institutions are the product of a complex evolutionary historical process that entailed experimentation by trial-and-error to settle upon optimal arrangements. As such, they do embody the wisdom of previous generations in some sense. However, Hayek’s position is not in complete accord with Burke’s here. Burke believed that these historical developments were guided by divine providence and, therefore, that the social institutions of Christian societies are sacred. Hayek, however, takes a more Darwinian view of such evolution and sees no role for divine providence in the matter. Our evolved social morality may be wrong and any particular social institution may actually be bad. Indeed, Hayek notes that religion sometimes induces society to embrace unjust customs and institutions. The key is to engage in the difficult intellectual task of determining the functions of those moral customs and institutions before changing them.
Hayek distinguishes morality from innate moral principles that may constitute part of human nature biologically. Natural law theorists have often held that we have certain inherent values as humans that are part of human nature and therefore shared by the entire species. Hayek does not deny this but he asserts that there are also social rules that constitute a traditional morality handed down from previous generations. There may be innate moral principles in human nature but there are also moral lessons and values that are taught to, and engrained in, children by their parents and their communities. Often, there is even a contradiction between these innate values and the learned values that one gets from society and tradition.
“What are chiefly responsible for having generated this extraordinary order, and the existence of mankind in its present size and structure, are the rules of human conduct that gradually evolved (especially those dealing with several property, honesty, contract, exchange, trade, competition, gain, and privacy). These rules are handed on by tradition, teaching and imitation, rather than by instinct, and largely consist of prohibitions (‘shalt not’s) that designate adjustable domains for individual decisions. Mankind achieved civilisation by developing and learning to follow rules (first in territorial tribes and then over broader reaches) that often forbade him to do what his instincts demanded, and no longer depended on a common perception of events. These rules, in effect constituting a new and different morality, and to which I would indeed prefer to confine the term ‘morality’, suppress or restrain the ‘natural morality’, i.e., those instincts that welded together the small group and secured cooperation within it at the cost of hindering or blocking its expansion.” — F. A. Hayek (The Fatal Conceit, Ch. 1)
The social morality that is needed for conduct in a large-scale open society such as we have today is quite different from that needed for survival in a small-scale closed society. So-called “primitive” societies do not have much contact with outsiders and are small enough that all members of the tribe know one another. As a consequence of their small and almost familial nature, they tend to operate on a very altruistic basis with a gift-economy. If the society is small enough, they may operate on a communistic basis where all things are shared freely, as is still the case at the level of the immediate family. However, this morality and the social arrangements that correspond to it do not scale well. As society grows too large for one to know all of the members of their extended community, it becomes impossible to maintain the same level of trust as is needed for such “primitive” arrangments to function. Those arrangments simply break down and give way to competitive, war-like tendencies.
The current market order emerged from a process of evolution whereby natural selection weeded out the arrangements less suited for survival. The market order and the tradition of the rule of law came about gradually over the course of thousands of years of gradual evolution.
“The extended order did not of course arise all at once; the process lasted longer and produced a greater variety of forms than its eventual development into a world-wide civilisation might suggest (taking perhaps hundreds of thousands of years rather than five or six thousand); and the market order is comparatively late. The various structures, traditions, institutions and other components of this order arose gradually as variations of habitual modes of conduct were selected. Such new rules would spread not because men understood that they were more effective, or could calculate that they would lead to expansion, but simply because they enabled those groups practising them to procreate more successfully and to include outsiders.
“This evolution came about, then, through the spreading of new practices by a process of transmission of acquired habits analogous to, but also in important respects different from, biological evolution. … [W]e might mention here that biological evolution would have been far too slow to alter or replace man’s innate responses in the course of the ten or twenty thousand years during which civilisation has developed — not to speak of being too slow to have influenced the far greater numbers whose ancestors joined the process only a few hundred years ago. Yet so far as we know, all currently civilised groups appear to possess a similar capacity for acquiring civilisation by learning certain traditions. Thus it hardly seems possible that civilisation and culture are genetically determined and transmitted. They have to be learnt by all alike through tradition.” — ibid.
As society grows and people who don’t really know one another are brought together into a single social order, conflict and war-like tendencies tend to emerge. This is the root of competition within market systems. However, the rule of law must step in to put restraints on competition. Hayek notes, “To operate beneficially, competition requires that those involved observe rules rather than resort to physical force. Rules alone can unite an extended order.”(ibid.) We find that the solidaristic and familial arrangements that unite people in “primitive” societies no longer bind people within large nations where our neighbors are often strangers. Thus, we must resort to different rules and moral principles that work in this new extended order. Tradition has handed down rules about property, contracts, fairness, and social conduct and we must follow these guidelines when operating within this extended order of the market system. At the same time, we still have the moral values of our “primitive” ancestors and therefore live in two worlds. At the level of the nuclear family, we live by the more altruistic and often communistic moral values that prevailed in “primitive” societies. However, the further we move outside of that nuclear family, the more we switch to operating upon a less altruistic code of conduct.
“Moreover, the structures of the extended order are made up not only of individuals but also of many, often overlapping, sub-orders within which old instinctual responses, such as solidarity and altruism, continue to retain some importance by assisting voluntary collaboration, even though they are incapable, by themselves, of creating a basis for the more extended order. Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e., of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once. To apply the name ‘society’ to both, or even to either, is hardly of any use, and can be most misleading (see chapter seven).
“Yet despite the advantages attending our limited ability to live simultaneously within two orders of rules, and to distinguish between them, it is anything but easy to do either. Indeed, our instincts often threaten to topple the whole edifice…. Indeed, the conflict between what men instinctively like and the learnt rules of conduct that enabled them to expand — a conflict fired by the discipline of ‘repressive or inhibitory moral traditions’, as D. T. Campbell calls it — is perhaps the major theme of the history of civilisation. It seems that Columbus recognised at once that the life of the ‘savages’ whom he encountered was more gratifying to innate human instincts. And as I shall argue later, I believe that an atavistic longing after the life of the noble savage is the main source of the collectivist tradition.”(ibid.)
The reality of living in two worlds without really understanding why leads people to embrace collectivist ideas and seek to destroy existing systems and replace them with better, more altruistic ones. What we fail to recognize, however, is that those more altruistic arrangements are not suited to the scale that society has now reached. It is an atavistic urge to live like our “primitive” ancestors which leads people to embrace revolutionary and insurrectionary collectivistic doctrines — “the feelings that press against the restraints of civilization are anachronistic, adapted to the size and conditions of groups in the distant past.”(ibid.) Communistic arrangements are ill-suited for mass society.
Nevertheless, as I have previously pointed out, Hayek sees no divine providence in social evolution and does not believe that the historical process is infallible. The historical process can result in flawed moralities and flawed institutions, though the tendency is for moralities and institutions to develop that serve some necessary function. Just as biological evolution tends to lead to organs that serve a function, like the eye that lets us see and the ear that lets us hear, so too does social evolution usually lead us in a beneficial direction. However, one must not forget that the evolutionary process, since it is not guided by any higher consciousness, often results in things like jawbones that are too small to fit all of our teeth and appendices that serve no apparent purpose but also have a tendency to burst for no reason. Our cultures and institutions are not above scrutiny and certain aspects of them may even need to be intentionally modified just as a dentist may need to remove wisdom teeth or a surgeon perform an appendectomy to improve upon nature’s flawed designs.
“Moreover, if civilisation has resulted from unwanted gradual changes in morality, then, reluctant as we may be to accept this, no universally valid system of ethics can ever be known to us.
“It would however be wrong to conclude, strictly from such evolutionary premises, that whatever rules have evolved are always or necessarily conducive to the survival and increase of the populations following them. We need to show, with the help of economic analysis (see chapter five), how rules that emerge spontaneously tend to promote human survival. Recognising that rules generally tend to be selected, via competition, on the basis of their human survival-value certainly does not protect those rules from critical scrutiny.”(ibid.)
Thus, Hayek leaves much room for criticizing traditional morality and our inherited social institutions. Historically, monogamy had a useful function that was quite advantageous. It lessened the risk of contracting STDs, provided more security for the raising of children, and created a stable home environment that helped ensure the survival of offspring. Once we understand the real function, then we can critically examine the institution or custom to consider making liberalizing reforms. The traditional family came about not because God hates adultery, homosexuality, and polygamy but rather because it happens to be conducive to procreation and the raising of children. We know that homosexuality is not something that people choose to engage in based on how popular the practice is. Legalizing gay marriage will not increase the number of homosexuals in our society, so there is no rational reason to oppose homosexual activities. People engaged in polyamorous relationships may now get regular testing for STDs and have agreements between the consenting partners in order to minimize risks. We may also have other institutions, like welfare measures, to ensure that children are still provided for if both partners don’t remain together and economic hardships result. Thus, alternative arrangements can supply the benefits that the traditional family once did.
The market system, in particular, is an emergent phenomenon that resulted from evolutionary processes. Whereas Burke would see it as the result of divine providence, Hayek sees it as a result of blind natural selection.
“It is no accident that many abstract rules, such as those treating individual responsibility and several property, are associated with economics. Economics has from its origins been concerned with how an extended order of human interaction comes into existence through a process of variation, winnowing and sifting far surpassing our vision or our capacity to design. Adam Smith was the first to perceive that we have stumbled upon methods of ordering human economic cooperation that exceed the limits of our knowledge and perception. His ‘invisible hand’ had perhaps better have been described as an invisible or unsurveyable pattern. We are led — for example by the pricing system in market exchange — to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant; and we in turn constantly live on the services of other people of whom we know nothing. All this is possible because we stand in a great framework of institutions and traditions — economic, legal, and moral — into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood in the sense in which we understand how the things that we manufacture function.
“Modern economics explains how such an extended order can come into being, and how it itself constitutes an information-gathering process, able to call up, and to put to use, widely dispersed information that no central planning agency, let alone any individual, could know as a whole, possess or control. Man’s knowledge, as Smith knew, is dispersed. As he wrote, ‘What is the species of domestic industry his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, in his local situation, judges much better than any statesman or lawgiver can do for him’ (1776/1976:11, 487). Or as an acute economic thinker of the nineteenth century put it, economic enterprise requires ‘minute knowledge of a thousand particulars which will be learnt by nobody but him who has an interest in knowing them’ (Bailey, 1840:3). Information-gathering institutions such as the market enable us to use such dispersed and unsurveyable knowledge to form super-individual patterns. After institutions and traditions based on such patterns evolved, it was no longer necessary for people to strive for agreement on a unitary purpose (as in the small band), for widely dispersed knowledge and skills could now readily be brought into play for diverse ends.”(ibid.)
Hayek criticizes the collectivist ideal of the centrally-planned economy on the grounds that it is an arrangement suited only for small-scale society. Hayek argues that the economy is too big for central planners to survey in one glance. The knowledge that is needed to adequately plan an economy is distributed throughout the whole economy in the minds of countless individuals.
“Today it is almost heresy to suggest that scientific knowledge is not the sum of all knowledge. But a little reflection will show that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active coöperation. We need to remember only how much we have to learn in any occupation after we have completed our theoretical training, how big a part of our working life we spend learning particular jobs, and how valuable an asset in all walks of life is knowledge of people, of local conditions, and of special circumstances.” — F. A. Hayek (The Use of Knowledge in Society)
Ludwig von Mises makes the case that often this “knowledge of particular circumstances of time and place” is encoded in prices. If you are looking for someone to deliver a load of gravel to your construction site, you make your decision on where to purchase the gravel on the basis of price. Company A may charge a high price because they realize that the only direct route to the site from their location is closed and, therefore, it is less efficient (more expensive) for them to deliver the gravel as it requires them to drive further, whereas company B has a cheaper price because it is easier for them to deliver the gravel to the site. The purchaser does not need to know all the details of why the companies have different prices but can simply make his choice based on the price. The choice is simple. The price signal encodes information even if the purchaser is unable to decrypt it and tell why the price is high or low. (Cf. Ludwig von Mises, Economic Calculation in the Socialist Commonwealth) Yet, not all of the “knowledge of particular circumstances of time and place” can be captured in price signals. Sometimes this knowledge has to do with how to do a particular job or logistical matters that central planners simply cannot learn. A central planner is everywhere and always operating upon a great deal of ignorance and, therefore, cannot possibly make optimal choices.
Since the central planner is operating on the basis of ignorance, he must resort to arbitrary authority to impose his decisions on others. He cannot simply convince everyone in the entire economy to go along with his plan. He does not even have the time to try. Furthermore, if he did, there would be countless instances where people would reject his plan on the basis of their own better knowledge about particular aspects of it. Furthermore, as David Graeber points out, the fact that the central planner is in a position of authority means that he can use his power to impose his will arbitrarily, thereby reinforcing his own ignorance since he doesn’t have to listen to the objections of anyone below him (and those below him also have an incentive to not speak up since voicing their objections may have negative ramifications). To F. A. Hayek, the fatal conceit is the belief that man can rationally design a better system from scratch than the one that has been passed down to us.
Though Hayek is critical of collectivist visions based on altruism, he does not think that poverty is something that should just be tolerated. The challenge of poverty ought not to be tackled in a revolutionary manner by burning everything down and trying to build something better from scratch, but is better addressed by introducing a social safety net (or, better yet, a “floor”) within the framework of the market system. Furthermore, we ought to take care to implement this social safety net in the least intrusive and least distortionary manner possible. His recommendation with regards to the social safety net is to implement some sort of minimum income guarantee alongside a system of social insurance for healthcare. Hayek is a progressive in the sense that he wants to improve upon the current system by expanding the welfare state but he is conservative in the sense of wanting to preserve all of the good things that have been handed down to us by those who came before. So Hayek does have a great deal in common with moderate social democrats. Hayek does not see any movement in the direction of socialism or in the direction of a welfare state as inevitably leading towards totalitarianism, in spite of what his critics allege. On the contrary, he wants to see welfare state reforms and some movement in the direction of what may colloquially be referred to as “social democracy.” Here, on the question of the proper role of government in welfare provision, Hayek could not possibly be any further away from the views of Edmund Burke, who opposed any sort of government intervention in the matter.
“The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be a wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.” — F. A. Hayek (Law, Legislation, & Liberty, volume 3)
Not only does Hayek support the idea of the government providing a minimum income guarantee to all of its citizens, but he also supports the concept of social insurance more generally, including for such things as healthcare. Furthermore, Hayek clarifies that government intervention for the purpose of disaster relief should be regarded as perfectly acceptable and desirable. Even monetarist and Keynesian interventions for counter-cyclical purposes are not fundamentally incompatible with libertarianism in Hayek's estimation.
“Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provisions. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance — where, in short, we deal with genuinely insurable risks — the case for the state’s helping to organize a comprehensive system of social insurance is very strong…. But there is no incompatibility in principle between the state’s providing greater security in this way and the preservation of individual freedom. To the same category belongs also the increase of security through the state’s rendering assistance to the victims of such ‘acts of God’ as earthquakes and floods. Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make provision for the consequences, such communal action should undoubtably be taken.
“There is, finally, the supremely important problem of combating general fluctuations of economic activity and the recurrent waves of large-scale unemployment which accompany them. This is, of course, one of the gravest and most pressing problems of our time…. Many economists hope, indeed, that the ultimate remedy may be found in the field of monetary policy, which would involve nothing incompatible even with nineteenth-century liberalism. Others, it is true, believe that real success can be expected only from the skillful timing of public works undertaken on a very large scale…. In any case, the very necessary efforts to secure protection against these fluctuations do not lead to the kind of planning which constitutes such a threat to our freedom.” — F. A. Hayek (The Road to Serfdom, Ch. 9)
F. A. Hayek, alongside Milton Freidman, ends up advocating a minimum income guarantee and a system of social insurance that would amount to a quite robust welfare state. In some sense, the Hayekian and Freidmanite model of a libertarian society resembles social democracy more so than it resembles “actually existing capitalism.” Nevertheless, the Hayekian and Freidmanite model is far less bureaucratic and interventionist than socialist welfare states but also less paternalist and more universalist than conservative welfare states. It should also be noted that this robust safety net or “floor below which nobody can fall” is an essential component of the market system that libertarians like Hayek and Friedman envisioned. Free markets progress by a process of creative destruction. The competitive market system operates in a manner that necessitates that some businesses will fail while others succeed. This creates a certain degree of natural instability within the capitalist system as entrepreneurs can easily fall into poverty if their project turns out to be a complete failure. By ensuring economic security for the people, it allows them to take more risks without facing extreme poverty as a possible consequence of failure — this is especially useful since the taking of risk is what pushes progress forward under the market system. It also becomes less likely that voters will push for economically interventionist policies and central planning. Furthermore, it creates a sort of stability and security that makes it less likely for the populace to revolt or resort to insurrectionary violence and revolution.
