Friedrich Von Hayek and the blurred boundaries of freedom

Friedrich August Von Hayek, Nobel laureate in economics in 1974 is rightly considered the noble father of modern neo-liberalism. Founder, animator and first president of the Mont Pélèrin Society, Hayek was the staunchest opponent of John Maynard Keynes' theories and his interventionist prescriptions as well as a direct inspiration for the economic policies of Margaret Thatcher and Ronald Regan. In 1991, a year before his death, George W. Bush awarded him the Presidential Medal of Freedom, the highest honour bestowed by the President of the United States. "Friedrich August von Hayek," reads the citation, "has done more than any other thinker of our time to explore the promises and boundaries of freedom. Hayek is a most interesting character. Austrian by birth, a cousin of Ludwig Wittgenstein and a close friend of Karl Popper, whom he was to call in the mid-1940s at theLondon School of Economics. Hayek first studied economics, philosophy and psychology, eventually obtaining two doctorates, in law in 1921 and in political science in 1923. He studied and worked with leading exponents of the Austrian school Carl Menger, von Wieser and Ludwig von Mises who hired him as his assistant. He spent some time in New York where he became interested in monetary policy. He became noted for his intelligence and breadth of interests and in 1931 was called by Lionel Robbins to the London School, along with other future heavyweights such as John Hicks and Nicholas Kaldor. In his younger years Hayek took a lurch towards socialism and then swerved, under the influence of von Mises, towards extreme liberal positions that would be diluted over the years, assuming a configuration that makes Hayek's thought original and difficult to label. Defined by most as a traditionalist conservative he entitled the postscript to his La Società Libera (Rubettino, 2007) "Why I am not a conservative". Here, by differences, he outlines the traits of his liberalism, which is inclined and confident with respect to change, while conservatives 'are inclined to use the powers of government to prevent change or to limit its scope to what most satisfies the most fearful mentality', characterised by a strong 'passion for authority, [by] a lack of understanding of economic forces' and by a 'complacency, characteristic (...) for the action of constituted authority'. Whereas for liberals such as himself the greatest concern 'is that power be kept within certain limits', for conservatives, on the contrary, it is 'that authority not be weakened'. This attitude,' Hayek concludes, 'can hardly be reconciled with the maintenance of freedom'. Hayek advocates individual freedom, for the social order that emerges spontaneously through the actions of citizens who freely pursue their interests and take advantage of all the opportunities offered by the market to improve their condition. Within this framework, government must play a role limited to the protection of property rights, the functioning of contracts, and the removal of obstacles that block the market mechanism. Government must, in other words, 'cultivate' the conditions of development, not determine or direct it. The liberalism that Hayek has in mind derives - in his own words 'from the discovery of a self-generating or spontaneous order of social reality (...) an order that has made it possible to utilise the knowledge and capacities of each member of society to an enormously greater extent than would be possible in any order created by central authority and that has led to the consequent desire to make the fullest use of these powerful forces that give rise to the spontaneous order' ('Report given at the Tokyo Conference of the Mont Pélèrin Society', September 1966).

This view of the functioning of the market and society more generally is radically different, according to Hayek, from that of the traditionally understood economy of his time. So radically different, in fact, that Hayek chooses to designate this market order with a new term - 'catallaxy' - precisely to differentiate his view of the economy from the classical one. The term derives from the Greek Katallattein which, as Hayek goes on to write, "means not only 'to barter' and 'to exchange', but also 'to admit into the community' and 'to become friends from enemies'". Liberalism, then, is the sum total of everything that politically, socially and economically needs to be done to foster the emergence of such an order, first and foremost by reducing government interference in the free choices of citizens as much as possible. Preventing all forms of interference in their 'protected individual domain'. "Liberalism," Hayek continues, "is therefore inseparable from the institution of private property, which is the name we usually give to the material part of this protected individual domain. In this sense, the coercive function of government must be limited to the application of 'rules of conduct' that establish the framework of relations between people who interact with each other despite having different goals and different values. Negative rules, in the sense that they establish what men and women cannot do. In addition to enforcing these rules of conduct, the government can only intervene in a coercive manner to require citizens to contribute, according to uniform principles to the cost of enforcing these rules and the cost of 'service functions'. These 'functions', as Hayek specifies, are 'certain other services that, for various reasons, spontaneous market forces cannot or cannot adequately produce'. These services have to do with the protection of citizens from natural hazards arising from 'hurricanes, floods, earthquakes, epidemics and so on' and those actions necessary to prevent or remedy the damage that may result from these. "Then there is a whole other class of risks," Hayek continues, "in respect of which the need for government action has only recently been recognised [...]. This is the problem of those who, for various reasons, cannot earn a living in a market economy, such as the sick, the old, the physically and mentally handicapped, widows and orphans - that is, those who suffer from adverse conditions, which can affect anyone and against which many are unable to protect themselves, but whom a society, which has reached a certain level of prosperity can afford to help" (Law, Legislation and Liberty, Il Saggiatore, 2010). In addition to this form of insurance against natural and social risks related to various forms of disability Hayek also provides real income support. He writes in his autobiographical dialogue 'I have always said that I am in favour of a minimum income (...) a minimum income that everyone can count on'. In The Free Society he then refers to 'a system of public assistance that is a uniform minimum for all cases of proven need, such that no one in society lacks food or shelter'.

In addition to protection against natural hazards and those of extreme poverty, public action must be considered legitimate, albeit coercive in nature, in matters of education. "In contemporary society," Hayek writes again in The Free Society, "the need for compulsory education up to a certain minimum level is twofold. In general, we will all be exposed to fewer risks and receive more benefits from our fellow human beings who share certain basic knowledge and beliefs with us. And, in a country with democratic institutions, there is another important consideration, namely that democracy cannot work, or can only work on a minimal local scale, with a partly illiterate population'. Public education, therefore, guarantees a minimum level of autonomy in enjoying the benefits of the spontaneous order, a more efficient functioning of democratic institutions, but also a greater compatibility of life values. "It is important to recognise," Hayek writes in this regard, "that general education is not only and perhaps not even primarily a means of communicating knowledge. There is a need for certain common standards of values, and although overemphasising this need may lead to very illiberal consequences, a common peaceful existence would obviously not be possible without any of these standards'.

The government, therefore, with these few exceptions has as its fundamental task to enforce 'rules of conduct'. This view is clear-cut and must be clearly distinguished from the view that the government must establish the ends and purposes of social organisation. While the former view is compatible with a liberal approach, the latter is totally incompatible. The reason for this incompatibility is curiously of an epistemological nature, that is, it relates to the nature of knowledge and its distribution in society. We will deal with this theme so characteristic of Hayekian thought later.

The 'rules of conduct', then, are what form the backbone of Hayek's vision of justice. He further defines it through four fundamental characteristics: the first refers to the fact that "justice can sensibly be spoken of only by referring to human action and not to some state of affairs as such, regardless of whether it was, or could have been, deliberately caused by anyone"; the second property specifies that "rules of justice have essentially the nature of prohibitions or, in other words, that injustice is really the primary concept and that the purpose of rules of mere conduct is to prevent unjust action"; the third property indicates that 'the injustice to be prevented is the violation of each individual's protected domain, a domain that must be made certain by means of these rules of justice' and, finally, the fourth property states that rules of justice 'can be developed through the consistent subjecting of any rule that a society has inherited to a test of universal applicability'.