Mind the Economy/Justice 86

Friedrich von Hayek, the drama of war and the fate of our children

by Vittorio Pelligra *

Friedrich August von Hayek (1889-1992). (AFP)

8' min read

8' min read

The influence that John Rawls' political thought has exerted since the publication of his most important work, A Theory of Justice, to date has been enormous. There have been many enthusiastic followers, many criticisms, and many interpretations over the years. Rawls' dialogue with other political thinkers of his and our time has been fruitful. With his Harvard colleague Robert Nozick, first of all, and with Jürgen Habermas, who, as we have already seen, have expressed very different positions that are difficult to reconcile with Rawls'. Among these dialogical thinkers, as we started to see last week, there is certainly the Austrian philosopher and economist Friedrich von Hayek. Hayek himself described, to the amazement of many, the differences between his and Rawls' thinking as more nominal than substantive. And in fact, despite the many differences, some interpreters have gone so far as to propose a sort of synthesis of the thought of the two capable of overcoming the "social democratic interpretative tradition" of the American philosopher's thought and proposing one centred on the certainly more Hayekian idea of "free market fairness" (Tomasi, J., Free Market Fairness. Princeton University Press, 2012).

Hayek's thinking and Rawls'

We began discussing last week two of the possible areas of convergence between Hayek's and Rawls' thought, in particular, with reference to the relationship between merit and distributive justice and to the procedural dimension of justice itself. Let us now continue our analysis by considering a third element of convergence between the two philosophers, which concerns the possibility of evaluating in terms of preferability the various states of the world to which the Hayekian 'catallaxy' or the Rawlsian 'basic structure' may give rise. Hayek, as we know, is a fierce critic of the constructivist approach, that is, of those who consider it necessary to establish a criterion of justice to assess social outcomes. A criterion that should then guide the design of institutions capable of generating preferable outcomes. But the aversion to this 'constructivist fallacy' does not prevent the Austrian philosopher from recognising the need for such a criterion to be effectively developed and applied, in his perspective, to the evaluation of possible outcomes originating from the spontaneous order of 'catallaxy'. Here the point becomes subtle. The object of Hayek's critique, in fact, is not so much the development or use of a metric to assess which social outcomes, among all possible ones, are preferable. Rather, his critique focuses on the possibility of constructing institutions capable of leading us towards those very outcomes that we a priori assess as preferable. Given that in the Hayekian logic of spontaneous order we could never predict which social outcome will result, there remains, however, the more than legitimate need to construct a criterion to assess the preferability of a certain outcome over another.

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The criterion of choice

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What criterion should we then use to determine whether a given allocation of resources is preferable to its possible alternatives? In this regard, it is interesting to note how surprisingly Rawlsian in spirit the method Hayek proposes to adopt is. He writes in Law, Legislation, and Liberty, 'One should regard as more desirable the order of a society that would be chosen if one knew that in it the initial position is decided simply by luck (such as being born into a certain family). Since the attractiveness of such a possibility to a particular adult individual would probably depend on his already acquired particular abilities, skills and tastes, it is better to say that the best society would be the one in which we would like to place our children if it were known that in it their position would be determined by chance' (p. 340). This method cannot but bring to mind the Rawlsian 'original position' and its 'veil of ignorance'. Because at bottom, both Hayek's criterion and Rawls' "veil of ignorance" respond to the same need, namely that of introducing an element of impartiality and justice into the process of aggregating our individual - necessarily biased - evaluations; of justice as fairness, Rawls would say.

Fairness and impartiality

This sensitivity towards the impartiality and fairness of a certain social order developed in Hayek, as he himself confesses, not so much by virtue of an abstract theoretical interest but as a consequence of a dramatic experience in London during the Second World War. He tells us this in a long and moving personal note that we find in Chapter 10 of Law, Legislation and Freedom. Allow me to quote it in full. Hayek writes 'I can perhaps help the reader if I illustrate the general thesis of this chapter with an account of personal experience that led me to see the problem in this way. That a person in an established position inevitably has a different attitude from that which should be taken in considering the general problem, I experienced when, as a London resident in the summer of 1940, it appeared quite probable that I and all my resources with which I could support my family would soon be destroyed by enemy bombing. 'At that time,' the philosopher continues, 'when we were all prepared to face even worse situations than those which in fact later occurred, I received offers from several neutral countries to entrust my still young children to an unknown family with whom they would presumably stay if I did not survive. I then had to consider the attractiveness presented by different social orders such as Argentina, the United States and Sweden based on the assumption that the conditions under which my children would grow up in that country would be determined mostly by chance. This led me to realise, which I probably would not have done out of pure abstract speculation, that as far as my children were concerned, rational preferences would be guided by somewhat different considerations from those that would have determined a similar choice for myself alone, with an already established position, and I believed, perhaps wrongly, that it would count for much more in a European country than in the United States, Therefore, while the choice for myself would have been influenced by considerations of the different possibilities that would have presented themselves to a man in his forties with skills and tastes already formed, with a certain reputation and belonging to certain classes, the choice for my children would have had to be made taking into consideration the particular environment in which chance would have placed them in one of these countries. For their own good, since they had yet to develop their personalities, I felt then that the very absence in the United States of those strong social distinctions which would have favoured me in the old world, should have made me decide, in the case of my children, in favour of the USA (I must perhaps add that this was based on the tacit assumption that my children would be placed with a white family and not with a coloured one)' (p. 342).

The Original Position and the Veil of Ignorance

How, we have said, can the Rawlsian 'original position' and 'veil of ignorance' not come to mind. The American philosopher writes in this regard: 'Among the essential characteristics [of the original position] is the fact that no one knows his place in society, his class position or social status, the part that chance assigns him in the division of natural endowments, his intelligence, strength and the like. I will also assume that the contracting parties know nothing about their own conceptions of the good and their own particular psychological propensities. The principles of justice are chosen under a veil of ignorance. This ensures that in the choice of principles no one is advantaged or disadvantaged by natural chance or the contingency of social circumstances. Since everyone enjoys an identical status, and no one is able to propose principles that favour his or her particular situation, the principles of justice are the result of fair agreement or bargaining' (A Theory of Justice. Feltrinelli, 1982, p. 28).

The Last Convergence

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There is, finally, a fourth and final important point of convergence between the thinking of the two. This is the common position that inequalities can only be tolerated in a social system if they produce a benefit for all. In addition to his version of the 'veil of ignorance' for assessing the preferability of one social outcome over another, Hayek proposes the criterion of 'maximisation of average expectations'. He writes in Law, Legislation and Freedom'[If] one agrees to have, and agrees to impose, uniform rules for a procedure that has vastly improved everyone's chances of satisfying their desires, but at the price of all individuals and groups running the risk of undeserved failure. [This] is the only procedure so far discovered in which information widely dispersed among millions of men can actually be used for the benefit of all - and used to secure individual freedom for all' (p. 272). In other words, if an inequality is undeserved but benefits everyone, then the set of rules that generated this allocation cannot be considered unjust. Here again the reference to Rawls is immediate. When in A Theory of Justice, defining his 'general conception of justice', he writes that this stipulates how 'All social values - freedom and opportunity, wealth and income, and the social basis of self-respect - must be distributed equally, unless an unequal distribution, of one or all of these values, benefits each'. The Hayekian addition of mean maximisation is necessary to break the impasse that would result from the presence of alternatives that cannot be classified in terms of Paretian efficiency. That is, when there are multiple alternative allocations in which some social groups are better off and others worse off and it is not possible to improve someone's position without, at the same time, making someone else's worse off. It is in this context that Hayek proposes to evaluate as best that allocation that maximises the chances of a hypothetical subject who would be drawn by lot among all citizens.

Minimum income and education

With this criterion it seems reasonable to give preeminence to those belonging to a disadvantaged social group exactly in the spirit of the Rawlsian 'difference principle'. A reasonable but not necessary conclusion. Hayek himself, in fact, seems to discard this interpretation when he writes that 'Although it seems reasonable to enact laws in such a way that they tend above all to improve the chances of those who have less, this can seldom be achieved by means of generic norms' (p. 341). Hayek thus sees the difficulties in applying a Rawlsian interpretation, but his opposition on this point seems more empirical than logical and is justified on the basis of historical data regarding the growth of the incomes of the poorer classes. Data according to which, historically, the growth of the wages of the disadvantaged classes has been proportionally faster than that of the wages of the wealthy classes. Data that could certainly lead to a different conclusion today. The most interesting fact, however, is that while on the one hand Hayek emphasises the practical difficulty of improving the chances of those who are worse off through general rules, elsewhere, as we have already seen, he argues at length about the need to guarantee the most disadvantaged both a minimum income and basic public education.

Different but common views

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Certainly Hayek and Rawls developed different worldviews that, however, if one reasons outside narrow ideological categories, appear to be characterised by common elements. This is linked, I am convinced, to the liberal inspiration that the two philosophers shared. Both argued that individuals should be free to pursue their own idea of the good life and that the role of the state should be to cultivate the conditions for this to happen. They agreed that in a liberal state, the government exists to serve the people and the people must not live, work and toil to serve the interests of the government. Both, again, agreed that the state must apply and enforce principles of justice and guarantee access to basic goods such as education and a basic income, and that the primary function of government is to ensure an institutional framework - the basic structure - within which citizens can pursue their legitimate individual goals.

(*) Professor of Economics (13/A2)
Department of Economics and Business - University of Cagliari


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