Friedrich von Hayek, justice and the limits of human knowledge

The idea of justice plays a central role in the social theory of the Austrian philosopher and economist Friedrich von Hayek. The particularity of his perspective concerns the fact that in it justice is primarily concerned with the so-called 'rules of conduct', those rules, that is, which every individual must observe if we are to make possible through the process of 'catallaxy' the emergence of a social order that will be unpredictable but optimal. Such an order derives from a process in which the choices of individuals freely pursuing their individual goals manage to co-ordinate and through the diffusion of scattered knowledge and the protection of individual, political and economic freedoms, thereby producing a mutual benefit for all participants.

Hayek, echoing Adam Smith, defines the backbone of this spontaneous order as the 'Great Society', a society guided, as we have said, by 'rules of just conduct' that, regardless of the ends each citizen sets out to achieve, stand to guarantee his or her 'protected individual domain'. In this way, the 'rules of conduct' make possible through exchange the simultaneous satisfaction of individuals' needs, aspirations and desires. As Eric Mack summarises "The Big Society is composed of individuals who differ in personal values, aspirations and commitments, in convictions, knowledge and beliefs, in social and economic skills and abilities, and in particular social and economic circumstances. Yet, surprisingly, they are brought together in peaceful and mutually beneficial relationships through the articulation and enforcement of rules that - regardless of their specific details - protect individuals in their possessions and in the use of the fruits of their labour, prohibit the violation of contractual commitments, and protect individuals in the gains from trade and contractual interactions" ("Hayek on Justice and the Order of Actions", in Feser, E., Cambridge Companion to Hayek, CUP, 2006).

The perception of security that citizens derive from the existence of such rules, then, makes them free to devote their intellectual and material resources instead of defending their prerogatives to production and exchange to the benefit of individuals and society as a whole. But the benefits of the guaranteed protection of the 'rules of just conduct' are not limited to the dimension of production and exchange. Perhaps the most interesting and also the most original aspect of Hayek's thought concerns the interaction between the market and knowledge. The latter, in fact, is scattered and possessed only in small part by each of the participants in the market game. This is why no one would be able to direct or steer the economy towards the achievement of particular goals. Even if the goals preferred by citizens were known, a central authority would simply not have the knowledge of the causal links between these goals and the actions necessary to pursue them. Only by renouncing such a dirigiste approach - the 'fatal conceit of socialism', Hayek would say - and accepting the evidence of the fallibility and limitedness of our knowledge, could we fully understand how the market can foster the functioning of a well-ordered society. The result will be an 'unintended' and 'spontaneous' order. Which will certainly emerge even if we could not know the characteristics ex-ante. Therefore, Hayek suggests, we should focus on the quality of the rules that preside over the process rather than on the ends we would like to achieve, however desirable.

From this position on the nature of the interaction between market and knowledge derives Hayek's hostility to planned economics, interventionist economic policy - his polemic with Keynes is famous - and the very idea of social justice, as we shall see later. The Hayekian vision of a just society is, in fact, a historical or procedural and not an 'end-state' vision, much closer, in this sense, to the positions of Robert Nozick than to those of John Rawls. But it is interesting, in this respect, to note that the justification of his vision of a just society is, just like Rawls', anti-utilitarian. Hayek regards as utilitarian any perspective according to which the preferability of a set of rules is measured by the characteristics of the social order that will concretely result from the adoption of that set of rules. Such a measurement is for Hayek logically and factually impossible. He writes in ''Freedom and the Economic System'' (1939): 'Economic planning always implies the sacrifice of some ends in favour of others, a balancing of costs and results, a choice between alternative possibilities; and the decision always presupposes that all the different ends are ordered in a definite order according to their importance, an order that assigns to each goal a quantitative importance that tells us what we should give up in order to achieve other ends and whether it is worth the pennies for these to be pursued and what price would be too high (...).) Agreement on a particular plan requires (...) for a society as a whole the same kind of complete quantitative scale of values as that which is manifested in the decision of each individual, but in an individualistic society, such agreement is neither necessary nor possible.

The classification of alternative social outcomes,' Hayek continues, 'presupposes something that does not exist and has never existed: a complete moral code in which the relative values of all human ends, the relative importance of all the needs of different people, are assigned a definite quantitative meaning.  (The Collected Works of F.A. Hayek, ed. Bruce Caldwell. University of Chicago Press, pp. 189-211). There is, in other words, no common metric for measuring and comparing the preferability of the ends each individual sets out to achieve in life to the ends of all others. Hayek's scepticism with respect to the possibility of such a social planning project is very similar in spirit to that which would emerge a few decades later from Berlin's critique of "Enlightenment monism" and which would find its most rigorous expression in Arrow and Sen's theorems on the aggregation of individual preferences and the impossibility of the "Paretian liberal" (we discussed this in Mind the Economy from 54 to 58). Where, then, to find a non-utilitarian justification for the 'rules of just conduct' that Hayek places at the heart of the 'Great Society'? We have already seen that these rules undergo a process of selection by trial and error and that the key criterion of this process is the Kantian idea of 'universalisability'. We should, therefore, first accept or reject a rule on the basis of the consequences that such a rule would have if it were universally applied. But Kantian deontological approach does not completely exhaust the Austrian's critique. The novelty of his proposal is not to reject the possibility of evaluating social norms on the basis of the goodness of the outcomes they lead to, but rather on the basis of the impossibility of identifying the connection between certain particular sets of rules and certain particular outcomes.