Discover more from The Freemen News-Letter
Hayek and Liberty's Constitution
In "The Constitution of Liberty," Hayek revitalized the classical liberal tradition in a socially liberal era that seemed to have completely snuffed out the limited government tradition.
All citations, unless otherwise stated, are from F.A. Hayek’s The Constitution of Liberty.
The 20th Century was filled with many liberal intellectuals whose ideas still hold sway in today’s discourse. The major reason for this was the crisis the liberal project was facing in the 1930s when the Great Depression caused it to come under attack from both the far right and the far left in the forms of fascism and socialism, respectively. No such event had ever before caused people to lose faith in the belief that freeing people to govern their own personal and economic lives would lead to a peaceful and prosperous society, and the defenders of liberal democracy were desperate for a solution.
The solution to many liberals was the philosophy of social liberalism promoted by people such as English economist John Maynard Keynes and U.S. President Franklin Delano Roosevelt. While they embraced the basic liberal principles of individual liberty and free market economics, they nevertheless rejected the belief that government ought to be limited to only protecting individual rights and instead advocated for a more expansive and activist government that promoted basic living conditions, equal opportunity and intervention in the economy to promote economic well being.
While social liberalism became the dominant philosophy within liberal democracy in the decades following World War II, it was met with strong dissent from classical liberals such as libertarians and Anglo-American conservatives who became startled by the growing power and size of government.
One of the most influential of these dissenters was Nobel Prize-winning economist and classically liberal political theorist F.A. Hayek, whose ideas had a major influence on both American President Ronald Reagan and British Prime Minister Margaret Thatcher. So why was Hayek such a strong advocate of classical liberal principles and a strong opponent of social liberalism? To find the answer to this, one must understand Hayek’s philosophy and how it’s reflected in both his political and economic views, which is best laid out in his popular book The Constitution of Liberty.
How Hayek Defined Freedom
Before delving into his philosophy, it is essential to know how Hayek defines freedom. The term can be subjective, but in Hayek’s use, it is the foundation his philosophy rests upon. To Hayek, freedom is defined as “The state in which a man is not subject to coercion by the arbitrary will of another or others.” (p. 58) Shortly thereafter, he expands more on this definition by saying, ”It always meant the possibility of a person’s acting according to his own decisions and plans.” (p. 59)
So Hayek’s definition of freedom is in line with the classical liberal understanding of freedom, which is the freedom to self-govern, the freedom to believe in whatever one chooses to believe in and to express it freely, as well as the freedom to own property and manage it as one pleases.
While social liberals do agree with this, they also criticize this definition as being too limited. To them, these freedoms are meaningless if things like living conditions or lack of opportunities prevent someone from using their freedoms to live a meaningful life.
In response to this criticism, Hayek uses the analogy of a rock climber stuck on a ledge who has one way of escaping. In this scenario, he argues that while the climber’s options may be limited by the circumstances, he is still free because whatever action he takes to escape is by his own choice and not forced by the coercion of another (p. 60-61).
Hayek on Coercion
Going off this discussion of freedom, the first main principle of Hayek’s philosophy is his moral opposition to coercion. In discussing coercion, he defines it as “such control of the environment or circumstances of a person by another that, in order to avoid greater evil, he is forced to act not according to a coherent plan of his own but to serve the ends of another.” (p. 71) To put it more clearly, coercion, to Hayek, is when an individual is not free to act or think for himself. This includes things like slavery, robbery, laws that limited religious expression, and censorship, among others.
To Hayek, coercion is evil because it strips individuals of their value as human beings as well as their capability to think and act for themselves and reduces them to being mere tools to be used by others (p. 71). That being said, he does acknowledge that a certain amount of coercion is a necessary evil so that the government can protect individuals from the coercion of other individuals. But even then, he argues that its use should be limited to when it is absolutely necessary in order to keep it from being abused and used arbitrarily (p. 72).
So, to summarize, the first key point of Hayek’s philosophy is that coercion is evil when it violates individual freedom and is only justified when exercised to protect that freedom from being infringed by another.
Hayek on Rationalism
The second key point of Hayekian thought is a rejection of rationalism. In discussing the difference between the French and British liberal traditions, he notes that the biggest divide between the two is their views on human nature and as a result, civilization. He defines the French tradition’s view of human nature as being rationalistic and inherently good and thus intellectually capable of designing and creating civilization (p. 118).
In regards to the British tradition’s view of human nature, Hayek compares it to the traditional Christian beliefs regarding the subject in that humans are by nature fallible and inclined to immorality (p. 120). Civilization in the British tradition, thus, was not a product of deliberate planning but rather a spontaneous order built by constant trial and error, testing and proving of ideas and practices over generations (p. 112).
Hayek agrees with the British tradition in referencing the Roman philosopher Cicero, who argued that the Roman Republic’s institutions were not built by one man and never could be since no one, even with all the help in the world, could possess all the knowledge in existence (p. 113).
To the dismay of Hayek, though, he notes that the French tradition has become the dominant way of thinking within modern liberalism (social liberalism), and this worried him because, from his point of view, the beliefs of the French had the potential to lead to authoritarianism (p. 109). One does not need to go further than the French Revolution to see how this can transpire as what started off as a liberal revolution devolved into the Reign of Terror, where those who opposed the rationalism of the revolutionary leaders were executed by the masses in the name of liberty.
While social liberalism is not tyrannical, it, as Hayek notes, is very rationalistic. This can be seen by how social liberal thinkers have tried to rationalize issues like crime as resulting from a lack of proper living conditions or societal opportunity, and tend to embrace bigger welfare programs and government action to address poverty as the chief solutions to crime rather than the actual enforcement of the law.
That isn’t to say Hayek wouldn’t say those factors don’t contribute to crime or that those programs wouldn’t help. Rather, he would be concerned about the growing power of government and the potential tyranny it could bring down the line.
Hayek On Centralized Planning
Going off his rejection of rationalism, the third main point of his philosophy is a rejection of centralized planning. In discussing progress, he rejects trying to plan it by saying, “Human reason can neither predict nor deliberately shape its own future” (p. 94) and even argues that trying to do so actually impedes progress (p. 95).
So how, then, does progress happen according to Hayek? According to him, progress is best achieved through a free society or, from a purely economic standpoint, a free market. He illustrates this with the example of how, in the West, products such as radios, cars, and airplane trips used to be luxury items but are now accessible to relatively poorer people thanks to the free market. That is because not only do free markets enable entrepreneurs to create those luxury goods in the first place, they also enable future ones to improve upon them to make them more accessible (p. 98).
To put it more concisely, Hayek argued that progress best thrives in a free society where people are free to innovate and experiment with new goods and services.
While his argument against a centrally planned economy has long been understood to be a criticism of socialism, similar criticisms can be made against social liberalism. While social liberals are capitalists by their nature as liberals, unlike classical liberals, they support strong government intervention in the free market. More specifically, as mentioned in the intro, they support the economic philosophy of John Maynard Keynes, who advocated for government spending projects and the central bank influencing interest rates both on the basis of promoting economic growth.
Hayek was a strong critic of Keynes’s economic beliefs because, as stated earlier, he was against attempting to plan progress (in this case, economic growth) and, as also stated earlier, warned that attempts to do so were often harmful. In the case of the economy, he warned that attempts by the government to manipulate economic growth ran the risk of generating artificial growth, which would soon be followed by massive economic downturn.
Hayek On the Power of the State
With Hayek’s philosophy and how it contrasts with social liberalism nailed down, it becomes apparent how it is reflected in both his political and economic views. One such political view where it is the most obvious is his view on the power of the state. Building off his earlier discussion of coercion, Hayek argues that the key to protecting individuals from it is to create respect for an individual’s free sphere, which he defines as the conditions for one to govern their own thoughts and actions (p. 206).
A key part of this sphere to Hayek is the protection of the right to private property, as noted when he argues, “We are rarely in a position to carry out a coherent plan of action unless we are certain of our exclusive control of some material objects.” (p. 208) What Hayek is saying here is that without the ability to own property, all other rights are pointless because the individual is coerced by that which controls the property.
Another key part of this sphere, to Hayek, is the ability to engage in voluntary cooperation or, in simpler terms, enter a contract with another. As Hayek notes, in today’s liberal society, one doesn’t necessarily need to own property to have their freedom secure, but rather that they are able to at least have property that is not under the exclusive control of another (p. 208). What he is referring to here is the ability to enter a contract to rent property from another, and this development in his beliefs has expanded freedom to those who aren't able to own property.
To secure these spheres, Hayek argues that the main purpose of government is to only use coercion to keep people from violating the freedoms of others (p. 211). This view is more limited than the social liberal view of government, which not only serves to protect freedom but also to promote equal social and economic outcomes.
Hayek on Bureaucracy
Another political issue that shows Hayek’s philosophical differences with social liberals is his beliefs regarding bureaucracy. He saw bureaucracy as being too focused on narrow understandings of the common good and far too prone to operate outside the rule of law.
In discussing the bureaucratic state, he starts off by observing that they originated with the absolute monarchs of continental Europe, who created layers of bureaucracy to execute their laws. Even when liberals tore down the absolute monarchies, the bureaucratic states remained intact, as well as their focus towards state-directed welfare over limited government (p. 288).
Elaborating on this further, he argues that it is almost impossible to rein them in. To illustrate this, he uses the Prussian idea of the Rechsstaat. Operating within the framework of constitutional monarchy, the liberals of Prussia sought to create an ideal bureaucratic state they called the Rechstaat that would be bound by the rule of law and be prohibited from arbitrary actions against individuals (p. 301).
As Hayek notes, however, this did not work. He argued that this was due to the Rechsstaat ultimately still being a bureaucratic state charged with handling the law it was supposed to safeguard rather than abuse (p. 302). Finishing off his commentary on the Rechsstaat, Hayek bemoans that it came into being when welfare states became popular, thus lessening the desire to limit government. Social liberals in the U.S. and U.K., in Hayek’s view erroneously, saw it as a working model for a bureaucratic state within a liberal framework and brought it home (p. 304 & 306).
In essence, Hayek is against bureaucracy because it, by its nature, tends to bend the limits placed on government, which Hayek saw as a threat to freedom. This is in clear contrast to social liberals such as Franklin Roosevelt and Lyndon Johnson, who, through the New Deal and Great Society, respectively, established the U.S. bureaucratic state as a means of enforcing their policies and administering their welfare programs.
Hayek on Economic Intervention
As for his economic views, a big point of contention between him and the social liberals was economic intervention. As was discussed earlier, a key point of Hayek’s philosophy was the belief that progress could not be planned but could only be done spontaneously through trial and error. As was also discussed in that section, this belief was something Hayek applied to social liberals and their support of Keynesian economics. Later on in the book, he goes into more depth about his opposition to government intervention in the economy.
When discussing his views on the subject, it’s important to know that when he said he was opposed to intervention, he wasn’t saying that he was opposed to any regulation of the market whatsoever. He did support certain regulations extending from the government’s duty to protect an individual’s private sphere (p. 329).
Hayek was also unopposed to the government providing essential goods and services that aren’t adequately provided by the market, such as infrastructure or health services, so long as the government doesn’t monopolize them (p. 333).
What Hayek was opposed to was any regulation or intervention that goes beyond government action absolutely necessary for the purpose of securing an individual’s private sphere. He warned that going beyond that purpose creates an impediment to the free market’s ability to spontaneously grow and progress (p. 331).
For example, Hayek argued that price and production controls are detrimental to the health of the market because the market can only function when prices and production levels are flexible to data, and such regulations inhibit that ability (p. 337-338). Additionally, he also saw such regulations as often violating individual freedom, such as trade restrictions or unnecessary occupational requirements. Such things inhibit the ability of individuals to provide goods and services (p. 336).
Hayek’s negative view of regulation was quite different from social liberals who, while being free market capitalists, tend to believe it needs strong regulations such as minimum wages or strict workplace regulations as a means of promoting equal opportunity.
Hayek on Wealth Redistribution
The other economic point of contention between Hayek and social liberals is progressive taxation and redistributive welfare states.
Social liberals are well known for their support of progressive taxation on the basis that the rich can afford to pay a heavier burden and that this will redistribute some of their wealth to the less fortunate and give them better economic outcomes via welfare programs. Hayek saw this as immoral and ineffective.
Hayek saw wealth redistribution as immoral because, in his view, it violates the protection of individuals from unjust coercion. To illustrate this, he compared progressive taxation to a minority group getting treated differently arbitrarily by the majority and how this violates equal protection of freedom (p. 449). As for why he saw wealth redistribution as ineffective, it ties back to his belief that attempts to plan progress are often counterintuitive. He argued that redistributive welfare actually reduces economic opportunity.
Hayek argued that, in a free market economy, a hardworking and intuitive individual is enabled to climb up the social ladder with few issues (p. 448). He pointed out, however, that progressive taxation makes it so that when one gets wealthier, they have more wealth taken by the government, making it harder for one to climb up the social ladder, thus reducing economic opportunity (p. 448). So, in essence, not only does progressive taxation and redistributive welfare violate freedom in Hayek’s eyes, it also achieves the opposite of what it is intended to do.
Hayek in Summary
To summarize, Hayek’s opposition to social liberalism in favor of classical liberalism boils down to his philosophical differences with them and how they are reflected in both his political and economic beliefs. Philosophically speaking, Hayek disagreed with the social liberal definition of freedom in favor of the classic liberal definition.
Furthermore, Hayek rejected social liberalism's tendency to support rationalism and its support for Keynesian economic intervention in favor of pure spontaneous growth and progress both socially and economically.
As for how these philosophical differences are seen politically, they are best reflected in Hayek’s limited view on the role of the state and opposition to bureaucracy in comparison to social liberals who support a more activist government and have embraced the bureaucratic state.
Finally, these differences in the economic context are best seen in his opposition to both strong regulation of the free market and to redistributive welfare programs funded by progressive taxation, both key elements of social liberalism.
There is no understating the significance of Hayek’s dissent from social liberalism. His strong arguments inspired a generation of leaders and thinkers and helped to revive the classical liberal tradition within liberalism, which many thought had been killed off by social liberalism during the Great Depression. While Hayek may have died nearly 30 years ago, his philosophy continues to live on and remain a force to be reckoned with to this day.
Fusionist Sun Devil is an anonymous fusionist, classically liberal, and counter-populist activist and private political commentator known for his thoughtful and pointed Twitter/X dialogue. He is an alumnus of Arizona State and the We the People project at the Center for Civic Education. @fusionist_devil