Hayek’s Still Relevant Response to Today’s Paternalist Planners

First Published: 2021-05-22

by Richard Ebeling

Among many American “progressives” and those in the Democratic Party establishment, there is a heady euphoria that their day has again come, that there is an opportunity to establish and implement their dream of a far more comprehensive and commanding government presence over the society.

Their vision already promises well over $6 trillion of additional federal government spending; and this is only what Biden and the Democrats have legislated or have been proposing for Congress to pass during the president’s first 100 days in office! Given the spider’s web of additional or intensified government intrusions into almost every corner of personal, social and economic life that is desired by the political paternalists, it would be far easier to count on one hand the various aspects of our lives that would remain free of governmental regulation and redistribution, command and control, and planning and plunder.

Not a Corner the Paternalists Do Not Want to Plan

There is a near religious self-righteousness and faith-based confidence that if government is given sufficient authority, with all the needed funding, with the “right people” placed into political office and bureaucratic oversight, all the problems of the world can be overcome and corrected. The earth is dangerously warming? No problem, government central planning under the heading of a Green New Deal both in America and around the world can keep the planet climate stable, or whatever it is that the global paternalists mean by that.

The wrong types and amounts of goods and services are being produced and unjustly “distributed” by the market? No problem, government regulatory and fiscal policy can see to it that the right goods, in the right amounts, are produced and then redistributed into the hands of those segments of the society the paternalists know are more and most deserving.

They just know the type of health care we each should have; how much our old age pensions should be; what wages we should earn and with what accompanying work conditions; the qualities and forms of foods and drinks we should be allowed to consume; the words we may use in conversation, the associations we should be allowed to form and participate in, and with what racial, ethnic, and gender numerical proportions in the memberships. They know how our children should be educated, and with what “anti-racist” and “gender-sensitive” content of ideas and understandings.

In other words, they basically claim to know everything about everyone in terms of how we should all go about our lives, with what purposes, for which ends, and with what outcomes for every one of us, based on how they have classified us on the basis of sex, gender, race ethnicity, social status, and “entitlement” deservedness. (See my articles, “The Nightmare Fairyland of the Green New Dealers” and “The Case for a Coercive Green New Deal?” and “The New Totalitarians”.)

The Paternalist’s Unbounded Arrogance

There is an almost unbounded arrogance and hubris in how they think about themselves in terms of what they should do to us in the name of doing for us. What they seem, absolutely and positively, unable to bring themselves to do, or even imagine themselves doing, is to simply leave us alone! They are obsessed with policing our use of words and our peaceful, nonviolent deeds. They seem incapable of letting us make our own decisions, and arrange our own personal and social and economic affairs.

If we are fat, it is because profit-motivated businessmen bombard us with too much of the wrong types of food, and the paternalists know the diets we should follow. If we are not eating enough, it is because those greedy private enterprisers won’t pay us a “fair” wage, or won’t give more to the needy who deserve it, out of the plentitude they “unjustly” have and control, and those paternalists will redistribute what others have produced. If members of racial and ethnic and gender minorities do not hold places and positions in various walks of life equal to their group statistical percentage in a community, it must be due to racism and “white male privilege,” and the paternalists will fix it through planned employment and occupation group quotas.

If only the right people are in power, with the needed and seemingly unlimited funding, and in possession of the required government authority and control, then all the problems of the world could and would be solved. Listening to or reading such people, you would think that none of the planning and paternalism they are proposing had ever been tried, or had even ever been criticized (other than by self-serving and illegitimate “apologists for capitalism,” of course).

It is all a new dawn, of a new day, filled with dreams of daringly doing over the human circumstance. Anyone with a bit of an historical perspective knows that there have been many disastrous attempts, especially over the last one hundred years, to remake society according to government design, with abysmal failure for hundreds of millions of people who were made the victims of the planners and paternalists. (See my articles, “Socialism: Marking a Century of Death and Destruction” and “Socialism, Like Dracula, Rises Again from the Grave” and “Socialism-in-Practice was a Nightmare, Not Utopia”.)

F. A. Hayek and the Dangers from Planning

In fact, there is little or nothing that the paternalists and planners do not presume and argue for that has not been challenged and criticized with great cogency in the past. One of the most important of these critical voices against political paternalism and government planning was that of the Austrian economist and Nobel Laureate, Friedrich A. Hayek (1899-1992).

In recent years, he has been the target of sometimes vicious attacks by those on the political “left,” who have misrepresented and even distorted what his views were on a wide variety of topics and policy issues, rather than straightforwardly answering his criticisms of their collectivist dreams. May 8th marked what would have been Hayek’s 122nd birthday, and it seems appropriate to recall his responses to the socialist ideas of his time, especially given their continuing relevance today. (See my article, “Quinn Slobodian and the Academic Attack on Mises and Hayek”.)

Hayek had early on made his international reputation as a leading monetary theorist who developed the Austrian theory of money and the business cycle, which had been first formulated by Ludwig von Mises. In this role, Hayek became one of the leading critics of and challengers to the emerging Keynesian Revolution in the 1930s and 1940s. (See my eBook, Monetary Central Planning and the State.)

During the war years, Hayek’s interests increasingly turned to answering the question, why was it that collectivism and totalitarianism had been intellectually and politically so successful in the first half of the 20th century, given the earlier successes of free market liberalism in the 19th century in ending monarchical tyranny and fostering widening and rising material betterment for growing numbers of people in Western societies?

Hayek’s explanation was offered in The Road to Serfdom (1944), a work that soon won him popular recognition and notoriety in the wider community of public opinion in both Europe and the United States. He offered an interpretation as to how and why a civilized and advanced nation like Germany could succumb to the demagoguery of Adolf Hitler and his National Socialist (Nazi) movement. Hayek’s warning was that there was nothing culturally or politically unique in the German people that made them susceptible to all this.

It was the attraction to the same collectivist and socialist ideas that were also increasingly common in countries like Great Britain and the United States. The appeal and hold of these ideas on the German people were just a few decades ahead of their impact in these other countries. And if any people did not wake up to their danger, economic control in a society can easily lead to political command over all aspects of life, if not stopped in time. (See my article, “Is America Still on F. A. Hayek’s ‘Road to Serfdom’?”.)

The Importance of Liberty and its Institutions

In the 1950s, Hayek’s interest centered on the political and social ideas and ideals upon which a free society is based, and without which such a free society is not easily maintained in the long run. This culminated in his 1960 grand book, The Constitution of Liberty. Here Hayek inquired into the nature and aspects of individual freedom, the meaning of the rule of law and the role of constitutions, and the rationales and limits to the welfare state in a free society.

But soon his mind turned to a new project that built on the arguments in The Constitution of Liberty, but which he believed deepened and extended them in ways that this recently published work had not. After working on this new book through the 1960s, he began to publish it in the 1970s in three separate volumes, under the general title, Law, Legislation, and Liberty: A Restatement of the Liberal Principles of Justice and Political Economy, they were: Volume 1: “Rules and Order” (1973); Volume 2: “The Mirage of Social Justice” (1976); and, Volume 3: “The Political Order of a Free People” (1979).

Given the recent revival of the socialist ideas of planning and paternalism, it seems appropriate to turn our attention to these volumes to better understand the presumptions and pretenses in this latest call for a return to a greater government direction of human society.

Social Institutions Not the Result of Human Design

Central to much of Hayek’s thinking beginning in the 1930s, and especially focused on in Volume 1 devoted to “Rules and Order,” is his emphasis that many if not most of the social institutions that serve human purposes and improvement are not the creation of human intention and design. A little reflection on the nature of language, custom, tradition, rules of everyday ethics, etiquette, manners and mores, and the related rules of human interaction in various social settings including those of commerce and enterprise, as well as aspects of the common law, all show that they are for the most part what the 18th century Scottish philosopher, Adam Ferguson, referred to as “the results of human action, but not of human design.” Almost all of these are the products of social evolution through the interactions of multitudes of people over many generations as they have grappled with and stumbled upon ways of effectively and successfully associating with each other for mutual gain.

Most of us can recall being assigned to read some play by William Shakespeare when in high school or college, and often finding it difficult to follow the use of words and the turn of phrases in the Bard’s famous works. Yet, only a little over four hundred years separate us from Shakespeare’s death in 1616. His use of the English language from ours has changed in many ways, but none of it was planned, designed or commanded by government edict or decree. Every day, in many little ways, all the users of English over these four centuries have spoken words, written sentences, modified some spelling, forgotten or added some punctuation, or connoted some different meaning in a phrase that have cumulatively changed how the language is spoken, written, and how ideas are conveyed through it.

Nor could anyone in 1616, or 1716, or 1816, or 1916 or 2016 have been able to know or anticipate the changes in English that have resulted in the language we speak and take for granted today in 2021. And none of us can have any real inkling of what changes await the English language in, say, the one hundred years to come.

No one can doubt that whether it is the language we speak or the customs and traditions we follow, or the manners, etiquette, or everyday ethics we practice in our dealings with others, that they all form parts of the essential societal glue without which complex and continuous human association would be nearly impossible. If their structures and the changes in them had been dependent upon a handful of minds that were guiding legislatures and bureaucracies on how and for what purposes they were used, society would be poorer in every imaginable way.

Choice and the Institutions of a Free Society

Central to Hayek’s argument on social institutions and their evolution is that only freedom allows all the minds of all the people in the world to participate in the forms and types of interactions that individuals choose to initiate and associate within, the end result of which is that we all gain from what all those others can contribute to the global community of humankind, within which we attempt to better fulfill our own personal ends and purposes.

Another element in the nature and structure of many social institutions is that they have evolved as procedural rules in the context of which each of us can go about our own ends while respecting the courses of action chosen by others. An example of such procedural rules is the rules of the road. They specify at what speed a car may be driven, that red lights must be stopped for at intersections, and that drivers must pull over when an emergency or police car is racing by with lights on and sirens blasting. But as long as these procedural rules of the road are followed, everyone is free to go where they want, when they want, for any purpose of their own choosing when behind the wheel of their automobile.

This contrasts, Hayek points out, with government regulations, controls, commands and prohibitions that dictate when people may act or interact, with whom, for what purposes, and under what terms and conditions. When this is done, not only are people limited in their liberty to what governments tell them, but their opportunities are limited to what the planners and regulators can know or imagine as possible and desirable. The actions of all of us are confined within what the limited minds of the planners and paternalists can conceive. Human progress, as well as everyone’s liberty, is straightjacketed to the decisions and knowledge of the few in political authority and power.

The Mirage of Social Justice

The political planners and paternalists frequently insist that among their ultimate goals in redesigning society and its institutions is to establish “social justice.” This is said to be different from older or more traditional notions of justice, in the sense of merely respecting another’s life, liberty and private property, or abiding by and fulfilling contracts and agreements into which a person has voluntarily and freely entered.

Social justice, its proponents argue, calls for each receiving what they “justly” deserve or to which they have a distributive “right” or entitlement. But what are each person’s just desserts in society, other than what he or she may have earned in the free exchanges of an open and competitive market?

In Volume 2 of Law, Legislation, and Liberty, Hayek’s theme is to demonstrate that social justice is a “mirage;” that is, something that when thought about from “afar” seems definite and clear, but when looked at up close loses all reality and objective meaning. What is a “fair wage,” or a “reasonable” standard of living, or a “just reward” for services rendered, or giving each their redistributive due for an “equitable” society?

Hayek argues that there is no meaning to “social justice,” in the sense that “society” has been unfair. The reason being is that “society” does not act and “benefit” or “harm” anyone. Society is merely the covering term for all the individual actions, interactions, and associative trades and exchanges in the marketplace made by and between individuals. Each earns income from services rendered to others based on their chosen role and participation in the social system of division of labor.

When I do my shopping in the supermarket and take a box of breakfast cereal off one of the shelves and put it in my shopping cart, I do not ask who are the individuals who have participated at different points in the multi-staged processes of production, the end result of which is the cereal box that is in front of me. Nor have I asked what each of those participants “really” deserve or what their personal merit and circumstances warrant in deciding what price to pay for the product I’m interested in buying. In fact, it is impossible for any of us to do so.

Shall Markets or Politics Determine Your Fate?

If government were to take on the role of ladler of deservedness and merit to each member of the society we would have to presume that those people in government know enough about each and every one of us in that society to objectively and correctly distribute to each what they justly should have, no more and no less, according to some knowable and unanimously or widely accepted standard or benchmark. Not only would it require a God-like knowledge of all of humanity, but it would involve a degree of totalitarian control and determination of every human being’s material and social fate that few of us would want to live under, if we but reflected a moment on what its consistent application would entail.

In the free marketplace, I need neither the approval nor agreement of all my fellow human beings or the government about what I “really” deserve or should have. My life is my own, lived by me, as I consider best, guided by the values and purposes I decide will give happiness and meaning to my existence.

Yes, how much I may earn and therefore the standard and quality of my life is dependent upon what others consider the worth of what I can do for them in the marketplace in the pursuit of their own purposes. But in that marketplace, there are actual and potential chances and opportunities for me to try to improve my talents, abilities, and skills in various ways that may enable me to enhance my value in the eyes of those who might purchase something I have for sale.

But once my “just rewards” are to be determined by those in political power, it is far more outside of and beyond my control or influence. In the free marketplace, I am free to try to find avenues on my own through which I can improve my income-earning abilities. But once this is politicized under a regime of redistributive “social justice,” it is out of my hands, with my only avenue being participation in political pressure groups attempting to get government to give more to the social group to which I have been assigned based on “class,” race, gender, or sexual orientation. My individual fate is tied to that of a collective, my membership in which will most likely have been imposed on me by others, whether I’ve wanted it or not.

For this reason, Hayek says at one point:

“The near-universal acceptance of a belief does not prove that it is valid or even meaningful any more than the general belief in witches or ghosts proved the validity of these concepts . . . I believe that ‘social justice’ will ultimately be recognized as a will-o’-the wisp which has lured men to abandon many of the values which in the past have inspired the development of civilization . . .

“Like most attempts to pursue an unattainable goal, the striving for it will also produce highly undesirable consequences, and in particular lead to the destruction of the indispensable environment in which the traditional values alone can flourish, namely personal freedom.”

Liberty Requires Limited Government

In Volume 3, which is concerned with “The Political Order of a Free Society,” Hayek warns that a free society is also endangered by the attempt to have a purer and more unrestrained system of political democracy. Democracy is an enemy of liberty when it is not appreciated that many of the historical freedoms that emerged along with the democratic ideal – freedom of speech and the press, freedom of association, freedom of religion, wide ranges of personal freedom of choice – can only be secured when majorities are limited in what and how they may make decisions affecting others in society. This includes the case for economic liberty.

Majorities can be as intolerant and tyrannical as the worst absolute monarchs of the past, if not even more so. What has failed, in Hayek’s view, has not been the idea of democracy as such, but the particular form of democracy that developed over the last two hundred years, under which fewer and fewer corners of individual life are safe from what coalitions of special interest groups that form majorities on Election Day can impose on the rest of society. (See my articles, “John Stuart Mill and the Three Dangers to Liberty” and “To End Budget Deficits, Restrict Political Pickpockets”.)

Hayek hoped that there could be found forms of “free government,” under which those who are ruled may “democratically” select those holding political office, but which at the same time leave the individual citizen free in most matters to live his own life as he sees best in free associations with others.

A very thoroughgoing classical liberal or libertarian, will, no doubt, find a noticeable number of inconsistencies and even contradictions in Hayek’s arguments concerning the role and limits of government in society. But this in no way detracts, in my view, from the underlying and essential insights that Hayek developed on the importance of freedom and the nature of a free society.

I would suggest that the spirit of all that Hayek argues in Law, Legislation, and Liberty is captured in the following passage in Volume 1 devoted to a discussion of “Principles and Expediency:”

“A successful defense of freedom must therefore be dogmatic and make no concessions to expediency, even where it is not possible to show that, besides the known beneficial effects, some particular harmful result would also follow from its infringement.

“Freedom will prevail only if it is accepted as a general principle whose application to particular instances requires no justification. It is thus a misunderstanding to blame classical liberalism for having been too doctrinaire. Its defect was not that it adhered too stubbornly to principles, but rather that it lacked principles sufficiently definite to provide clear guidance . . .

“People will not refrain from those restrictions on individual liberty that appear to them the simplest and most direct remedy of a recognized evil, if there does not prevail a strong belief in definite principles.”

At a time when freedom is once more directly under attack by those who wish to return to the failed system of government planning and paternalism, renewing our understanding of and appreciation for Friedrich A. Hayek’s contributions can only strengthen our arguments for a society of liberty. (See my article, “F. A. Hayek and Why Government Can’t Manage Society” and my book, For a New Liberalism.)

Dr. Richard Ebeling is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel, in Charleston, South Carolina.

Dr. Ebeling is the author of Austrian Economics and Public Policy: Restoring Freedom and Prosperity  (2016); Monetary Central Planning and the State (2015) as well as the author of Political Economy, Public Policy, and Monetary Economics: Ludwig von Mises and the Austrian Tradition (2010) and Austrian Economics and the Political Economy of Freedom (2003). And the editor of the three-volume, Selected Writing of Ludwig von Mises, published by Liberty Fund.

He is also the co-editor of When We Are Free (Northwood University Press, 2014), an anthology of essays devoted to the moral, political and economic principles of the free society, and co-author of the seven-volume, In Defense of Capitalism (Northwood University Press, 2010-2016).

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