November 8, 2019


Hayek, Republican Freedom, and the Universal Basic Income (MATT ZWOLINSKI, NOVEMBER 6, 2019, Niskanen)

Hayek's devotion to the ideals of free markets and limited government is well-known. His most famous book, The Road to Serfdom, argued that economic and political liberties are tightly connected, and that liberal democracies cannot safely curtail the former without also endangering the latter. His later works, especially The Constitution of Liberty, set forth a positive vision of a free society centered on the idea that individuals should be left largely free to act on the basis of their own values and beliefs, rather than those of government regulators or planners, in both the personal and economic dimensions of their lives.

While everybody knows that Hayek saw himself as a champion of individual freedom, few understand the precise nature of the freedom that Hayek sought to defend. Unlike many libertarians, who understand freedom primarily in terms of non-interference or respect for property rights, Hayek subscribed to a republican theory in which freedom consists of being able to live one's life "according to [one's] own decisions and plans, in contrast to ... one who was irrevocably subject to the will of another." [...]

Hayek's republican political theory provides one of the main theoretical foundations for his strong support of free markets. Although many contemporary republican theorists have been either overtly hostile or at best lukewarm toward the market economy, Hayek saw correctly that market competition can serve as one of the most effective guarantors of republican freedom.

The essence of market competition is the existence of alternatives, and the right to say "no" to offers that fail to serve one's interests at least as well as one of those alternatives. In a competitive labor market, an employer who tries to force an employee to do something she doesn't want to do is constrained by that employee's ability to quit and find a job elsewhere. A used car dealer who would like to take advantage of a buyer by charging an unfairly high price is similarly constrained by the presence of a competing dealer next door. In general, the more competitive a market is, the more prices and other terms of agreements will be regulated by the impersonal forces of supply and demand, and the less any particular market agent will be able to impose her particular will on her partner in exchange. All market actors are constrained by the general, impersonal rules of the market. But those same rules generally work to prevent any market actors from achieving a position of dominance over others.

Similarly, it is largely because Hayek views competition as such an effective check on coercion that he views government power with suspicion. After all, government is the only institution within society to claim and generally possess an effective monopoly on the use of force. And this monopoly on force is often used to establish and maintain other monopolies: on roads, on the delivery of regular mail, on the creation and enforcement of criminal law, and so on. Because individuals who value these services have nowhere else to go, they are often left with no practical alternative to compliance with the government's demands. 

Moreover, as legal rules become more numerous and complex, as ordinary individuals become unable to know in advance what actions are permitted and which are prohibited, as law enforcement becomes practically unable to enforce all the rules that they could, in theory, enforce, the extent of individual discretion within government increases, and so too does the possibility of arbitrary coercion. In that case, individuals are no longer required to comply with "the law," but with the edicts of a bureaucrat behind a desk, or an officer behind a badge. When the agents of the state are granted a practically unchecked power to apply the law (or not) in whatever way he sees fit, individuals are no longer fully free.

When Free Markets Aren't Enough

But while Hayek's republicanism provides strong support for the ideals of free markets and limited government, it also provides a criterion for determining when those institutions are not enough. Market competition generally protects the consumer against predation by unscrupulous sellers, but this protection can be undermined by collusion and natural monopolies. Similarly, competition in the labor market might protect workers from exploitation when those workers have an adequate range of alternatives available to them, but fall short when those alternatives are limited either by features of the local economy (a lack of jobs) or by characteristics of the employee (e.g. limited skills or lack of mobility).

In order to protect individual freedom in these circumstances, Hayek believed that some governmental action was both necessary and appropriate. Indeed, Hayek took great pains even in his most partisan work, The Road to Serfdom, to distance himself from a dogmatic opposition to government action, writing that "nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rough rules of thumb, above all the principle of laissez faire." Hayek believed that government had a legitimate (though delicate) role to fill in preventing and/or regulating monopolies. He believed that government had important work to do in the areas of sanitation, health services, and public works. And, most strikingly of all, he believed that it was not only permissible but necessary for government to redistribute income in order to provide a social safety net that would ensure "a certain minimum income for everyone, or a certain floor below which nobody need fall even when he is unable to provide for himself."

The great lie we on the right tell ourselves is that a man with no wealth can enjoy freedom.  Of course, the corresponding lie on the left is that a man with no freedom can enjoy wealth. 

Posted by at November 8, 2019 5:26 AM