Hayek (1899-1992)

1
Hayek (1899-1992)

• When the course of civilization takes an
  unexpected turn, when instead of the continuous
  progress which we have come to expect, we find
  ourselves threatened by evils associated by us
  with past ages of barbarism, we blame naturally
  anything but ourselves. (825)

2
Modernity Release of individual energies

• During the whole of this modern period of
  European history the general direction of social
  development was one of freeing the individual
  from the ties which had bound him to the
  customary or prescribed ways in the pursuit of
  his ordinary activities. (827)
• ?
• Progress
• by the beginning of the twentieth century the
  working man in the western world had reached a
  degree of material comfort, security, and
  personal independence which a hundred years
  before had seemed scarcely possible.(828)

3
Socialism A Threat to Freedom

• Socialism was early recognized as the gravest
  threat to freedom and quite openly began as a
  reaction against the liberalism of the French
  Revolution, (?) and from its inception was
  frankly authoritarian (828)

4
Socialism ? Democracy

• Nobody saw more clearly than de Tocqueville that
  democracy as an essentially individualist
  institution stood in an irreconciliable conflict
  with socialism (828)

5
Freedom, a Socialist Disguise

• to harness to its cart the strongest of all
  political motives, the craving for freedom,
  socialism began increasingly to make use of the
  promise of a new freedom. (828)
• (Socialism) was to bring economic freedom,
  without which the political freedom already
  gained was not worth having. (828)
• But, how did Socialists understand Freedom?

6
Two Understandings of Freedom

• Freedom as freedom from coercion, freedom from
  the arbitrary power of other men

• Freedom as freedom from necessity (which is but
  another name for the old demand for an equal
  distribution of wealth)

But what was promised to us as the Road of
Freedom was in fact the High Road to Servitude.
(829)
7
The Welfare State

• Unlike socialism, the conception of the welfare
  state has no precise meaning. (832)
• We shall see that some of the aims of the
  welfare state can be realized without detriment
  of individual liberty others cannot be realized
  in a society that wants to preserve personal
  freedom. (833)

Legitimate goals provision of collective goods
(i.e. museums) and security
8
Against Progressive Taxation

• Insignificant increase in tax collection
• Disincentives for the most productive people
  severe limitation of the incomes that could be
  earned by the most successful and thereby
  gratification of the envy of the
  less-well-off.(834)

9
Socialism is a Mistake

• our civilization depends, not only for its
  origin but also for its preservation, on what can
  be precisely described only as the extended order
  of human cooperation, an order more commonly, if
  somewhat misleadingly, known as capitalism.(838)
• there is no known way, other than by the
  distribution of products in a competitive market,
  to inform individuals in what direction their
  several efforts must aim so as to contribute as
  much as possible to the total product. (838)

10
Milton Friedman (1912-), Capitalism and Freedom

• Liberalism free discussion voluntary
  co-operation (rejection of coercion)
• the role of the market is that it permits
  unanimity without conformity that it is a system
  of effectively proportional representation. (840)

11
The Market Against Politics?

• Political channels strain the social cohesion
  essential for a stable society
• But
• The widespread use of the market reduces the
  strain on the social fabric by rendering
  conformity unnecessary with respect to any
  activities it encompasses.(841)

12
The Game of Society

• Need for Rules (Umpire)
• The Right Role of Government A government which
  maintained law and order, defined property
  rights, served as a means whereby we could modify
  property rights and other rules of the economic
  game, adjudicated disputes about the
  interpretation of rules, enforced contracts,
  promoted competition, provided a monetary
  framework, engaged in activities to counter
  technical monopolies and to overcome neighbohoord
  effects widely regarded as sufficiently important
  to justify government intervention, and which
  supplemented private charity and the private
  family in protecting the irresponsible, whether
  madman or childsuch a government would clearly
  have important funtions to perform. The
  consistent liberal is not an anarchist. (846-7)