Hayek and the Welfare State

|Peter Boettke|

I received an intriguing email last week from an individual embarking on the study of free market economics and Hayek in particular.  He was concerned because after an initial fascination with Hayek's writings, he had been alerted to the fact that Hayek did not provide a blanket rejection of many welfare state policies.  He wanted to know what I thought.  When pressed on this question, I often stress that it is important to distinguish between Hayek's own argument and Hayekian arguments.  One could offer, in short, a Hayekian critique of Hayek's own policy position.

I didn't want to stress this position at this time, and instead focused on what actually Hayek's own argument achieves.  Just imagine, seriously imagine, how different our political reality would be if all public policies had to pass through Hayek's "generality norm" critieria.  A lot, seriously a lot, of what currently gets passed through the political process will be eliminated.  Not everythihng a libertarian might hope for, but certainly a massive move in that direction.  

So yes, a national health care system might pass through the philosophical/political theory filter of a "generality norm", but I would suspect that somewhere in the range of 40-60% of what goes on in contempoary affairs in the US would be caught by that filter and would be considered illegitimate.

Besides engaging in that exercise --- which I think would be an interesting task for an enterprising graduate student to jump at --- Hayek gives another more general dilemma that we must wrestle with intellectually at that relates to general principles and counter-factual thought experiments. As he wrote in The Constitution of Liberty (1960, 258):

Those who attempt to delimit the functions of government in terms of aims rather than methods thus regularly find themselves in the position of having to oppose state action which appears to have only desirable consequences or having to admit that they have no general rule on which to base their objections to measures which appears to have only desirable consequences or of having to admit that they have no general rule on which to base their objections to measures which, though effective for particular purposes, would in their aggregate effect destroy a free society. Though the position that the state should have nothing to do with matters not related to the maintenance of law and order may seem logical so long as we think of the state solely as a coercive apparatus, we must recognize that, as a service agency, it may assist without harm in the achievement of desirable aims which perhaps could not be achieved otherwise.  The reason why many of the new welfare activities are a threat to freedom, then, is that, though they are presented as mere service activities, they really constitute an exercise of the coercive powers of government and rest on its claiming exclusive rights in certain fields.

Our task as economically informed social critics, Hayek tell us, was much easier with doctrinaire socialism and collectivism because we could easily demonstrate that they could not achieve what they themselves wanted to achieve.  But this is not the case with the welfare state, which as Hayek puts it, is not a definite system with explicitly stated goals.  The welfare state is instead a "conglomerate of so many diverse and even contradictory elements" that are sometimes compatible with a free society and sometimes incompatible.  Sorting through the contradictions, and the mixed methods used in the pursuit of welfare state programs is no easy task.   "The chief danger today is that," Hayek wrote (260), "once an aim of government is accepted as legitimate, it is then assumed that even means contrary to the principles of freedom may be legitimately employed."

So while the "generality norm" doesn't provide the same bright red-line as a doctrinaire laissez faire position would provide, it does constrain policy choice, and it sets up the constitutional project.  But the resolution of that constitutional project given the problem of establishing a "stopping argument" when that argument relies on establishing the veracity of counter-factual arguments in dealing with the seen and unseen consequences of welfare state policies. 

Comments

[K Sralla]

A priviatized healthcare system with real functioning prices is infinitely more economic and humane in rationing medicine to those who need it than the most enlightened and caring board of government bureaucrats. Almost anyone of average intelligence over a dinner conversation can understand this if the basic economics are clearly explained.

Nevertheless, once several generations grow up under a welfare program, it becomes almost impossible to root it out, no matter how bad the system. Remember that most folks seem to understand that social security is in essence a legalized government-sponsored ponzy scheme, but despite the clarity of the accounting, it remains the third rail of American politics. In the end, the argument of a just and elightened "society" seems to trump all positive economic arguments.

Many in Britain seem to view it as their proper duty to suffer bad healthcare so that others, poorer than themselves, may likewise freely experience equally bad healthcare. Once this kind of psychosis sets in, there is really little which can be done to combat it.

[Jim Rose]

Richard Epstein published a paper titled hayekian socialism.

[David Johnson]

The decision before us is not between an authoritarian society and a stateless society, it is instead between a more authoritarian society and a less authoritarian society. Hayek provides outstanding philosophical tools we can use to argue the latter, and must not be summarily dismissed or excommunicated because he isn't a doctrinaire anarchist.