Notes: Hayek and Democracy
I have long been of the opinion that Friedrich Hayek saw more deeply into why the market economy is so productive--the use of knowledge in society, competition as a discovery procedure, et cetera--than neoclassical economics, with its Welfare Theorems that under appropriate conditions the competitive market equilibrium (a) is Pareto-Optimal or (b) maximizes a social welfare function that is the sum of individual utilities in which each individual's weight is the inverse of their marginal utility of income.
I have also long been of the opinion that Karl Polanyi saw more deeply than Hayek into what the necessary foundations for a well-functioning and durable market economy--and good society--were.
But last night I ran into a passage that makes me wonder whether Hayek in his inner core believed that democracy had any value--even any institutional value--at all. It came on pp. 171-2 of Friedrich Hayek (1979), Law, Legislation and Liberty: The Political Order of a Free People vol. III (Chicago, Il.: University of Chicago Press: 0226320901):
"Egalitarianism is of course not a majority view but a product of the necessity under unlimited democracy to solicit the support even of the worst.… It is by the slogan that 'it is not your fault' that the demagoguery of unlimited democracy, assisted by a scientistic psychology, has come to the support of those who claim a share in the wealth of our society without submitting to the discipline to which it is due. It is not by conceding 'a right to equal concern and respect’ to those who break the code that civilization is maintained…"
Now it is certainly true that of the trio "Prosperity, Liberty, Democracy," Hayek puts prosperity first and liberty second--or, rather, that freedom of contract needs to be more closely safeguarded than freedom of speech, for if there is freedom of contract then freedom of speech will quickly reappear, but if there is no freedom of contract than freedom of speech will not long survive. But the passage above makes me wonder whether democracy has any place in Hayek's hierarchy of good things at all.
Sam Brittan wrote somewhere that Hayek is an odd combination of market libertarian and social conservative--that his "free people" are always "submitting to the discipline" required by society's current moral conventions. Indeed, there are places where Hayek goes further and limits what a "free people" can do even more--where his idea of "freedom" seems to be freedom to (a) transact at the market's current prices, and (b) shut up and be grateful. Witness Friedrich Hayek (1976), Law, Legislation and Liberty: The Mirage of Social Justice vol. II (Chicago, Il.: University of Chicago Press: 0226320839), p. 93:
"While in a market order it may be a misfortune to have been born and bred in a village where…the only chance of making a living is fishing… it does not make sense to decribe this as unjust. Who is supposed to have been unjust?--especially… if these local opportunities had not existed, the people in question would probably never have been born at all… [for lack of] the opportunities which enabled their ancestors to produce and rear children..."
It seems to me that this "shut up and be grateful you were ever born" proves far too much, and is far too powerful an argument to be true, for it can be used in defense of any imaginable social order:
* - While in a feudal order it may be a misfortune to have been born and bred a serf owing three days a week of labor on the lord's demesne… it does not make sense to decribe this as unjust... if feudalism had not existed, the people in question would probably never have been born at all...
* - While under the Roman Imperium it may be a misfortune to have been born a slave to Marcus Porcius Cato… it does not make sense to decribe this as unjust... if the Roman Imperium had not existed, the people in question would probably never have been born at all...
* - While in the American colonies it may be a misfortune to have been born a slave to Thomas Jefferson… it does not make sense to decribe this as unjust... if the American colonies had not existed, the people in question would probably never have been born at all...
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