Hayek on Social Justice
By David Henderson
Yesterday I was reading excerpts from Hayek’s Law, Legislation, and Liberty to prepare for a conference this coming weekend in Seattle. Here are some choice excerpts from Hayek’s discussion of “social justice.”
For the same reason that the prices which guide the direction of different efforts reflect events which the producer does not know, the return from his efforts will be frequently be different from what he expected, and must be so if they are to guide production appropriately. The remunerations which the market determines are, as it were, not functionally related with what people have done, but only with what they ought to do. They are incentives which as a rule guide people to success, but will produce a viable order only because they often disappoint the expectations they have caused when relevant circumstances unexpectedly changed. It is one of the chief tasks of competition to show which plans are false. [italics his]
It’s clear from context that “ought” here is not used in the usual sense of “moral obligation,” but in the sense of what one should do if one wants the highest possible return on his (her) resources.
Men can be allowed to act on their own knowledge and for their own purposes only if the reward they obtain is dependent in part on circumstances which they can neither control nor foresee. And if they are to be allowed to be guided in their actions by their own moral beliefs, it cannot also be morally required that the aggregate effects of their respective actions on the different people should correspond to some ideal of distributive justice. In this sense freedom is inseparable from rewards which often have no connection with merit and are therefore felt to be unjust. [italics his]
In explaining how it’s good to allow new products on the market even though doing so hurts current producers, Hayek writes:
Of course, those who as a result will be deprived of their former customers will incur a loss which it would be in their interest to prevent. But like all others, they will have been profiting all the time from the repercussions of thousands of similar changes elsewhere which release resources for a better supply of the market.
The known and concentrated harm to those who lose part or all of the customary source of income must, in other words, not be allowed to count against the diffused (and, from the point of view of policy, usually unknown and therefore indiscriminate) benefits to many. We shall see that the universal tendency of politics is to give preferential consideration to few strong and therefore conspicuous effects over the numerous small and therefore neglected ones . . .