Hayek & Rawls
John Rawls has done more to promote the ideals of egalitarianism and social justice than any thinker since the Second World War. And no thinker has been more openly hostile to these ideals than Friedrich Hayek - at least this is the conventional interpretation of Hayek's work. But in their struggle against post-war philosophy's greatest egalitarian thinker, Hayek's disciples have a problem - their guru didn't leave them any arguments against Rawls. The reason he didn't was because he agreed with Rawls. In the second volume of Law, Legislation and Liberty Hayek explained that he saw little point in engaging with Rawls' Theory of Justice since 'the differences between us seemed more verbal than substantial..." Hayek was not mistaken about this. When he disagrees with Rawls it is over economic not philosophical issues. Much of the apparent philosophical disagreement is a result of Hayek's peculiar way of using terms like egalitarianism and social justice.
Hayek spent his entire career arguing against the socialism of the 1930s and 40s. But by the 1970s the leading egalitarian thinkers had moved on - not just in their policies but also in their ideals. While Hayek's arguments against socialist central planning are devastating, his work has done little to refute the social democratic vision Rawls inspired. Hayek took a stand against nationalisation and central planning at a time when these policies were fashionable with both sides of politics. He played a leading role in organising a movement to defend the free market against socialism. And for his efforts he has earned the respect of a generation of think tank intellectuals and conservative politicians. He has also earned the undying enmity of the left - a left which, ironically, has largely abandoned the socialist ideals he attacked.
Hayek has become an icon - a symbol for an entire movement. And in the comic book world of partisan stereotypes, Hayek's own voice gets lost. Political thinkers are expected to be team players, and both Hayek's supporters and opponents credit him with stereotyped views that he never held. It's not easy to give a concise overview of Hayek's political philosophy. His thought was always a work in progress. He described himself as a 'muddler' - the kind of thinker who struggles to find a new way of understanding a subject rather than simply elaborating the conventional doctrine. Muddlers, he said, will sometimes 'talk about a subject before they have painfully worked through to some degree of clarity' (Hayek, 1978b: 53).
Readers looking for a simple endorsement of partisan doctrine will be disappointed by Hayek. His ideas are alive. The various strands of his thought head off in different directions and it's not always clear where they lead. Perhaps the best approach to his work is to read him the way he read others. In his essay 'Two types of mind' he wrote:
My gain from hearing or reading what other people thought was that it changed, as it were, the colours of my own concepts. What I heard or read did not enable me to reproduce their thought but altered my thought. I would not retain their ideas or concepts but modify the relations between my own (Hayek, 1978b: 52-53).
Now that the social democratic left has finished with central planning and nationalisation, it's time to rethink political ideas and reconsider intellectual alliances. We can safely allow Hayek's thoughts to influence our own without worrying that we'll be brainwashed into becoming doctrinaire neoliberals. In the process we may find that some of Hayek's friends are our friends too. In recent years some libertarian thinkers have grown frustrated with their conservative allies. In the United States, the Republican Party's drift towards big government populism, its pandering to special interests, its passion for military adventures, and its disregard for civil liberties has alienated Hayek's intellectual heirs. In their search for new intellectual partners, the Cato Institute's Will Wilkinson and Brink Lindsey are talking about a combination of Hayek's economic insights with Rawls' philosophical theory. For social democrats who look to Rawls rather than Marx, this is a conversation worth having. If only we were able to have it in Australia.
Hayek & Rawls
Hayek and Rawls both worked from the same tradition - liberalism. They argued that individuals should to be free to pursue their own idea of the good life and that the state's role is as an enabler. The government exists to serve the people; the people do not exist to serve the government. A liberal state enforces principles of justice and ensures access to primary goods like education. Its only purpose is to maintain an institutional framework within which citizens can pursue their own goals. Governments - even democratically elected governments - should not have goals of their own.
The key problem for liberal theorists is find a way to decide what system of rules and institutions will maximise everyone's opportunity to achieve their goals. Interestingly, the reasoning Hayek uses comes from his personal experience. In an unusually personal footnote in volume two of Law, Legislation and Liberty Hayek tells a story about living in London during World War II. During the German bombing in 1940 he was afraid he might die. And like any parent, he worried about what would happen to his children:
It was at that time, when we were all prepared for much worse than eventually happened, that I received offers from several neutral countries to place my then small children with some unknown family with whom they would presumably remain if I did not survive the war. I had thus to consider the relative attractiveness of social orders as different as those of the USA, Argentine and Sweden, on the assumption that the conditions in which my children would grow up in that country would be determined more or less by chance. This led me, as abstract speculation perhaps never could have done, to realize that where my children were concerned, rational preferences should be guided by considerations somewhat different from those which would determine a similar choice for myself who occupied already an established position and believed (perhaps wrongly) that this would count for more in a European country than in the USA. Thus, while the choice for myself would have been influenced by the considerations of the relative chances for a man in his early forties with formed skills and tastes, a certain reputation and with affiliations with classes of particular inclinations, the choice for my children would have had to be made in consideration of the particular environment in which chance was likely to place them in one of those countries. For the sake of my children who still had to develop their personalities, then, I felt that the very absence in the USA of the sharp social distinctions which would favour me in the Old World should make me decide for them in favour of the former. (I should perhaps add that this was based on the tacit assumption that my children would there be placed with a white and not with a coloured family.) (Hayek, 1976: 188-89 n25).
It is possible that Hayek was wrong in his comparison of the United States and Sweden, but this has no effect on the validity of the argument he used to make the decision. The principle he arrived at was this: 'we should regard as the most desirable order of society one which we would choose if we knew that our initial position in it would be decided purely by chance' (Hayek, 1976: 132). For anyone who has read Rawls' Theory of Justice, this will pattern of reasoning will be familiar. Hayek's thought experiment parallels Rawls' 'original position.' In his effort to discover the most desirable order of society Rawls asked readers to choose principles of justice from behind a 'veil of ignorance':
Among the essential features of [the original position] is that no one knows his place in society, his class position or social status, nor does any one know his fortune in the distribution of natural assets and abilities, his intelligence, strength, and the like. I shall even assume that the parties do not know their conceptions of the good or their special psychological propensities (Rawls, 1973: 12).
A number of writers have commented on this parallel. These include Elizabeth Anderson, Lawrence Connin, Arthur Diamond and John Gray (Anderson, 2005; Connin, 1985; A. Diamond, 1980; Gray, 2004). Hayek himself acknowledges that their arguments run in parallel (Hayek, 1976: 100). So how far did Hayek go in agreeing with Rawls? While he referred to Rawls' 1971 book A Theory of Justice Hayek admitted that he had not studied it. What he had read was an earlier article 'Constitutional Liberty and the Concept of Justice' (Rawls, 1963). In this article Rawls had already outlined the foundation principles of his theory. After considering the original position, Rawls arrived at two principles for the design of institutions:
...first, each person participating in an institution or affected by it has an equal right to the most extensive liberty compatible with a like liberty for all; and, second, inequalities as defined by the institutional structure or fostered by it are arbitrary unless it is reasonable to expect that they will work out to everyone's advantage and provided that the positions and offices to which they attach or from which they may be gained are open to all (Rawls, 1963: 100).
Rawls stressed that 'the second principle holds that an inequality is allowed only if there is reason to believe that the inequality will work to the advantage of every person engaged in or affected by the institution which defines or permits it' (Rawls, 1963: 101-102). Many of Rawls' readers believed that only a socialist system could satisfy these constraints. Daniel Bell, for example, remarked that 'With Rawls, we have the most comprehensive effort in modern philosophy to justify a socialist ethic' (Bell, 1972: 57). But Hayek was aware of this interpretation but did not agree (Hayek, 1976: 183). A socialist system may reduce inequality, but Hayek believed that it could only do so by reducing opportunities for the most disadvantaged. While a free market system would increase inequality, it would do so in a way that was to the advantage of everyone. As he explained in one of his 1976 Australian lectures: 'Thanks to this unequal distribution, the poor get in a competitive market economy more than they would get in a centrally-directed system' (Hayek, 1979: 14). It is clear that Hayek would never have chosen to send his orphaned children to a socialist country.
Some critics are convinced that Hayek had misunderstood Rawls' argument (for example, DiQuattro, 1986). After all, Rawls' theory was a justification of both egalitarianism and social justice - two ideas that everyone knows Hayek vehemently rejected. But this interpretation gives Hayek less credit than he deserves.
The ambiguity social justice
In 'Two Types of Mind' Hayek described his thinking style as muddling or puzzling - he was the kind of person who has trouble memorising conclusions and, so, is forced to think through problems from first principles (Hayek, 1978b). Because of this, Hayek always paid more attention to underlying concepts than the names that people attached to them. Unlike some other readers, he understood very clearly what Rawls meant by the term social justice and how it differed from his own use of the term.
Rawls distinguishes between 'procedural' justice and 'allocative' justice. Under a system of procedural justice, the production and distribution of goods takes place according to a system of rules. As long as the rules are adhered to, any resulting distribution is just. In contrast, allocative justice pre-existing goods are 'divided among definite individuals with known desires and needs. The goods to be allotted are not produced by these individuals, nor do these individuals stand in any existing co-operative relations' (Rawls, 1973: 88). Rawls argued that the allocative conception of justice led to utilitarianism - an ethical system he rejected. His theory of justice as fairness relied on pure procedural justice (Anderson, 2005). The purpose of the original position with its veil of ignorance was to arrive at a basic structure of rules:
In justice as fairness society is interpreted as a cooperative venture for mutual advantage. The basic structure is a public system of rules defining a scheme of activities that leads men to act together so as to produce a greater sum of benefits and assigns to each certain recognized claims to a share in the proceeds. What a person does depends upon what the public rules say he will be entitled to, and what a person is entitled to depends on what he does. The distribution which results is arrived at by honoring the claims determined by what persons undertake to do in the light of these legitimate expectations (Rawls, 1973: 84).
Some of Rawls' critics seem to be hiding behind their own veil of ignorance - a veil that keeps them from actually reading his work. For example, Centre for Independent Studies' Peter Saunders and Kayoko Tsumori mistakenly interpret Rawls as arguing for a system based on allocative justice (Saunders & Tsumori, 2002: 76). For Rawls, achieving 'social justice' was about finding institutional arrangements that satisfied the principles of justice - a system of rules that would result in fair equality of opportunity and would be to the advantage of the least well off (Rawls, 1973: 87). Hayek understood this and explained that he had 'no basic quarrel' with Rawls' reasoning. His only complaint was with Rawls' terminology. 'The fact which I regret and regard as confusing is merely that in this connection he employs the term 'social justice'" (Hayek, 1976: 100).
Hayek objections to 'social justice'
For Hayek, 'social justice' meant allocative justice - the demand 'for an assignment of the shares in the material wealth to the different people and groups according to their needs or merits' (Hayek, 1991: 121). Hayek had two objections to 'social justice' - it was incompatible with a liberal social order and it would destroy the market. The Hoover Institution's Kurt Leube neatly summarises Hayek's liberal vision 'Hayek sees its main task as that of finding rules to enable men with different values and convictions to live together. These rules should be so constructed as to permit each individual to fulfill his aims' (Leube, 1984: xxv).
In a liberal social order the government has no aims of its own. As Hayek saw, this is incompatible with the pursuit of 'social justice'. To ensure that every citizen received the share they needed or deserved, government would have to impose its own aims on society. This is because rational people differ in their interpretations of 'social justice'. For some, merit is about equal shares for all (Hayek refers to this as 'egalitarianism'). For others it is about reward for talent, effort or contribution to the welfare of society. For others still it is about giving people what they need to fulfill their innate potential as human beings.
Hayek's second objection to 'social justice' was that it would destroy the market - the only institution capable of supporting developed nations at their current standard of living. In his most famous book, The Road to Serfdom, Hayek warned that pursuing socialism's project of central planning and nationalised industry would lead to totalitarianism (Hayek, 2001). Later he argued that pursuing 'social justice' through the welfare state would lead to the same result (Hayek, 1994: 108). The reason the pursuit of 'social justice' is incompatible with the market is that market outcomes do not correspond to any principle of need or merit. In The Constitution of Liberty, Hayek made this clear:
Most people will object not to the bare fact of inequality but to the fact that the differences in reward to do not correspond to any recognizable differences in the merits of those who receive them. The answer commonly given to this is that a free society on the whole achieves this kind of justice. This, however, is an indefensible contention if by justice is meant proportionality of reward to moral merit. Any attempt to found the case for freedom on this argument is very damaging to it, since it concedes that material rewards ought to be made to correspond to recognizable merit and then opposes the conclusion that most people will draw from this by an assertion which is untrue (Hayek, 1960a: 93-94).
In volume two of Law, Legislation and Liberty he was even blunter:
It has of course to be admitted that the manner in which the benefits and burdens are apportioned by the market mechanism would in many instances have to be regarded as very unjust if it were the result of a deliberate allocation to particular people (Hayek, 1976: 64).
The point Hayek is making is that, in a liberal social order, justice is about conformity with procedures. If the distribution of rewards seems unnecessarily unequal the correct response is to reconsider the structure of rules and institutions. There is no major conflict with Rawls here. When we think about institutional reform, Rawls is suggesting that we imagine ourselves in the original position and judge rival proposals from there (Rawls, 2005: 22-28). Hayek, in effect, is suggesting that we imagine placing our children in the societies created by each proposal.
Hayek & the welfare state
One of the reasons a Rawlsian interpretation of Hayek seems implausible is because Rawls' theory is so frequently used to defend welfare state institutions (Bessant, Watts, Dalton, & Smyth, 2006: 153; Murray, 1988: 82-83; Pierson, 1991: 198). The reason welfare state institutions now need defending is because they are under attack from Hayek's followers (Mishra, 1984). So how could the guru of welfare state retrenchment possibly agree with Rawls?
According to some thinkers, Hayek believed that welfare state institutions were a Trojan horse for socialism (Bessant et al., 2006: 50). This was certainly the belief of Hayek's Austrian mentor, Ludwig Mises. According to Mises 'the Welfare State is merely a method for transforming the market economy step by step into socialism' (Mises, 1980). Both Mises and Hayek warned that socialist policies put the state on a slippery slope to totalitarianism (Caldwell, 1997). But unlike Mises, Hayek endorsed a range of welfare state institutions. In his 1960 book The Constitution of Liberty he wrote:
All modern governments have made provision for the indigent, the unfortunate, and disabled and have concerned themselves with questions of health and the dissemination of knowledge. There is no reason why the volume of these pure service activities should not increase with the general growth of wealth. There are common needs that can be satisfied only by collective action and which can be thus provided for without restricting individual liberty (p 257).
As an uncompromising libertarian, Mises was disappointed with this position. In a review of The Constitution of Liberty he wrote:
...the author tries to distinguish between socialism and the Welfare State. Socialism, he alleges, is on the decline; the Welfare State is supplanting it. And he thinks the Welfare State is, under certain conditions, compatible with liberty (Mises, 1980).
There are places where Hayek appears to agree with Mises about the welfare state leading to socialism. In a 1978 interview with Axel Leijonhufvud he explained that many socialist parties had given up on socialising the means of production and were now pursuing social justice through the welfare state. He argued that this would produce the same result as socialism but through a slower process (Hayek, 1994: 108). While this might appear to be a contradiction, Hayek's position on welfare was, in fact, consistent throughout his writings. What he argued against was the use of welfare state institutions to pursue 'social justice'. Since the market would never give all citizens the incomes and services that they deserved, taxing and redistribution on a large enough scale to approach 'socially just' outcomes would eventually cause the market to fail. Policy makers would be driven to intervene to correct this market failure and this would require direct state control of prices and incomes (Hayek, 1979: 24).
For Hayek, the key thing that puts a nation on the road to serfdom is not state support for health care or unemployment insurance, but the pursuit of 'social justice.' Throughout his career Hayek argued for a guaranteed minimum income and government support for education and social services (for example, Hayek, 1949: 111; Hayek, 1976: 87; 1978a: 118; 2001: 124).
Was Hayek a social democrat?
Hayek's support for the welfare state disturbs some libertarians. The University of Nevada's Hans-Hermann Hoppe went so far as to say that Hayek's views 'cannot systematically be distinguished from that of a modern social democrat' (Hoppe, 1994). Was Hoppe right? Hayek's support for the welfare state was limited and heavily qualified. In The Road to Serfdom he argued that a wealthy society could grant citizens a minimum standard of living but wondered whether 'those who thus rely on the community should indefinitely enjoy all the same liberties as the rest' (Hayek, 2001: 124). And while he raised no objection to 'government rendering quite a number of services' he did object to government monopolies which stifled competition. He was particularly of critical Britain's National Health Service (Hayek, 1994: 149).
None of Hayek's concrete policy suggestions runs the risk of creating big government. But at the same time, his arguments do not place any firm limit on the size of government. As he explained in The Constitution of Liberty, 'it is the character rather than the volume of government activity that is important' (Hayek, 1960a: 222). According to the Australian National University's Jeremy Shearmur, Hayek left himself open to the charge that his arguments were compatible with an extensive welfare state (Shearmur, 2003: 582-583).
Radical libertarians like Ayn Rand, Hans-Hermann Hoppe, Walter Block criticised Hayek for not supporting laissez-faire capitalism. Rand referred to him as 'an example of our most pernicious enemy' (Rand, 1997: 308), Hoppe accused him of being confused about the meaning of liberty (Hoppe, 1994), and Block labeled him a lukewarm advocate for free enterprise (Block, 1996). All of these thinkers found Mises more persuasive than Hayek. They could see that Hayek's policy positions came from his very different understanding of liberalism. Hayek himself once said that he was always more persuaded by Mises answers than by his arguments (Caldwell, 2004: 148). Confronted by Hayek's work, Rawlsian social democrats may have the opposite reaction - his arguments may seem more persuasive than his answers.
Beyond left & right
In the United States, Hayek's followers formed an intellectual alliance with conservatives. Alliances require a common enemy, and in the early 1960s the enemy was socialism. To fight socialism, Frank Meyer, senior editor of the National Review, argued for an intellectual synthesis of Hayek's classical liberalism and the traditionalist conservatism of thinkers like Russell Kirk. This synthesis became known as fusionism (Edwards, 1999: 107-108). Meyer came up with an ingenious way of reconciling classical liberalism and conservatism. Conservatives wanted to promote moral virtue while classical liberals wanted the government let citizens (and corporations) take responsibility for their own decisions. Meyer argued that citizens could only be virtuous if they were free. Conservatives had to accept that 'the political condition of moral fulfilment is freedom from coercion.' And in return, classical liberals had to accept that a free society was impossible without a virtuous citizenry (Meyer, 1965: 16).
Fusionism provided the intellectual backing for one of the most successful political movements in America's post-war history. Its greatest champions were Barry Goldwater and Ronald Reagan. Goldwater failed spectacularly against Lyndon Johnson and even before Watergate, Richard Nixon's presidency was a huge disappointment. But with Reagan the movement finally broke through. Politically fusionism was a great success but intellectually tensions remained. While Hayek recognised that a political alliance with conservatives was useful, he never really trusted them - there was never any fusion going on in Hayek's mind. In his essay 'Why I Am Not A Conservative,' he wrote:
In the last resort, the conservative position rests on the belief that in any society there are recognizably superior persons whose inherited standards and values and position ought to be protected and who should have a greater influence on public affairs than others. The liberal, of course, does not deny that there are some superior people - he is not an egalitarian - but he denies that anyone has authority to decide who these superior people are (Hayek, 1965: 94).
From the 1970s Hayek's American followers were challenged by the growing influence of the neoconservatives. Irving Kristol was the leading figure in this loose grouping. He was a great communicator of ideas and heavily influenced by the philosopher Leo Strauss (Kristol, 1999: 6). Strauss had argued that the liberal practice of treating all values as equal contributed 'to the victory of the gutter' (Strauss, 1989a: 154). He warned that abandoning the search for objective values had led the crisis of modernity (Strauss, 1989b: 81). His student Martin Diamond argued that American liberal democracy was in danger unless its citizens believed that theirs was a system that rewarded virtue and punished vice (M. Diamond, 1992). Kristol shared these concerns. He argued that people would only feel free when they subscribed to a 'prevailing social philosophy' and warned that:
A 'free society' in Hayek's sense gives birth in massive numbers to 'free spirits' - emptied of moral substance but still driven by primordial moral aspirations. Such people are capable of the most irrational actions (Kristol, 1971: 13).
Hayek was aware of Kristol's arguments but was not convinced (Hayek, 1976: 73-74). In Hayek's terms, Kristol was arguing for a society governed by a shared understanding of 'social justice' - something Hayek could never accept. Presumably this shared understanding would be safeguarded by the kind of self-appointed 'superior persons' that made Hayek so anxious. Hayek played little part in the culture wars which erupted in response to the counter-culture of the 1960s. The right's campaign against relativism, nihilism and post-modernism was a neoconservative obsession (Joyce, 2003). And as James Piereson of the John M Olin Foundation explains, from the 1970s on much of the philanthropic support behind America's right wing think tanks was directed to conservative rather than libertarian causes (Piereson, 2005). With the current Bush presidency the conflict between Hayekian classical liberals and conservative thinkers has intensified. The Cato Institute's Brink Lindsey recently wrote:
Conservatism itself has changed markedly in recent years, forsaking the old fusionist synthesis in favor of a new and altogether unattractive species of populism. The old formulation defined conservatism as the desire to protect traditional values from the intrusion of big government; the new one seeks to promote traditional values through the intrusion of big government (Lindsey, 2006).
Lindsey argues that 'prevailing ideological categories are intellectually exhausted.' Fusionism is dead. Without the threat of socialism to hold it together, the right no longer exists. As classical liberal, Lindsay suggests a new intellectual alliance based on a 'reconciliation between Hayek and Rawls.'
In Britain during the early 1990s, sociologist Anthony Giddens also saw a growing tension between the classical liberals (neoliberals) who looked to Hayek and Milton Friedman and the conservatives and neoconservatives who looked to Michael Oakeshott and Irving Kristol. With the death of old-fashioned command and control socialism, Giddens argued for an intellectual fusion of social democracy and conservatism. In 1994 he suggested that 'Conservatism in the shape of neoconservatism and philosophical conservatism can be drawn on positively, if critically' to support a radical program that goes beyond the old left and right divisions (Giddens, 1994: 49). In Australia, David McKnight has rejected both Hayek and the philosophy of liberalism. He argues that social democrats should adopt the same approach as conservatives - government should have a moral purpose (McKnight, 2005).
While the Liberal/Labor divide in Australia remains stable, the intellectual divide between left and right does not. There is a realignment taking place but it is not a realignment that involves marginal electorates or swinging voters. Voters are notoriously inattentive to the kinds of issues that intellectuals get excited about. Political parties are idea brokers rather than idea producers. They bring ideas and constituencies together. They have the retail end of the business. Academics like Hayek are producers and think tanks like Cato and the Centre for Independent Studies are wholesalers. The most significant realignment is taking place at the wholesale level - the people who package and market ideas. This is a group that includes academics, think tank intellectuals and journalists. They are the kind of people who decide whether eating camembert is left or right wing. They create and maintain the stereotyped packages of argument and policy that define a person's political identity. Without the old socialist policy to bind them together, leftist intellectuals have been forced to rethink their aims and ideals. Philosophically, are they liberals, conservatives or something else? Many of Australia's leading leftist thinkers have rejected liberalism. In a paper titled 'The disappointment of liberalism' the Australia Institute's Clive Hamilton picks apart Rawls' theory of justice (Hamilton, 2004). RMIT's Rob Watts is also highly critical of Rawls and liberalism. In a recent conference paper he even draws on Leo Strauss to make his point (Watts, 2006). Leftist intellectuals are becoming increasingly conservative and defensive.
Hayek realised how important ideals are for an intellectual movement. In 'The Intellectuals and Socialism' he argued that socialists had won the support of intellectuals because they had a positive vision for the future. The socialists sketched the outlines of utopia while their opponents picked at their arguments and defended the status quo (Hayek, 1960b). In turning to conservatism for inspiration, today's social democrats risk being caught in the same position. They are critics without ideals. They oppose the excesses of capitalism and 'neoliberalism' but no longer hold up socialism as an alternative. Social democrats need to ask themselves whether they are liberal champions of society's most marginalised and disadvantaged or conservative critics of capitalism and social change.
For Rawlsian liberals, social democracy is about improving the opportunities of society's least advantaged. The countries that seem to be most successful in Rawlsian terms are countries which have embraced the market. Hayek was right to oppose socialism. But Hayek's fears about real world welfare states have turned out to be misplaced. The Nordic countries use some of the great wealth generated by capitalist enterprise to make sure all their citizens have an opportunity to pursue the kinds of life they value. Child care, health care, education and social insurance are all freely available. Their welfare states do not use taxes and redistribution to eliminate inequality or align the income distribution with some meritocratic ideal. As a result, there are large parts of the Nordic model that do not fall foul of Hayek's arguments against 'social justice'.
Even economists like George Mason University's Tyler Cowen have had to admit that the Swedes are both prosperous and free. 'Sweden (or should I say Stockholm?) remains one of the best places in the history of the world to date,' he writes, 'and we are fooling ourselves if we don't recognize that' (Cowen, 2006). The success of countries like Sweden, Norway and Denmark has even attracted the attention of Hayek scholars like Peter Boettke. The question is no longer whether Nordic-style social democracy can work, but whether it can work in a country like the United States. Boettke doubts that it can and suggests that the United States is too large and ethnically diverse to support the kind of institutions the Danes maintain (Boettke, 2007).
Australia is a different situation from either the US or the Nordic states. If it turned out that greater public support for child care, education and health care did improve opportunities for the least advantaged, then it seems clear that Rawlsian liberals should support them. And if Hayekian liberals acknowledged that Hayek and Rawls were making essentially the same argument about justice, then they should support them too. That is why it is so interesting that the Cato Institute's Will Wilkinson is calling for a Rawls/Hayek fusion. On the Cato institute's weblog he writes:
Rawls and Hayek were, in my estimation, the greatest social/political thinkers of the 20th Century. Rawls understood markets better than he is given credit for, but no one understood markets better than Hayek. And Hayek was a first-rate political philosopher, but Rawls was king of that hill. If you fortify Rawls' theory of justice with a Hayekian grasp of the co-ordinating function of prices, and the dynamics of spontaneous order (or fortify Hayek with Rawls' rather more intelligible normative framework), you will arrive, as Brink [Lindsey] argues in less esoteric terms, at something like a system that gives free rein to the informational and dynamically equilibrating function of market prices, while creating a framework for well-targeted and effective social insurance that mitigates counterproductive incentives (Wlkinson, 2006).
Wilkinson calls this intellectual fusion, 'Rawlsekianism'. Because of his views about how markets work, he believes the result would be more libertarian than social democratic. But what makes Wilkinson's invitation so appealing is that it shifts the focus of the debate from philosophy to social science. The argument is about the effectiveness of rival policies and the only sticking point with this is that Hayek's supporters often prefer rationalist theory to empirical evidence.
Naturally there will be some difficulties in bringing these two branches of liberalism together. Hayek admired independent business people and looked down his nose at employees. He thought the union movement was a menace to society and was suspicious of democracy. As a result he has attracted many followers who are less interested in liberalism and more interested in promoting the interests of business, bashing unions and promoting capitalism in the developing world - even when this means supporting illiberal dictatorships. The tribal nature of politics means that these people may be hard to separate from genuine liberals.
But despite the difficulties, a conversation with Hayek's liberal followers is worth having. While they might dream of making government smaller, Hayek's followers may settle for making it more limited and more effective. After all, nobody else if offering to give them the steep expenditure cuts they want. And while social democrats might want to increase spending in order to provide better services, there are other options. Freeing up markets and curb corporate welfare could also provide more resources for policies like early childhood education, support for low paid workers. And for both groups the bottom line should be better opportunities for the least advantaged.
Perhaps the major problem in Australia will be finding classical liberals who take Hayek as seriously as Wilkinson and Lindsey do.
Don Arthur is currently completing a PhD on free market think tanks and the politics of poverty, and is a regular contributor to weblog Club Troppo.
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