I am currently reading Hayek's The Road to Serfdom and was surprised to find him supporting some form of minimum income. I am aware Friedman also advocated something of this type (though in the form of a negative income tax). Both, no doubt, were great fighters for the liberal cause. I am also aware, however, that Hayek altered some of his views later in life (for example, ceasing to support a central bank), but, after some amount of googling, I have been unable to find a decisive answer. So my question is twofold: first of all, did Hayek support a minimum income, and if so, how did he reconcile it with the economic and political tenets of classical liberalism? The two seem to be in irresolvable conflict. Finally, feel free to throw in your own ideas on this issue (which include justifications, not just claims).
maybe he was a better economist than (political) philosopher.
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
Landon: I am currently reading Hayek's The Road to Serfdom and was surprised to find him supporting some form of minimum income. I am aware Friedman also advocated something of this type (though in the form of a negative income tax). Both, no doubt, were great fighters for the liberal cause. I am also aware, however, that Hayek altered some of his views later in life (for example, ceasing to support a central bank), but, after some amount of googling, I have been unable to find a decisive answer. So my question is twofold: first of all, did Hayek support a minimum income, and if so, how did he reconcile it with the economic and political tenets of classical liberalism? The two seem to be in irresolvable conflict. Finally, feel free to throw in your own ideas on this issue (which include justifications, not just claims).
Hayek supported a minimum income as a second best solution in order to appease welfare-statists. Compared to the types of income redistribution that exists in North America and Western Europe a minimum income would be much more efficient and would actually take arbitrary power away from politicians (because the minimum income doesn't leave much room for special favors for small groups like the current system). If I had a button that would switch us from our current system to one with a minimum income as the only state welfare provision, then I would push it without hesitation.
"I cannot prove, but am prepared to affirm, that if you take care of clarity in reasoning, most good causes will take care of themselves, while some bad ones are taken care of as a matter of course." -Anthony de Jasay
I agree with you completely Solid_Choke, insofar as Hayek's suggestion would be infinitely better than the system we have now, which is far closer to the socialist kind of "security" that he criticizes in the same chapter ("Security and Freedom"). However, it doesn't sound like he is proposing such a minimum income as a sort of compromise, but rather he treats it as a necessity almost undeniable. He says, on page 148 of the new U of C edition, "There is no reason why in a society which has reached the general level of wealth which ours has attained the first kind of security [of which he uses "minimum income" as an example] should not be guaranteed to all without endangering general freedom," and, "there can be no doubt that some minimum...can be assured to everybody." He also suggest that the state, "assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision," using sickness and and accident as examples, and likening such situations to state assistance to victims of natural disaster. Finally, he even proposes the government combat, "general fluctuations of economic activity and the recurrent waves of large-scale unemployment which accompany them."
What I find most interesting however, is his statement at the end of the chapter that, "Some security [referring to "security against severe privation and the reduction of the avoidable causes of misdirected effort and consequent disappointment."] is essential if freedom is to be preserved, because most men are willing to bear the risk which freedom inevitably involves only so long as that risk is not too great." How is income redistribution in the vein of minimum income necessary to preserve freedom?
EDIT: Another poster claimed that Hayek was not "terribly consistent." But isn't this to be regarded as an intellectual virtue? People who never change or alter their opinions are rarely intellectually rigorous or honest. In fact, it is the duty of the intellectual to constantly challenge him or herself, and doubt his or her own conclusions.
Landon: I agree with you completely Solid_Choke, insofar as Hayek's suggestion would be infinitely better than the system we have now, which is far closer to the socialist kind of "security" that he criticizes in the same chapter ("Security and Freedom"). However, it doesn't sound like he is proposing such a minimum income as a sort of compromise, but rather he treats it as a necessity almost undeniable. He says, on page 148 of the new U of C edition, "There is no reason why in a society which has reached the general level of wealth which ours has attained the first kind of security [of which he uses "minimum income" as an example] should not be guaranteed to all without endangering general freedom," and, "there can be no doubt that some minimum...can be assured to everybody." He also suggest that the state, "assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision," using sickness and and accident as examples, and likening such situations to state assistance to victims of natural disaster. Finally, he even proposes the government combat, "general fluctuations of economic activity and the recurrent waves of large-scale unemployment which accompany them." What I find most interesting however, is his statement at the end of the chapter that, "Some security [referring to "security against severe privation and the reduction of the avoidable causes of misdirected effort and consequent disappointment."] is essential if freedom is to be preserved, because most men are willing to bear the risk which freedom inevitably involves only so long as that risk is not too great." How is income redistribution in the vein of minimum income necessary to preserve freedom? EDIT: Another poster claimed that Hayek was not "terribly consistent." But isn't this to be regarded as an intellectual virtue? People who never change or alter their opinions are rarely intellectually rigorous or honest. In fact, it is the duty of the intellectual to constantly challenge him or herself, and doubt his or her own conclusions.
The way I originally interpreted those passages was that people wouldn't accept laissez-faire capitalism unless a provision like this was made (remember that at that time just about every "thinking person" was a full on socialist). Upon reconsideration and more thought about Hayek's more recent works (especially his praise for John Rawls) I think you are probably right that Hayek supported an "absolute minimum" even as a optimal choice (in other words, not just because people wouldn't accept capitalism otherwise).
Landon:Another poster claimed that Hayek was not "terribly consistent." But isn't this to be regarded as an intellectual virtue? People who never change or alter their opinions are rarely intellectually rigorous or honest. In fact, it is the duty of the intellectual to constantly challenge him or herself, and doubt his or her own conclusions.
Consistency is an outcome of the use of logic and reason. Inconsistency in a set of theories is not a virtue. It is the sign of a simple mind or the lack of careful thought concerning the possible outcomes of holding certain premises. I also believe there is a difference between full developing / testing your theorems and self-doubt. The former is beneficial while the latter is a completely useless hand wringing gesture. Don't mistake doubt for humility either.
'It is difficult to imagine any normal person wishing to meet Marx for a third time.' - Alexander Gray, The Socialist Tradition
Landon:how did he reconcile it with the economic and political tenets of classical liberalism? The two seem to be in irresolvable conflict.
I don't see why a minimum income is incompatible with libertarianism.
If we understand minimum income to mean a reasonable assurance that as many people as possible will receive some minimum level of income, then the question becomes: which system will do a better job at providing a minimum income, the market or the state? And here the answer is clear: the state's incentives, generated by the incentival and informational problems of monopolies, are much less reliable than market incentives, generated by market competition. Even though the market faces public goods problems, we must remember that government faces public choice problems. The crucial point is that the market has a corrective mechanism: the entrepreneur, who can earn profits in solving public goods problems. Government has no equivalent corrective process; in fact, efficient government programs are punished with losses, while inefficient ones earn profits.
Thus, the market can more reliably provide a minimum income than the state.
Landon:"There is no reason why in a society which has reached the general level of wealth which ours has attained the first kind of security [of which he uses "minimum income" as an example] should not be guaranteed to all without endangering general freedom," and, "there can be no doubt that some minimum...can be assured to everybody."
What does Hayek mean here? Because there is no system of social organization that functions automatically (Boétie, Hume), and because people have free will, there is no possibility of a 100% guarantee for anything. Different systems can have more or less reliable incentives to do things, and that's the closest we can get to a guarantee.
If Hayek is thinking that government can guarantee things because it possesses the power of legal coercion, then he is falling into the fallacy (diagnosed by Long here) of viewing the state as a sorcerer, who, through the use of incantations, can magically achieve ends without the inconvenience of means.
LibertarianAnarchy.com - Government is immoral, unnecessary, and doesn't work!
To Laughing Man: When you said that Hayek did not believe in a gold standard and therefore was not consistent, because I personally would agree with him that such a standard is not ideal, I interpreted your statement as speaking of inconsistency as a function of time. I was obviously wrong, and stand corrected. Whether or not he was actually inconsistent is, obviously, the subject of another thread.
Sage: I feel reasonably certain that Hayek was speaking of government action here, and yet at the same time I find it impossible to conceive that he did not realize that such action necessarily involved coercive power. It is this apparent contradiction I am trying to solve. The best answer I have found comes from a 2007 lecture upon which I stumbled just a few minutes ago. It can be found at <http://www.manhattan-institute.org/html/hayek2007.htm>. According to this interpretation, the fundamental distinction is between an attempt to impose "justice" (in the form, for example, of minimum income) on the impersonal forces of a free market, and altering the conditions in which those free choice are made. Any thoughts?
I've pondered this question for some time because coming to a conclusion (which I have already related).
Hayek wasn't in favor of a minimal wage policy out of personal belief (despite coming from a Socialist background). He favored minimal wage, among other seemingly strange ideas for an Austrian economist, as a concession to be made to some sectors of society which he saw as potentially dangerous to the more productive ones. Call this a bribe if you want. While I tend to agree with Hayek on the issue of making a few concessions to keep the more turbulent elements of society at bay there's one fatal flaw in the plan. I liken this situation to paying protection money to the mob (or taxes to your local government) and being left alone in return. It may work for a while but how long before the thugs will ask for more than the prearranged sum?
Yes, it's time for the Dr Goebbels show!
Ludwig von Mises Institute | 518 West Magnolia Avenue | Auburn, Alabama 36832-4528
Phone: 334.321.2100 · Fax: 334.321.2119
contact@Mises.org | webmaster | AOL-IM MainMises
Mises.org sitemap