Mises Daily

This Way Toward Equality

[From The Writings of F. A. Harper, Volume 2: Shorter Essays]

Another enticing sign along the road toward serfdom is “equality.” It is one of the most appealing enticements of all, and therefore holds great danger to liberty and freedom. Analysis of this question is most difficult to accomplish with brevity, yet its importance justifies the attempt.

Equality of economic benefits (both income and wealth) seems to have wide appeal. To some it is appealing for ideological reasons; they believe equality to be ideal from the standpoint of justice. Others support the idea for selfish reasons; I would guess that four-fifths or more of the people believe themselves to be below the average in income, and therefore stand to gain through equalization. And everyone would like to equalize with those who are better off than he himself is.

F.A. Hayek’s type of liberalism supports the idea of equality of opportunity, but not necessarily equality of income. To understand this reasoning we must consider why incomes differ.

  1. Incomes differ because people differ in their economic drive, in the extent to which they want to apply themselves to work vs. use their time in recreation and leisure. It is their privilege to so choose, but if they choose a higher proportion of leisure, the economic penalty attached should not be shifted to others.

  2. Incomes differ because people differ in their economic ability. Men are not created equal in economic capacity, and these differences cannot be corrected by law or by governments. The things that law and governments can do are to give everyone more nearly equal economic opportunities.

  3. Incomes differ because of all sorts of limitations on free and fair competition — monopolies, etc., etc. Many of these are the result of measures enacted with avowed objectives such as “security” and “fair trade.” It is this type of thing which Hayek and all “true” liberals would not tolerate. As they see it, a clear function of law and of government is to insure freedom of opportunity by protecting against these abuses.

Whether or not we like this situation, incomes have a strong and persistent tendency toward inequality. Some of this tendency is a natural force, just as much as the force of gravity and the tendency of water to seek its own level. Those resulting from natural forces can be altered only at the cost of loss of individual liberty and freedom. Some inequality is the product of certain laws and regulations, or of the economic environment which is allowed to exist. Abundant evidence shows that government has been unable to prevent inequality of incomes, except perhaps temporarily. It can, however, do much to influence the basis for income differences — the rules of the game, so to speak. It can either encourage or discourage income differences based on economic productivity and the contributions to progress, as contrasted with the circumstances of birth, membership in effective pressure groups, or aptitude for political gangsterism and intrigue, as seems to have prevailed in Germany.

Equalization of incomes is likely to poison initiative and retard progress to the extent that the real incomes of everyone are lowered from what they otherwise would be. The fact that large incomes suffer more than small ones should not be comforting to those whose smaller incomes are further reduced as the result of a program supposed to benefit them.

Hayek’s type of thinking has been unfairly accused of holding no sympathy for the lot of the other fellow — of being unreasonably selfish. Critics believe that destitution and need can be dealt with most efficiently and fairly through voluntary charity and localized relief. They are opposed to state-sponsored equalization of incomes without regard to the individual’s economic contribution. Those capable of producing should be allowed to do so, and should be given every possible encouragement and inducement. Giving them something for nothing does not do this. Instead, it stifles initiative and reduces production, and therefore defeats the purpose of economic betterment for the nation. Equalization of incomes can be accomplished only by moving down the road toward serfdom.

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