Hayek's The Constitution of Liberty - Institute of Economic Affairs

h ay e k ’ s t h e c o n s t i t u t i o n o f l i b e r t y
e q ua l i t y, f r e e d o m a n d j u s t d i s t r i b u t i o n
should be removed, that all privileges of individuals should be
abolished, and that what the state contributed to the chance of
improving one’s conditions should be the same for all.’ Liberals
had held that ‘all should be allowed to try,’ but recognised that
individual differences will give some an advantage over others.
The more recent view – the one that Hayek opposes – insists that
‘all must be assured an equal start and the same prospects.’ This
approach requires governmental intervention and adjustments
that curb individual freedom (92–3). Hayek strongly defends the
older understanding of opportunity:
Let us by all means endeavor to increase opportunities
for all. But we ought to do so in the full knowledge that
to increase opportunities for all is likely to favor those
better able to take advantage of them and may often at
first increase inequalities. Where the demand for ‘equality
of opportunity’ leads to attempts to eliminate such ‘unfair
advantages,’ it is only likely to do harm. All human
differences, whether they are differences in natural gifts
or in opportunities, create unfair advantages. But, since
the chief contribution of any individual is to make the best
use of the accidents he encounters, success must to a great
extent be a matter of chance. (388)
Benefits of inequality
Hayek offers a justification for inequality in several places in The
Constitution of Liberty. In Chapter 3, he provides a spirited defence
of inequality as indispensable to civilisation’s progress. Since a
rising standard of life depends more on an increase in knowledge
than on the accumulation of capital, one might expect Hayek to
defend primarily the scientists or inventors who lead the way
in discovering useful knowledge. Here, however, he defends the
position of the rich, whose way of life contributes a kind of unintended
knowledge that is indispensable to progress. Their contribution
is to experiment ‘with a style of living that will eventually
be available to many.’ Hayek avoids any distinction here between
legitimate and illegitimate wealth, regardless of its source, amount
or use. The rich teach the rest, but inadvertently and by example
rather than by purposeful instruction.
To defend inequalities of wealth, Hayek contends that ‘[t]here
is no way of making generally accessible new and still expensive
ways of living except by their being initially practiced by some.’
Thus ‘in any phase of progress the rich, by experimenting with
new styles of living not yet accessible to the poor, perform a necessary
service without which the advance of the poor would be very
much slower.’ As the poor seek to imitate the lifestyle of the rich,
the cost of producing new goods comes down, so that eventually
they become affordable to many. Indeed, ‘[e]ven the poorest
today owe their relative material well-being to the results of past
inequality.’ Meanwhile, the rich are beginning to enjoy new goods
that will be sought by the masses some decades hence. Hayek
insists that his is a valid argument and not some ‘far-fetched and
cynical apologetics.’ Even so, he concedes that it will not assuage
those who fail to achieve the desired results or feel ‘the pain of
unfulfilled desire aroused by the example of others’ (44–5). This
of course gives rise to problems of justice and envy in democratic
societies.
Hayek goes on to apply this argument to the international
scene, holding that the poor nations learn much from the rich
ones and, by aspiring to imitate them, contribute both to their
own progress and to that of civilisation. His key point here is
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