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
that the advantage of the West is due mainly to its ‘more effective
utilization of knowledge’ and not to ‘a greater accumulation
of capital.’ This knowledge has cost the leading nations much to
obtain, but it is a ‘free gift’ to those who follow, enabling them ‘to
reach the same level at a much smaller cost’ (46–7).
In Chapter 8, Hayek makes a case for ‘the man of independent
means’ and for entrepreneurs in particular. He points out that
in modern democratic society, ‘most of us work as employed
members of large organizations, using resources we do not own
and acting largely on the instructions given by others’ (118). The
principles of freedom were developed, however, in a society where
most people, and particularly the influential ones, ‘were independent
in the activities that gave them their livelihood.’ The
question is whether the interests and outlook of employed persons
are supportive of a free society. Hayek thinks that the fact of being
employed not only affects a person’s ‘initiative and in ventiveness,’
but also greatly limits his knowledge ‘of the responsibilities of
those who control resources,’ including the allocation of capital
(122). Moreover, people tend to choose employment, rather
than independence, because they ‘want the relative security and
absence of risk, and responsibility that an employed position
brings,’ or because they expect that employment will offer a larger
income and a more satisfying activity (120). The employee is likely
to think that his income should depend on his merit, not on the
results of his initiatives.
These developments have had a great impact on modern
politics. Not surprisingly, the employed prefer a paternalistic
government, a ‘higher tutelary power’ that will provide a broad
range of social services and oversee ‘the directing activities which
they do not understand but on which their livelihood depends’
(123). They are attracted to the idea that the state, in taxing and
in providing services, should aim for social justice. They come to
regard persons who make their living by employing capital as a
privileged class or special interest ‘which can justly be discriminated
against’ (123). Little do they realise that their own opportunities for
employment ultimately depend on ‘the existence of independent
individuals who can take the initiative in the con tinuous process of
re-forming and redirecting organizations’ (124).
Men of independent means are essential to preserving
competitive enterprise, but their most important contribution to
a free society is the leadership they provide, especially ‘in the field
of cultural amenities, in the fine arts, in education and research,
in the preservation of natural beauty and historic treasures, and
above all, in the propagation of new ideas in politics, morals,
and religion’ (125). From this standpoint Hayek defends not only
entrepreneurs, but also a leisured class, whose members likely will
have grown up to appreciate non-material goods and also to feel
an obligation to take the lead in intellectual, moral and artistic
affairs. In most of the USA, this class has almost completely disappeared,
so that businessmen now lack intellectual leadership and
have no ‘coherent and defensible philosophy of life.’ A progressive
society requires ‘a cultural elite within the propertied class’
(128–9).
Merit and value
Hayek’s underlying concern in Chapter 6 is the problem of distributive
justice. Already he has shown that government must not,
as a matter of law, distribute goods to persons according to the
principle of equality. This leaves open, however, the possibility
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