The Constitution of Liberty [Paperback]

Most people are still far from appreciating the economic basis for THE CONSTITUTION OF LIBERTY by Hayek, which stands as a political argument so solidly made, it has a quality that might be considered crazy. Published in 1960, the amounts of money being discussed in this book are ludicrously small for people who do not live in China. In an economic system which was striving to become global in character, Hayek was concerned about majority thinking on incomes reaching some maximum limit, which might be imposed by progressive taxation (which was worse then in America and Great Briton than it is now), as an end to economic growth.

"Where this may lead is illustrated by a recent proposal, only narrowly defeated, of the National Planning Commission of India, according to which a ceiling of $6,300 per annum was to be fixed for all incomes (and a ceiling of $4,300 for salary incomes). . . . Can there be much doubt that poor countries, by preventing people from getting rich, will also slow down the general growth of wealth? And does not what applies to the poor countries apply equally to the rich?" (p. 322, Chapter Twenty, Taxation and Redistribution).

These amounts still might be in the ballpark for what people in some parts of the world could be willing to work for, if they had the opportunity, but the nature of economics has changed so much, the idea that people anywhere could be spending any of their time for such small change, while the American military is getting a billion dollars a week to look for whoever could be inflicting some real damage on the American economy, like September 11 did, is more than enough to make people wonder what Iraqis would do with freedom if they had it. Some rewards have been offered to Iraqis for the kind of information that what make the Americans there happy. The American way seems to be designed for managers who can figure out how to get to the top so they can retire with a deferred compensation package in the neighborhood of $139 million, like the recently resigned president of the New York Stock Exchange, who was in danger of handing out favors to people in that ballpark.

If millions of dollars can provide a reasonable opportunity to give a person the freedom to enjoy himself, it is surprising that spending a billion dollars a week to support the American military in Iraq is not as much fun as complaining about it. My favorite complaint can be found in the Index of Subjects under Experts (democracy and, social security).

"3. The extreme complexity and consequent incomprehensibility of the social security systems create for democracy a serious problem. . . . As a result, the expert has come to dominate in this field as in others. . . . But, almost invariably, this new kind of expert has one distinguishing characteristic: he is unhesitatingly in favor of the institutions on which he is expert. This is so not merely because only one who approves of the institution will have the interest and the patience to master the details, but even more because such an effort would hardly be worth the while of anyone else: the views of anybody who is not prepared to accept the principles of the existing institutions are not likely to be taken seriously and will carry no weight in the discussions determining current policy." (pp. 290-291).

Hayek implies that his own position has no place in the councils of the high and mighty, but there is plenty of support for his view that the future is easily diminished by the system of financing which is being relied on to provide the benefits of such institutions.

"Does anyone really believe that the average semiskilled worker in Italy is better off because 44 per cent of his employer's total outlay is handed over to the state or, in concrete figures, because of the 49 cents which his employer pays for an hour of his work, he receives only 27 cents, while 22 cents are spent for him by the state?" (p. 294).

Obviously, Italy has been operating its scheme long enough to produce benefits that rival the amount which workers get. Similarly, it seems the American government has an acute interest in having work done overseas, to avoid American workers earning the right to retirement under a social security system which might soon be as costly for American workers. Hayek was writing before a large portion of American social security contributions were dumped into U.S. bonds to produce the trillion dollar surpluses that were never real. It was truly amazing that America was able to balance the books for so long with such shaky maneuvers, but the plan was to produce a system like "that in Germany, where about 20 percent of the total national income is placed in the hands of the social security administration." (p. 294). With what America is spending on the military, it is never going to be able to turn that much money over to a privatized administrator.

Hayek's states his theory in part I of this book, titled "The Value of Freedom". He seeks to explore the nature of the ideal of freedom (liberty) and to explain why this ideal is valuable and worth pursuing. He finds the nature of freedom in the absence of coercion on a person by another person or group. He argues that in giving the broadest scope of action to each individual, society will benefit in ways that cannot be forseen in advance or planned and each person will be allowed to develop his or her capacities. Hayek summarizes his views near the end of his book (p. 394):

" [T]he ultimate aim of freedom is the enlargement of those capacities in which man surpasses his ancestors and to which each generation must endeavor to add its share -- its share in the growth of knowledge and the gradual advance of moral and aesthetic beliefs, where no superior must be allowed to enforce one set of views of what is right or good and where only further experience can decide what should prevail."

The book focuses on issues of economic freedom and on the value of the competitive market. Hayek has been influenced by writers such as David Hume, Edmund Burke, and John Stuart Mill in "On Liberty."

Part II of the book discusses the role of the State in preserving liberty. It develops a view of law which sees its value in promoting the exercise of individual liberty. The approach is historic. Hayek discusses with great sympathy the development of the common law and of American constitutionalism -- particularly as exemplified by James Madison.

In Part III of the book, Hayek applies his ideas about the proper role of government in allowing the exercise of individual liberty to various components of the modern welfare state. Each of the chapters is short and suggestive, rather than comprehensive. Hayek relies on technical economic analysis, and on his understanding of economic theory, as well as on his philosophical commitments, in his discussion. What is striking about Hayek's approach is his openness (sometimes to the point of possible inconsistency with his philosophical arguments). He tries in several of his chapters to show how various aspects of the modern welfare state present threats to liberty in the manner in which he has defined liberty. But he is much more favorably inclined to some aspects of these programs than are some people, and on occasion he waffles. This is the sign of a thoughtful mind, principled but undoctrinaire.

I think there is much to be learned from Hayek. He probably deserves more of a hearing than he gets. For a nonspecialist returning to a book such as this after a long time off, it is good to think of other positions which differ from Hayek's in order to consider what he has to say and to place it in context. For example, in an essay called "Liberty and Liberalism" in his "Taking Rights Seriously" (1977) the American legal philosopher Ronald Dworkin discusses Mill's "On Liberty" with a reference to Hayek. Dworkin argues that for Mill, liberty meant not the absence of coercion but rather personal independence. Mill was distinguishing between personal rights and economic rights, according to Dworkin. Thus Dworkin would claim that Hayek overemphasizes the value of competitiveness and lack of state economic regulation in the development of Hayek's concept of liberty.

The British political thinker Isaiah Berlin seems to suggest to me, as I read Hayek's argument, that there are other human goods in addition to liberty, as Hayek defines liberty. Further, Hayek does not establish that liberty, as he understands it, is always the ultimate human good to which others must give place. It may often be that good, but there may also be circumstances in which other goods should be given a more preeminent role when human well-being is at issue. In thinking about Hayek, it would also be useful to understand and to assess his concept of liberty by comparing and contrasting his approach to that of John Rawls in his "A Theory of Justice."

Hayek's book is important, thought-provoking and valuable. Probably no writer of a book of political philosophy can be asked for more. It deserves to be read and pondered. It has much to teach, both where it may persuade the reader and where it encourages the reader to explore competing ideas.