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Hayek’s Utilitarianism & Liberty

Hayek’s utilitarian outlook is distinctive in that he explicitly repudiates any hedonistic conception of the content of utility itself.[73] How, then, does he understand utilitarian welfare? Just how are we to assess different systems of rules in regard to their welfare-promoting effects? Here Hayek comes close to modern preference utilitarianism, but gives that view an original formulation, in arguing that the test of any system of rules is whether it maximizes an anonymous individual’s chance of achieving his unknown purposes.[74] In Hayek’s conception, we are not bound to accept the historical body of social rules just as we find it: it may be reformed in order to improve the chances of the unknown man’s achieving his goals. It will be seen that this is a maximizing conception, but not one that represents utility as a sort of neutral stuff, a container of intrinsic value whose magnitude may vary. Indeed, in taking as the point of comparison an hypothesized unknown individual, Hayek’s conception (as he recognizes[75]) parallels John Rawls’ model of rational choice behind a veil of ignorance as presented in Rawls’ Theory of Justice.

Mention of Rawls’ contractarian derivation of principles of justice at once raises the question of how Hayek’s indirect or system utilitarian argument is supposed to ground the rules of justice he defends, and, in particular, how Hayek’s defense of the priority of liberty squares with his utilitarian outlook.

Several observations are apposite here. First, Hayek undoubtedly follows Hume in believing that, because they constitute an indispensable condition for the promotion of general welfare, the rules of justice are bound to take priority over any specific claim to welfare. Again, it is to be noted that Hume’s second rule of justice, the transference of property by consent, itself frames a protected domain and so promotes individual liberty. Finally, Hayek argues forcefully that, if individuals are to be free to use their own knowledge and resources to best advantage, they must do so in a context of known and predictable rules governed by law. It is in a framework of liberty under the rule of law, Hayek contends, that justice and general welfare are both served. Indeed, under the rule of law, justice and the general welfare are convergent and not conflicting goals or values.

Justice, Liberty, and the Rule of Law In Hayek’s Constitution of Liberty

These claims regarding the relations between justice, liberty, and the rule of law encompass the most controversial and the most often attacked portion of Hayek’s social philosophy. Common to all criticisms of it is the objection that Hayek expects too much of the rule of law itself, which is only one of the virtues a legal order may display, and a rather abstract notion at that. Among classical liberals and libertarians, this objection has acquired a more specific character. It has been argued[76] that upholding the rule of law cannot by itself protect liberty or secure justice, for these values will be promoted only if the individual rights are respected. Hayek’s theory is at the very least radically incomplete, according to these critics, inasmuch as his conception of the rule of law will have the classical liberal implications he expects of it, only if it incorporates a conception of individual rights, which he seems explicitly to disavow. All these liberals and libertarians fasten upon Hayek’s use of a Kantian test of universalizability to argue that such a test is almost without substance, in that highly oppressive and discriminatory laws will survive it, so long as their framers are ingenious enough to avoid mentioning particular groups or named individuals in them. The upshot of this criticism is that, in virtue of the absence in his theory of any strong conception of moral rights, Hayek is constrained to demand more of the largely formal test of universalizability than it can possibly deliver, and so to conflate the ideal of the rule of law with other political goods and virtues.

Criticisms of Hayek’s Universalizable ‘Rule of Law’

This fundamental criticism of Hayek, stated powerfully by Hamowy[77] and Raz[78] and endorsed in earlier writings of my own,[79] now seems to me to express an impoverished and mistaken view of the nature and role of Kantian universalizability in Hayek’s philosophical jurisprudence. It embodies the error that, in Hayek or indeed in Kant, universalizability is a wholly formal test.

In his “Principles of a Liberal Social Order,” (A-115, in B-13) Hayek tells us: “The test of the justice of a rule is usually (since Kant) described as that of its ‘universalizability,’ i.e. of the possibility of willing that rules should be applied to all instances that correspond to the conditions stated in it (the ‘categorical imperative’).”[80] As an historical gloss, Hayek observes that:

It is sometimes suggested that Kant developed his theory of the Rechtstaat by applying to public affairs his conception of the categorical imperative. It was probably the other way round, and Kant developed his theory of the categorical imperative by applying to morals the concept of the rule of law which he found ready made (in the writings of Hume).[81]

Hayek’s own argument, that applying Kantian universalizability to the maxims that make up the legal order yields liberal principles of justice which confer maximum equal freedom upon all, has been found wanting by nearly all his critics and interpreters. Thus Raz quotes Hayek as follows:

“The conception of freedom under the law that is the chief concern of this book rests on the contention that when we obey laws, in the sense of general abstract rules laid down irrespective of their application to us, we are not subject to another man’s will and are therefore free. It is because the judge who applies them has no choice in drawing the conclusions that follow from the existing body of rules and the particular facts of the case, that it can be said that laws and not men rule … As a true law should not name any particulars, so it should especially not single out any specific persons or group of persons.”

Raz comments on this passage: “Then, aware of the absurdity to which this passage leads, he modifies his line, still trying to present the rule of law as the supreme guarantee of freedom. . .”[82]

Similarly, discussing Hayek’s criteria that laws should not mention proper names and that the distinctions which the law makes be supported both within and without the group which is the subject of legislation, Hamowy comments:

That no proper name be mentioned in a law does not protect against particular persons or groups being either harassed by laws which discriminate against them or granted privileges denied the rest of the population. A prohibition of this sort on the form laws may take is a specious guarantee of legal equality, since it is always possible to contrive a set of descriptive terms which will apply exclusively to a person or group without recourse to proper names … [83]

How are these standard objections to be rebutted?

Meeting Objections to the Universalizability Test

We must first of all note that, even in Kant and in Kantian writers other than Hayek, such as R. M. Hare and John Rawls, the test of universalizability does far more than rule out reference to particular persons or special groups. The test of universalizability does indeed, in the first instance, impose a demand of consistency as between similar cases, and in that sense imposes a merely formal requirement of non-discrimination. This is the first stage or element of universalization, the irrelevance of numerical differences. But the next stage of universalization is that of asking whether one can assent to the maxim being assessed coming to govern the conduct of others towards oneself: this is the demand of impartiality between agents, the demand that one put oneself in the other man’s place. And this element or implication of universalizability leads on to a third, that we be impartial as between the preferences of others, regardless of our own tastes or ideals of life – a requirement of moral neutrality. I do not need to ask here exactly how these elements of universalizability are related to one another, to ask (most obviously) if the second is entailed by the first in any logically inexorable way, or similarly the third by the second. It is enough to note that there is a powerful Kantian tradition according to which strong implications do link the three phases of universalization, and that this is a tradition to which Hayek himself has always subscribed.[84]

Applying the full test of universalizability to the maxims that go towards making a legal order, we find that, not only are references to particulars ruled out, but the maxims must be impartial in respect of the interests of all concerned, and they must be neutral in respect of their tastes or ideals of life. If it be once allowed that the test of universalizability may be fleshed out in this fashion, it will be seen as a more full-blooded standard of criticism than is ordinarily allowed, and Hayek’s heavy reliance on it will seem less misplaced. For, when construed in this fashion, the universalizability test will rule out (for example) most if not all policies of economic intervention as prejudicial to the interests of some and will fell all policies of legal moralism. Two large classes of liberal policy, supposedly allowable under an Hayekian rule of law, thus turn out to be prohibited by it.

Hayek himself is explicit that the test of universalizability means more than the sheerly formal absence of reference to particulars. As he puts it:

The test of the justice of a rule is usually (since Kant) described as that of its ‘universalizability,’ i.e. of the possibility of willing that the rules should be applied to all instances that correspond to the conditions stated in it (the ‘categorical imperative’). What this amounts to is that in applying it to any concrete circumstances it will not conflict with any other accepted rules. The test is thus in the last resort one of the compatibility or non-contradictoriness of the whole system of rules, not merely in a logical sense but in the sense that the system of actions which the rules permit will not lead to conflict.[85]

The maxims tested by the principle of universalizability, then, must be integrated into a system of nonconflictable or (in Leibniz’ terminology) compossible rules, before any of them can be said to have survived the test.

Again, the compatibility between the several rules is not one that holds in any possible world, but rather that which obtains in the world in which we live. It is here that Hayek draws heavily on Hume’s account of the fundamental laws of justice, which he thinks to be, not merely compatible with, but in a large measure the inspiration for Kant’s political philosophy.[86] As I have already observed, the practical content of the basic rules of justice is given in Hume by anthropological claims, by claims of general fact about the human circumstance. It is by interpreting the demands of universalizability in the framework of the permanent necessities of human social life that we derive Hume’s three laws of natural justice.

Kantian Universalizability & Liberal Justice

Note again that, in Hume, as in Hayek, the laws of justice are commended as being the indispensable condition for the promotion of general welfare, i.e. their ultimate justification is utilitarian. But in order to achieve this result, neither Hayek nor Hume need offer any argument in favor of our adopting a Principle of Utility. Rather, very much in the spirit of R. M. Hare’s Kantian reconstruction of utilitarian ethics,[87] Hayek’s claim is that an impartial concern for the general welfare is itself one of the demands of universalizability. A utilitarian concern for general welfare is yielded by the Kantian method itself and is not superadded to it afterwards. Hayek’s thesis, like Hume’s, is that a clear view of the circumstances of human life shows justice to be the primary condition needed to promote general welfare. But, like Hare and Kant, he thinks concern for both justice and the general welfare to be dictated by universalizability itself.

Hayek’s argument, then, is that the maxims of liberal justice are yielded by applying the Kantian universalizability test to the principles of the legal order. As he puts it:

It will be noticed that only purpose-independent (‘formal’) rules pass this (Kantian) test because, as rules which have originally been developed in small purpose-connected groups (‘organizations’) are progressively extended to larger and larger groups and finally universalized to apply to the relations between any members of an Open Society who have no concrete purposes in common and merely submit to the same abstract rules, they will in the process have to shed all reference to particular purposes.[88]

Again, in listing the essential points of his conception of justice Hayek asserts:

… a) that justice can be meaningfully attributed only to human actions and not to any state of affairs as such without reference to the question whether it has been, or could have been, deliberately brought about by somebody; b) that the rules of justice have essentially the nature of prohibitions, or, in other words, that injustice is really the primary concept and the aim of rules of just conduct is to prevent unjust action; c) that the injustice to be prevented is the infringement of the protected domain of one’s fellow men, a domain which is to be ascertained by means of these rules of justice; and d) that these rules of just conduct which are in themselves negative can be developed by consistently applying to whatever such rules a society has inherited the equally negative test of universal applicability – a test which, in the last resort, is nothing less than the self-consistency of the actions which these rules allow if applied to the circumstances of the real world.[89]

There seem to be several elements, then, in Hayek’s contention that applying the Kantian test to the legal framework yields a liberal order. First, though he does not explicitly distinguish the three stages or phases of universalization I mentioned earlier, he is clear that the universalizability test is not only formal, and that it comprehends the requirement that the scheme of activities it permits in the real world would be conflict-free. Second, at any rate in a society whose members have few if any common purposes, law must have a largely formal character, stipulating terms under which men may pursue their self-chosen activities rather than enjoining any specific activities on them; in the term Hayek adopts from Oakeshott,[90] the form of legal rule appropriate to such an abstract or open society is “nomocratic” rather than “teleocratic,” purpose-neutral rather than purpose-dependent. Third, in a society whose members lack common purposes or common concrete knowledge, only abstract rules conferring a protected domain on each can qualify as rules facilitating a conflict-free pattern of activities. This means that the conditions of our abstract or open society will themselves compel adoption of a rule conferring just claims to liberty and private property – which Hayek rightly sees as indissolubly linked – once these conditions are treated as the appropriate background for the Kantian test.

One crucially important implication of this last point, noted in all of Hayek’s political writings over the last twenty years but spelled out most systematically in the second volume of his recent trilogy, Law, Legislation and Liberty, is that the rules of justice which survive the Kantian test can prescribe justice only in the procedures and never in end-states. As Hayek puts it, explicating Hume: “There can be no rules for rewarding merit, or no rules of distributive justice, because there are no circumstances which may not affect merit, while rules always single out some circumstances as the only relevant ones.”[91]

This pattern of argument is an important and striking one, worth examining in detail on its merits, and not capable of being dismissed as prima facie unworkable. One important point may be worth canvassing, however. Hayek argues that once the legal framework has been reformed in Kantian fashion, it must of necessity be one that maximizes liberty. Hamowy goes so far as to assert that Hayekdefines liberty as conformity with the rule of law.[92] Now, whereas not every aspect of Hayek’s treatment of freedom and coercion is clear or defensible,[93] it seems a misinterpretation to say that he ever defines freedom as consisting solely in conformity with the rule of law. Rather, he takes such conformity to be a necessary condition of a free order. His thesis is that applying the Kantian test to the legal order will of itself yield a maxim according equal freedom to all men.[94] So it is not that the rule of law contains freedom as part of its definition, but rather that a freedom-maximizing rule is unavoidably yielded by it. In other terms, we may say that, whereas moral rights do not come into Hayek’s theory as primordial moral facts, the right to a protected domain is yielded by his conception as a theorem of it.

If Hayek is right that his method shows the unacceptability of contemporary patterned conceptions of justice, for example, and if as I think, he has shown that only procedural justice can be squared with the liberal maxim demanding equal freedom of action, then we can begin to see the measure of his achievement. Certainly, his Kantian derivation of equal freedom deserves close and sympathetic scrutiny, and it cannot be assumed without argument that Hayek’s system cannot protect individual rights or claims to justice simply because such rights do not enter the system at a fundamental level. For the most original and striking claim of Hayek’s legal and political philosophy, which in this respect may be regarded as a synthesis of the theories of justice of Hume and Kant, is that applying the rational test of universalizability to the conditions of our world must of necessity yield a system of rules in which a protected domain of individual liberty is secured.

Some Criticism of Hayek’s System of Ideas: Buchanan and Oakeshott

In regard to his theory of justice, the criticisms we have surveyed appear to be premature, or at least inconclusive. We have yet to consider a much more fundamental criticism of Hayek’s system, directed against it by thinkers in very different traditions, which attends to the highly ambiguous role in Hayek’s theory of the idea of spontaneous order.

James Buchanan on Hayek

One of the clearest and deepest statements of some of the difficulties in Hayek’s use of spontaneous order arguments may be found in James M. Buchanan’s writings. In an important paper,[95] Buchanan observes that, in Hayek’s later writings we find:

the extension of the principle of spontaneous order, in its normative function, to the emergence of institutional structure itself. As applied to the market economy, that which emerges is defined by its very emergence to be that which is efficient. And this result implies, in its turn, a policy of nonintervention, properly so. There is no need, indeed there is no possibility, of evaluating the efficiency of observed outcomes independently of the process; there exists no external criterion that allows efficiency to be defined in objectively measurable dimensions. If this logic is extended to the structure of institutions (including law) that have emerged in some historical evolutionary process, the implication seems clear that that set which we observe necessarily embodies institutional or structural ‘efficiency.’ From this it follows, as before, that a policy of nonintervention in the process of emergence is dictated. There is no room left for the political economist, or for anyone else, who seeks to reform social structures, to change laws and rules, with an aim of security instead of efficiency in the large … Any ‘constructively rational’ interferences with the ‘rational’ processes of history are, therefore, to be avoided.

Buchanan’s criticism, then, is that Hayek’s apparent extension of spontaneous order or evolutionary arguments from the market processes to institutional structures is bound to disable the tasks of criticism and reform. We are left with no leverage in Hayek’s account which might be used against the outcomes of the historical process. Instead, it seems, we are bound to entrust ourselves to all the vagaries of mankind’s random walk in historical space.

In an earlier critique,[96] Buchanan noted perceptively the phenomenon of “spontaneous disorder” – the emergence of patterns of activity that thwart the purposes and damage the interests of all who participate in them. Such “spontaneous disorder” is, after all, the core of the idea of the Prisoner’s Dilemma, which has been explored imaginatively in Buchanan’s writing in its political and constitutional applications. The neglect in Hayek’s political work in English of any treatment of the problem this Dilemma poses for his system invites the attempt to accommodate these fundamental objections.

It is clear, however, that as it stands Hayek’s conception of spontaneous order needs revision or at least refinement. Buchanan’s identification of certain states of affairs as manifesting spontaneous disorder suggests the question whether the idea of spontaneous order in Hayek is a value-free explanatory notion or else a moral notion of some sort. If the former – as Hayek’s examples of spontaneous order in nature suggest – then spontaneous order really functions as a cipher for invisible hand explanations of the sort brilliantly discussed by Robert Nozick in his Anarchy, State, and Utopia.[97]

We might then be compelled to regard the growth of interventionism and of the welfare state, and even certain aspects of the functioning of totalitarian regimes, as exemplifying spontaneous order inasmuch as we might be able to explain these social phenomena as the unintended outcomes of human action. If, on the other hand, spontaneous orders are taken as embodying positive moral values – if, that is to say, the idea of a maleficient or destructive spontaneous order is repudiated as incoherent – then it seems clear that Hayek requires a far bolder moral theory than any he has advanced thus far. In particular, such a moral theory would need to bridge the gap between evaluative and descriptive language which is a feature of modern moral philosophy, and in this and other respects it would need to come much closer to natural law ethics than Hayek has ever himself done.

Buchanan’s critique is decisive, then, in compelling Hayek to clarify the idea of spontaneous order as being either a moral notion, which might plausibly be embedded only in some variant of natural law ethics, or else as a value-free explanatory concept whose political uses must then be made more explicit than Hayek has heretofore done.

Buchanan’s critique is important, again, in disclosing that Hayek’s attitude to rationalism is ambivalent and unstable. If we adopt the latter view of spontaneous order as a value-free explanatory idea, its uses in political argument depend upon two kinds of considerations. First, they must invoke a political ethics, which arguably is given by Hayek’s synthesis of Hume with Kant. More problematically, however, the use of an explanatory idea of spontaneous order in political argument presupposes that we have a genuine theoretical or synoptic knowledge of social life of just the sort that Hayek occasionally suggests is impossible. This is to say that, if we are to make use of the idea of spontaneous social order in framing or reforming social institutions so as to make best use of society’s spontaneous forces, we need to invoke a theoretical model of social structure and social process which gives some assurance as to the outcome of our reforms. To this extent, contrary to some of Hayek’s recommendations but in line with a part of his recent practice, we cannot avoid adopting a critical rationalist stance toward our inherited institutions and the historical process. This is true, whether we accept Hayek’s own effort at a political ethics, or Buchanan’s neo-Hobbesian contractarian constitutionalism.

Michael Oakeshott on Hayek

These cited points are reinforced if we consider Michael Oakeshott’s attitude to Hayek’s work.[98]Oakeshott is a more intrepid traditionalist than Hayek in that Oakeshott claims that we cannot in the end do anything but accept the traditions which we inherit in our society. Certainly, we cannot appraise our traditions by reference to any transcendental standard of reason or justice, since such standards (in Oakeshott’s view) necessarily turn out to be abridgements of our traditions themselves. Like Hayek, then, Oakeshott maintains that all moral or political criticism must be immanent criticism, but, unlike Hayek, he denies that there is any inherent or evolutionary tendency for the development of traditional practices to converge on liberal institutions. For this reason Oakeshott would insist that his conception of civil association or nomocracy – upon which, as we have already seen, Hayek draws in his conception of the juridical framework of the liberal order – is a description of a strand of practice in the modern European state and has no necessary application beyond the cultural milieu in which it came to birth. Oakeshott would accordingly repudiate the implicit universalism of Hayek’s argument for the liberal order.

To some extent, of course, Hayek concedes that there cannot be universal scope for liberal principles when he allows that the Great or Open Society is itself an evolutionary emergence from rude beginnings. Where he differs from Oakeshott is in affirming that the Great or Open Society in which liberal principles are uniquely appropriate represents the future of all mankind. In this respect, Hayek continues to subscribe to an Enlightenment doctrine of universal human progress which Oakeshott has abandoned. I do not mean that Hayek has ever endorsed the belief that historical change is governed by a law of progressive development, but rather that he seems to take for granted (what surely is most disputable) that the unhampered natural selection of rival practices and traditions will result in a general convergence on liberal society.

Hayek’s Variant of Classical Liberalism: A Fusing of Libertarian & Traditionalistic Ideals?

A contrast of Hayek’s thought with that of Oakeshott revives one of the commonest criticisms of Hayek’s work, namely, that it straddles incompatible conservative and libertarian stand-points. The upshot of my discussion thus far may support this standard criticism in that it suggests that Hayek’s system is poised uneasily between the constructivist (but not uncritical) rationalism of a Buchanan and the out-and-out traditionalism of an Oakeshott.

At the same time, however, elements of Hayek’s conception of social evolution via the competitive selection of rival traditions may provide a point of convergence, if not of fusion, for some libertarian and conservative concerns. One central argument in contemporary neo-conservatism, after all, is in the claim that the stability of the free society depends upon its containing strong supportive traditions. Modern neo-conservatives such as Irving Kristol and Daniel Bell take up the doubts expressed by writers of the Scottish Enlightenment such as Smith and Ferguson about the effect on society’s moral traditions of the workings of the commercial marketplace itself. A major difficulty in the neo-conservative analysis is the lack of any very convincing prognosis: if free markets have corrosive effects in respect of the moral traditions which support them, so that capitalism institutions contain cultural contradictions which make them over the long run self-destroying, what is to be done?

This is an especially hard question if we recognize (as some of the neo-conservatives themselves sometimes fail to do) that merely capturing positions of power in the apparatus of the contemporary democratic state affords no longrun security for the market order.

Hayek’s Voluntaristic Traditionalism: A Market in Traditions

There is in Hayek’s work an argument for voluntaristic traditionalism which goes some way toward answering this question. Hayek sees that the principal cause of the erosion of definitive moral traditions in advanced societies is not so much the market itself, but rather interventionist policies sponsored by governments. Often with the support of business, governments have contributed to the erosion of moral traditions by their educational, housing, and welfare policies. Hayek’s argument for a voluntaristic traditionalism distinguishes him from neo-conservatives, firstly in that he would argue that it is government interventionism which causes much of the contemporary moral malaise and because he would not seek to use government power to prop up faltering traditions. Rather, he seeks to establish something like a market in traditions, in the hope that the traditions which would emerge from an unhampered social life would be most congenial to the stability of the market order itself. In his argument for a competitive and voluntaristic traditionalism, Hayek plainly treats particular traditional communities as filter devices for social practices of the sort Robert Nozick discusses in his fascinating and profound account of the framework of utopia.[99]

It cannot be said unequivocably that Hayek’s libertarian traditionalism answers the most profoundly disturbing doubts of the neo-conservatives. In particular, Hayek’s advocacy of procedural justice, with the role of chance in distributing incomes being recognized clearly,[100] confronts the difficulty that the moral defense of capitalism has chiefly been conducted by reference to the notion of desert. By comparison with this traditional defense, Hayek’s apologia for the market order may be, as Kristol observes, “nihilistic.”[101]

Against this criticism Hayek may justifiably maintain that there is a sheer conflict between traditional sentiments of desert and merit and any clear-sighted defense of the market order – a conflict which the neo-conservative endorsement of the market order does nothing to resolve.

Kristol’s criticism of Hayek has other, and perhaps profounder aspects, however. Hayek recognizes that contemporary moral sentiment is by no means uniformly, or even generally, favorable to the market order, and, both in his writings on Mandeville[102] and elsewhere, Hayek has implicitly acknowledged that the spontaneous growth of moral norms may not, in fact, yield results congenial to a stable market order. At the same time, Hayek continues to advocate a strong form of moral conventionalism, resisting the claims of those who see modern morality as in need of radical reform. There is thus a tension, perhaps irresolvable in terms of Hayek’s system, between his Mandevillian moral iconoclasm and his moral conservatism.

Conclusion: Hayek’s Research Program & Classical Liberalism

In his argument for a voluntaristic traditionalism, Hayek (as we have seen) answers some of the concerns of contemporary conservatives. His argument for a market in traditions may be vulnerable to criticism, inasmuch as the growth of anti-market ethics over the past centuries seems to belie his expectation that natural selection of moral traditions will filter out those unfriendly to the market process. In recognition of this, Hayek would in consistency be compelled to adopt, in respect of moral convention, a more “rationalist” stance than he usually recommends. He would need to undertake a systematic criticism of modern morality in regard to its viability as part of an ongoing market order. In so doing, he would be resuming the task undertaken by those moderate rationalists, Bernard Mandeville and David Hume, whom Hayek rightly sees as the fountainheads of classical liberalism. Even if his own system of ideas should prove unstable, it recalls to us the insights of the great classical liberals, and intimates the most powerful research program in classical liberal political philosophy. And, in recalling that intellectual tradition from what had sometimes seemed an irrecoverable oblivion, Hayek’s work is a hopeful augury for an uncertain future.[103]

Further reading http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/1999/11/cj19n2-6.pdf