3. Letter on The Constitution of Liberty by F.A. von Hayek

3.
LETTER ONTHE CONSTITUTION OF LIBERTYBY F.A. HAYEK

June 11, 1960

Mr. Kenneth S. Templeton

William Volker Fund

Dear Ken:

F.A. Hayek’s The Constitution of Liberty is a work monumental in its scope and invaluable for the extent of its erudition.²⁰ Of the twenty-five chapters in the complete work, I reviewed fourteen in detail in draft form. (See my confidential memorandum of January 21, 1958, and my critique for Hayek sent to you on January 24, 1958.) The major change in those chapters is the far greater breadth of the footnotes, which now become an invaluable reference source for people wishing to dig further into the literature on liberty.

Hayek’s work may be divided into three parts: philosophical, historical, and economic applications. His aim is to erect a groundwork for a theory and systematic approach to liberty; unfortunately Hayek fails in this aim, in all three departments.

Philosophically, Hayek grounds freedom solely on the shaky reed of man’s ignorance. There are good arguments to be drawn for leaving all roads open so that knowledge can expand, but this hardly deserves the exclusive reliance that Hayek places on it. So concerned is Hayek to oppose rationalism as the threat to liberty, that he abandons any attempt for a rationalist groundwork for liberty. While Hayek has improved on his previous draft slightly, in richness of material and in qualifying particularly poor passages, there is no substantive change in his position. As before, Hayek begins very well in the first chapter by defining freedom as meaning “absence of coercion,” but fails badly in defining “coercion.” For Hayek, “coercion” is defined as arbitrary, specifically harmful acts; the term is thus used much more broadly and yet more narrowly than its proper definition: “the use of violence.” Hence, Hayek can say that for a factory to fire a worker in a place where unemployment is heavy—or to threaten to fire him—is an act of “coercion,” on the same level as actual acts of violence.

Hayek’s only principle of noncoercion for government is the “rule of law,” on which he places exclusive reliance. In such a chapter as chapter 16, “The Decline of the Law,” Hayek is excellent in attacking modern legal philosophers who push the state in a socialistic direction beyond the rule: such as Kelsen and the legal positivists, and Harold Laski.²¹ However, Hayek spends virtually equal emphasis on attacking those who would narrow the rule to limit government activity to defense of life, liberty, and property. Hayek attacks this as an “extreme,” unduly narrow, etc., view of the role of government. To Hayek, laissez-faire is almost as bad an outgrowth of “rationalism” as is socialism.

This book makes clear to me, as the first fourteen chapters of the draft did not, that Hayek’s rule of law limits are even looser than I had thought. For not only does he admit at one point that the rule of law cannot be precisely defined, and that it must be suspended in emergencies, but he also would only apply the rule to what Hayek calls “coercive” activities of the State. There is a vast area of State activity which Hayek calls “noncoercive” and where the State can act perfectly legitimately. “Coercive” activities are thus confined to such direct acts of tyranny as price controls, fixing production, socialist planning, etc. But a government supply of a service—such as public housing, etc.—is not considered coercive, and therefore cannot be opposed on principle according to Hayek. For such “noncoercive” activities, says Hayek, the proposed activity must be considered case by case, ad hoc, in a pragmatic, utilitarian manner.

Furthermore, even such clearly coercive activities of the government as conscription are not considered really coercive by Hayek because they are general rules, applying to everyone in a certain defined category (although, as Hayek sometimes admits, these categories can be widened and narrowed flexibly). Everyone knows in advance that he will be drafted, he can predict it, etc. (Of course, in practice, the draft is neither universal nor predictable, but that is another problem.)

Hayek’s devotion to the relatively unimportant rule of law principle, and his hostility to rationalism, distort his historical sections so as to make them virtually valueless (although, as I said above, the footnote references are most important). Thus, Hayek tries to erect the categories of the “English tradition” (good) and the “French tradition” (bad). Jefferson, Paine, Price, etc.—fine libertarians all— are dismissed hostilely as being in the bad French tradition, while their direct ancestor, John Locke, is hailed as a “good” English empiricist. Actually, there was little difference between them. Condorcet, surely a “bad” French rationalist by Hayek’s standards, somehow comes out “good” because he favored a constitution for France and is therefore supposed to be in favor of the rule of law. And while favoring the American Constitution, the Bill of Rights, and the Ninth Amendment as defending liberty, Hayek erroneously considers the American Revolution to be really conservative, and far worse, defends the New Deal Supreme Court for correcting the “extreme” views of the Old Supreme Court in outlawing interventionary measures, etc.

Most grievous omission of all, for a historical discussion of libertarian thought, is the complete failure to discuss the really libertarian French thinkers of the nineteenth century: Bastiat, Molinari, Dunoyer, etc.²² For these rationalist, pure libertarians would have revealed Hayek’s error in identifying rationalism and tyranny, and in placing such faith in the eighteenth-century English Old Whigs. Even the nineteenth-century classical economists of England are too “French” for Hayek’s taste, although it is impossible to see how Benthamite utilitarianism can be “French”; it was original with Bentham. Hayek’s unfortunate “rationalist French” vs. “Whiggish British” traditions, makes him neglect all the really important problems in a history of libertarian thought: e.g., the split between the natural-rights and the utilitarian traditions of liberty. Both of these schools of thought are virtually ignored.

This book is thus a tragic failure, despite the many profound passages scattered through the book, despite the wealth of references, and despite the isolated chapters that have much net value (these are chapter 1, defining liberty and attacking the socialistic definitions; chapter 8, on employment, independence, and the role of the intellectuals; chapter 16, on the modern decline of the rule of law; chapter 20, which, though advocating fallacious proportional taxation, is valuable on balance for its fine criticisms of progressive taxation; and the postscript, which has much keen critique of “conservatism,” although its positive position is a weak, ultimately pragmatic “Whiggism”).

It is, in fine, a tragic failure because, setting out in this big book to establish a groundwork and a system for liberty, this is precisely what Hayek fails to do and which constitutes his chief error. He has no principle for liberty His only principle is the “rule of law,” and this, weak anyway, is so vitiated and qualified that, by the end, there is virtually no principle remaining.

This lack of principle can best be shown by a list I have compiled from the book, setting forth Hayek’s partisan biases, biases stemming from his odd concept of the State’s “noncoercive” activities, and from his defining “coercion” peculiarly to include “neighborhood effects” on others’ property, etc. The following is the list of Hayek’s specific partisan biases in economic applications of his theory.

Hayek favors the following:

▪ requiring “monopolist” not to discriminate in price among his customers

▪ government sanitation

▪ government roads

▪ compulsory jury service (which he considers “noncoercive”)

▪ compulsory deputizing of constables (also, as I’ve said, conscription is “noncoercive”)

▪ government enforcement of religious conformity in an age when people believe that the collective community is responsible for everyone’s actions against God (e.g., if people believe that homosexuals would bring down the wrath of Sodom and Gomorrah upon them, homosexuality should be outlawed)

▪ government enforcement of “rules of conduct” in public places (a vague endorsement)

▪ suspension of liberty in “emergencies” (e.g., the right of habeas corpus), in the “public interest”

▪ the “clear and present danger” invasion of free speech

▪ government subsidies in the “public interest” (e.g., for “defense”)

▪ government supplying of a monetary system

▪ government supplying of standards weights and measures

▪ government supplying of statistics

▪ government surveying

▪ government sanitary services

▪ government health services

▪ municipal services

▪ government public works-which individuals would not pay for

▪ many government enterprises, so long as they are not compulsorily “monopolistic”

▪ “factory” acts, and other government regulations of production

▪ interference with absolute private property in land

▪ failure of government to enforce gambling contracts

▪ government aid to the indigent, up to a “minimum of subsistence” for everyone; and this “minimum” keeps rising along with the general standard of living (!)

▪ government subsidies for scientific research, other “experiments”

▪ municipal government parks

▪ municipal government museums

▪ municipal government theaters

▪ municipal government sports facilities

▪ outlawing of peaceful secondary strikes and boycotts

▪ collective bargaining, on work rules-which Hayek fails completely to realize are hindrances on production and on management’s private property, and which he identifies as extensions of the rule of law to industry (!?)

▪ collective bargaining on wage differentials (Note: collective bargaining should not be outlawed, but an economist should realize its economic evils and its lack of advantages)

▪ outlawing of voluntary closed-shop “yellow-dog” contracts

▪ compulsory old-age insurance

▪ compulsory unemployment insurance; Hayek favors Federal compulsion on everyone to take out insurance, rather than for the government to “insure” everyone directly itself; however, he would supplement this with “temporary” federal aid and subsidy to private insurance companies for such insurance (all this he would do along the lines of existing compulsory automobile insurance, which he also favors)

Further, while opposed to the existing federal social security program, Hayek is against scrapping it entirely, now that it is set up, and only favors a gradual transformation of the present system into his proposed system.

Hayek is also against a monetary policy so “tight” as to lead to protracted unemployment (even though he sees that unions would be responsible for this unemployment).

▪ an odd maximum limit on proportional taxation which would only be the percentage of national income extracted by the government; thus, if the government decides to extract 50 percent of the national income, his proposed maximum would be 50 percent

Hayek favors central banking and is opposed to a free-market money.

He is against the return to a gold standard; instead he favors governmental stabilization of the price level, including in such measures a “commodity reserve standard.”

Hayek also believes that absolute private-property rights are invalid in cities, and advocates larger municipal ownership.

He favors the following:

▪ town planning by government, to coordinate neighborhoods, etc.

▪ town planners

a. taxing property owners who “gain” by their measures even though the individual property owner may be opposed to the measure

b. subsidizing the “losers”

▪ the right of expropriation of private property by government (right of eminent domain, etc.) provided it is at “fair compensation”—the “fair compensation,” of course to be determined by... government

He concedes that the Henry George single-tax plan would be fine if only there could be clearly separated in practice the site value from the improvement value of land;

He favors

▪ governmental building codes, and minimum safety regulation

▪ compulsory expropriation of land

▪ federal government parks, and “nature reservations”

▪ federal government spreading of agricultural knowledge to farmers

▪ compulsory minimum education for children, with government of course setting the minimum standards

▪ government aid for education of the poor; he seems to adopt the Friedman plan for government financing of every parent, who can choose his own private school, thus eliminating the need for public schools (of course, the private schools would have to meet governmental “minimum standards”); however, he doesn’t go as far as the Friedman plan, because Hayek

a. wants to retain public schools in isolated districts where private schools would not pay

b. in retrospect, favors public schools for nineteenth-century America, when transportation was poorer, and where public schools were needed to “Americanize” the immigrants compulsorily

▪ “academic freedom” and “tenure” in colleges

▪ government, federal aid to higher education especially of general scientists and scholars

▪ government special taxation of slum property

Cordially,
Murray