Hayek’s role for the state
A fascinating defense of Hayek, in response to Sach’s column (posted here the other day). According to Tim Duy, Hayek was more reasonable than we give him credit for being (thanks to Economist’s View for this one):
In Defense of Hayek, by Tim Duy: I feel a need to at least quickly defend Hayek against Jeffery Sachs attacks. Sachs leaves the impression that Hayek is a right wing ideologue who argues against any state provision of social services. From the Road to Serfdom:
There is no reason why in a society which has reached the general level of wealth which ours has attained the first kind of security should not be guaranteed to all without endangering general freedomâ€¦there can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybodyâ€¦Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of the assistance â€“ where, in short, we deal with genuinely insurable risks â€“ the case for the stateâ€™s helping to organize a comprehensive system of social insurance is very strongâ€¦.To the same category belongs also the increase of security through the stateâ€™s rendering assistance to the victims of such â€œacts of Godâ€ as earthquakes and floods. Whenever communal action can mitigate disasters against which the individual can neither attempt to guard himself or make provision for the consequences, such communal action should undoubtedly be takenâ€¦.There is, finally, the supremely important problem of combating general fluctuations of economic activity and the recurrent waves of large-scale unemployment which accompany themâ€¦
The type of planning that Hayek was vociferously opposed to is that meant to offset not insurable risk, but the fundamental shifts that accompany structural change:
The planning for security which has such an insidious effect on liberty is that for security of a different kind. It is planning designed to protect individuals or groups against diminutions of their income, which although in no way deserved yet in competitive society occur daily, against losses imposing severe hardships having no moral justification yet inseparable from the competitive system.
In other words, it is appropriate for society to guarantee a proscribed level of health care accessibility, but not to guarantee you against loss because technological change eliminates your job. Note thatÂ Hayekâ€™s list of accessible social services is actually quite broad. And in other parts of the Road to Serfdom, he recognizes the need for government to address externalities, monopolies, etc.
I dislike efforts to color Hayek as a one-dimensional personality as much as I am irritated by efforts from the right to discredit Keynes as a socialist. Of course, some blame for the attack on Hayek should be directed to the right; so called supporters of Hayek have damaged his reputation with such simplistic expositions as this cartoon.
Speaking of Keynes, Robert Skidelskyâ€™s masterful biography includes Keynesâ€™s thoughts on Hayek:
Keynesâ€™s response was unexpected. Hayekâ€™s was a â€œgrand book,â€ he wrote, and â€œwe all have the greatest reason to be grateful to you for saying so well what needs so much to be saidâ€¦.Morally and philosophically I find myself in agreement with virtually the whole of it; and not only in agreement, but in deeply moved agreement.â€
Keynes did note, however, that Hayek, by admitting to the need for government to serve a social function, recognized that there was in fact need for a middle ground, but could not determine where to draw it.
Finally, it is important to recognize that Hayek was writing in reaction to the rise of Fascism in Germany and Stalinism in the Soviet Union. There is an important lesson there, and God help us if we ignore it in an eagerness to discredit Hayek.