Hayek and the Welfare State, Yet Again

by Henry Farrell on May 21, 2012

In lieu, I presume, of a reply to my previous posts disagreeing with him on Hayek and Judt, Tyler Cowen links to “this post”:http://bleedingheartlibertarians.com/2012/05/hayek-on-serfdom-and-welfare-states/#more-2954 by Kevin Vallier on _Bleeding Heart Libertarians_ which frames the debate thusly:

bq. Every once in a while folks in the political corner of the blogosphere start talking about Hayek’s argument in The Road to Serfdom. As Matt Yglesias said Monday, lots of people, conservatives and liberals alike, say that Hayek believed that any welfare state inevitably leads to totalitarianism. Then some people who have actually _read_ Hayek reply that he always supported social insurance, safety nets, public goods provision and many forms of regulation. Then confusion ensues.

bq. … Obviously Farrell and Judt’s claims are over the top due to their use of various “of any sort” “unequivocally” “at all” and “Hitler” modifiers … instead of beating up on them, let’s use our collective annoyed-by-someone-on-the-internet energy in a constructive fashion: to see what we can learn about Hayek’s real arguments against socialism and the welfare state. … Caldwell concludes, rightly, that Hayek was right about this. But he points out that Hayek’s criticism of the welfare state is subtler and involves two claims. The first problem with the welfare state is that it is a philosophically slippery target. … when Farrell reads this, he concludes that Hayek basically made the same claims about the welfare state and socialism, namely that both institutions will lead, eventually, to totalitarianism, even if the socialism gets us there sooner than the welfare state. … In my last post, I pointed out that _even the later Hayek_ defended a universal basic income … Thus, Hayek supported what we typically call a welfare state throughout his career. … In my view, then, Hayek’s target is not “the welfare state” as such, that is, not a social insurance or safety net state, but rather a _state based on a robust conception of distributive justice applied to its economic components_ … Hayek’s critique of the welfare state simply falls out of his broader conception of the legal order of a free people. … So let’s distinguish between two kinds of welfare states: the welfare state of law and the welfare state of administration. Hayek’s preferred welfare state is limited by his insistence that the law be regulated by clear, public, general principles rather than administrative bodies.

bq. Hayek opposes the welfare state of administration. … But the second problem with the welfare state of administration is that it contains an internal dynamic that pushes in a socialist direction. … Of course, this is not totalitarianism by any means. For one thing, if citizens affirm even modest economic freedoms (as most members of liberal democracies do), then they will resist this accretion effect before things get too bad. And that’s the pattern we see: even in Scandinavian countries, people resist regulation due to their concerns about efficiency and, yes, concerns about property rights (sometimes more effectively than we supposedly libertarian Americans). …

bq. Hayek overplayed his hand by arguing that the tinkerer’s welfare state will inevitably lead to totalitarianism, but not by much. The most free and economically successful liberal democracies hybridize welfare states of law and welfare states of administration. They’re hybrids largely due to the fact that most citizens of liberal democracies endorse elements of both liberalism and socialism. But if citizens of liberal democracies gave up liberalism entirely and stopped minding regulation so much, then I think the dynamic of the administrator’s welfare state would lead to significant authoritarianism that, while not totalitarian, would be uncomfortably close.

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