Book Review: Economic Freedom and Representative Government

Thursday, April 4, 2013

Economic Freedom and Representative Government is a lecture delivered by F. A. Hayek at The Royal Society of the Arts on the 31st of October, 1973, about a year before Hayek was awarded the Nobel Prize in Economic Sciences.  This lecture highlights the dangers of unlimited government, points out flaws which lead to unlimited government, and offers a theoretical solution.  As always, Hayek's observations are very perspicacious, and though this lecture was written primarily for a British audience (they do not have a written Constitution), we in the United States today find ourselves facing many of the problems he wrote of 40 years ago.

To begin with, Hayek assumes that the majority of the people are in favor of a free market and against government direction; however, most of the groups would like an exception to be made in their favor.

 Take, for example, an Iowa farmer.  He is in favor of the free market, and though he may dislike the idea of giving welfare to thousands of lazy people in the inner city of Chicago, he may deem farm bills and agricultural subsidies fair and right.  The auto manufacturers couldn't care less about agricultural subsidies, but they want their bailouts, the folks in government housing want their handouts, the banks want a share when they're in trouble, and on and on...

 Any political party that wants to achieve and maintain power is forced to use its powers to buy the support of particular groups "not because the majority is interventionist, but because the ruling party would not retain a majority if it did not buy the support of particular groups by the promise of special advantages."  This is the problem.

Hayek explains that the problem is there because of majority rule.  Whatever the majority decides becomes law, and since it is law, it is believed to be just.  "A legislature is now not a body that makes laws; a law is whatever is resolved by a legislature."  Hence, "law is not dependent on justice but determines what is just."  This is a perversion of "law."  The old, real sense of the word is lost.  The legislature is not bound by committing themselves to general rules, and if they want to retain a majority they must "use coercion in the discriminatory manner that is required to assure benefits to particular people or groups."  

Here in the United States, I must note, we had a law which bound the legislatures to general rules...It was called the Constitution.  Davy Crockett understood this and said, "We have the right as individuals to give away as much of our own money as we please in charity; but as members of Congress we have no right to appropriate a dollar of the public money [for special interests or charity]."  The legislatures were bound to specific duties outlined in the U.S. Constitution, but now they've freed themselves from a strict interpretation of the Constitution and make laws to try to control anything and everything, binding and fettering the people instead.  But, I digress...

According to Hayek, "The main subject of this lecture is what we have to do, if we ever again get a chance to stop those tendencies [outlined above] inherent in the existing political systems which drive us toward a totalitarian order"--an unlimited government.

To preserve individual freedom, Hayek says, coercion must be confined to the general rules of just conduct.  "An individual who is bound to obey only such rules of just conduct as I have called these rules of law in this narrow sense [lawyer's law--relating to the laws which apply equally to all and define the protected sphere of each person with which others are prohibited from interfering, made to "prevent conflicts between people who do not act under central direction but on their own initiative, pursuing their own ends..."] is free in the sense that he is not legally subject to anybody's commands, that within known limits he can choose the means and ends of his activities."  

But how?  How can legislatures, especially divided into political parties that only gain a majority by promising special benefits to some groups, resist these pervasive tendencies?  Hayek admits that there never has been a legislature limited to making laws in the narrow sense described in the last paragraph.  

Hayek proposed having two representative assemblies.  One would make laws in the narrow sense and its members, disinterested citizens, would be elected for very long terms and would not be eligible for re-election.  The other would be governed by the laws of the first assembly in directing government proper.

F.A. Hayek admitted that he did not believe his "utopian construction" of an idea for a government would not be realised in the foreseeable future.  However, he decided to promulgate the idea because as David Hume said, "In all cases, it must be advantageous to know what is the most perfect in the kind, that we may be able to bring any real constitution or form of government as near it as possible, by such gentle alterations and innovations as may not give too great a disturbance to society."

I enjoyed reading this lecture.  The problems presented by Hayek are pertinent today.  I think many of these problems would have been prevented in the United States if we had insisted on keeping Congress and the President bound by a strict interpretation of the Constitution.  

And now, my dear reader, I pose the question to you: what do you believe is the best way to face this problem caused by special interests?  What do you think is the most efficient way to preserve the classical meanings of law and justice?  Is a law whatever the legislature decides, and because a majority decides something should be a "law," is it necessarily just?  Think about it.