Accidental one percent

Let’s treat the rich as accidents, says Hayek, in our ongoing exploration of Austrian thought.

While Hayek admits that property as a concept did “not fall ready made from heaven”,[i] he nonetheless takes issue with the “socialist” conception that it was “invented.” He argues that “the recognition of property preceded even the most primitive cultures, and that certainly all that we call civilization has grown up on the basis of that spontaneous order of actions which is made possible by the delimitation of protected domains of individuals or groups” (italics added). (2590-2614)

In a long set of volumes complete with soaring paeans to liberty and other abstractions, this reference to fences is a rare moment when Hayek lands on terrestrial planes to actually explain what he is on about. Amidst such beautiful prose, the reference to vulgar property as the fount of “all” civilization seems like a sharp reduction of what constitutes the good life – sharply at odds with the complex views of Adam Smith (1759) and even Menger. It seems difficult to put property at the center of one’s value system without being seen as an apologist for the current distribution of property in society. Hayek maintains that he is not defending outcomes, only whether certain behaviors can lead us to believe that certain limits between individuals exist. (2614) Nonetheless, elsewhere, he argues that “it will generally be impracticable to correct” injustices created by circumstances of birth or initial distributions. “It will on the whole seem preferable to accept the given position as due to accident and simply from the present onwards refrain from any measures aiming at benefiting particular individuals or groups.” (6841)

But by what mechanism would the now powerful be unilaterally disarmed from exercising their disproportionate power?

Hayek was indeed worried about the power of large corporations in society, but he believed this could be remedied by “depriving government of the power of benefiting particular groups” and by closing loopholes in legislation that create discretion for government (9844-9943) More than banks, Hayek saw unions as a major threat to freedom, which could only exist (he claims) because of government endorsement. (9984, 10126) Indeed, if government allows these groups to grow past a certain point, only “some dictatorial power could break” their grip. (10046)

Change and intentionality in law

But lawyers can also undermine the abstract qualities of law, especially as the demands of the administrative state grow. Hayek argues that rulers conflate statute commands with “grown law” because the same entities administer them, even though they are for very different ends – the former serving as essentially the articles of incorporation of the state. (3030-3051) The more the government expands its role into service provision, the more people will focus on what treatment they can expect from administrative bodies. (3157)[ii] Too much focus on “public law” can lead to totalitarianism, a “mental bias” which public law tends to engender in legislators. (3093, 3283)[iii]

If a different “philosophy of law” prevails with a more revolutionary character, then the same desire for consistency will lead to a scrubbing of existing law.[iv] Hayek blames economists for provoking these changes in the “philosophy of law,” as lawyers have adopted economistic or empirical concepts to explain the “inevitable tendencies” brought on by economic policies, or made reference to facts like the number of governments that follow one or another policy as evidence for its wisdom.[v] 1803 Later, he blames sociologists, for dedicating attention to “the specific effects” of laws rather their contribution to the overall order. “While it is easy enough to pick from descriptive sociological studies knowledge of some particular facts, the comprehension of that overall order which the rules of just conduct requires the mastery of a complex theory which cannot be acquired in a day. Social science conceived as a body of inductive generalizations drawn from the observation of limited groups, such as most empirical sociology undertakes, had indeed little to contribute to an understanding of the function of law.” (2714-2735)

Still, Hayek allows that there is some need for purposive correction of the only gradually changing “grown law,” as when there are “wholly new circumstances.” Indeed, the judge will often be unable to correct errors made from within the law, as he “is not performing his function if he disappoints reasonable expectations created by earlier decisions.” (2214) The otherwise infallible common law can indeed be polluted when judges come from “members of a particular class whose traditional views made them regard as just what could not meet the general requirements of justice.” (2234)

Hayek does not seem to provide any motor that would explain how the law might be more or less polluted by these tendencies over time. The lack of explanatory power abounds throughout the exposition. When theorizing about the emergence of legislative bodies, he says that their function as appropriators for war funds predated their role as statute-creators.  However, he says that when the “wish to [create statute] arose it was almost inevitable” than these representative bodies take over this function. Later, when theorizing about whether states are truly sovereign or not, he notes that they are sovereign so long as they don’t upset public “opinion.” (2277-2317)[vi] How these wishes “arise” or how opinion is shaped is left to the reader to ascertain.

[i] Indeed, he concedes that absolutist notions of property are only completely applicable in the case of chattel or moveable property. Even by the time we get to ownership in land (much less intellectual property), it is highly difficult to define protected domains in mutually exclusive ways, given pervasive externalities. (2635)

[ii] Hayek explicitly calls for limiting the size of government and allowing private entities to compete with public ones so as to make sure that no one’s expectations became static. (3220)

[iii] Indeed, Hayek later notes that some Marxists call for the replacement of law by administration. (5388)

[iv] Hayek’s legal revolutionaries might describe the ISDR lawyers, who systematically scrub old norms to create new ones.

[v] Here, the notion in ISDR tying “Fair and equitable treatment” to “prevailing state practice” would have disappointed Hayek. Luckily for him, ISDR lawyers are very haphazard in their actual empirical treatment of these questions.

[vi] He later writes that “sovereignty” and “states” maybe indispensable tools for international law, but worries that they may also undermine the notion of international law. (5494) It is difficult to even speak of the concept of “international law” without reference to these topics, however. What Hayek may be referencing is human rights law.


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