Was Hayek a (Welfare) Statist?

There’s been a little flurry in the blogosphere of late about what F. A. Hayek thought about the welfare state, apparently touched off by a remark made by the late Tony Judt in a newly published book, the result of a collaboration between the late Tony Judt and Timothy Snyder Thinking the Twentieth Century. Judt makes the following charge.

Hayek is quite explicit on this count: if you begin with welfare policies of any sort — directing individuals, taxing for social ends, engineering the outcomes of market relationships — you will end up with Hitler.

Tyler Cowen, in a generally favorable and admiring take on the book and Judt’s writings, observed that Judt was being unfair to Hayek.

Then, Henry Farrell weighed in on Judt’s side and cited the discussion between Andrew Farrant and Edward McPhail who contend that Hayek wrongly held that any form of welfare statism would lead to totalitarianism while Caldwell denied that this was Hayek’s argument in The Road to Serfdom, maintaining that Hayek’s subsequent criticism of the welfare state was more subtle and less categorical than the argument of The Road to Serfdom against full scale planning. Farrell criticizes Cowen and Caldwell for defending Hayek, even while acknowledging a bit of sloppiness on Judt’s part in not making clear that Hayek did distinguish between the provision of some forms of social insurance from welfare-state policies. To support his case against Hayek, Farrell quotes from Hayek’s introduction to the 1956 American edition of The Road to Serfdom in which Hayek cited the experience of England under the post-war Labour government in warning that the statist policies of the Labour government would cause an adverse change in public attitudes that would eventually erode even the English pubic’s attachment to liberal principles.

However, even if Hayek qualifies his claims in the first paragraph quoted, he’s changed his tune towards the end. He very explicitly claims that the paternalist welfare state is creating the conditions under which (unless the policy is changed or reversed) totalitarianism will blossom, reducing the populace (as described in the bit of Tocqueville that Hayek quotes) into a “flock of timid and industrial animals, of which government is the shepherd,” which will surely sooner or later come under the control of “any group of ruffians.” More tersely: Welfare Statism=Inevitable Long Term Moral Decline=Hilter! ! ! !

Hayek surely had his moments of brilliant insight, but this wasn’t one of them – for all his protestations of anti-conservatism it’s a fundamentally conservative, and rather idiotic claim. I don’t think that Judt was being unfair at all.

Responding to Judt’s attack on Hayek as reinforced by Farrell, Kevin Vallier tried to shift the conversation toward an understanding of what Hayek actually thought about the welfare state, offering a conceptual distinction — of whose relevance I am somewhat skeptical — between a welfare state of law and a welfare state of administration, the former referring to a welfare state in which benefits are administered in a uniform fashion according to legally prescribed rules and a welfare state in which the benefits are distributed by officials at their own discretion.

In reply, Farrell dismisses the point that Hayek was not opposed to the provision of a safety net and various forms of social insurance. Farrell regards this as an irrelevant detail.

This is, in fact, agreed to by all parties – hence my suggestion in the original post that “Hayek clearly believes that there are non-statist, non-paternalist ways of achieving some (if not all) of the same ends.” But the reason why Hayek sees this as allowable, as Vallier acknowledges in his own defense of Hayek, is that it is not statist – it involves coercion, but does not have the statist logic that Hayek views as pernicious.

Now if you find this a bit confusing, I can’t blame you, because it is. But the confusion is not all Farrell’s. It is also Hayek’s. He did try to get more mileage out of his argument in The Road to Serfdom than it could sustain, and to do so he had to resort to sociological intuition, hand-waving and rhetoric, in contrast to the comparatively rigorous argument of The Road to Serfdom. Nevertheless, the avowedly socialist postwar Labour government nationalized many industries, and tried to implement central planning, so Hayek’s concerns about the consequences of the Labour government must be considered in a wider context than just expansion of the welfare state.

What was unfair about Tony Judt’s comment was a failure to distinguish between the different levels of the argument that Hayek was making. The arguments may have been related, but they were not the same. The argument of The Road to Serfdom was an argument about the logical implications of central planning. The argument about the welfare state was an argument about a slippery slope. Those are very different arguments, and not to acknowledge the difference is unfair, even (or, perhaps, especially) if Hayek’s argument about the welfare state was less than compelling.

HT:  David Levey

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14 Responses to “Was Hayek a (Welfare) Statist?”


  1. 1 Tas von Gleichen May 22, 2012 at 3:26 am

    I think this article is going into extreme mentioning Hitler a couple of times. It sort of makes sense that the two would not get along very well. Hayek is a total different caliber.

  2. 2 cinnamoncolbert May 22, 2012 at 5:59 am

    sort of like milton friedman, everyone says how brilliant he is, but no one can ever explain, in plain english, 1 thing that he did that is worth paying attention to
    Tell me : why does anyone care what hayek or friedman said about anything ?
    As a scientist who works on DNA and proteins and stuff like that, I don’t give a rats a** what Watson or Crick or Darwin or any other figure did or didn’t say – what is it with econ, that you seem stuck perpetually not going anywheres ?

    PS: given how many words have already been written on this topic, you must have extra ordinary insight , and self confidence, to think that you can add anything

  3. 3 Greg Ransom May 22, 2012 at 8:15 am

    Read Hayek’s chapter on welfare etc in his _The Constitution of Liberty_, and Hayek chapters on governmental institutional design in his _Law, Legislation and Liberty_ — which Farrell clearly has not read — and much of the claimed “confusion” and “handwaving” evaporates. Hayek makes actual arguments which are unknown to Farrell, and unaddressed.

    (I should add that Hayek’s argument about the decline of character and a sense of principles in the massive, unprincipled redistributive state is not “confusion” and is not “handwaving”, it’s an actual argument and we’ve witnessed illustrations of the mechanisms in various ways, many of which are widely noticed and common currency in discussions of the pathologies of the modern, massive, welfare / redistributive state.)

    You have to be familiar with and have mastered the material and you need to engage that material in order to actually provide an intelligent analysis and critique of the material.

    This is was is almost never the case in the second hand, second rate Hayek commentary you come across every day from academics and public intellectuals.

    It’s shoddy and cellophane thin stuff, usually motivated by a political desire to marginalize Hayek and his work, rather than to engage it in any serious scholarly way.

    The shoddiness and incompetence of so much of the Hayek literature and academic chatter about Hayek is one reason I started my Taking Hayek Seriously blog, as a place to direct people to material actually worth reading and engaging.

    The Hayek literature is beginning to get better.

    It still has a long way to go.

  4. 4 Greg Ransom May 22, 2012 at 10:42 am

    Can we get a careful & sophisticated discussion of Hayeks’ work on the inter-relation of institutional evolution / design and patterns of negatively constrained social inter-actions?

    Can we get a careful discussion of Hayeks’ work on welfare institutions and welfare institutional design as presented in his _The Constitution of Liberty_?

    Can we get a careful discussion of Hayeks’ work on the ratchet mechanism in which one failed “pragmatic” government intervention is “fixed” by a larger “pragmatic” intervention?

    Can we get a careful discussion of Hayeks’ work on market & rule of law compatible governmental institutions and administrative and “pragmatic” governmental institutions which are less so?

    Rarely.

    And is seems essentially never from leftists on the internet and in the journals out to marginalize Hayek.

  5. 5 Greg Ransom May 22, 2012 at 3:26 pm

    Let me recommend Ryan Murphy’s reality check on this whole internet “discussion”: http://increasingmu.wordpress.com/2012/05/22/defending-boilerplate-hayek/

  6. 6 Julian Janssen May 22, 2012 at 6:50 pm

    Here’s my newest post, “Keynes’ lesson on aggregate demand” where I discuss Keynes’ introduction of the Keynesian cross.

    http://socialmacro.blogspot.com/2012/05/keynes-lesson-on-aggregate-demand.html

    Criticism is appreciated.

  7. 7 David Glasner May 23, 2012 at 9:42 am

    Tas, No one could doubt that.

    cinnamoncolbert, I am not one of Friedman’s greatest fans, but he was a great economist, and it shouldn’t be that hard to find a half a dozen really important contributions that he made if you surf the web for about 5 minutes. Obviously economics is a lot harder than genetics.

    Greg, There are real social pathologies that Hayek identified, but Hayek would be the first to admit that there are multiple causes for any of them (theory of complex phenomena), and if one reads about the social history of Europe, one is immediately struck by the prevalence of social pathologies among all strata of the population over many centuries, so there is more going on than just the redistributive state.

  8. 8 Abimbola Agboluaje May 25, 2012 at 1:02 pm

    On social pathologies: it is useful to separate the impact of welfarist or redistributive social policies on the “decline in character” and “principles” from that which central planning policies through which the state dominates the “commanding heights” of the economy has at the level of concept/theory. In practice, governments mostly tend to do both together. the “maturity” of state and soceity matters. if you turn to a country like Nigeria, it is clear that state monopoly and investment in major industries had a more corrossive/corrupting effect on politics, social mores, quality of governance than welfarist/redistributive social policies. the impact is clear enough to make the phenomena not complex! relevant to think of “homo sovieticus”…ruse, evasion part of pyschological and social construction

  9. 9 Paul Udstrand June 2, 2012 at 6:57 am

    Cininomcolbert,

    You have to remember, economics has degenerated into a field of competing ideologies rather than evidence based discourse. This is why people are still arguing about what guys like Hyek thought or said. These are “canon” arguments, it looks more like religious arguments about scripture than science… because it is. Of course if you simply step back and look at history over the past 60 years, you find that Hayek was wrong either way. The only non-communist totalitarian states that emerged in the last half of the 20th century were the south and central American countries that implemented Hyek and Friedman’s economic policies.

  10. 10 David Glasner June 2, 2012 at 8:40 pm

    Abimbola, Thanks for your comment; you raise an important distinction.

    Paul, I am not an admirer of Pinochet’s Chile, but there was a peaceful transformation in Chile from a military dictatorship to a fairly liberal democratic state. I don’t think that that process was hindered by any of the economic policies recommended by Hayek or Friedman.

  11. 11 Paul Udstrand June 3, 2012 at 8:49 am

    Tis not the transition from Pinochet to a liberal democracy that represents Hayek’s programs but the transition form a liberal democracy to Pinochet’s dictatorship. One of the frequently observed problems with Friedman and Hayek’s economic programs in the 60s and 70s was that they could only be implemented by dictatorships. When Friedman complained to Margret Thatcher that her austerity measures weren’t sweeping enough, her reply was: “This isn’t Chile Mr. Friedman”.

    If you call 40 years of civil war a “peaceful” transition back into Democracy, I can only wonder what your definition of “peaceful” is. This is the Irony of the entire Chicago economic program, it claimed to be opposing totalitarianism, but that opposition relied on dictatorial government for it’s implementation.


  1. 1 Economist's View: Links for 2012-05-22 Trackback on May 22, 2012 at 12:09 am
  2. 2 Links for 2012-05-22-Economic Issue | Coffee At Joe's Trackback on May 22, 2012 at 11:40 am
  3. 3 Defending Boilerplate Hayek « Increasing Marginal Utility Trackback on May 22, 2012 at 12:53 pm

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About Me

David Glasner
Washington, DC

I am an economist at the Federal Trade Commission. Nothing that you read on this blog necessarily reflects the views of the FTC or the individual commissioners. Although I work at the FTC as an antitrust economist, most of my research and writing has been on monetary economics and policy and the history of monetary theory. In my book Free Banking and Monetary Reform, I argued for a non-Monetarist non-Keynesian approach to monetary policy, based on a theory of a competitive supply of money. Over the years, I have become increasingly impressed by the similarities between my approach and that of R. G. Hawtrey and hope to bring Hawtrey's unduly neglected contributions to the attention of a wider audience.

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