The Rule of Law -- Part 17
Hayek’s discussion of equality, value, and merit.
In this essay we’ll explore Friedrich Hayek’s discussion of the concepts of equality, value, and merit in his book The Constitution of Liberty.
Hayek writes:
The fact that certain advantages rest on human arrangements does not necessarily mean that we could provide the same advantages for all or that, if they are given to some, somebody else is thereby deprived of them. The most important factors to be considered in this connection are the family, inheritance, and education, and it is against the inequality which they produce that criticism is mainly directed. They are, however, not the only important factors of environment. Geographic conditions such as climate and landscape, not to speak of local and sectional differences in cultural and moral traditions, are scarcely less important. We can, however, consider here only the three factors whose effects are most commonly impugned. So far as the family is concerned, there exists a curious contrast between the esteem most people profess for the institution and their dislike of the fact that being born into a particular family should confer on a person special advantages … It seems to be widely believed that, while useful qualities which a person acquires because of his native gifts under conditions which are the same for all are socially beneficial, the same qualities become somehow undesirable if they are the result of environmental advantages not available to others. Yet it is difficult to see why the same useful quality which is welcomed when it is the result of a person's natural endowment should be less valuable when it is the product of such circumstances as intelligent parents or a good home.
Hayek writes that if society is to give freedom to parents, it must accept the inevitably varied results of that freedom as those results come to materialize over time:
The value which most people attach to the institution of the family rests on the belief that, as a rule, parents can do more to prepare their children for a satisfactory life than anyone else. This means not only that the benefits which particular people derive from their family environment will be different but also that these benefits may operate cumulatively through several generations … [Objections to that situation] rest on the discontent that the success of some people often produces in those that are less successful, or, to put it bluntly, on envy. The modern tendency to gratify this passion and to disguise it in the respectable garment of social justice is developing into a serious threat to freedom. Recently an attempt was made to base these demands on the argument that it ought to be the aim of politics to remove all sources of discontent. This would, of course, necessarily mean that it is the responsibility of government to see that nobody is healthier or possesses a happier temperament, a better-suited spouse or more prospering children, than anybody else. If really all unfulfilled desires have a claim on the community, individual responsibility is at an end. However human, envy is certainly not one of the sources of discontent that a free society can eliminate. It is probably one of the essential conditions for the preservation of such a society that we do not countenance envy, not sanction its demands by camouflaging it as social justice, but treat it, in the words of John Stuart Mill, as “that most anti-social and odious of all passions.”
(I would note here that a previous essay discussed the detrimental effects of an obsession with status on individual well-being.)
Hayek then discusses how our understanding of merit enters into our understanding, or resentment, of inequality:
Most people will object not to the bare fact of inequality but to the fact that the differences in reward do not correspond to any recognizable differences in the merits of those who receive the … The proper answer is that in a free system it is neither desirable nor practicable that material rewards should be made generally to correspond to what men recognize as merit and that it is an essential characteristic of a free society that an individual's position should not necessarily depend on the views that his fellows hold about the merit he has acquired. This contention may appear at first so strange and even shocking that I will ask the reader to suspend judgment until I have further explained the distinction between value and merit. The difficulty in making the point clear is due to the fact that the term “merit,” which is the only one available to describe what I mean, is also used in a wider and vaguer sense. It will be used here exclusively to describe the attributes of conduct that make it deserving of praise, that is, the moral character of the action and not the value of the achievement.
Hayek asks us to focus less on the concept of merit, and more on the concept of value:
[T]he value that the performance or capacity of a person has to his fellows has no necessary connection with its ascertainable merit in this sense. The inborn as well as the acquired gifts of a person clearly have a value to his fellows which does not depend on any credit due to him for possessing them. There is little a man can do to alter the fact that his special talents are very common or exceedingly rare. A good mind or a fine voice, a beautiful face or a skillful hand, and a ready wit or an attractive personality are in a large measure as independent of a person's efforts as the opportunities or the experiences he has had. In all these instances the value which a person's capacities or services have for us and for which he is recompensed has little relation to anything that we can call moral merit or deserts. Our problem is whether it is desirable that people should enjoy advantages in proportion to the benefits which their fellows derive from their activities or whether the distribution of these advantages should be based on other men's views of their merits … Reward according to merit must in practice mean reward according to assessable merit, merit that other people can recognize and agree upon and not merit merely in the sight of some higher power. Assessable merit in this sense presupposes that we can ascertain that a man has done what some accepted rule of conduct demanded of him and that this has cost him some pain and effort. Whether this has been the case cannot be judged by the result: merit is not a matter of the objective outcome but of subjective effort. The attempt to achieve a valuable result may be highly meritorious but a complete failure, and full success may be entirely the result of accident and thus without merit.
Hayek points out that it is much easier to discern value than merit:
We may wish that we were able to draw this distinction in every instance. In fact, we can do so only rarely with any degree of assurance. It is possible only where we possess all the knowledge which was at the disposal of the acting person, including a knowledge of his skill and confidence, his state of mind and his feelings, his capacity for attention, his energy and persistence, etc. The possibility of a true judgment of merit thus depends on the presence of precisely those conditions whose general absence is the main argument for liberty. It is because we want people to use knowledge which we do not possess that we let them decide for themselves. But insofar as we want them to be free to use capacities and knowledge of facts which we do not have, we are not in a position to judge the merit of their achievements. To decide on merit presupposes that we can judge whether people have made such use of their opportunities as they ought to have made and how much effort of will or self-denial this has cost them; it presupposes also that we can distinguish between that part of their achievement which is due to circumstances within their control and that part which is not. The incompatibility of reward according to merit with freedom to choose one's pursuit is most evident in those areas where the uncertainty of the outcome is particularly great and our individual estimates of the chances of various kinds of effort very different. In those speculative efforts which we call “research” or “exploration,” or in economic activities which we commonly describe as “speculation,” we cannot expect to attract those best qualified for them unless we give the successful ones all the credit or gain, though many others may have striven as meritoriously. For the same reason that nobody can know beforehand who will be the successful ones, nobody can say who has earned greater merit. It would clearly not serve our purpose if we let all who have honestly striven share in the prize. Moreover, to do so would make it necessary that somebody have the right to decide who is to be allowed to strive for it. If in their pursuit of uncertain goals people are to use their own knowledge and capacities, they must be guided, not by what other people think they ought to do, but by the value others attach to the result at which they aim.
Hayek describes how the price system helps people know what they can expect themselves to profitably pursue:
If the remuneration did not correspond to the value that the product of a man's efforts has for his fellows, he would have no basis for deciding whether the pursuit of a given object is worth the effort and risk. He would necessarily have to be told what to do, and some other person's estimate of what was the best use of his capacities would have to determine both his duties and his remuneration. The fact is, of course, that we do not wish people to earn a maximum of merit but to achieve a maximum of usefulness at a minimum of pain and sacrifice … [I]t is only the value of the result that we can judge with any degree of confidence, not the different degrees of effort and care that it has cost different people to achieve it.
Hayek argues that if we turn from objectively-based methods of determining “meritorious” projects (like the free market’s price system, or, say, standardized tests) to more subjective methods, we can never be confident those methods will determine the value we should be looking for in a society that values innovation:
Though most people regard as very natural the claim that nobody should be rewarded more than he deserves for his pain and effort, it is nevertheless based on a colossal presumption. It presumes that we are able to judge in every individual instance how well people use the different opportunities and talents given to them and how meritorious their achievements are in the light of all the circumstances which have made them possible. It presumes that some human beings are in a position to determine conclusively what a person is worth and are entitled to determine what he may achieve. It presumes, then, what the argument for liberty specifically rejects: that we can and do know all that guides a person's action. In our dealings with other men we feel that we are doing justice if we recompense value rendered with equal value, without inquiring what it might have cost the particular individual to supply us with these services. What determines our responsibility is the advantage we derive from what others offer us, not their merit in providing it. We also expect in our dealings with others to be remunerated not according to our subjective merit but according to what our services are worth to them. Indeed, so long as we think in terms of our relations to particular people, we are generally quite aware that the mark of the free man is to be dependent for his livelihood not on other people's views of his merit but solely on what he has to offer them. It is only when we think of our position or our income as determined by “society” as a whole that we demand reward according to merit … [M]ost of our judgments of value are not moral judgments. That this must be so in a free society is a point of cardinal importance; and the failure to distinguish between value and merit has been the source of serious confusion. If the pursuit of a hobby produces a special skill or an accidental invention turns out to be extremely useful to others, the fact that there is little merit in it does not make it any less valuable than if the result had been produced by painful effort.
Hayek then discusses how a liberal democracy (liberal in the sense of classical liberalism, not modern-day “liberals”) should of course decide the issues the government should address based on majority vote, but that the range of issues the government should be able to decide at all should be limited based on principles of limited government:
The democratic and the liberal traditions thus agree that whenever state action is required, and particularly whenever coercive rules have to be laid down, the decision ought to be made by the majority. They differ, however, on the scope of the state action that is to be guided by democratic decision. While the dogmatic democrat regards it as desirable that as many issues as possible be decided by majority vote, the liberal believes that there are definite limits to the range of questions which should be thus decided. The dogmatic democrat feels, in particular, that any current majority ought to have the right to decide what powers it has and how to exercise them, while the liberal regards it as important that the powers of any temporary majority be limited by long-term principles. To him it is not from a mere act of will of the momentary majority but from a wider agreement on common principles that a majority decision derives its authority. The conception that government should be guided by majority opinion makes sense only if that opinion is independent of government.
Hayek then describes the principles that should limit government, and also limit the power of majorities over others:
That other people's property can be serviceable in the achievement of our aims is due mainly to the enforceability of contracts. The whole network of rights created by contracts is as important a part of our own protected sphere, as much the basis of our plans, as any property of our own. The decisive condition for mutually advantageous collaboration between people, based on voluntary consent rather than coercion, is that there be many people who can serve one's needs so that nobody has to be dependent on specific persons for the essential conditions of life or the possibility of development in some direction. It is competition made possible by the dispersion of property that deprives the individual owners of particular things of all coercive powers … [I]t seems that freedom demands no more than that coercion and violence, fraud and deception, be prevented, except for the use of coercion by government for the sole purpose of enforcing known rules intended to secure the best conditions under which the individual may give his activities a coherent, rational pattern.
As Hayek explains, the predominant philosophical understanding of the “rule of law” (beyond the enforcement of mere power) involved the protection of a sphere within which individuals are free to decide for themselves:
“The rule whereby the indivisible border line is fixed within which the being and activity of each individual obtain a secure and free sphere is the law.” … [This is] the basic conception of the law of liberty. This conception of the law which made it the basis of freedom has since been largely lost. It will [my] chief aim … to recover and make more precise the conception of the law on which the ideal of freedom under the law was built and which made it possible to speak of the law as “the science of liberty.” … The conception of freedom under the law that is the chief concern of this book rests on the contention that when we obey laws, in the sense of general abstract rules laid down irrespective of their application to us, we are not subject to another man's will and are therefore free. It is because the lawgiver does not know the particular cases to which his rules will apply, and it is because the judge who applies them has no choice in drawing the conclusions that follow from the existing body of rules and the particular facts of the case, that it can be said that laws and not men rule. Because the rule is laid down in ignorance of the particular case and no man's will decides the coercion used to enforce it, the law is not arbitrary.0 This, however, is true only if by “law” we mean the general rules that apply equally to everybody. This generality is probably the most important aspect of that attribute of law which we have called its “abstractness.” As a true law should not name any particulars, so it should especially not single out any specific persons or group of persons. We shall have to return later to the manner in which modern legal theory has increasingly obscured these distinctions. Here we can only indicate the contrast between the two concepts of law by giving examples of the extreme positions taken on them. The classical view is expressed in Chief Justice John Marshall's famous statement: “Judicial power, as contradistinguished from the power of the laws, has no existence. Courts are the mere instruments of the law, and can will nothing.” Hold against this the most frequently quoted statement of a modern jurist, that has found the greatest favor among so-called progressives, namely, Justice Holmes's that “general propositions do not decide concrete cases.” The same position has been put by a contemporary political scientist thus: “The law cannot rule. Only men can exercise power over other men. To say that laws rule and not men may consequently signify that the fact is to be hidden that men rule over men.”
Hayek describes what he considers to be the only moral “guidelines” the government should be able to enforce by law, namely those guidelines that are designed not to control individual people, but to even-handedly set out the rules under which everyone can exercise the maximum amount of personal freedom within minimal rules that maintain basic order:
The fact is that, if “to rule” means to make men obey another's will, government has no such power to rule in a free society. The rationale of securing to each individual a known range within which he can decide on his actions is to enable him to make the fullest use of his knowledge, especially of his concrete and often unique knowledge of the particular circumstances of time and place. The law tells him what facts he may count on and thereby extends the range within which he can predict the consequences of his actions. At the same time it tells him what possible consequences of his actions he must take into account or what he will be held responsible for. This means that what he is allowed or required to do must depend only on circumstances he can be presumed to know or be able to ascertain. No rule can be effective, or can leave him free to decide, that makes his range of free decisions dependent on remote consequences of his actions beyond his ability to foresee … [T]he main features of all somewhat more advanced legal orders are sufficiently similar to appear as mere elaborations of what David Hume called the “three fundamental laws of nature, that of the stability of possession, of its transference by consent, and of the performance of promises.”… [W]e can produce the conditions for the formation of an order in society, but we cannot arrange the manner in which its elements will order themselves under appropriate conditions. In this sense the task of the lawgiver is not to set up a particular order but merely to create conditions in which an orderly arrangement can establish and ever renew itself.
In the next essay in this series, we’ll explore Hayek’s understanding of the origins of the rule of law.