Friedrich Hayek (1899-1992) was an Austrian economist and social theorist, and winner of the Nobel prize in economics in 1974. He is best known for his work on the knowledge-generating function of a free-market price system, but also produced work in jurisprudence and cognitive science. Hayek was incredibly influential culturally and politically. He was a key figure in the Chicago School of Economics, which promoted free-market ideologies, and played advisory roles to political figures such as Margaret Thatcher and Ronald Regan. In *The Atavism of Social Justice* (published in 1976), Hayek criticizes the notion of “social justice” as an outdated, nonsensical doctrine within today’s modern, market-driven society governed by abstract social norms. In fact, “social justice” endeavors are dangerous because they’re antithetical to a free, open society— requiring freedom-limiting collective action, authoritarian reappropriation, and inducing market inefficiencies. ![[Friedrich Hayek, The Atavism of Social Justice.pdf]] “Atavism”, broadly speaking, is often used in biology, anthropology, and sociology to refer to the reappearance or reversion to characteristics typical of ancestors or earlier forms. In *The Atavism of Social Justice*, Hayek suggests that the call for social justice is an atavistic reversion to small, close-knit tribal instincts that were prevalent in humanity’s past. He argues that such a reversion limits freedom and is incompatible with the complex spontaneous order of modern, open societies where interactions and exchanges occur in a much larger and more abstract market setting. ### Section 1 Hayek has been attempting, unsuccessfully, to make sense of the term “social justice” in a society of free people engaged in a market economy. He sees “social justice” as an empty and intellectually disreputable phrase since there’s no consensus on what is socially just and no clear formula for justly distributing goods. Instead, Hayek argues for individual responsibility and just *individual* conduct in maintaining a peaceful society of free people. > I have come to regard “social justice” as nothing more than an empty formula, conventionally used to assert that a particular claim is justified without giving any reason. > > The term “social justice” is today generally used as a synonym of what used to be called “distributive justice.” The latter term perhaps gives a somewhat better idea of what can be meant by it, and at the same time shows why it can have no application to the results of a market economy: there can be no distributive justice where no one distributes. ### Section 2 Until just the last 10,000 years, humans lived in small hunter-gatherer bands of 50 or so with a unitary, shared purpose and rigid social hierarchy. Many of our moral feelings come not just from culture but are also genetic vestiges of this time. Individuals from this time were much less free and creative. Freedom is a product of modern civilization. Those who want to return to this rigid social hierarchy with a unified goal, such as socialists, risk giving up our freedom. > We must not forget that before the last 10,000 years, during which man has developed agriculture, town and ultimately the “Great Society,” he existed for at least a hundred times as long in small food-sharing hunting bands of 50 or so with a strict order of dominance within the defended common territory of the band. The needs of this ancient primitive kind of society determined much of the moral feelings which still govern us, and which we approve in others. ### Section 3 Early society had “specific obligatory ends”— fixed goals which everyone was bound to. However, as civilization developed, societies transitioned to “abstract rules of conduct”— general social rules within which individuals can exercise personal choice. This began a “game” where people acted autonomously, leading to a spontaneous social order and the visibility of disperse information via market prices. However, this new form of social organization was at odds with our older natural instincts. > The great advance which made possible the development of civilization and ultimately of the Open Society was the gradual substitution of abstract rules of conduct for specific obligatory ends, and with it the playing of a game for acting thus fostering a spontaneous order. The great gain attained by this was that it made possible a procedure through which all relevant information widely dispersed was made available to ever-increasing numbers of men in the form of the symbols which we call market prices. But it also meant that the incidence of the results on different persons and groups no longer satisfied the age-old instincts. The market process is a game where individuals compete to maximize their gains by selling and exchanging goods and services with others, particularly strangers, thereby improving the living standards of the participants. Hayek proposes we call this market game the game of “catallaxy,” a word with classical Greek roots meaning “exchange” or “admit into the community.” ### Section 4 As trade and commerce developed, people began to be motivated by the abstract signal-price. This required a shift in moral attitude and the development of the game of catallaxy. Thus began the transition from common, specific ends towards that of the open and abstract society. >As the abstract signal-price thus took the place of the needs of known fellows as the goal >towards which men's efforts were directed, entirely new possibilities for the utilization of resources opened up — but this also required wholly different moral attitudes to encourage their exploitation. The rules of property law and of contract law proved most relevant in the game. They allowed effective division of labor and the resulting adjustment of people’s efforts. ### Section 5 Inter-firm division of labor is what really drives the achievement of the market. Free market prices aggregate dispersed knowledge and signal what to produce and how, but only if the market isn’t interfered with by the government. This free market process led to the growth and prosperity of all who participated. >It is in a great measure this inter-firm division of labor, or specialization, on which the achievement of the competitive market depends, and which that market makes possible. Prices the producer finds on the market at once tell him what to produce and what means to use in producing it. [\...] His selfish striving for gain makes him do, and enables him to do, precisely what he ought to do in order to improve the chances of any member of his society, taken at random, as much as possible — but only if the prices he can get are determined solely by market forces and not by the coercive powers of government. The free market’s price signals objectively guides people where to place their efforts. Since the free market increases the odds that any random member of a community will be better compensated, then the free market ought to be considered as just. In other words, because the market efficiently allocates resources and opportunities, the resulting payment for services is fair. >Yet the ordering and productivity enhancing function of prices, and particularly the prices of services, depends on their informing people where they will find their most effective place in the overall pattern of activities — the place in which they are likely to make the greatest contribution to aggregate output. If, therefore, we regard that rule of remuneration as just which contributes as much as possible to increasing the chances of any member of the community picked out at random, we ought to regard the remunerations determined by a free market as the just ones. ### Section 6 When governments meddle with market prices, they distort the natural signals of the market, disrupt the efficient use of resources, and disturb the balance of supply and demand. >When governments started to falsify the market price signals, whose appropriateness they had no means of judging (governments as little as anyone else possessing all the information precipitated in prices), in the hope of thereby giving benefits to groups claimed to be particularly deserving, things inevitably started to go wrong. Not only the efficient use of resources, but, what is worse, also the prospects of being able to buy or sell as expected through demand equaling supply were thereby greatly diminished. If a system improves everyone’s prospects better than any alternative system could, then its outcomes should be considered fair as long as everyone is following the same rules and not cheating. It's cheating to accept winnings from the market and then use the government's powers to gain more benefits. This is true even though we might take actions outside of the market system to ensure a basic level of well-being for those who didn't get enough from the market. >I feel that in any game that is played because it improves the prospects of all beyond those which we know how to provide by any other arrangements, the result must be accepted as fair, so long as all obey the same rules and no one cheats. If they accept their winnings from the game, it is cheating for individuals or groups to invoke the powers of government to divert the flow of good things in their favor — whatever we may do outside this game of the market to provide a decent minimum for those whom the game did not supply it. | Hayek on social safety nets | |-----------------------------| | In "The Road to Serfdom", Hayek argues for some level of government intervention in ensuring basic welfare standards. He supports a safety net, including services like healthcare and temporary financial assistance, while still advocating for a predominantly free-market economy. People suffering from extreme poverty might support authoritarian solutions, which he saw as a far greater risk to freedom than a limited welfare state.| ### Section 7 Many will have resentment over inequality and therefore wish to correct it by authoritative redistribution. However, the total generated wealth is only available because the market rewards people differently without regard for what is “just.” Incredibly high incomes are justified because it is the result of people making their largest contributions to the economic pool and thereby benefiting everyone. Additionally, these high incomes benefit the less enterprising, lucky, or clever since they can still earn a regular income. >High actual gains of the successful ones, whether this success is deserved or accidental, is an essential element for guiding resources to where they will make the largest contribution to the pool from which all draw their share. We should not have as much to share if that income of an individual were not treated as just, the prospects of which induced him to make the largest contribution to the pool. Incredibly high incomes may thus sometimes be just. What is more important, scope for achieving such incomes may be the necessary condition for the less enterprising, lucky, or clever to get the regular income on which they count. In fact, the relatively high income enjoyed by those in the West is due to this inequality. The world's population has been able to increase so much due to the productivity of the game of catallaxy, and maintaining that productivity will be crucial for supporting the world's growing population. >As a result of playing the game of catallaxy, which pays so little attention to justice but does so much to increase output, the population of the world has been able to increase so much, without the income of most people increasing very much, that we can maintain it, and the further increases in population which are irrevocably on the way, only if we make the fullest possible use of that game which elicits the highest contributions to productivity. ### Section 8 People who do not appreciate catallaxy, or resent its supposed injustice, do so because they did not design it and so do not understand it. Individuals participating in the market game will accomplish the most if they selfishly pursue their own interests. The market demands that individuals, especially employers, compete fairly and make choices that benefit society most and are guided only by abstract price signals. It would be a failure of duty to the public to employ a less efficient worker, to spare an incompetent competitor, or favor particular customers. This has encouraged, required even, the spread of liberal morals and the equal treatment of others. >The moral attitude which this order demands not only of the entrepreneur but of all those, curiously called “self-employed,” who have constantly to choose the directions of their efforts, if they are to confer the greatest benefit on their fellows, is that they compete honestly according to the rules of the game, guided only by the abstract signals of prices and giving no preferences because of their sympathies or views on the merits or needs of those with whom they deal. It would mean not merely a personal loss, but a failure in their duty to the public, to employ a less efficient instead of a more efficient person, to spare an incompetent competitor, or to favor particular users of their product. The gradually spreading new liberal morals, which the Open or Great Society demanded, required above all that the same rules of conduct should apply to one’s relation to all other members of society [\...] While most people welcomed this broadening of moral consideration, they also resented having to extend moral obligations to more people and not being able to give special preference to certain people. >This extension of old moral rules to wider circles, most people, and particularly the intellectuals, welcome as moral progress. But they apparently did not realize, and violently resented when they discovered it, that the equality of rules applicable to one’s relationship to all other men necessarily implied not only that new obligations were extended to people who formerly had no such claims, but also that old obligations which were recognized to some people but could not be extended to all others had to disappear. This special, more personal moral duty was essential for the small groups of our tribal past but is incompatible with the productive and impersonal workings of an Open Society. Demands for "social justice" are a reversion of this changing moral landscape, a weaponization of government to forcefully take from those who succeeded in the game of catallaxy. >Yet these are kinds of obligations which are essential to the cohesion of the small group but which are irreconcilable with the order, the productivity, and the peace of a great society of free men. They are all those demands which under the name of “social justice” assert a moral claim on government that it give us what it can take by force from those who in the game of catallaxy have been more successful than we have been. Such an artificial alteration of the relative attractiveness of the different directions of productive efforts can only be counter-productive. However, social justice initiatives only disrupt the market economy and its price signals, as "free riders" become an unbearable drag on the economy. > If expected remunerations no longer tell people where their endeavours will make the greatest contribution to the total product, an efficient use of resources becomes impossible. Where size of the social product, and no longer their contributions to it, gives individuals and groups a moral claim to a certain share of that product, the claims of those who really deserve to be described as "free riders" become an unbearable drag on the economy. ### Section 9 In some African communities, young men can’t get ahead financially because tribal customs require they share their earnings with family. Similarly, the main negative consequence of "social justice" is that it holds back individuals from achievement through re-investment. It's also at odds with a society whose productivity is high *because* of inequality and the resulting efficient allocation of resources. Additionally, poor people are better off than they would be in a centrally-planned economy. This is due to shifting social coordination from common, particular goals to instead one of abstract individual action. This shift has made both the open society and individual freedom possible. However, it requires a level of discipline to maintain, that socialists, who claim to feel “alienated”, refuse to accept despite enjoying the benefits of it. > The chief adverse effect of “social justice” in our society is that it prevents individuals from achieving what they could achieve — through the means for further investment being taken from them. It is also the application of an incongruous principle to a civilization whose productivity is high, because incomes are very unequally divided and thereby the use of scarce resources is directed and limited to where they bring the highest return. Thanks to this unequal distribution the poor get in a competitive market economy more than they would get in a centrally directed system. The achievements of the open society and individual freedom were made possible by the shift towards abstract rules of individual conduct. However, "alienated" socialists, supported by atavistic instinct, want to claim the benefits without committing the required discipline. > Socialists have the support of inherited instincts, while maintenance of the new wealth which creates the new ambitions requires an acquired discipline which the non-domesticated barbarians in our midst, who call themselves “alienated,” refuse to accept although they still claim all its benefits. ### Section 10 People may accuse my argument of being “social Darwinism.” It’s true that past thinkers, influenced by Darwin’s theories, have overemphasized the importance of natural selection of the most able individuals in free competition. However, the main benefit of competitive selection isn’t of individual selection but rather that of cultural evolution through learning. They key point is, civilization advanced by what has actually worked in practice, taking us beyond what we could have imagined. > …civilization grew not by the prevailing of that which man thought would be most successful, but by the growth of that which turned out to be so, and which, precisely because he did not understand it, led man beyond what he could have ever conceived.