Liberalism, Socialism, and Social Justice

picasso anti fascismLiberalism, Socialism, and Social Justice

By Friedrich August Hayek

             All people, whether primitive or civilized, U.N. Buildingorganize what they perceive partly by means of attributes that language has taught them to attach to groups of sensory characteristics. Language enables us not only to label objects given to our senses as distinct entities, but also to classify an infinite variety of combinations of distinguishing marks according to what we expect from them and what we may do with them. Such labeling, classification, and distinction are of course often vague. More importantly, all usage of language is laden with interpretations or theories about our communist

            As a consequence, various difficulties arise in analyzing and criticizing our own views. For example, many widely held beliefs live only implicitly in words or phrases implying them and may never become explicit; thus they are never exposed to the possibility of criticism, with the result that language transmits not only wisdom but also a type of folly that is difficult to eradicate.

            It is also difficult to explain in a particular vocabulary – because of its own limitations and because of the connotations it bears – something that differs from what that language had traditionally been used to explain. Not only is it difficult to explain, or even to describe something new in received terms, it also may be hard to sort out what language has previously classified in a particular manner – especially a manner based on innate distinctions of our senses.

            Such difficulties have driven some scientists to invent new languages for their own disciplines. Reformers, and especially socialists, have been driven by the same urge, and some of them have proposed deliberate reformation of language in order the better to convert people to their own position (see Bloch, 1954-59).

            In view of such difficulties, our vocabularies, and the theories embedded in it, are crucial. So long as we speak in language based in erroneous theory, we generate and perpetuate error. Yet the traditional vocabulary that still profoundly shapes our perception of the world and of human interaction within it – and the theories and interpretations embedded in that vocabulary – remain in many ways very primitive. Much of it was formed during long past epochs in which our minds interpreted very differently what our senses conveyed. Thus, while we learn much of what we know through language, the meanings of individual words lead us astray: we continue to use terms bearing archaic connotations as we try to express our new and better understanding of the phenomena to which they refer.

            A pertinent example is the way transitive verbs ascribe to inanimate objects some sort of mind-like action. Just as the naïve or untutored mind tends to assume the presence of life wherever it perceives movement, it also tends to assume the activity of mind or spirit wherever it imagines that there is purpose. The situation is aggravated by the fact that, to some degree, the evolution of the human race seems to repeat itself during the early development of each human mind. In his account of The Child’s Conception of the World (1929: 359), Jean Piaget writes: ‘The Child begins by seeing purpose everywhere.’ Only secondarily is the mind concerned with differentiating between purposes of the things themselves (animism) and purposes of the makers of the things (artificialism). Animistic connotations cling to many basic words, and particularly to those describing occurrences producing order. Not only ‘fact’ itself but also ‘to cause,’ ‘coerce, ’distribute,’ ‘prefer,’ and ‘organize,’ terms indispensible in the description of impersonal processes, still evoke in many minds the idea of a personal actor.

            The word “order” itself is a clear instance of an expression which before Darwin, would have been taken almost universally to imply a personal actor. At the beginning of the last (19th) century even a thinker of the stature of Jeremy Bentham maintained that ‘order presupposes an end’ (1789/1887, Works: II, 399). Indeed, it could be said that, until the ‘subjective revolution’ in economic theory of the 1870’s, understanding of human creation was dominated by animism – a conception from which even Adam Smith’s ‘invisible hand’ provided only a partial escape until, in the 1870’s, the guide-role of competitively-determined market prices came to be more clearly understood. Yet even now, outside the scientific examination of law, language and the market, studies of human affairs continue to be dominated by a vocabulary chiefly derived from animistic thinking.

            One of the most important examples comes from socialist writers. The more closely one scrutinizes their work, the more clearly one sees that they have contributed far more to the preservation than to the reformation of animistic thought and language. Take for instance the personification of ‘society’ in the historic tradition of Hegel, Comte, and Marx. Socialism, with its ‘society,’ is indeed the latest form of those animistic interpretations of order historically represented by various religions (with their ‘gods;’ polytheism). The fact that socialism is often directed against religion hardly mitigates this point. Imagining that all order is the result of design, socialists conclude that order must be improvable by better design of some superior mind. For this socialism deserves a place in an authoritative inventory of the various forms of animism – such as that given, in a preliminary way, by E.E. Evans-Pritchard in his Theories of Primitive Religion (1965). In view of the continuing influence of such animism, it seems premature even today to agree with W.K. Clifford, a profound thinker who, already during Darwin’s lifetime, asserted that ‘purpose has ceased to suggest design to instructed people except in cases where the agency of men is independently probable’ (1879: 117).

            The continuing influence of socialism on the language of intellectuals and scholars is evident also in descriptive studies of history and anthropology. As Braudel asks: ‘Who among us has not spoken about the class struggle, the modes of production, the labor force, the surplus value, the relative pauperization, the practice, the alienation, the infrastructure, the superstructure, the use value, the exchange value, the primitive accumulation, the dialectics, the dictatorship of the proletariat…?’ (Supposedly all derived from or popularized by Karl Marx: see Braudel 1982b).

            In most instances, underlying this sort of talk are not simple statements of fact but interpretations or theories about consequences or causes of alleged facts. To Marx especially we also owe the substitution of the term ‘society’ for the state or compulsory organization about which he is really talking, a circumlocution that suggests that we can deliberately regulate the actions of individuals by some gentler and kinder method of direction than coercion. Of course the extended, spontaneous order…would have been as little able to ‘act’ or to ‘treat’ particular persons as would a people or a population. On the other hand, the ‘state’ or, better the ‘government,’ which before Hegel used to be the common (and more honest) English word, evidently connoted for Marx too openly and clearly the idea of authority while the vague term ‘society’ allowed him to insinuate that its rule would secure some sort of freedom.

            Thus while wisdom is often hidden in the meaning of words, so is error. Naïve interpretations that we now know to be false, as well as profoundly helpful if often unappreciated advice survive and determine our decisions through the words we use. Of particular relevance to our discussion is the unfortunate fact that many words that we apply to various aspects of the extended order of human cooperation carry misleading connotations of an earlier kind of community. Indeed, many words embodied in our language are of such character that, if one habitually employs them, one is led to conclusions not implied by any sober thought about the subject in question, conclusions that also conflict with scientific evidence.

            In addition to the terms ‘society’ and ‘social’ we have tried to disentangle the ambiguity of terms such as ‘natural’ and ‘artificial;’ of ‘genetic’ and ‘cultural’ and others. It shall also be noted that I generally prefer to use the less usual but more precise term ‘several property’ to the more popular and common expression ‘private property.’

            For instance, there was the deliberate deception practiced by American socialists in their appropriation of the term ‘liberalism.’ As Joseph A. Schumpeter rightly put it (1954: 394); “As a supreme if unintended compliment, the enemies of the system of private enterprise have thought it wise to appropriate its label.”

The same applies increasingly to European political parties of the middle, which either, as in Britain, carry the name liberal or, as in West Germany, claim to be liberal but do not hesitate to form coalitions with openly socialist parties. It has become almost impossible for a [Gladstone] liberal to describe himself as a liberal without giving the impression that he believes in socialism. Nor is this a new development; as long ago as 1911, L.T. Hobhouse published a book under the title Liberalism that would more correctly have been called Socialism , promptly followed by a book entitled The Elements of Social Justice (1922).

            Important as is this particular change…we must concentrate…on the ambiguities and vagueness caused by the names generally given to the phenomena of human interaction. We may as well begin with the terms generally used to distinguish between the two opposed principles of the order of human collaboration, capitalism and socialism, both of which are misleading and politically biased. While intended to throw a certain light on these systems, they tell us nothing relevant about their character.

The word ‘capitalism’ in particular (still unknown to Karl Marx in 1867 and never used by him) burst upon political debate as the natural opposite of ‘socialism’ only with Werner Sombart’s explosive book Der modern Kapitalismus in 1902 (Braudel, 1982a: 227). Since this term suggests a system serving the special interests of owners of capital, it naturally provoked the opposition of those who, as we have seen, were its main beneficiaries, the members of the proletariat. The proletariat was enabled by the activity of owners of capital to survive and increase, and was in a sense actually called into being by them. It is true that owners of capital made the extended order of human intercourse possible, and this might have led to some capitalists proudly accepting that name for the result of their efforts. It was nevertheless an unfortunate development in suggesting a clash of interests which does not really exist.

            A somewhat more satisfactory name for the extended economic order of collaboration is the term ‘market economy,’ imported from the German. Yet, it too suffers from some serious disadvantages. In the first instance, the so-called market economy is not really an economy in the strict sense but a complex of large numbers of interacting individual economies with which it shares some but by no means all defining characteristics. If we give to the complex structures resulting from the interaction of individual economies a name that suggests that they are deliberate constructions, this yields the personification or animism to which, as we have seen, so many misconceptions of the processes of human interaction are due, and which we are at pains to escape. It is necessary to be constantly reminded that the economy the market produces is not really like products of deliberate human design but is a structure which, while in some respects resembling an economy, in other regards, particularly in not serving a unitary hierarchy of ends, differs fundamentally from a true economy. Another disadvantage of the term ‘market economy’ is that in English no convenient adjective can be derived from it, and such an expression indicating the appropriateness of particular actions is indeed needed in practice.

            As such examples illustrate all too well, in the study of human affairs difficulties of communication begin with the definition and naming of the very objects we wish to analyze. The chief terminological barrier to understanding [the concept of society] is the expression ‘society’ itself – and not only inasmuch as it has, since Marx, been used to blur distinctions between governments and other ‘institutions.’ As a word used to describe a variety of systems of interconnections of human activities, ‘society’ falsely suggests that all such systems are of the same kind. It is also one of the oldest terms of this kind, as for example in the Latin societas, from socius, the personally known fellow or companion; and it has been used to describe both an actually state of affairs and a relation between individuals. As usually employed, it presupposes or implies a common pursuit of shared purposes that usually can be achieved only by conscious collaboration.

            As we have seen, it is one of the necessary conditions of the extension of human cooperation beyond the limits of individual awareness that the range of such pursuits be increasingly governed not by shared purposes but by abstract rules of conduct whose observance brings it about that we more and more serve the needs of people whom we do not know and find our own needs similarly satisfied by unknown persons. Thus, the more the range of human cooperation extends, the less does motivation within it correspond to the mental picture people have of what should happen in a ‘society,’ and the more ‘social’ comes to be not the key word in a statement of the facts but the core of an appeal to an ancient, and now obsolete, ideal of general human behavior. Any real appreciation of the difference between, on the one hand, what actually characterizes individual behavior in a particular group and, on the other, wishful thinking about what individual conduct should be is increasingly lost. Not only is any group of persons connected in practically any manner called a ‘society,’ but it is concluded that any such group should behave as a primitive group of companions did.

            Thus the word ‘society’ has become a convenient label denoting almost any group of people, a group about whose structure or reason for coherence nothing need be known – a makeshift phrase people resort to when they do not quite know what they are talking about. Apparently a people, a nation, a population, a company, an association, a group, a horde, a band, a tribe, the members of race, of a religion, sport, entertainment, and the inhabitants of any particular place, all are, or constitute, societies.

            To call by the same name such completely different formations as the companionship of individuals in constant personal contact and the structure formed by millions who are connected only by signals resulting from long and infinitely ramified chains of trade is not only factually misleading but also almost always contains a concealed desire to model this extended order on the intimate fellowship for which our emotions long.

Bertrand de Jouvenel has well described this instinctive nostalgia for the small group – ‘the milieu in which man is first found, which retains for him an infinite attraction: but any attempt to graft the same features on a large society is utopian and leads to tyranny’ (1957: 136).

            The noun ‘society’ misleading as it is, is relatively innocuous compared with the adjective ‘social,’ which has probably become the most confusing expression in our entire moral and political vocabulary. This has happened only during the past one hundred years, during which time its modern usages, and its power and influence, have expanded rapidly from Bismarckian Germany to cover the whole world. The confusion that it spreads, within the very area wherein it is most used, is partly due to its describing not only phenomena produced by various modes of cooperation among men, such as in a ‘society,’ but also the kinds of actions that promote and serve such orders. From this latter usage it has increasingly been turned into exhortation, a sort of guide-word for rationalist morals intended to displace traditional morals, and now increasingly supplants the word ‘good’ as a designation of what is morally right. As a result of this ‘distinctly dichotomous’ character, as Webster’s New Dictionary of Synonyms appropriately puts it, factual and normative meanings of the word ‘social’ constantly alternate, and what at first seems a description imperceptibly turns into a prescription.

            “On this particular matter, German usage influenced the American language more than English; for by the eighteen-eighties a group of German scholars known as the historical or ethical school of economic research had increasingly substituted the term ‘social policy’ for the term ‘political economy’ to designate the study of human interaction. One of the few not to be swept away by this new fashion, Leopold von Wiese, later remarked that only those who were young in the ‘social age’ – in the decades immediately before the Great War – can appreciate how strong at that time was the inclination to regard the ‘social’ sphere as a surrogate for religion. One of the most dramatic manifestations of this was the appearance of the so-called social pastors. But, to be ‘social,’ Wiese insists, ‘is not the same as being good or righteous or “righteous in the eyes of God.” To some of Wiese’s students we owe instructive historical studies on the spreading of the term ‘social.’

            Though abuse of the word ‘social’ is international, it took perhaps its most extreme forms in [West] Germany where the constitution of 1949 employed the expression sozialer Rechtsstaat (social rule of law). From this the conception of ‘social market economy’ has spread – in a sense which its popularize Ludwig Erhard certainly never intended. But while the rule of law and the market are, at the start, fairly clear concepts, the attribute ‘social’ empties them of any clear meaning. From these uses of the word ‘social,’ German scholars came to the conclusion that their government is constitutionally subject to the Sozialstaatsprinzip, which means little less than that the rule of law has been suspended. Likewise, these German scholars saw a conflict between Rechtsstaat and Sozialstaat and entrenched the soziale Rechtsstaat in their constitution — one that was written by Fabian muddle-heads inspired by the nineteenth-century inventor of ‘National Socialism,’ Friedrich Naumann (H. Maier, 1972: 8).

            Similarly, the term ‘democracy’ used to have a fairly clear meaning; yet ‘social democracy’ not only served as the name for the radical Austro-Marxism of the inter-war period but then was chosen in Britain as a label for a political party committed to a sort of Fabian socialism. Yet the traditional term for what is now called the ‘social state’ was ‘benevolent despotism,’ and the very real problem of achieving such despotism democratically, i.e., while preserving individual freedom, is simply wished away by the concoction ‘social democracy.’

            By far, the worst use of ‘social,’ one that wholly destroys the meaning of any word it qualifies is in the almost universally used phrase ‘social justice.’ The phrase ‘social justice’ is, as a distinguished man more courageous than I bluntly expressed it long ago, simply “a semantic fraud from the same stable as People’s Democracy” (Curran, 1958: 8). The alarming extent to which the term seems to have perverted the thinking of the otherwise intelligent younger generation was shown by an Oxford doctor’s thesis on Social Justice (Miller, 1976), in which the traditional conception of justice is referred to by the extraordinary remark that “there appears to be a category of private justice.”(!).

            It has been suggested that ‘social’ applies to everything that reduces or removes differences of income. But why call such action ‘social’? [Is it] perhaps because it is a method of securing majorities, that is, votes, in addition to those one expects to get for other reasons? This seems to be so, but it also means that every exhortation to us to be ‘social’ is an appeal for a further step towards the ‘social justice’ of socialism. Thus, use of the term ‘social’ becomes virtually equivalent to the call for ‘distributive justice.’ This is, however, irreconcilable with a competitive market order and with growth or even maintenance of population and of wealth. Thus, people have come, through such errors, to call ‘social’ what is the main obstacle to the very maintenance of ‘society.’ (And they call it, ‘Social Justice’). “Social’ should really be called ‘anti-social.’

            It is probably true that men would be happier about their economic conditions if the felt the relative positions of individuals were just. Yet, the whole idea behind ‘distributive justice’ —that each individual ought to receive what he morally deserves — is meaningless in the extended order of human cooperation, because the available product (its size, and even its existence) depends on what is in one sense a morally indifferent way of allocating its parts. For [many reasons] moral desert cannot be determined objectively, and in any case the adaption of the larger whole, to facts yet undiscovered, requires that ‘success is based on results, not on motivation’ (Alchian, 1950: 213).

            Any extended system of cooperation must adapt itself constantly to changes in its natural environment (which include the life, health and strength of its members); the demand that only changes with just effect should occur is ridiculous. It is nearly as ridiculous as the belief that deliberate organization of response to such changes can be just. Mankind could neither have reached nor could now maintain its present numbers without an inequality that is neither determined by, nor reconcilable with, any deliberate moral judgments.

            Effort of course will improve individual chances, but it alone cannot secure results. The envy of those who have tried just as hard, although fully understandable, works against the common interest. Thus, if the common interest is really our interest, we must not give in to this very human instinctual trait, but instead allow the market process to determine the reward. Nobody can ascertain, save through the market, the size of an individual’s contribution to the overall product, nor can it otherwise be determined how much remuneration must be tendered to someone to enable him to chose the activity which will add most to the flow of goods and services offered at large. Of course if the latter should be considered morally good, then the market turns out to produce a supremely moral result.

            Mankind is split into two hostile groups by promises that have no realizable content. The sources of this conflict cannot be dissipated by compromise, for every concession to factual error merely creates more unrealizable expectations. Yet, an anti-capitalistic ethic continues to develop on the basis of errors by people who condemn the wealth-generating institutions to which they themselves owe their existence. Pretending to be lovers of freedom, they condemn ‘several property,’ contract, competition, advertizing, profit, and even money itself. Imagining that their reason can tell them how to arrange human efforts to serve their innate wishes better, they themselves pose a grave threat to [advancing] civilization.


 Excerpt from The Fatal Conceit: The Errors of Socialism, Vol. I (of XXII volumes), by F.A. Hayek. Edited by W.W. Barley III. Derived from Chap. 7, Our Poisoned Language, pgs. 106 – 119.

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