Sunday, May 21, 2006

Who, Whom? (1944)

by F.A. Hayek

'The finest opportunity ever given to the world was thrown away because the passion of equality made vain the hope for freedom'.

Lord Acton

IT is significant that one of the commonest objections to competition is that it is "blind." It is not irrelevant to recall that to the ancients blindness was an attribute of their deity of justice. Although competition and justice may have little else in common, it is as much a commendation of competition as of justice that it is no respecter of persons.

That it is impossible to foretell who will be the lucky ones or whom disaster will strike, that rewards and penalties are not shared out according to somebody's views about the merits or demerits of different people but depend on their capacity and their luck, is as important as that, in framing legal rules, we should not be able to predict which particular person will gain and which will lose by their application.

And this is nonetheless true, because in competition chance and good luck are often as important as skill and foresight in determining the fate of different people.The choice open to us is not between a system in which everybody will get what he deserves according to some absolute and universal standard of right, and one where the individual shares are determined partly by accident or good or ill chance, but between a system where it is the will of a few persons that decides who is to get what, and one where it depends at least partly on the ability and enterprise of the people concerned and partly on unforeseeable circumstances.

This is no less relevant because in a system of free enterprise chances are not equal, since such a system is necessarily based on private property and (though perhaps not with the same necessity) on inheritance, with the differences in opportunity which these create. There is, indeed, a strong case for reducing this inequality of opportunity as far as congenital differences permit and as it is possible to do so without destroying the impersonal character of the process by which everybody has to take his chance and no person's view about what is right and desirable overrules that of others.

The fact that the opportunities open to the poor in a competitive society are much more restricted than those open to the rich does not make it less true that in such a society the poor are much more free than a person commanding much greater material comfort in a different type of society.

Although under competition the probability that a man who starts poor will reach great wealth is much smaller than is true of the man who has inherited property, it is not only possible for the former, but the competitive system is the only one where it depends solely on him and not on the favors of the mighty, and where nobody can prevent a man from attempting to achieve this result.

It is only because we have forgotten what unfreedom means that we often overlook the patent fact that in every real sense a badly paid unskilled worker in this country has more freedom to shape his life than many a small entrepreneur in Germany or a much better paid engineer or manager in Russia.

Whether it is. a question of changing his job or the place where he lives, of professing certain views or of spending his leisure in a particular manner, although sometimes the price he may have to pay for following his inclinations may be high, and to many appear too high, there are no absolute impediments, no dangers to bodily security and freedom, that confine him by brute force to the task and the environment to which a superior has assigned him.

That the ideal of justice of most socialists would be satisfied if merely private income from property were abolished and the differences between the earned incomes of different people remained what they are now is true.

What these people forget is that, in transferring all property in the means of production to the state, they put the state in a position whereby its action must in effect decide all other incomes. The power thus given to the state and the demand that the state should use it to "plan" means nothing else than that it should use it in full awareness of all these effects.

To believe that the power which is thus conferred on the state is merely transferred to it from others is erroneous. It is a power which is newly created and which in a competitive society nobody possesses. So long as property is divided among many owners, none of them acting independently has exclusive power to determine the income and position of particular people-nobody is tied to any one property owner except by the fact that he may offer better terms than anybody else.

What our generation has forgotten is that the system of private property is the most important guaranty of freedom, not only for those who own property, but scarcely less for those who do not. It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we as individuals can decide what to do with ourselves. If all the means of production were vested in a single hand, whether it be nominally that of "society" as a whole or that of a dictator, whoever exercises this control has complete power over us.

Who can seriously doubt that a member of a small racial or religious minority will be freer with no property so long as fellow-members of his community have property and are therefore able to employ him, than he would be if private property were abolished and he became owner of a nominal share in the communal property. Or that the power which a multiple millionaire, who may be my neighbor and perhaps my employer, has over me is very much less than that which the smallest fonctionnaire possesses who wields the coercive power of the state and on whose discretion it depends whether and how I am to be allowed to live or to work? And who will deny that a world in which the wealthy are powerful is still a better world than one in which only the already powerful can acquire wealth?

It is pathetic, yet at the same time encouraging, to find as prominent an old communist as Max Eastman rediscovering this truth:

"It seems obvious to me now--though I have been slow, I must say, in coming to the conclusion--that the institution of private property is one of the main things that have given man that limited amount of free and equalness that Marx hoped to render infinite by abolishing this institution. Strangely enough Marx was the first to see this. He is the one who informed us, looking backwards, that the evolution of private capitalism with its free market had been a precondition for the evolution of all our democratic freedoms. It never occurred to him, looking forward, that if this was so, these other freedoms might disappear with the abolition of the free market."

It is sometimes said, in answer to such apprehensions, that there is no reason why the planner should determine the incomes of individuals. The social and political difficulties involved in deciding the shares of different people in the national income are so obvious that even the most inveterate planner may well hesitate before he charges any authority with this task.

Probably everybody who realizes what it involves would prefer to confine planning to production, to use it only to secure a "rational organization of industry," leaving the distribution of incomes as far as possible to impersonal forces.

Although it is impossible to direct industry without exercising some influence on distribution, and although no planner will wish to leave distribution entirely to the forces of the market, they would probably all prefer to confine themselves to seeing that this distribution conforms to certain general rules of equity and fairness, that extreme inequalities are avoided, and that the relation between the remuneration of the major classes is just, without undertaking the responsibility for the position of particular people within their class or for the gradations and differentiations between smaller groups and individuals.

We have already seen that the close interdependence of all economic phenomena makes it difficult to stop planning just where we wish and that, once the free working of the market is impeded beyond a certain degree, the planner will be forced to extend his controls until they become all comprehensive. These economic considerations, which explain why it is impossible to stop deliberate control just where we should wish, are strongly reinforced by certain social or political tendencies whose strength makes itself increasingly felt as planning extends.

Once it becomes increasingly true, and is generally recognized, that the position of the individual is determined not by impersonal forces, not as a result of the competitive effort of many, but by the deliberate decision of authority, the attitude of the people toward their position in the social order necessarily changes. There will always exist inequalities which will appear unjust to those who suffer from them, disappointments which will appear unmerited, and strokes of misfortune which those hit have not deserved. But when these things occur in a society which is consciously directed, the way in which people will react will be very different from what it is when they are nobody's conscious choice.

Inequality is undoubtedly more readily borne, and affects the dignity of the person much less, if it is determined by impersonal forces than when it is due to design. In a competitive society it is no slight to a person, no offense to his dignity, to be told by any particular firm that it has no need for his services or that it cannot offer him a better job. It is true that in periods of prolonged mass unemployment the effect on many may be very similar.

But there are other and better methods to prevent that scourge than central direction. But the unemployment or the loss of income which will always affect some in any society is certainly less degrading if it is the result of misfortune and not deliberately imposed by authority. However bitter the experience, it would be very much worse in a planned society. There individuals will have to decide not whether a person is needed for a particular job but whether he is of use for anything, and how useful he is. His position in life must be assigned to him by somebody else.

While people will submit to suffering which may hit anyone, they will not so easily submit to suffering which is the result of the decision of authority. It may be bad to be just a cog in an impersonal machine; but it is infinitely worse if we can no longer leave it, if we are tied to our place and to the superiors who have been chosen for us. Dissatisfaction of everybody with his lot will inevitably grow with the consciousness that it is the result of deliberate human decision.

Once government has embarked upon planning for the sake of justice, it cannot refuse responsibility for anybody's fate or position. In a planned society we shall all know that we are better or worse off than others, not because of circumstances which nobody controls, and which it is impossible to foresee with certainty, but because some authority wills it.

And all our efforts directed toward improving our position will have to aim, not at foreseeing and preparing as well as we can for the circumstances over which we have no control, but at influencing in our favor the authority which has all the power. The nightmare of English nineteenth-century political thinkers, the state in which "no avenue to wealth and honor would exist save through the government," would be realized in a completeness which they never imagined-though familiar enough in some countries which have since passed to totalitarianism.

As soon as the state takes upon itself the task of planning the whole economic life, the problem of the due station of the different individuals and groups must indeed inevitably become the central political problem. As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power. There will be no economic or social questions that would not be political questions in the sense that their solution will depend exclusively on who wields the coercive power, on whose are the views that will prevail on all occasions.

I believe it was Lenin himself who introduced to Russia the famous phrase "who, whom?"-- during the early years of Soviet rule the byword in which the people summed up the universal problem of a socialist society. Who plans whom, who directs and dominates whom, who assigns to other people their station in life, and who is to have his due allotted by others? These become necessarily the central issues to be decided solely by the supreme power.

More recently an American student of politics has enlarged upon Lenin's phrase and asserted that the problem of all government is "who gets what, when, and how." In a way this is not untrue. That all government affects the relative position of different people and that there is under any system scarcely an aspect of our lives which may not be affected by government action is certainly true. In so far as government does anything at all, its action will always have Borne effect on "who gets what, when, and how."

There are, however, two fundamental distinctions to be made. First, particular measures may be taken without the possibility of knowing how they will affect particular individuals and therefore without aiming at such particular effects. This point we have already discussed. Second, it is the extent of the activities of the government which decides whether everything that any person gets any time depends on the government, or whether its influence is confined to whether some people will get some things in some way at some time. Here lies the whole difference between a free and a totalitarian system.

The contrast between a liberal and a totally planned system is characteristically illustrated by the common complaints of Nazis and socialists of the "artificial separations of economics and politics" and by their equally common demand for the dominance of politics over economics. These phrases presumably mean not only that economic forces are now allowed to work for ends which are not part of the policy of the government but also that economic power can be used independently of government direction and for ends of which the government may not approve. But the alternative is not merely that there should be only one power but that this single power, the ruling group, should have control over all human ends and particularly that it should have complete power over the position of each individual in society.

That a government which undertakes to direct economic activity will have to use its power to realize somebody's ideal of distributive justice is certain. But how can and how will it use that power? By what principles will it or ought it to be guided? Is there a definite answer to the innumerable questions of relative merits that will arise and that will have to be solved deliberately? Is there a scale of values, on which reasonable people can be expected to agree, which would justify a new hierarchical order of society and is likely to satisfy the demands for justice?

There is only one general principle, one simple rule which would indeed provide a definite answer to all these questions: equality, complete and absolute equality of all individuals in all those points which are subject to human control. If this were generally regarded as desirable (quite apart from the question whether it would be practicable, i.e., whether it would provide adequate incentives), it would give the vague idea of distributive justice a clear meaning and would give the planner definite guidance.

But nothing is further from the truth than that people in general regard mechanical equality of this kind as desirable. No socialist movement which aimed at complete equality has ever gained substantial support. What socialism promised was not an absolutely equal, but a more just and more equal, distribution. Not equality in the absolute sense but "greater equality" is the only goal which is seriously aimed at.

Though these two ideals sound very similar, they are as different as possible as far as our problem is concerned. While absolute equality would clearly determine the planner's task, the desire for greater equality is merely negative, no more than an expression of dislike of the present state of affairs; and so long as we are not prepared to say that every move in the direction toward complete equality is desirable, it answers scarcely any of the questions the planner will have to decide.

This is not a quibble about words. We face here a crucial issue which the similarity of the terms used is likely to conceal. While agreement on complete equality would answer all the problems of merit the planner must answer, the formula of the approach to greater equality answers practically none. Its content is hardly more definite than the phrases "common good" or "social welfare."

It does not free us from the necessity of deciding in every particular instance between the merits of particular individuals or groups, and it gives us no help in that decision. All it tells us in effect is to take from the rich as much as we can. But, when it comes to the distribution of the spoils, the problem is the same as if the formula of "greater equality" had never been conceived.

Most people find it difficult to admit that we do not possess moral standards which would enable us to settle these questions-if not perfectly, at least to greater general satisfaction than is done by the competitive system. Have we not all some idea of what is a "just price" or a "fair wage"? Can we not rely on the strong sense of fairness of the people? And even if we do not now agree fully on what is just or fair in a particular case, would popular ideas not soon consolidate into more definite standards if people were given an opportunity to see their ideals realized?

Unfortunately, there is little ground for such hopes. What standards we have are derived from the competitive regime we have known and would necessarily disappear soon after the disappearance of competition. What we mean by a just price, or a fair wage is either the customary price or wage, the return which past experience has made people expect, or the price or wage that would exist if there were no monopolistic exploitation.

The only important exception to this used to be the claim of the workers to the "full produce of their labor," to which so much of socialist doctrine traces back. But there are few socialists today who believe that in a socialist society the output of each industry would be entirely shared by the workers of that industry; for this would mean that workers in industries using a great deal of capital would have a much larger income than those in industries using little capital, which most socialists would regard as very unjust.

And it is now fairly generally agreed that this particular claim was based on an erroneous interpretation of the facts. But once the claim of the individual worker to the whole of "his" product is disallowed, and the whole of the return from capital is to be divided among all workers, the problem of how to divide it raises the same basic issue.

What the "just price" of a particular commodity or the "fair" remuneration for a particular service is might conceivably be determined objectively if the quantities needed were independently fixed. If these were given irrespective of cost, the planner might try to find what price or wage is necessary to bring forth this supply. But the planner must also decide how much is to be produced of each kind of goods, and, in so doing, he determines what will be the just price or fair wage to pay.

If the planner decides that fewer architects or watchmakers are wanted and that the need can be met by those who are willing to stay in the trade at a lower remuneration, the "fair" wage will be lower. In deciding the relative importance of the different ends, the planner also decides the relative importance of the different groups and persons. As he is not supposed to treat the people merely as a means, he must take account of these effects and consciously balance the importance of the different ends against the effects of his decision. This means, however, that he will necessarily exercise direct control over the conditions of the different people.

This applies to the relative position of individuals no less than to that of the different occupational groups. We are in general far too likely to think of incomes within a given trade or profession as more or less uniform. But the differences between the incomes, not only of the most and the least successful doctor or architect, writer or movie actor, boxer or jockey, but also of the more and the less successful plumber or market gardener, grocer or tailor, are as great as those between the propertied and the propertyless classes.

And although, no doubt, there would be some attempt at standardization by creating categories, the necessity of discrimination between individuals would remain the same, whether it were exercised by fixing their individual incomes or by allocating them to particular categories.

We need say no more about the likelihood of men in a free society submitting to such control-or about their remaining free if they submitted. On the whole question, what John Stuart Mill wrote nearly a hundred years ago remains equally true today:

"A fixed rule, like that of equality, might be acquiesced in, and so might chance, or an external necessity; but that a handful of human beings should weigh everybody in the balance, and give more to one and less to another at their sole pleasure and judgement, would not be borne unless from persons believed to be more than men, and backed by supernatural terrors."

These difficulties need not lead to open clashes so long as socialism is merely the aspiration of a limited and fairly homogeneous group. They come to the surface only when a socialist policy is actually attempted with the support of the many different groups which together compose the majority of a people. Then it soon becomes the one burning question which of the different sets of ideals shall be imposed upon all by making the whole resources of the country serve it. It is because successful planning requires the creation of a common view on the essential values that the restriction of our freedom with regard to material things touches so directly on our spiritual freedom.

Socialists, the cultivated parents of the barbarous offspring they have produced, traditionally hope to solve this problem by education. But what does education mean in this respect? Surely we have learned that knowledge cannot create new ethical values, that no- amount of learning will lead people to hold the same views on the moral issues which a conscious ordering of all social relations raises. It is not rational conviction but the acceptance of a creed which is required to justify a particular plan.

And, indeed, socialists everywhere were the first to recognize that the task they had set themselves required the general acceptance of a common Weltanschauung, of a definite set of values. It was in these efforts to produce a mass movement supported by such a single world view that the socialists first created most of the instruments of indoctrination of which Nazis and Fascists have made such effective use.

In Germany and Italy the Nazis and Fascists did, indeed, not have much to invent. The usages of the new political movements which pervaded all aspects of life had in both countries already been introduced by the socialists. The idea of a political party which embraces all activities of the individual from the cradle to the grave, which claims to guide his views on everything, and which delights in making all problems questions of party Weltanschauung, was first put into practice by the socialists. An Austrian socialist writer, speaking of the socialist movement of his country, reports with pride that it was its "characteristic feature that it created special organizations for every field of activities of workers and employees."

Though the Austrian socialists may have gone further in this respect than others, the situation was not very different elsewhere. It was not the Fascists but the socialists who began to collect children from the tenderest age into political organizations to make sure that they grew up as good proletarians. It was not the Fascists but the socialists who first thought of organizing sports and games, football and hiking, in party clubs where the members would not be infected by other views.

It was the socialists who first insisted that the party member should distinguish himself from others by the modes of greeting and forms of address. It was they who by their organization of "cells" and devices for the permanent supervision of private life created the prototype of the totalitarian party. Balilla and Hitlerjugend, Dopolavoro and Kraft durch Freude, political uniforms and military party formations, are all little more than imitations of older socialist institutions.'

So long as the socialist movement in a country is closely bound up with the interests of a particular group, usually the more highly skilled industrial workers, the problem of creating a common view on the desirable status of the different members of society is comparatively simple. The movement is immediately concerned with the status of one particular group, and its aim is to raise that status relatively to other groups.

The character of the problem changes, however, as in the course of the progressive advance toward socialism it becomes more and more evident to everyone that his income and general position are determined by the coercive apparatus of the state, that he can maintain or improve his position only as a member of an organized group capable of influencing or controlling the state machine in his interest.

In the tug-of-war between the various pressure groups which arises at this stage,, it is by no means necessary that the interests of the poorest and most numerous groups should prevail. Nor is it necessarily an advantage for the older socialist parties, who avowedly represented the interests of a particular group, to have been the first in the field and to have designed their whole ideology to appeal to the manual workers in industry. Their very success, and their insistence on the acceptance of the whole creed, is bound to create a powerful countermovement-not by the capitalists but by the very large and equally propertyless classes who find their relative status threatened by the advance of the elite of the industrial workers.

Socialist theory and socialist tactics, even where they have not been dominated by Marxist dogma, have been based everywhere on the idea of a division of society into two classes with common but mutually conflicting interests: capitalists and industrial workers. Socialism counted on a rapid disappearance of the old middle class and completely disregarded the rise of a new middle class, the countless army of clerks and typists, administrative workers and schoolteachers, tradesmen and small officials, and the lower ranks of the professions.

For a time these classes often provided many of the leaders of the labor movement. But as it became increasingly clear that the position of those classes was deteriorating relatively to that of the industrial workers, the ideals which guided the latter lost much of their appeal to the others. While they were all socialists in the sense that they disliked the capitalist system and wanted a deliberate sharing-out of wealth according to their ideas of justice, these ideas proved to be very different from those embodied in the practice of the older socialist parties.

The means which the old socialist parties had successfully employed to secure the support of one occupational group - the raising of their relative economic position-cannot be used to secure the support of all. There are bound to arise rival socialist movements that appeal to the support of those whose relative position is worsened. There is a great deal of truth in the often heard statement that fascism and National Socialism are a sort of middle-class socialism-only that in Italy and Germany the supporters of these new movements were economically hardly a middle class any longer. It was to a large extent a revolt of a new underprivileged class against the labor aristocracy which the industrial labor movement had created.

There can be little doubt that no single economic factor has contributed more to help these movements than the envy of the unsuccessful professional man, the university-trained engineer or lawyer, and of the "white-collared proletariat" in general, of the engine driver or compositor and other members of the strongest trade-unions whose income was many times theirs. Nor can there be much doubt that in terms of money income the average member of the rank and file of the Nazi movement in its early years was poorer than the average trade-unionist or member of the older socialist party-a circumstance which only gained poignancy from the fact that the former had often seen better days and were frequently still living in surroundings which were the result of this past.

The expression "class struggle a rebours," current in Italy at the time of the rise of fascism, did point to a very important aspect of the movement. The conflict between the Fascist or National Socialist and the older socialist parties must, indeed, very largely be regarded as the kind of conflict which is bound to arise between rival socialist factions. There was no difference between them about the question of its being the will of the state which should assign to each person his proper place in society. But there were, as there always will be, most profound differences about what are the proper places of the different classes and groups.

The old socialist leaders, who had always regarded their parties as the natural spearhead of the future general movement toward socialism, found it difficult to understand that with every extension in the use of socialist methods the resentment of large poor classes should turn against them. But while the old socialist parties, or the organized labor in particular industries, had usually not found it unduly difficult to come to an understanding for joint action with the employers in their particular industries, very large classes were left out in the cold. To them, and not without some justification, the more prosperous sections of the labor movement seemed to belong to the exploiting rather than to the exploited class.

The resentment of the lower middle class, from which fascism and National Socialism recruited so large a proportion of their supporters, was intensified by the fact that their education and training had in many instances made them aspire to directing positions and that they regarded themselves as entitled to be members of the directing class.

While the younger generation, out of that contempt for profitmaking fostered by socialist teaching, spurned independent positions which involved risk and flocked in ever increasing numbers into salaried positions which promised security, they demanded a place yielding them the income and power to which in their opinion their training entitled them. While they believed in an organized society, they expected a place in that society very different from that which society ruled by labor seemed to offer. They were quite ready to take over the methods of the older socialism but intended to employ them in the service of a different class.

The movement was able to attract all those who, while they agreed on the desirability of the state controlling all economic activity, disagreed with the ends for which the aristocracy of the industrial workers used their political strength.

The new socialist movement started with several tactical advantages. Labor socialism had grown in a democratic and liberal world, adapting its tactics to it and taking over many of the ideals of liberalism. Its protagonists still believed that the creation of socialism as such would solve all problems. Fascism and National Socialism, on the other hand, grew out of the experience of an increasingly regulated society's awakening to the fact that democratic and international socialism was aiming at incompatible ideals.

Their tactics were developed in a world already dominated by socialist policy and the problems it creates. They had no illusions about the possibility of a democratic solution of problems which require more agreement among people than can reasonably be expected.

They had no illusions about the capacity of reason to decide all the questions of the relative importance of the wants of different men or groups which planning inevitably raises, or about the formula of equality providing an answer. They knew that the strongest group which rallied enough supporters in favor of a new hierarchical order of society, and which frankly promised privileges to the classes to which it appealed, was likely to obtain the support of all those who were disappointed because they had been promised equality but found that they had merely furthered the interest of a particular class.

Above all, they were successful because they offered a theory, or Weltanschauung, which seemed to justify the privileges they promised to their supporters.

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