December 23, 2013 columns

Why Did Hayek Support a Basic Income?

Hayek endorsed a guaranteed minimum income—but didn’t say why. In this essay, Matt Zwolinski attempts reconstruct Hayek’s argument.

In my original essay on libertarianism and the Basic Income Guarantee, I briefly noted Friedrich Hayek’s support of the idea that the state should ensure “a certain minimum income for everyone … a sort of floor below which nobody need fall even when he is unable to provide for himself.” Unfortunately, Hayek didn’t say much about why he supported a basic income, apart from writing that it appeared to him to be a a “necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.”

Still, it’s possible to reconstruct an argument out of what Hayek did say. And it is an argument that ought to be of special interest to libertarians. Not just because Hayek was himself a libertarian – though the fact that one of the most important libertarians of the 20th century supported a basic income is by itself certainly worthy of note. No, the reason libertarians should pay special attention to Hayek’s argument is that it is based on concepts that are absolutely central to libertarian thought – the twin ideas of freedom and coercion. 

Like other libertarians, Hayek saw the protection of individual liberty as one of the most basic and important political ideals. And like other libertarians, Hayek thought what freedom meant, at least in its relevant political sense, was essentially negative at its core. Political freedom for Hayek was essentially a kind of freedom from, not a freedom to. More precisely, political freedom mean freedom from coercion by the arbitrary will of others. (See his Constitution of Liberty, p. 58)

A slave is unfree because his every decision is subject to interference at the will of his master. To be free, in contrast, is to be able to act according to one’s own decisions and plans, without having to seek the approval of any higher authority (CL p. 59). When others threaten to harm our vital interests unless we act as they wish, or are in a position to do so at their whim, our freedom is threatened. In such cases, our actions are guided by the will of the coercer, not our own.

This is why Hayek saw a powerful regulatory state as a threat to individual freedom. The state’s regulations are always implicitly or explicitly backed by threats – “Do this or else!” – and thereby coerce citizens into acting in accordance with the will of the regulator (or the will of the special interests served by the regulator), instead of their own. And in the pure socialist society where the state is the only employer, the individual’s condition is reduced to one of almost complete dependence (CL p. 187). Even if such a state were to keep its power largely in check, refraining for the most part from actually interfering with individuals’ decisions, the mere fact that it has the unconstrained power to do so means that its citizens would exist in a condition of domination – their fates subject to the arbitrary will of the ruling classes.

Hayek’s commitment to freedom and opposition to coercion also explains his libertarian belief that free markets and private property are a necessary precondition of political freedom. After all, one of the most important functions that rights of property serve is to provide individuals with a domain in which they need not seek the approval of any other person in order to act as they wish. Property rights provide individuals with a kind of jurisdiction over which their own will is law.

And competitive markets serve as a check against any particular individual’s desire to use the power their property gives them as a way of exercising dominance over others. The shop owner might like to use the fact that he owns the food that you need to reduce you to a condition of dependency. And the employer who has a job that you need might like to do the same. But so long as there are other shops, and other employers, who are willing to make you a better offer in order to obtain your business or labor for themselves, their desire for dominance is one they cannot hope to realize in practice. Market freedom, as Robert Taylor has recently argued, is often an effective form of antipower.

Hayek’s account of freedom and coercion is not uncontroversial among libertarians. But it is an account that has deep affinities with the classical republican tradition of thinking about liberty, as expressed in the writings of Algernon Sydney and James Madison, among others. And it is a view that is in many ways quite powerful and plausible – if not as the sole, exhaustive account of What Freedom Really Is, then at least as an account of a kind of freedom about which we as libertarians have good reason to care.

But while a concern for freedom in this sense lends strong support to a system of free markets and private property, as well as to a healthy skepticism of big government, it can also lead to worries about certain forms of coercion within the market. To see why, consider this impressive essay written about a year and a half ago by Chris Bertram, Corey Robin, and Alex Gourevitch, in which the authors document many ways in which employers in the United States appear to stand in a position to arbitrarily impose their will upon their employees. For example:

workers in most parts of the United States can be commanded to pee or forbidden to pee. They can be watched on camera by their boss while they pee. They can be forbidden to wear what they want, say what they want (and at what decibel), and associate with whom they want.

Employers’ power over workers even extends beyond the boundaries of the workplace:

Employers invade employees’ privacy, demanding that they hand over passwords to their Facebook accounts, and fire them for resisting such invasions. Employers secretly film their employees at home. Workers are fired for supporting the wrong political candidates (“work for John Kerry or work for me”), failing to donate to employer-approved candidates, challenging government officials, writing critiques of religion on their personal blogscarrying on extramarital affairs, participating in group sex at home, cross-dressing, and more. Workers are punished for smoking or drinking in the privacy of their own homes.

Libertarians need not accept all of these critiques at face value. In some cases, what appears to be an arbitrary exercise of power on the part of employers will turn out, on closer inspection, to be a necessary cost-control measure and thus a precondition to any mutually beneficial employment relationship at all. In other cases, the arbitrary power will be the result not of market competition but of previous governmental regulations

But not all cases of restrictions on worker freedom can be dismissed so easily. Especially by advocates of a political philosophy that purports to hold freedom as its highest political end. Libertarians would certainly be outraged if the restrictions described above were being imposed by the TSA or some other government agency. But should we be any less concerned when the restrictions are imposed by a private company? 

No doubt as libertarians we feel confident that, in most cases, the competitive pressures of the market will limit private companies’ ability to impose such restrictions. Government monopolies, on the other hand, face no such pressure, and so no such check on their power. But even if market competition is often a good check against private dominance, there is no good economic reason to believe that it will always be sufficient. Can we really dismiss the possibility that hard economic times, combined with an excess supply of labor and a small number of employers, will leave some employers with considerable market power over their workers? Are we really willing to say that each and every one of the outrages documented by Bertram et al. is the product of workers’ free choice, rather than (what they appear to be) something imposed on workers against their will by those who wield power over them? 

If libertarians are concerned to protect the freedom of all, and not just the freedom of most, we will want some mechanism that catches those who fall through the cracks left by imperfect market competition. We will want, too, some mechanism for protecting individuals whose economic vulnerability renders them vulnerable to domination outside the marketplace – the woman, for example, who stays with her abusive husband because she lacks the financial resources to support herself without him.

Cases such as these point the way to a freedom-based case for a Basic Income Guarantee, of the sort that Hayek might very well have had in mind. A basic income gives people an option – to exit the labor market, to relocate to a more competitive market, to invest in training, to take an entrepreneurial risk, and so on. And the existence of that option allows them to escape subjection to the will of others. It enables them to say “no” to proposals that only extreme desperation would ever drive them to accept. It allows them to govern their lives according to their own plans, their own goals, and their own desires. It enables them to be free.

Of course, a basic income would need to be funded by taxation (or would it?), and so would seem to involve the imposition its own kind of coercion. Hayek recognized this fact, but like most in the classical liberal tradition, Hayek did not believe that all taxation was incompatible with freedom. What makes the coercion of the slavemaster, or the monopolist, so worrisome for Hayek is that it involves the arbitrary imposition of one person’s will on another. By contrast, a tax system that is clearly and publicly defined in advance, that imposes only reasonable rates for genuinely public purposes, that is imposed equally upon all, and that is constrained by democratic procedures and the rule of law, might still be constitute interference, but not arbitrary interference. In a perfect world, Hayek thought, we would be able to eliminate coercion altogether, including even the relatively mild kind of coercion that a modest form of taxation involves. But in our world, coercion can only be minimized, not eliminated, and the coercion of some individuals by others can often be held in check only by the use of coercion itself (CL, p. 59).

For Hayek, then, and for those who follow in his footsteps, a basic income is motivated not by an allegedly misguided commitment to egalitarianism or to positive liberty. It is motivated instead by the value that libertarians prize above all others – freedom. And it is motivated by an understanding of freedom that libertarians ought to find highly attractive. The point of a basic income isn’t to give everyone the same amount of wealth. It is to ensure that everyone has enough access to material wealth to render them immune to the coercive power of others. That’s an understanding of freedom that appears to have been good enough for John Locke. It ought to be good enough for his contemporary followers as well.