Burczak’s alternative largely rests on a theory of social justice derived from the “capabilities” literature associated with Sen and Nussbaum. The capabilities literature was born from dissatisfaction with purely formal liberal theories of justice, which worry only about the rules by which people act, rather than the content of those actions—thus allowing, for example, that it could be perfectly just if a number of citizens starve to death because no one else is willing voluntarily to provide or trade with them for food. By contrast, the capabilities literature focuses on ensuring that individuals have, as Burczak puts it, the “means and resources to develop their capabilities to lead choiceworthy lives.” For your life to be choiceworthy, you must have sufficient options to achieve “vital human functions.” (What those functions might be is, in Burczak’s phrase, an “empirical project.”) That point is key to Burczak’s critique of Hayek.
Following the capabilities literature, Burczak faults all the various strands of the liberal tradition for their refusal to believe that individuals can agree on the ingredients of the “good life.” Burczak believes that both history and human nature reveal that such agreement is indeed possible on at least the means to the ends associated with the “good life”; such means might include that people are “well-nourished and educated, have access to adequate health care and shelter, have property that allows explorations of one’s subjective appraisal of beneficial opportunities, and possess the ability to participate in social institutions and interactions with dignity.” If so, democratic processes have a role in ensuring we all have access to these means to live the good life.
The most obvious policy implication here is some redistribution of income or wealth, but capabilities theorists also argue for minimum guarantees of food, health care, and housing. Hayek himself argued for a minimum income for those who were unable to participate in the market on their own (and thereby earned the wrath of more radical anti-statists), but what Burczak calls for is far more wide-ranging and resource-intensive than anything acceptable to even the most moderate libertarian. For example, he approvingly cites Sweden and Finland as examples of countries with effective approaches to the problem of capabilities. No existing libertarian tent is big enough to endorse a Scandinavian-style welfare state.
The obvious libertarian retort to the capabilities approach, which Burczak does not confront in any detail, is that not agreeing on a conception of the good life is a virtue of the liberal order, not a vice. If we agree to allow multiple conceptions of the good life to coexist, we don’t have to fight over what the good life is and how the spoils to make it possible should be divided. That battle would, Hayekians argue, impoverish us all, including the people such policies were designed to help.
Importantly, the capabilities literature goes beyond material goods in considering what is required for a truly human life, including “participating in social institutions and relations with dignity.” Burczak recognizes that determining what this means in practice would be very difficult and subject to some of the knowledge problems Hayek identified. Yet he still defends a kind of social democracy where such “foundational” resources are provided for everyone as an “equal starting point.” One of his proposals is borrowed from Bruce Ackerman and Anne Alstott, both of Yale Law School, who argue for a “social inheritance” grant for each citizen upon reaching the age of majority. This grant (they think it should amount to $80,000, which at the time they were writing would have amounted to $250 billion a year) would enable everyone to become a true “stakeholder” and would promote substantive equality of opportunity. Burczak argues that this is a sort of negative wealth tax that would provide substantial resources at low overhead and would enable everyone to participate fully in the Hayekian market process.
This is not your grandfather’s socialism—or his libertarianism. Burczak is comfortable with the market as long as it allows the state to provide foundational resources. Once we have some assurance that all can lead “choiceworthy” lives, allowing people to engage in the choices entailed by market relations is perfectly fine with Burczak—with one notable exception. He also insists that we make mandatory the self-managed, worker-owned firm as opposed to the more standard labor/capital divide, exempting only single-employee businesses where the owner hires no wage labor. He offers a fairly technical argument for why traditional capitalist relationships are exploitative and thus the enemy of a “choiceworthy” life.
Labor-managed firms themselves are not antagonistic to the market economy. Even if other forms of employment contract are not legally permitted, such firms still exist in a market context where competition and profit and loss determine their success or failure. In fact, it is possible to make a Hayekian argument for labor-managed firms (though not for mandating them) by focusing on the better communication of knowledge that might come from a more decentralized internal structure. This is not an argument that Burczak offers, but it has been made by the Austrian economist David Prychitko.
For those libertarians who advocate a minimal to nonexistent state based on natural rights, responding to Burczak is easy: Your system would violate people’s freedoms, and that is bad, no matter the consequences. But that response forecloses such libertarians from persuading someone like Burczak—or almost any other social scientist who judges policies and institutions by how well they perform and not by abstract rights—to become more libertarian. Although Hayek himself wasn’t always radical in his views, you can use Hayekian insights to make the case for a very radical libertarian vision.
One question a Hayekian might ask is whether the democratic state can actually achieve the outcomes required by the capabilities approach. Is the state really better than civil society at improving the nutrition, health care, or housing of a population? Burczak spends little time confronting concerns about whether self-interested political actors can produce the outcomes they promise. After all, we have already put into place a number of programs designed to do some of that work. Their track record is mixed at best: Although public schools, for example, were intended to make education accessible to everyone, the worst ones are often found in inner cities and rural areas, replicating the very inequities that public education was supposed to reduce.
If Burczak is a bellwether, his book suggests the debate over markets vs. socialism will become more and more empirical. Do unconstrained markets produce outcomes for the least well-off that are at least as good as could be produced under other economic systems? Can political processes achieve the goals that critics of markets would like? Looking again to schools, it’s telling that vouchers and other alternative educational arrangements tend to be popular among the inner-city poor—and, when put in place, have had more success than traditional public schools in improving outcomes for that same group. Similarly, the deregulation of the telecommunications market has brought cheap and portable voice and data communications to millions of poor Americans, making their lives more “choiceworthy” by increasing their connectedness to the rest of the world.
In some sense, these have always been the questions at the center of the grand debates in political economy, but for most of the 20th century the ground staked out by socialists was much farther away from the ground free marketeers defended. The continued narrowing of that gap reflects the success of Mises, Hayek, and many economists and activists who followed them. Even those who now call themselves socialists admit, not always happily, that markets generally outperform planning, arguing simply that there are exceptions (medical care and the environment, among others) that require intervention. For most of the 20th century, this general acceptance of the market would have made them nonsocialists by definition. No one was going to the barricades in order to subsidize health insurance and hybrid cars. With Burczak’s book, the gap narrows even more, as his accurate and respectful treatment of Hayek produces a post-Hayekian socialism that is not all that far from a free market—and that opens up the possibility of fruitful new debates in the future.
Steven Horwitz , the author of Microfoundations and Macroeconomics: An Austrian Perspective (Routledge), teaches economics at St. Lawrence University. He is writing a book on classical liberalism and the family.
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