HAYEK AND RAWLS : THE LIMIT OF STATE INTERVENTION IN THE ECONOMY

Abstract

This thesis aims to compare the views of Hayek and Rawls on the question of the limit of proper state intervention in the economy. Their views are often thought to be totally different and hence incompatible. In comparing and contrasting their views, it is found that while it is true that Hayek and Rawls do differ in their assignments of the proper scope of state intervention, they nevertheless share the same wider commitment to the conception of a neutral liberal state, and in their attempt to reach their conclusions through different paths. they commit the same mistakes that seriously undermine their case for the kind of liberal orders they envisaged. To support my case. I shall first present an exposition of both theories of the state. In Chapter One, I analyze Hayek's conception of the liberal state Hayek argues vehemently against the socialist and command economies for he thinks that such economies would only lead to unfreedom and are thus illiberal He maintains that only in a democratic state governed by the rule of law can freedom be truly sustained Hayek's notion of the rule of law is derived from his social theory of spontaneous order for such laws are laws of liberty as they are spontaneously developed from the evolutionary social process and thus are non-coercive The problems found in Hayek's theory of spontaneous order. however, seriously undermine his attack against the command economies and his own arguments for the 18th century type of limited government. In Chapter Two, I examine Rawls's theory of justice and find that some of the underlying assumptions Rawls makes turn out to be too far-fetched; consequently problems arise when we apply his principles of justice to the issue of government regulation. Eventually, Rawls fails to show that his kind of society is able to provide adequate support for a fair distribution of the social primary goods. In Chapter Three, I compare and contrast the Hayekian and Rawlsian positions on the issue of proper state intervention in the economy. We shall find that both Hayek and Rawls believe that individual autonomy is essential to guaranteeing both human dignity and a thriving economy, and are committed to the idea of a liberal neutral state governed by the rule of law which is crucial to the advancement of the divergent kinds of the conceptions of the good that the individuals in society may pursue. State intervention, defined by the rule of law, must therefore not be aimed at assisting the individuals in pursuing a particular conception of the good. In Hayek's case, the spontaneous order of the market system best ensures that the state remains neutral by not either helping nor hindering anyone beyond the minimal requirement that is consistent with the rule of law; in Rawls's, however, the government intervenes with the distribution of the market results so as to make it accord with the requirement of the economic principle of justice, the difference principle. But the problems found in Hayek's social theory of spontaneous order and the kind of assumptions Rawls makes in his political theory of justice undermine their attempts to adhere to the idea of a liberal, non-interfering neutral state.