Friedrich Hayek on the Welfare State

A blog about business and economics.
May 14 2012 8:20 AM

Friedrich Hayek on the Welfare State

A controversy arises every once in a while as to whether or not Friedrich Hayek stated that welfare state policies are likely to put a country on "the road to serfdom." These arguments tend to arise in two different directions. Sometimes conservatives will cite Hayek to this affect as part of an argument against welfare state policies, only to be met by liberals who cite contrary points in Hayek's writings to try to make them look foolish. Alternatively, sometimes liberals say Hayek said the welfare state would lead to totalitarianism in order to make Hayek look foolish, only to be rebutted by Hayek fans on the right citing contrary arguments he made.

For a version of someone on the left arguing that Hayek argued against social welfare policies, check this out from Henry Farrell who has the goods. On the other hand, if you click this link and read the following three paragraphs from The Road to Serfdom you'll find Hayek arguing in favor of a guaranteed social minimum "of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody" as well as arguing that where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance—where, in short, we deal with genuinely insurable risks—the case for the state's helping to organize a comprehensive system of social insurance is very strong." He also argues that we need active demand management to combat "general fluctuations of economic activity and the recurrent waves of large-scale unemployment that accompany them" though he offers the hope that "the utlimate remedy may be found in the field of monetary policy, which would involve nothing incompatible even with 19th century liberalism" (don't tell Ron Paul). Hayek also wrote at times that the government needs to legislate against air pollution.

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The answer to this puzzle, I think, is that Hayek was inconsistent.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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