Rawls and Hayek

I'm starting to really like John Rawls. His idea of "property-owning democracy" (republican distributism) as the only just alternative to socialism is quite interesting.

"One major difference [between welfare state capitalism and property-owning democracy] is that the background institutions of property-owning democracy, with its system of (workably) competitive markets, try to disperse the ownership of wealth and capital, and thus to prevent a small part of society from controlling the economy and indirectly political life itself. Property-owning democracy avoids this, not by redistributing income to those with less at the end of each period, so to speak, but rather by ensuring the widespread ownership of productive assets and human capital (educated abilities and trained skills) at the beginning of each period, all this against a background of the equal basic liberties and fair equality of opportunity. The idea is not simply to assist those who lose out through accident or misfortune (although this must be done), but instead to put all citizens in a position to manage their own affairs and to take part in social cooperation on a footing of mutual respect under appropriately equal conditions."(Collected Papers, Ch. 19)

Now, Rawls did not say that this is the way to go, but he asserted that property-owning democracy (republican distributism) and democratic socialism were the only two systems that could conceivably meet the criteria of justice he laid out in "A Theory of Justice."

F. A. Hayek's vision of the market is like low-maintenance agriculture, not like uncultivated land. He's for free trade, not laissez-faire. His concept of "spontaneous order" isn't some idea of order emerging from chaos or spontaneous order emerging within a vacuum. No! Rules and social order are established by government, and these rules, when done on the principle of isonomy, so as to eliminate any uncertainty or arbitrariness, allow for individuals to plan efficiently. The economy is a game and people can only play rationally when the rules are set so that they know what to expect. When the players act within the game, order emerges. In a game of socker, the players collectively try to score a goal, but the situation is constantly changing and each player must spontaneously decide how to act in the moment. The coach can give a little guidance and make suggestions, but he has to let the players make their moves on their own while the game is underway. The players move together as a group and arrange themselves in a rational way on the field, not always because they have been told to do so but often just because each individual knows what the rules are and what the goal is and responds to the changing conditions accordingly.

But Hayek realizes that the economy isn't a game. The metaphor only goes so far. The individuals involved are real people and the risks at stake are human lives. Thus, Hayek suggests that we need a social safety net in the form of a welfare state with social insurance in order to ensure that the “losers” in this game are protected. Think of this as protective gear, like helmets and shin pads. The safety net is supposed to help ensure that the players all go home safe at the end of the night, regardless of how ruthless and competitive the game gets during the day.

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