CANADIAN JOURNAL OF PHILOSOPHY

Volume XIII, Number 4, December 1983

Hayek, justice and the Market

A.W. CRAGG, Laurentian University

It is Alistair Macleod's view that what he calls justice judgments are at

root judgments abput states of affair and only derivatively about actions.
His interest in Fredrick Hayek's book, The Mirage of Social justice,
derives at least in part from the fact that assessing the justice of actions is
logically prior to assessing the justice of situations or states of affairs.
Thus evaluating Hayek's views offers a way in which Macleod can test
his own position.
In responding to Professor Macleod's interesting and provocative
paper, I shall begin by criticising his own position with respect to the
relation of judgments about situations to judgments about actions. I
shall argue that contrary to what Macleod asserts judgments about the
justice of actions and judgments about the justice of situations are inex-
tricably intertwined. Second, I shall argue that Macleod's criticism of the
view that judgments about the justice of actions are more basic than
judgments about the justice of situations is a sound one. However,
Hayek's attack on social justice is not rooted in this position. I shall con-
clude by arguing that correctly understood, Hayek's position on the

563
A.W. Cragg

matter of social justice is coherent and a more serious challenge to a

good deal of conventional wisdom on the question of social justice than
Macleod's analysis suggests.
It is Macleod's view that Hayek's critique of social justice rests on the
thesis that justice judgments about actions are more fundamental than
justice judgments about states of affairs. Macleod argues that on this fun-
damental point, Hayek is wrong.

All major theories sponsor principles of justice which point the way to an
answer to the question, "Is it just that A should have much and B little?"
without any detour through the question, "what action ought to be performed
by an individual or agency with the power to determine what the shares of A
and B shall be?".

Macleod defends this position and rejects an alternative view which he

attributes to Hayek.
I want to argue that on this specific issue Macleod is wrong. Two ex-
amples will help to make the point. Imagine A is a prosperous farmer in
Nova Scotia and B a prosperous farmer in Southern Italy. B's farm and
his physical health are destroyed by an earthquake. Assume further that
no human intervention could have saved B from catastrophe and that
things being what they are nothing can now be done to restore B to the
position which formerly he enjoyed. Is it just that A should have much
and B little? Surely the question has little point in these circumstances.
Let us alter the example. Both A and Bare prosperous fruit farmers in
the Annapolis valley. A's fruit crop is hit by frost and destroyed. B's crop
suffers no damage. In the absence of outside help, A is financially ruined.
Is it just that A should have much and B little? Here the question is
significant since remedial action is possible.
The point is this. justice judgments are moral judgments. They serve
to delineate situations which require correction or situations which
should have been prevented. Situations which are not brought about
through human agency and which are not alterable through human in-
tervention are not appropriate candidates for justice judgments. Such
situations may be unfortunate, or tragic or regretable. But their victims
are not victims of injustice. To generalize, a state of affairs which has not
been or was not brought into existence by human design and which
could not have been prevented by human intervention or action and
which is not amenable to remedial action is neither just nor unjust. It is
in this sense that judgments about the justice of situations and
judgments about actions are inextricably intertwined. If one judges that
someone is a victim of injustice, it follows that one .is al~o of the view
that the situation is the result of or can be ameliorated in a significant
way by human intervention. Thus, contrary to what Macleod contends,
to answer the question 'Is it just that A should have much and B little?'

564
 Hayek, justice and the Market

one must detour through the question What action ought to be per-
formed by an individual or agency with the power to determine what the
shares of A and B shall be?' For 'It is unjust that A should have much and B
little' implies 'The injustice ought to be corrected.' But if A's having much
and B little is not a result of human action and further if the situation is not
open to amelioration, then it is not the case that the situation ought to
be corrected because it cannot be corrected. And if it is not the case
that the situation ought to be corrected or could have been avoided
then the imbalance between A and B is not an unjust one.
How does all this relate to Hayek's position. Macleod suggests that
Hayek's critique is dependent on the view that justice judgments about
actions are more fundamental than justice judgments about situations.
Insofar as Hayek does adopt this view, Macleod's criticisms are sound.
Indeed, how could an action be evaluated as just or unjust in the
absence of an evaluation of the situation it was designed to bring about?
However, while Hayek may occasionally suggest the position attributed
to him, his critique of social justice does not depend on adopting this
view. Neither does Hayek ever explicitly endorse the view which
Macleod attributes to him.
What then is Hayek's position on social justice. I suggest that he is
advancing two distinct theses. His first and dominant thesis is that you
cannot both have a market economy and distribute wealth in a manner
which is consistent with a principle of social or distributive justice. His
second and distinct thesis is that it is not possible to construct an
economic system where distribution of wealth is guided by or consistent
with principles of social justice.
With respect to the first thesis, Hayek's position seems clear. A
market is like a game of mixed skill and chance. One has a better
chance if one is skillful, determined, energetic and so on. But these
qualities do not guarantee success. Thus, if one is going to allow or en-
courage the development of a market, one must accept the fact that
some people who deserve to be well off are going to fail in their
endeavours. And some people will be well off who by reference to any
conventional standards of desert deserve just the opposite.
Thus:

... a genuine market order ... does not and cannot achieve a distribution cor-
responding to any standard of material justice ... (81)

We can now return to the basic issue. Given the nature of a market
economy, there is nothing which can be done to eradicate social in-
justice. Therefore, those who advocate both a market economy and an
economy where material wealth is distributed in a systematically just
fashion are advocating the impossible. But even worse, when society

565
A.W. Cragg

sets off to attempt both the result is more social injustice not less. It is in
this sense that Hayek is able to say that inside a market economy the no-
tion of social justice is meaningless. And while Hayek's economic analy-
sis may be mistaken on this, his claim is nonetheless a coherent one.
Now it should be immediately clear that the debate cannot end
here. It is possible to replace a market economy with a centrally
directed non-market economy. Hence, it is possible that we might
eliminate the injustices spawned by the market by replacing the market
with another system, as Macleod notes. That is to say, from the fact that
the distribution of material wealth in a manner required by social justice
is not a coherent objective inside a market economy it does not follow
that the pursuit of social justice is not a coherent option full stop.
Hayek recognizes this point. And it leads him to his second thesis,
namely that a centrally directed (socialist) economy must inevitably
depart from principles of social justice if by social justice is meant the
distribution of wealth on grounds of desert. Thus, while it is possible to
create a system where everyone receives what they deserve for the
work they do, in such a system it is inevitable that some people will be
assigned by the system to do work they do not want to do. Inevitably
basic decisions in assignment of tasks will follow rules of efficiency and
expediency.
What then are we to conclude from Hayek's exploration of his se-
cond thesis. Social justice is unattainable whatever the economic
system in place in a given society. It is a mirage. Does it follow that the
concept is an incoherent one? Hayek sometimes implies that it does.
And certainly Macleod has understood him in this way. However, the
text is not clear. So we must return to the basic position and work out
the answer for ourselves. To call a situation unjust is to imply that it is
the result of human action. Or, alternatively, it is to imply that the in-
justice present in a particular situation can be corrected or ameliorated.
However, it does not follow that an ideal is a mirage just because it can-
not be achieved. It is only a mirage if we cannot even move in the direc-
tion of its achievement. Hayek claims to show that no economic system
will allow a perfectly just distribution of material wealth without at the
same time generating some form of injustice. What his analysis does not
show is that a socialist economy is less perfect than a market economy
in this respect. If this sort of comparison is possible, and much that
Hayek says suggests that it is, then the concept of social justice is not a
mirage. And to that extent, the critique fails.
(It should be noted in parenthesis that some formulations of the no-
tion of justice depart from the principle of desert as Macleod points out
in the early parts of his paper. And while Hayek does respond to
available alternatives, time does not permit an exploration of those
responses here.)

566
 Hayek, Justice and the Market

Hayek's basic position then is quite simple. Those who preach social
justice have an obligation to show that social justice can be achieved,
the sense in which it is achievable, and the costs associated with its
achievement. Failure to do so opens such persons to the charge of in-
coherence and Hayek, having examined the candidates, levels the
charge. Insofar as his challenge follows the pattern I have outlined
above, it escapes the criticisms of Macleod and presents itself as both
logically and morally coherent.
Whether Hayek's position is also correct is another matter best left to
another time.

September, 1981

567