trechos de "Liberalism", do economista Hayek - 1973

The service functions of government

The strict limitation of governmental powers to the enforcement of general rules of just conduct required by liberal principles refers only to the coercive powers of government. Government may render in addition, by the use of the means placed at its disposal, many services which involve no coercion except for the raising of the means by taxation; and apart perhaps from some extreme wings of the liberal movement, the desirability of government undertaking such tasks has never been denied. They were, however, in the nineteenth century still of minor and mainly traditional importance and little discussed by liberal theory which merely stressed that such services had better be left in the hands of local rather than central government. The guiding consideration was a fear that central government would become too powerful, and a hope that competition between the different local authorities would effectively control and direct the development of these services on desirable lines.

The general growth of wealth and the new aspirations whose satisfaction were made possible by it have since led to an enormous growth of those service activities, and have made necessary a much more clear‑cut attitude towards them than classical liberalism ever took. There can be no doubt that there are many such services, known to the economists as 'public goods', which are highly desirable but cannot be provided by the market mechanism, because if they arc provided they will benefit everybody and cannot be confined to those who are willing to pay for them. From the elementary tasks of the protection against crime or the prevention of the spreading of contagious diseases and other health services, to the great variety of problems which the large urban agglomerations raise most acutely, the required services can only be provided if the means to defray their costs are raised by taxation. This means that, if these services are to be provided at all, at least their finance, if not necessarily also their operation must be placed in the hands of agencies which have the power of taxation. This need not mean that government is given the exclusive right to render these services, and the liberal will wish that the possibility be left open that when ways of providing such services by private enterprise are discovered, this can be done. He will also retain the traditional preference that those services should so far as possible be provided by local rather than central authorities and be paid for by local taxation, since in this manner at least some connection between those who benefit and those who pay for a particular service will be preserved. But beyond this liberalism has developed scarcely any definite principles to guide policy in this wide field of ever increasing importance.

The failure to apply the general principles of liberalism to the new problems showed itself in the course of the development of the modern Welfare State. Though it should have been possible to achieve many of its aims within a liberal framework, this would have required a slow experimental process; yet the desire to achieve them by the most immediately effective path led everywhere to the abandonment of liberal principles. While it should have been possible, in particular, to provide most of the services of social insurance by the development of an institution for true competitive insurance, and while even a minimum income assured to all might have been created within a liberal framework, the decision to make the whole field of social insurance a government monopoly, and to turn the whole apparatus erected for that purpose into a great machinery for the redistribution of incomes, led to a progressive growth of the government controlled sector of the economy and to a steady dwindling of the part of the economy in which liberal principles still prevail.

Positive tasks of liberal legislation

Traditional liberal doctrine, however, not only failed to cope adequately with new problems, but also never developed a sufficiently clear programme for the development of a legal framework designed to preserve an effective market order. If the free enterprise system is to work beneficially, it is not sufficient that the laws satisfy the negative criteria sketched earlier. It is also necessary that their positive content be such as to make the market mechanism operate satisfactorily. This requires in particular rules which favour the preservation of competition and restrain, so far as possible, the development of monopolistic positions. These problems were somewhat neglected by nineteenth‑century liberal doctrine and were examined systematically only more recently by some of the 'neoliberal' groups.

It is probable, however, that in the field of enterprise monopoly would never have become a serious problem if government had not assisted its development by tariffs, certain features of the law of corporations and of the law of industrial patents. It is an open question whether, beyond giving the legal framework such a character that it will favour competition, specific measures to combat monopoly are necessary or desirable. If they are, the ancient common law prohibition of conspiracies in restraint of trade might have provided a foundation for such a development which, however, remained long unused. Only comparatively lately, beginning with the Sherman Act of 189o in the USA, and in Europe mostly only after the Second World War, were attempts made at a deliberate antitrust and anti‑cartel legislation which, because of the discretionary powers which they usually conferred on administrative agencies, were not wholly reconcilable with classical liberal ideals.

The field, however, in which the failure to apply liberal principles led to developments which increasingly impeded the functioning of the market order, is that of the monopoly of organized labour or of the trade unions. Classical liberalism had supported the demands of the workers for 'freedom of association', and perhaps for this reason later failed effectively to oppose the development of labour unions into institutions privileged by law to use coercion in a manner not permitted to anybody else. It is this position of the labour unions which has made the market mechanism for the determination of wages largely inoperative, and it is more than doubtful whether a market economy can be preserved if the competitive determination of prices is not also applied to wages. The question whether the market order will continue to exist or whether it will be replaced by a centrally planned economic system may well depend on whether it will prove possible in some manner to restore a competitive labour market.

The effects of these developments show themselves already in the manner in which they have influenced government action in the second main field in which it is generally believed that a functioning market order requires positive government action: the provision of a stable monetary system. While classical liberalism assumed that the gold standard provided an automatic mechanism for the regulation of the supply of money and credit which would be adequate to secure a functioning market order, the historical developments have in fact produced a credit structure which has become to a high degree dependent on the deliberate regulation by a central authority. This control, which for some time had been placed in the hands of independent central banks, has in recent times been in effect transferred to governments, largely because budgetary policy has been made one of the chief instruments of monetary control. Governments have thus become responsible for determining one of the essential conditions on which the working of the market mechanism depends.

In this position governments in all Western countries have been forced, in order to secure adequate employment at the wages driven up by trade union action, to pursue an inflationary policy which makes monetary demand rise faster than the supply of goods. They have been driven by this into an accelerating inflation which in turn they feel bound to counteract by direct controls of prices that threaten to make the market mechanism increasingly inoperative. This seems now to become the way in which, as already indicated in the historical section, the market order which is the foundation of a liberal system will be progressively destroyed.