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Subject Area: Political Theory

Towards the Just Society, Ralph Horwitz - Friedrich August von Hayek, Toward Liberty: Essays in Honor of Ludwig von Mises, vol. 1 [1971]

Edition used:

Toward Liberty: Essays in Honor of Ludwig von Mises on the Occasion of his 90th Birthday, September 29, 1971, vol. 1, ed. F.A. Hayek, Henry Hazlitt, Leonrad R. Read, Gustavo Velasco, and F.A. Harper (Menlo Park: Institute for Humane Studies, 1971).

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Towards the Just Society
Ralph Horwitz

Ninety candles on a cake brightens the festivities of any nonagerian but it is the inspirational thought of a Mises that provides the illumination for even the most inconsequential tribute in a Festschrift.

“The distinction between what is just and what is unjust invariably refers to interhuman social relations. The ultimate yardstick of justice is conduciveness to the preservation of social co-operation. Conduct suited to serve social co-operation is just, conduct detrimental to the preservation of society is unjust. There cannot be any question of organizing society according to the postulates of an arbitrary preconceived idea of justice. The problem is to organize society for the best possible realization of those ends which men want to attain by social co-operation. Social utility is the only standard of justice. It is the sole guide of legislation.”

This characteristic affirmation of grand postulate appears on page 54 of Mises's Theory and History—an interpretation of social and economic evaluation (1957). It is without doubt, without reservation. There are, he continues, no irreconcilable conflicts between selfishness and altruism, between economics and ethics, between the concerns of the individual and those of society.

Utilitarian philosophy and its finest product, economics, reduced these apparent antagonisms to the opposition of short-run and long-run interests. Society, Mises insists, could not have come into existence or been preserved without a harmony of the rightly understood interests of all its members.

This, it seems to me, is fighting rationalism - stirring the emotions no less than the reason. One leaps to defend or to demolish. I cannot believe it to be wertfrei but I find it entirely satisfying in that it stimulates the blood no less than the brain. Indeed when first I dipped into Mises at the age of seventeen, I had the identical response. It was his Socialism as much, perhaps more, than any other of the ‘great books’ that armed me with all the total authority that one needs at eighteen to reject anybody else's views of what constitutes the Good Society. To be a non-socialist in student controversies in the early 1930's, when Capitalism was to every other student obviously moving to its Marxian climacteric, was bliss indeed. To have the knowledge that economic calculation is non-possumus outside a market economy, that competition leads to egalitarianism and that collectivism is on a road to serfdom was to be not only different but almost unique.

As a first year on a South African campus one was patently in possession of a secret weapon in student politics. Apartheid was already casting its darkening shadow despite the fact that a very few Africans in my own Cape Province, one of the four that had come together in 1910 to constitute the Union of South Africa, still enjoyed a limited franchise on the common roll, that my University of Cape Town was still free to admit whomsoever it wished to its academic freedom, and that my home town did not yet segregate by colour on its public buses or its park benches or its concert halls.

Mill on Liberty and Mises on Socialism - what more conviction did one require and how could one not become unredeemingly intoxicated with pursuit not merely of justice but of the Just Society itself?

As one grows older, objectivity and subjectivity - I concede - have got a trifle mixed up. These reflections on Towards the Just Society are inspired by the eminent praxeologist to whom this collection of essays does honour but I am only too conscious of how far this particular offering departs from the path of conceptual rigour and epistomological exactitude. My defence is that, while the fine-tuning of economic science guarantees that the entire picture disappears from the TV screen, the insights of political economy sometimes concentrate on actual human behaviour in real societies.

I was born and grew up in a social system that was not unique but different only, I believe, in that the interchanges between any particular society or national sovereignty and its environment constrain its social evolution. In the last quarter of the last century the discovery of the world's richest diamond mines and gold fields in the South African veldt opened up to entrepreneurship the transformation of stagnating self-sufficiency into uninhibited capitalistic pursuit of profit. Led by perhaps the nineteenth century's most soaring entrepreneurial dreamer and action man, Cecil John Rhodes, a typical but remarkable group of immigrant ‘new-men’ revolutionized the society of trekking white pastoralists and black tribesmen.

Bringing together capital from the City of London, scarce mining skills from worked out Cornish tin mines and aborted Californian and Australian gold-rushes, and mass physical energy from nomadic Africa, financiers of integrity more questionable than questioned carried through their Schumpeterian role.

Modern South Africa was created.

In the widest, deepest sense there was social co-operation. Co-operation of sophisticated capital, critical human skills and primitive human energy. Co-operation of English-speaking ‘uitlander’ and Afrikaans-speaking ‘boer’,∗ immigrant cosmopolitan gambler with nothing to lose but the pack on his itinerant back from which he traded and Calvinistic cattle-raiser identifying wealth only with the 6000 or 8000 acres to which a day's horse-riding and a white skin gave undisputed title. Co-operation between a newly forged corporate structure of mining-finance house, conceived by co-operating English, German and Jewish entrepreneurial management, to off-set high risk ventures in ore exploitation and an age-old tradition of Bantu-speaking collectivist land-ownership to off-set the even greater uncertainties of elusive, illusive pasturages.

It was the social co-operation of an exchange-economy in which market forces of economic calculation began the process of economic growth.∗

In the course of only a few decades these market forces yielded a steadily rising output. The gross national product of South Africa became a calculable exercise as coinage and money values evolved in place of cattle-bartering and crop-sharing in a case illustration of the textbook theory of money as the marketable commodity as Mises had written it almost contemporaneously.

Capitalistic dynamism and acquisitive individualism generated and fructified wealth. Until they burst into the African sub-continent, centuries of primitive tribal collectivism that denied the right to individual title of land registration had yielded nothing much more than nomadic subsistence, while the trekking Afrikaners rejecting British Colonial Office and Victorian capitalism alike as totally alien to their own volk values were declining into poor-whiteism.

Social divisiveness also of course goes alongside social co-operation. And the social divisiveness is very much part of the same social process. To this extent one can hardly deny Karl Marx his insights. The conflict elements are present - perhaps even as deep and as wide as the elements of co-operative consensus. Mises may be right in his insistence that utilitarian philosophy and economics, its finest product, correctly attribute the divisiveness to the short run and the social co-operation to the long run; and that the infinite potential of the market-exchange economy will ultimately reconcile. Ipso facto, the Just Society is highly unlikely to emerge from collectivist choices and controls though competitive capitalism and individualism may follow a long, circuitous route before it resolves the short-run antagonisms in the long-run social co-operation of the just society.

However, it is not simply that, as Keynes reminded us, we are all dead in the long run and that we would like at least some of our justice in this rather than another world. It is that action has, if not infinite, then powerful capacity and motivation to prolong the short-run. It is not merely that the contrived constraints of the market produce the imperfect or monopolistic competition of Robinson and Chamberlin but that social co-operation has protean properties for the identification and pursuit of self-interest in place of the life, liberty and happiness to which all men are said to be entitled.

The mining-finance house system of the South African Chamber of Mines has raised some thousands of millions of pounds to finance the production over the past seventy-five years of about one-third of all the gold mined by man throughout history and currently about three-quarters of the Free World's gold output. In that respect it has served vitally the social co-operation of Western capitalism and international free trade through its evolving gold standard and foreign exchange technology. But the same Chamber of Mines from about the turn of this century also perfected its own internal co-operation to achieve a centralized recruiting and industrial relations organization.

For almost the same three-quarter century, this organizational structure has operated a complete monopsony over the employment of the total work force of African miners. Through the technique of the ‘maximum-average’ wage - a subtle method of incentive output stimulation and controlled time-rate - the money earnings of more than 300,000 African mine workers were as late as the 1960's perhaps less than the earnings received in the 1880's before the employers' competition was eliminated by organizational technique. Furthermore the white miners through their form of co-operation of organized unionism for the same seven to eight decades have imposed a total prohibition on the employment of African miners in any category of work designated by their unions as ‘white man's work’.

The method and minutiae of these mine-working arrangements have inhibited gold mining production to an incalculable effect on working costs. One may hazard an opinion that the removal of these restrictive practices at any time this past three-quarters of a century would have had the same effect as a fifty percent increase in the world price of gold.

The so-termed labour colour bar or job reservation system in South Africa operates throughout the entire economy. But the rigidity and rigour has grown progressively with each decade despite the overwhelming evidence and economic argument that the system depresses increasing wealth for white and black South Africans. Its differential effect on wages are manifest. In agriculture the real wages of African farm workers are in 1971 often below the level of 1910. In four categories of manufacturing, construction, government employment and distributive trades, official figures show that African, Asian and Coloured, that is non-white, wages went up an average 5.8 percent annually over about the last decade; white wages increased at 8.6 percent per year over the same period.

In absolute figures from 1962 to 1967 white wages went from £96 to £140 a month and non-white wages from £22 to £29 a month. The contrived differentials (contrived in the sense of deliberate interference with market competition) for skilled work for whites and non-skilled work for Africans range from seven times as much in non-mining activities to sixteen times as much in the mining industry.

The evidence is strong that with each decade after South Africa moved from self-subsistence to a sophisticated exchange economy, the African has been getting poorer in comparison with the whites: his average per capita income in 1970 being about £53 per year, while white per capita income (which includes profits and rents as well as wages) is over £1000 a year. This process has been very much part of the ‘long-run’ in South African economic history. It is a process distinguished on the one hand by the integrating effects of economic development under market-capitalism and, on the other, of the absolute resistance to such integrating effects by the white electorate and its polity. Almost uninterruptedly, the white parliaments have legislated firstly to deprive all non-whites of every vestige of voting right and secondly to erect an extraordinary code of industrial legislation that makes it unlawful in 1971 for any African to exercise any choice whatsoever where he works, for whom he works and what he works at.

Furthermore no African may own land outside a government-demarcated geographical thirteen percent of South African territory, although the Africans are some eighty percent of the total population. Africans were deprived of their right to buy land in the competitive market as far back as 1910 and promises by the white parliament to allocate certain lands by administrative fiat remain unfulfilled to this day.

Political power has been and is used without limitation to control and direct the competitive market forces of social co-operation. I have endeavoured to record the historical detail in the Political Economy of South Africa. The competitive market, I accept, values men and their output without regard to colour and creed. Economic calculation is apolitical and capitalism promotes social mobility. Yet the polity will not necessarily accept such competitive market values and government may insist that the apolitical calculation of economic individualism is unacceptable to its institutionalized culture.

Certainly the governments of South Africa from the Act of Union in 1910 have never allowed market forces to determine the interhuman social relations of white and non-white. The institutionalized culture of white South Africa has insisted that these interhuman relationships shall be determined absolutely and finally by the sovereignty of the legislature. To ensure that the legislature shall be elected solely by white men and women, Parliament was prepared to tear up its own constitutional entrenchments; to guarantee that the sovereignty of its political will was not exposed to even the confidential diplomatic debate of member-meetings of the British Commonwealth, it reconstituted its Union as a Republic of South Africa in 1961.

There are those of course who would insist that the Republic of South Africa has preserved law and order and, as such, freedom. There are others who would question the law, the order and the freedom. It seemed to me that my (subjective) view of the Just Society required another environment and another nationality.

Have I found that Society in Britain?

It is already many years now that a British Conservative cabinet minister declared: “We are all socialists now.” Britain is perhaps the most mixed—some would say mixed-up—economy among contemporary major economies. The elements of collectivism and individualism are inextricably interwoven; its Keynesian concepts mock the precepts of the Wealth of Nations, though Britain was the first nation in history to achieve wealth as much through the creativity of Adam Smith as by any other inspiration.

A great American Secretary of State has said: “Britain has lost an Empire and has not yet found a role.” The observation was more epigrammatic than acute. For at least a quarter of a century Britain has, I believe, been pursuing a role - not very consciously, not very formatively, not very conceptually. She is in her pragmatic, non-professional tradition stumbling on this role much as she stumbled on her Empire. Then, as now, a few men had visions of destiny - creative men with soaring imaginations of human relationships. Then, as now, there were great missionaries of civilizing faith. Much lesser men denied - and deny - the vision, abuse the faith, and foul the accomplishment. The dark pages of the Empire chequered the story, just as distortions of contemporary human behavior frustrate the search for the Just Society.

Yet it was and is a record of achievement unexcelled by any of the other great peoples of history, including the Romans.

Representative institutions of government and peaceful change of power came to fruition in England. Her civil wars ended 300 years ago and she has never since experienced really revolutionary violence. The pundits assure us that the Westminster model of democracy proved incapable of export. Set up in distant climes hesitatingly, tentatively, generally unwillingly, but finally wherever the map was coloured red, some manifestation of democracy came in the end to every corner of the Empire until colonies evolved into Commonwealth.

In the end, of course, the sun did set on the Empire and, I believe in ultimate consequence, the sunlight often disappeared in the corners of disenchanted imperialism. The Westminster model shone and shines brightest besides the Thames. In Asia, in the Indies, in Africa the model of representative government proved unstable and power was and is taken by force by men of violence. I venture the thought that it was not any fundamental defects in the Westminster model. Nor, I submit, is that model only appropriate for a homogeneous society achieving social stability and economic vitality over centuries of endeavour and continuing good fortune.

While much of the Westminster model is distinctively British, it is not - I further believe - exclusively for the British. Ultimately it will prove to be the only model for civilized community of human diversity. From Athenian acropolis, Roman forum, Westminster chamber come universal lessons of human freedom and the rule of law. Comes, in short, a cultural milieu or ethos at least as much a determinant for the Just Society as institutions favourable to individual economic calculation.

Yet many sneer and jeer at ‘decadent Britain’, allegedly bumping along at the bottom of the growth league and alternating between a restrictionist conservatism and a debilitating socialism. Does present day Britain lack great purpose and great achievement? Is it the British of the second half of the twentieth century who are without conscience and compassion? Is it Britain among all the nations of the Disunited Nations which lacks a moral view, a vision of humanism that encompasses something more than materialism?

As a life-long non-Marxist, non-communist, non-socialist, non-nationalizer - indeed, as a life-long would-be capitalist and defender of the classical economic faith in so far as I know it when I cannot see it and proclaim it when I do not understand it - my subjective observation is that the British Labour Party has contributed at least as much to moral purpose and humanistic idealism as the British Conservative Party. The British Liberal Party, I believe, has contributed more than either but the Liberals have not had an innings these past fifty years, which may explain the current state of the queered pitch.

Contemporary Britain to its critics seems more devoted to Eros than to Mammon. In their judgment the British are not merely permissive in their silver sea but gadarene swine. The permissive society admittedly accepts that Queen Victoria is now dead. Even buried. But those scholars who have researched what went on when Queen Victoria was alive have recorded that goings on then were a lot more permissive in private if not in public; and the goings on that outraged John Calvin in his Europe were doubtless even more permissive than what went on under Queen Victoria's rather snotty nose.

There is, however, another aspect of permissive Britain in the 1960s and the 1970s of far greater significance. The real nature of permissiveness is the extension of nineteenth century non-conformity with traditional church rituals to twentieth century non-conformity with mass or herd values generally. Permissiveness in Britain today is permission to be individualistic in every aspect of human behaviour - in belief, in opinion, in taste, in preference, in want, in desire, in human choice. There exists, I am certain, no society anywhere of more splendid individualism than Britain in the 1970s.

What is interesting is that such an unequivocal, unchecked, uncontained assertion of personal code of conduct - of ego rather than egoism - should have reached its apotheosis in Socialist Britain.

Whatever freedoms socialism contains in the market-place - and they are real, important and undesirable - it has certainly not subdued British non-conformity. Men and women - above all young men and women - have never given less of a damn for what Authority says or what Authority rules. Any state, it seems to me, that would attempt to suppress or contain rights to individuality cannot ultimately preserve social co-operation - the ultimate yardstick of justice as Mises postulates.

British toryism has ensured the conservation of traditional beliefs and mores. British liberalism began the restructuring of Britain's role - the slow withdrawal from Empire and the equally slow and arduous spread of social justice. British socialism will one day be accorded its due for its distinctive contribution to the enormously complex task of bringing about the Just Society.

This Just Society is not, it then seems to me, either an inevitable creation of the ‘invisible hand’, still less a formulated concept for programmed accomplishment. While the market economy gives unique and indispensible individualism to the choices of free human beings and promotes the long-run productivity of social co-operation, every economy will require an ethos favourable to the human dignity of all its peoples and a polity to give a legal framework for that ethos to flower. The polity of Britain, the great leaders of thought and achievement in political, intellectual, moral, social and economic life, have a consensus of what contemporary Britain is about. It is, I would claim, about fairness - a generalized and general pursuit of fairness. So subjective a concept as ‘fairness’ can patently mean different shades of subtlety but it is identifiable, indeed almost tangible. The British are most certainly in pursuit of it and no bargain attempted or struck can ignore the fair terms for all parties. In a way it is a return to the medieval concept of the just price. To analyse the full implications of the accomodation of the just price, indeed of the Just Society, with economic progress and growth is beyond the scope of this essay.

In contemporary Britain, however, ‘fairness’ is the word you will find more used than perhaps any other as a statement of political purpose, of industrial objective. No decision about the cake and no division of the cake that does not seem to make for a more fair allocation of its goodies is acceptable.

The real difference between the Conservatives and the Socialists is that the former believe the cherries should be so dotted about the cake that only those most diligent and most skilful in their search of the cherries should get them; the Socialists would appropriate the cherries for the national benefit and then hand them out to the deserving. The difficulty in recognising the national interest or general benefit is that no one has been able to point it out - at least not set up as a monument in Piccadilly Circus. Eros probably has more reality. How separate the undeserving from the deserving? Is it quite the same categorization of rich and poor or even poor and rich?

If I have a taste for Marx, it is for Groucho who made Night at the Circus and Horse Feathers in this century, rather than for Karl who made Das Kapital in the last. That Britain has a class structure is hardly deniable. But that structure is extraordinarily complicated and not to be simplified into expropriators and expropriated. In the nineteen-fifties Harold Wilson clashed with Hugh Gaitskell, whose coming premiership he inherited, because Gaitskell would have expunged the Labour Party's doctrinal clause IV on nationalization. Yet it was Prime Minister Wilson who later warned an audience of trade unionists to stop looking to Highgate cemetery where Karl Marx is buried for answers or inspiration.

Collective choice makes more hideous mistakes than market choice and certainly on occasions yeilds irreversible disasters. But the story of the British economy in the last fifty years of its disenchantment with the market economy and its distaste for competition is not an objective record. No economist ever put one story without another economist jumping in to put another version. Both are probably fairy-tales. Reality, one recognizes as one grows balder and balder, is not for encapsulation, It is not merely that one man's poison is another man's meat; it is that one man's truth is another man's untruth.

Anyway, for my part I cannot work out gross national product and I do not believe it measures anything but arithmetic. Cost-benefit studies are the sophistication of the sophists, where they are not the blind leading the blind. I believe men of goodwill and compassion might perhaps be able to devise a measure of the quality of our lives that might be called Gross National Humanity. It would measure what we have preserved as well a what we have polluted, our compassion no less than our competitiveness, our concern for the poor and unfortunate as well as our acquisition of goods, our green belts of nature's peace as well as our lanes of motorized cacophony.

It would put a value on the product of a village cricket pitch and village pub, as well as on the output of a smoking factory and a screaming discotheque. It would rate the continuity of centuries of nothing much achieved but that which earlier, less greedy generations began. It would evaluate the prospects of social stability, human fellowship, human freedoms.

An economy needs an ethos and economic science must revert to political economy. Gross national humanity would be a sensible and sensitive computation of the value-judgments of political economy. It would not limit itself to the computerized aridity of input-output programming. It would be a measure of the Just Society.

[∗]Uitlander translates from Afrikaans as foreigner and boer as indigenous countryman. The Anglo-Boer War of 1899 or Second Freedom War, as Afrikaans historians prefer to call it, in emotive symbolism was between the uitlanders and the boers.

[∗]See the author's Political Economy of South Africa (Weidenfeld and Nicolson; Praeger 1967)