Abstract
The present paper is concerned with the nexus between the different dimensions of liberty, public policies, and the market mechanism. We argue that in order to evaluate the performance of the market mechanism in promoting freedom comprehensively, both the opportunity and the process aspect of liberty must be taken into consideration. Depending on where the emphasis is laid, the achievements of the market mechanism and market interventions through government action in promoting liberty appear in a different light. Two authors have developed encompassing concepts of liberty that can be applied for such a purpose: Isaiah Berlin and F. A. von Hayek. We analyse where Berlin and Hayek are in disagreement and discuss how their different views result in directly conflicting policy preferences.
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Notes
Henceforth abbreviated “TCL” and “CL”. We also draw partially on and extend an earlier article on the concepts of liberty of Berlin and Hayek (Groß and Pitsoulis 2009).
Education or school vouchers were first proposed by Friedman (1955) as a tool to increase choice and school quality by subsidizing consumers of education services and introducing competition between schools.
Of course in both examples things are more complicated, as there are also positive externalities involved, like the neighborhood effects of unsegregated education and the network effects of health insurance. An analysis of the interrelated externalities in our two examples would be a fruitful undertaking but is beyond the scope of this paper.
For a further discussion of Hayek’s alleged conservatism see Gray (2009).
In our view this is a case where we cannot speak of actions of an agent at all because the very agent becomes only an extension of another agent’s actions. In this case most people would probably agree that liberty does not exist.
We will take up this point again later.
We are indebted to an anonymous reviewer for a clarification of this point. However, as we have said earlier, the judgment depends on the conception of liberty. For example in the case of goods that have the potential to cause addiction someone who regards process-liberty as important may argue that reducing the needs for such things may actually increase overall liberty.
On this see also Hayek (1948).
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Acknowledgments
The authors are indebted to James Forder, Henry Hardy, Serena Moore, Mark Pottle as well as Viktor Vanberg and participants in the 7th Freiburg Workshop on Law and Economics for helpful comments. We would also like to thank the Isaiah Berlin Literary Trust at Wolfson College, Oxford, for the kind permission to use the literary estate of Isaiah Berlin. His writings have been a powerful source of inspiration to us. Last but not least our work greatly profited from the comments and suggestions of two anonymous reviewers. All remaining errors are, of course, our own.
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Pitsoulis, A., Groß, S.W. “The other side of the argument”: Isaiah Berlin versus F. A. von Hayek on liberty, public policies, and the market. Const Polit Econ 26, 475–494 (2015). https://doi.org/10.1007/s10602-015-9193-3
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DOI: https://doi.org/10.1007/s10602-015-9193-3