Inequalities, Impersonality, and Design
On the Justification of Inequalities in the Open Society
A typical feature that is singled out in characterizations of the “open society” or the “great society” is its impersonal nature. Karl Popper characterizes the relationships taking place in the open society as “abstract” and “depersonalized”:
“As a consequence of its loss of organic character, an open society may become, by degrees, what I should like to term an ‘abstract society.’ It may, to a considerable extent, lose the character of a concrete or real group of men, or of a system of such real groups. This point which has been rarely understood may be explained by way of an exaggeration. We could conceive of a society in which men practically never meet face to face – in which all business is conducted by individuals in isolation who communicate by typed letters or by telegrams, and who go about in closed motor-cars. Such a fictitious society might be called a ‘completely abstract or depersonalized society.’ Now, the interesting point is that our modern society resembles in many of its aspects such a completely abstract society. Although we do not always drive alone in close motor cars (but meet face to face thousands of men walking past us in the street) the result is very nearly the same as if we did – we do not establish as a rule any personal relation with our fellow-pedestrians. Similarly, membership of a trade union may mean no more than the possession of a membership card and the payment of a contribution to an unknown secretary. There are many people living in a modern society who live in anonymity and isolation, and consequently, unhappiness.”[1]
This seventy-year-old characterization of modern societies surely applies with even more force today. A common explanation for all the things that are going wrong nowadays is that people are living socially isolated and therefore impoverished lives, a tendency largely strengthened by the development of social networks. In his account of the “great society,” Friedrich Hayek links this abstract and impersonal character to the fact that it consists mainly of a network of “economic relations”:
“It is of course true that within the overall framework of the Great Society there exist numerous networks of other relations that are in no sense economic. But this does not alter the fact that it is the market order which makes peaceful reconciliation of the divergent purposes possible – and possible by a process which redounds to the benefit of all. That interdependence of all men, which is now in everybody’s mouth and which tends to make all mankind One World, not only is the effect of the market order but could not have been brought by any other means. What today connects the life of any European or American with what happens in Australia, Japan or Zaire are repercussions transmitted by the network of market relations.”[2]
A few lines below, Hayek remarks that the fact that the Great Society is predominantly made of economic relations doesn’t mean that only “economic ends” are relevant in this society. Economic relations are essentially means to pursue a plurality of ends that are not “economic” in any meaningful sense – indeed, Hayek argues that there is nothing such as “economic ends.” What the market order provides is a mechanism and a metric (prices) to make tradeoffs between competing ends. Hayek’s account of the great society as essentially economic in this sense could nonetheless be criticized from a Weberian perspective. The impersonality of social relationships in modern societies is not only due to the constitutive role of the market order but also to the predominance of the bureaucratic organization and the institutionalization of the rational-legal form of authority that grounds it. The market order and bureaucracy combine to favor the development of social relations where individuals do not directly interact together, or more exactly interact without needing to know others’ identities and communicate with them. What is true however is that while the scope of bureaucracy is limited to the relations that fall within the coercive authority of the state, the impersonality that results from the development of economic relations is mostly untied to administrative or political borders.
Popper and Hayek, as well as Weber for that matter, are well aware that the abstract and impersonal nature of the open society does not come without a cost. It tends to make people “unhappy” because it weakens personal ties related to one’s membership in a clan, a tribe, or a community. It undermines beliefs in magical or mystical forces as well as traditional forms of authority based on them. It demands individuals to submit to rules they don’t fully understand the rationale as these rules are supposed to guide them in a world whose complexity makes it well beyond a human mind’s comprehension. What emerges from this analysis of the nature of the open society is that individuals are faced with two possibilities. Either they accommodate the complexity of the open society and learn to accept the implications of submitting to the rational, legal, and impersonal form of authority that grounds its functioning. Or they rebel against it and endorse traditional forms of authority, sticking to “nonrational” beliefs and, eventually, adhere to a religious or political cult built around the charisma of some persons or organizations promising to protect communities from the devastations caused by the impersonality of the open society.
This last interpretation is, I think, a better reading of Hayek-like theses such as the one Hayek exposes in The Road to Serfdom.[3] The latter is often summarized by the “slippery slope” argument: once the state is allowed to interfere with individuals’ private affairs, there is nothing to stop it from gaining more and more influence until becoming totalitarian. That makes Hayek’s account appear wrong in light of the 70 years that have passed since the publication of the book. When you read Hayek’s book closely, however, what you find is not so much the idea that state intervention places the free society on a slippery slope toward totalitarianism but rather the claim that there are only two social orders that correspond to stable equilibria. On the one hand, there is the commercial and individualist order that corresponds to the open society, on the other hand, we find the organizational and collectivist order that is modeled based on the template of the militarist form of organization. The former does not imply that the state cannot intervene – quite contrary, but what Hayek denies is that there is a middle ground between the impersonal nature of the open society and the personal, hierarchical, and organizationally planned structure of authoritarian/totalitarian societies.[4]
In this context, there is one very interesting claim that Hayek makes in The Road to Serfdom regarding the origins of economic inequalities that is relevant to assessing the merits and the acceptability of the open society. Hayek affirms that inequalities are less difficult to support when they are due to impersonal forces that when they result from the decisions of a small number of persons:
“Inequality is undoubtedly more readily borne, and affects the dignity of the person much less, if it is determined by impersonal forces that when it is due to design. In a competitive society it is no slight to a person, no offense to his dignity, to be told by any particular firm that it has no need for his services or that it cannot offer him a better job… the unemployment or the loss of income which will affect some in any society is certainly less degrading if it is the result of misfortune and not deliberately imposed by the authority… While people will submit to suffering which may hit anyone, they will not so easily submit to suffering which is the result of the decision of authority. It may be bad to be just a cog in an impersonal machine; but it is infinitely worse if we can no longer leave it, if we are tied to our place and to the superiors who have been chosen for us.”[5]
So, the claim is that the impersonal causes of inequality make it easier to accept than if it results from the will of some authority. That sounds plausible with nonetheless some caveats. The question is whether or not the authority is perceived as legitimate by the individuals who are burdened by inequalities. For suppose that inequalities are due (or perceived to be due) to sovereign decisions made by some political authority. There are at least two cases where we can expect that individuals could accept these inequalities as being justified: (i) These inequalities contribute to the common good; (ii) These inequalities result from the popular choice. If the authority is viewed as legitimate either because it pursues what is considered the common good or because its choices are viewed as the emanation of the general will, it is not clear that the inequalities that result from its decisions will be perceived as affecting the “dignity of the person.” This is the point indeed: in a collectivist society, the very sources of dignity may be found elsewhere than in the respect of persons-qua-persons.
Moreover, casual observation suggests that very few people content themselves with impersonal explanations for economic inequalities. Even though it is technically true that within the market order, the causes for inequalities are many and so tightly entangled that it makes hardly any sense to try to tie them to individual decisions, many individuals will look for a broader narrative that more or less arbitrarily identifies specific causes. It becomes then possible to go backward in the causal chain until one finds a specific person or group of persons that is responsible for the economic situation. This is precisely the problem: most of the time, this causal backward induction will end up with decisions made by authorities that are not perceived as legitimate, e.g., big companies or “corrupt” elites. Whether this is true or not is not really relevant, as long as these are what people perceive and believe that determine whether or not they accept the social order.
Hayek is fundamentally right that within an individualist social order, the impersonal nature of the open society makes economic inequalities easier to accept and justify. But this is relevant only as long as individualism is widely shared in the population and people do not isolate causes that find their origins in the decisions of economic actors that are perceived as politically illegitimate.
[1] Karl Popper, The Open Society and Its Enemies, 7th edition (Routledge, 1945 [2012]), p. 165-6.
[2] F. A. Hayek, Law, Legislation and Liberty, Volume 2: The Mirage of Social Justice (Chicago: University of Chicago Press, 1978), p. 112-3.
[3] F. A. Hayek, The Road to Serfdom: Text And Documents--The Definitive Edition, New edition (Chicago: University of Chicago Press, 1944 [2007]).
[4] Caldwell and Klausinger are making the same point in their biography. See Bruce Caldwell and Hansjoerg Klausinger, Hayek: A Life, 1899–1950 (University of Chicago Press, 2022) empl. 10089 in the Kindle edition.
[5] Hayek, The Road to Serfdom, p. 137-8.
"The slippery slope" and "there are only two stable equilibria" are different versions of the same claim.
If you think in terms of optimization theory, this ought to be obvious. Picture the energy required to maintain the system as an inverse U. The system always returns to one end or the other. If a shock moves it far from the good equilibrium at one end, it will inexorably slide to the bad equilibirum unless some new shock reverses the first one.