Maneuvering in the Messy Mixed Economy

Friedrich Hayek argued that only action can be just or unjust. So, when the famous Austrian playwright and novelist Ödön von Horváth was promenading on the Champs-Élysées during a thunderstorm and was hit—and ultimately killed—by a bough of some tree, we cannot speak of injustice. The tree did not intend to kill him; it just happened.

But Hayek’s view that justice only meaningfully applies to actions has further (and perhaps more important) implications. It also implies that the income and wealth patterns in a pure market economy are neither just nor unjust. While it certainly can be just or unjust how two people in the market economy interact, the specific order resulting from the interaction of millions of people is neither just nor unjust. As nobody plans the overall order (there is no action, no guiding will behind it), it is beyond justice.

Today’s economies are mixed systems. In these systems, there is generally a free market process. Therefore, generally, the specific order that emerges is beyond justice. However, governments do intervene, that is, they, relying on coercion, interfere with people’s free actions. While perhaps not all, some interventions are intended to shape the income and wealth patterns in society. And to the degree that these interventions then impact the overall pattern of wealth in society, justice becomes applicable: how the government shapes these patterns can be just or unjust. For instance, governments tax inheritances with the purpose of preventing rising inequality, or they bail out ailing banks (as occurred after the 2008 crisis).

You need not find this problematic per se. Perhaps there are good reasons for the interventions. However, even if generally fine, it is only unproblematic if all government interventions are actually just.

As soon as some government interventions are unjust, however, a delicate situation emerges, because then we have an income and wealth pattern that is partly the result of unjust actions and that can thus be partly called just or unjust. To make this clear, if in a pure market economy you are poor or lose your job, you are just like Ödön von Horváth. You may be angry with your fate, but you haven’t been treated unjustly. But if you are poor or lose your job in a mixed economy, this may be (partly) the result of governmental action, that is, government’s unjust coercion-based actions. But then you may have justified claims to governmental action in order to retribute the prior injustice. And perhaps more. In Sanford Ikeda’s words, “once the redistributive intervention takes place, those who lose as a result now have a legitimate and identifiable target, i.e., the central authority and its supporters, to blame.”

If this reasoning is correct, our evaluation of numerous actions of citizens within the mixed economy becomes very difficult, if not impossible. It’s a mess! For instance, if the bakery around the corner evades taxes, is this unjust? (That it is illegal is surely the case, but legality is not morality.) Once you acknowledge that the government has erected an insidiously complex regulatory regime that favours big companies who, with their lawyers and consultants, are better able to manoeuvre the mixed economy, it is no longer possible to pronounce a clear verdict. But also when we examine the actions of big players such as Apple it soon becomes evident that it is really difficult to find a good vantage point from whence to judge their actions, including attempts to capture regulation. For they may also be victims of unjust government intervention—a point in case is probably the EU Commission’s decision to punish Apple for allegedly exploiting its power in the music streaming business.

In the imperfect mixed economy, then, people and companies who evade taxes, who violate the law, who implement schemes to circumvent government interventions, may even have the moral high ground. They may be justified to do illegal stuff. And they may be justified to capture regulation or even fight for new regulation that favours their industry. I am not saying that they are justified. These are moral questions and these, if they have definite answers at all, surely require detailed and intricate analysis of each specific case.

But what is evident is that in an interventionist society, things really get messy and murky. It is not clear that those who do stuff that would definitely be reprehensible in the pure market economy, act reprehensibly in the mixed economy.

Max Molden is a PhD student at the University of Hamburg. He has worked with European Students for Liberty and Prometheus – Das Freiheitsinstitut. He regularly publishes at Der Freydenker.