Saturday, March 2, 2013

Hayek on the Moral Ambiguity of Free Market Meritocracy.

Hayek on the moral ambiguity of free market meritocracy. From Friedrich A. Hayek, Law, Legislation and Liberty, Volume 2: The Mirage of Social Justice (Chicago: University of Chicago Press, 1976), p. 74.

The Fable of Market Meritocracy. By Shikha Dalmia. Forbes, February 10, 2010.

The Reality of Meritocracy. By Bryan Caplan. Library of Economics and Liberty, February 11, 2010.

Merit and the Market: A Reply from Shikha Dalmia. By Bryan Caplan. Library of Economics and Liberty, February 16, 2010.

More on Merit: A Reply to Dalmia. By Bryan Caplan. Library of Economics and Liberty, February 17, 2010.


It is unquestionably true that, particularly among those who were very successful in the market order, a belief in a much stronger moral justification of individual success developed, and that, long after the basic principles of such an order had been fully elaborated and approved by catholic moral philosophers, it had in the Anglo-Saxon world received strong support from Calvinist teaching. It certainly is important in the market order (or free enterprise society, misleadingly called “capitalism”) that the individuals believe that their well-being depends primarily on their own efforts and decisions. Indeed, few circumstances will do more to make a person energetic and efficient than the belief that it depends chiefly on him whether he will reach the goals he has set for himself. For this reason this belief is often encouraged by education and governing opinion—it seems to me, generally much to the benefit of most of the members of the society in which it prevails, who will owe many important material and moral improvements to persons guided by it. But it leads no doubt also to an exaggerated confidence in the truth of this generalization which to those who regard themselves (and perhaps are) equally able but have failed must appear as a bitter irony and severe provocation.

It is probably a misfortune that, especially in the USA, popular writers like Samuel Smiles and Horatio Alger, and later the sociologist W. G. Sumner, have defended free enterprise on the ground that it regularly rewards the deserving, and it bodes ill for the future of the market order that this seems to have become the only defense of it which is understood by the general public. That it has largely become the basis of the self-esteem of the businessman often gives him an air of self-righteousness which does not make him more popular.

It is therefore a real dilemma to what extent we ought to encourage in the young the belief that when they really try they will succeed, or should rather emphasize that inevitably some unworthy will succeed and some worthy fail—whether we ought to allow the views of those groups to prevail with whom the over-confidence in the appropriate reward of the able and industrious is strong and who in consequence will do much that benefits the rest, and whether without such partly erroneous beliefs the large numbers will tolerate actual differences in rewards which will be based only partly on achievement and partly on mere chance.