“Since it has been argued so far that an essentially liberal economic regime is a necessary condition for the success of any interstate federation, it may be added, in conclusion, that the converse is no less true: the abrogation of national sovereignties and the creation of an effective international order of law is a necessary complement and the logical consummation of the liberal programme.”~ Friedrich Hayek, from his essay 'Insterstate Federalism,' collected in Individualism and the Economic Order [hat tip Branden Christensen]
Friday, 8 April 2022
"...an effective international order of law is a necessary complement and the logical consummation of the liberal programme.”
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Peter, how do you reconcile what Hayek wrote with what Ayn Rand wrote: "A free nation—a nation that recognizes, respects and protects the individual rights of its citizens—has a right to its territorial integrity, its social system and its form of government ... Such a nation has a right to its sovereignty (derived from the rights of its citizens) and a right to demand that its sovereignty be respected by all other nations."?
“Collectivized ‘Rights,’”
The Virtue of Selfishness, 103
Surely the logical consummation of the liberal programme is not to abrogate national sovereignties, but to have any number of them, all free?
I guess they’re reconciled, if at all, by recognising they’re talking about different contexts.
Rand is talking about a nation in which its citizens rights are already fully respected, and economic and personal freedom is protected by law. Whereas Hayek is talking about how to move towards more economic freedom at a time when the trend is in the opposite direction.
Indeed, Hayek is writing in 1939, when most nations are entirely opposed to anyone being free at all. Since the trend was towards more government interference, not less, he posited that an overarching federalism (somewhat in the way Austro-Hungary worked) might be a way of ‘implementing rights from above’ — even when nations’ leaders and luminaries are opposed.
The post-war example, which Hayek possibly inspired, is in the way supra-national agreements/organisations like GATT and the WTO oversaw and inspired the post-war growth in free(ish) trade even between unfree nations, that often happened in the teeth of local opposition.
Thinking ahead (in 1939) to how such a supra-national organisation might continue increasing economic freedom against such opposition, he posited the emergence of a federal arrangement that would help to reduce the political power of freedom’s opponents; in this way, ‘abrogating’ the sovereignty of unfree nations in the name of increasing the freedom between (and within) those nations.
PS: for the fullest context, you can read Hayek's whole piece here, beginning like so:
IT IS rightly regarded as one of the great advantages of interstate federation that it would do away with the impediments as to the movement of men, goods, and capital between the states and that it would render possible the creation of common rules of law, a uniform monetary system, and common control of communications. The material benefits that would spring from the creation of so large an economic area can hardly be overestimated, and it appears to be taken for granted that economic union and political union would be combined as a matter of course. But, since it will have to be argued here that the establishment of economic union will set very definite limitations to the realization of widely cherished ambitions, we must begin by showing why the abolition of economic barriers between the members of the federation is not only a welcome concomitant but also an indispensable condition for the achievement of the main purpose of federation.
Unquestionably, the main purpose of interstate federation is to secure peace: to prevent war between the parts of the federation by eliminating causes of friction between them and by providing effective machinery for the settlement of any disputes which may arise between them and to prevent war between the federation and any independent states by making the former so strong as to eliminate any danger of attack from without. If this aim could be achieved by mere political union not extended to the economic sphere, many would probably be content to halt at the creation of a common government for the purpose of defense and the conduct of a common foreign policy, when a more far-reaching unification might impede the achievement of other ideals.
There are, however, very good reasons why all plans for interstate federation include economic union and even regard it as one of its main objectives...
Thanks for the explanation. I have read the whole article now. Too much talk of "the Union and not its parts must be responsible for all decisions which will harm or benefit other countries" and "monetary or colonial policy which will, of course, continue to exist in a federation" to convince me that Hayek's idea is compatible with true freedom.
PS, to be clear, your explanation was a good one. It does make sense of Hayek's statement, even if I cannot see how his federation concept, as he has described it, is the best solution to achieve liberty.
Horses for courses. The obvious example of federation leading to more freedom was 19th century Europe, where the amalgamation of a plethora of separate principalities and city-states into larger national units was an essential mechanism for widespread free trade. When the federation is moving in the opposite direction towards more hampering bureaucracy, arguably the European Union of late, freedom may be best be secured by breaking away as in the case of Brexit.
I suppose it is like with all relationships: it is healthy if it makes you a better person, or in the case of a nation federating, a freer nation. But also like with all relationships, if the person you are getting involved with turns out to be a psycho, it may not be worth it if the benefits are short lived, as in the case of a nation that has federated finding itself at war if it tries to break away.
That’s not a bad analogy Terry, but I will suggest an improvement. It’s not a matter of whether your partner is a psycho or not, it’s whether you are both benefiting each other at the stage of life you’re both at, and the direction you both want to head. Same goes for countries. At one stage you’re both heading in a similar direction and it’s complimentary. Later on your other has turned a different direction, or maybe just stayed the same whilst you’ve headed somewhere else. That doesn’t mean it was wrong to get together in the first place, or that they’re a psycho, it’s just whether a relationship that used to bring mutual benefits still does or not. It can go the other way too. Relationships that in earlier years you would have shunned can acquire new found benefit because either you or them have changed.
Mark, I will stick with my analogy. It *does* matter whether your partner is a psycho or not. If war and possibly annihilation is the price to pay for a bit of extra breathing space or self-improvement (that could have been gotten by oneself or with someone else), then I say the relationship is not worth it. Where we can agree is that the merits of federating should be judged based on facts at hand, which includes the principles held by those who are federating, and the likelihood of them turning to war if they do not get their way.
Of course it matters if your partner is a psycho or not. Goes without saying. I'm saying the decision to stay or go (in a relationship or federation) doesn't rely on such a high bar as the other party being a psycho, but whether your rational self interests are aligned or not. Needing to conclude that someone is a psycho is an extreme position to reach before action is taken to go. Likewise, not being a psycho is an insufficient reason to stay.
Now that you have corrected your earlier statement, I agree.
Now that you have clarified your prior statement ("It’s not a matter of whether your partner is a psycho or not" to "Of course it matters if your partner is a psycho or not. Goes without saying"), I agree with you.
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