Thursday, May 19, 2011

Part 4 - Position Paper

Individualistic Thought and the Potential for Equality

      Friedrich von Hayek was a loyal classical liberal, believing strongly in such concepts as a free-market economy, economic freedom and self-interest, while also strongly opposing the possibility of socialism in politics, as well as collectivist thought altogether. With the quotation provided in the source, von Hayek emphasizes his ideals in that the concepts of socialism cannot provide society with a true form of equality, due to the fact that even when the people will not follow through on the concepts of liberalism like self-interest and economic freedom, the governing power will take their place. Through this, an “enforced equality” will always present itself. I believe that even though there is logic to von Hayek’s words, there is a limit to the extent to which his ideals would benefit society without being blended the principles of collectivism that help form the overall ideals of modern liberalism. Taking von Hayek’s concept into consideration, prosperity becomes a possibility, but only at the cost of leaving others behind.

      The concept of economic freedom is a critical component in von Hayek’s argument, especially through his statement, “authoritarian determination of status of each individual in the new hierarchical order”. With this quotation, he explains that even with the concept of having a Government in control of the economical ranking and placement of individuals, there will always be a form of segregation between people in regards to their economic placement, or rank in society. Due to this imbalance, socialism becomes an unlikely fix for a gap between the social and economical classes. There will always be individuals with the desire to make their own lives better, and to move up in society into greater economic prosperity. I can agree with von Hayek in the sense that the possibility of having all individuals in a society maintaining the same economical status is very unlikely. Although strict economic freedom provides the opportunity for anybody to improve their own quality of life, the flaw with that ideal is that people with less means to success may result in a poorer quality of life. To fix this, a more complete and thorough plan must be implemented, such as bringing modern liberalism into effect instead. Then, von Hayek’s ideals on economic freedom are still kept in tact, while other principles such as welfare capitalism can create a safety net for those who are less prosperous, using specific things like minimum wage, unemployment benefits, and other things to ensure that everybody is given a chance at success.

      Going hand-in-hand with economic freedom is the principle of self-interest, and Friedrich von Hayek stands firm in his belief that self-interest is simply how the economy exists. Being a supporter of free-market economics, he believes that the economy is fuelled by self-interest. Keeping this in mind, von Hayek also expresses that equality cannot be achieved, even with a government-directed economy, due to the fact that it “can only result in an officially enforced inequality”. This means that an extra driving force or form of bias will always arise, resulting in the individual temptation to break free from the lower ranks of other groups of people. I believe that these aspects of Friedrich von Hayek’s ideals are reasonable, considering the materialistic desires of the majority of individuals even to this day. However, without even partial government intervention, the economy becomes completely at the mercy of the entire society; when the people suffer, so does the economy. During the Great Depression, the economy was being maintained with a free-market system, although the people had no spending money to continue stimulating the economy itself, resulting in the American market plummeting. The fact that the economy ends up being completely reliant on the constant fluctuation of spending patterns by the people creates the consistent chance for another crash like the Great Depression. This is why, despite the free-market’s positive aspects, I believe that the governing power should at least have the power to implement some form of defence against the possibility of another recession. This way, communities and individuals can still indulge in their own desires and interests, while still having confidence that their entire economy will not collapse overnight.

      Though Friedrich von Hayek brings forth realistic and sensible ideas to promote a more successful economy, his ideals provided in the source seem like a half-constructed plan. His promotion of the individualistic-based principles of Liberalism create the possibility for success, but the lack of collectivist ideals create an even greater possibility to form a margin between the successful and the individuals who fall back into economic deficit. Even with the concept of economic freedom, the possibility of everybody benefitting is a large stretch, which is why concepts like welfare state make up for its shortcomings. Also, in regards to self-interest and free-market economics, the relentless fluctuation from strength to weakness in a country’s finance brings forth a much more fragile economy altogether without a safety net to play a supportive role during difficult times. Therefore, though we may be able to agree with and acknowledge the principles that von Hayek presents as understandable and insightful, and even though a society built on a foundation of equality is unlikely, a comfortable zone in between the two extremes is, in my opinion, the greatest likelihood for prosperity to benefit the everyday individual, as well as the overall society.

1 comment:

  1. Thoughtful, at times insightful, argument. The principles introduced by the source are analysed adeptly in the body of the argument, and the Great Depression is applied appropriately. Specific principles of Keynesian economics are identified as well, though neither Keynes or a Mixed economy are clearly referenced.