Hayek separates, in his Constitution of Liberty, value from merit. Value is the worth of a good or service for that community (set, in Hayek’s free market world, by that community), and merit is the moral worth of an action. It doesn’t matter whether I have packed a loaf of bread beautifully or just adequately: the value of the packed loaf of bread will be the same, and I will get the same wage as the perfectionist beside me. Companies that produce things people don’t want will not make as much money as companies that produce things people do want, even though they may be wonderful employers.
Hayek says that “in a free system it is neither desirable nor practicable that material rewards should be made generally to correspond to what men recognize as merit and that it is an essential characteristic of a free society that an individual’s position should not necessarily depend on the views that his fellows hold about the merit he has acquired.” Freedom, or liberty, comes from the markets sorting out value, not on someone or collection of people in government deciding on what jobs or products or whatever are morally meritorious – for that gives them the power of value-judgement, and it’s but a short step to totalitarianism.
Furthermore, Hayek argues, attempts to equalise society based on merit, or to insist that “all must be assured an equal start and the same prospects”, are based on envy (and here he dismisses Crosland’s Future of Socialism).
Finally, Hayek discusses “another argument on which the demands for a more equal distribution are frequently based”: “membership in a particular community or nation entitles the individual to a particular material standard that is determined by the general wealth of the group to which he belongs.” As there is no merit in being born into a society, group or class, there is no justice in being rewarded thus. Being poor in Britain is very different to being poor in Sierra Leone – and “few people would be prepared to recognize the justice of these demands on a world scale.” Of course, he says, we should protect our citizens against the risks of life (infirmity etc), but “it is an entirely different matter, however, to suggest that those who are poor, merely in the sense that there are those in the same community who are richer, are entitle to a share in the wealth of the latter”. (He goes on to say that “rather than admit people to the advantages that living in their country offers, a nation will prefer to keep them out altogether” – prescient, but a subject for another post.)
For someone who sits on the fence between liberalism and socialism, these arguments provide much food for thought. I often wonder at the wealth of bankers, or of top accountants or CEOs, especially in relation to the relative un-wealth of teachers or nurses. According to an article by the Independent a couple of years ago, “the best paid full-time workers are all in the City of London, where average earnings were £921 a week. That’s nearly two-and-a-half times more than the lowest average UK wage of £389 in Derbyshire.” Now, the markets dictate that someone who gambles on derivatives is of more value than someone who picks peas. The liberal in me shrugs and says, ‘while that’s not the relative value I’d place on these, being a liberal means letting things happen, and not imposing one’s own value-judgements, for what we need is liberty over everything, even equality’.
But value is a funny thing. We see things in terms of monetary value; Hayek himself was an economist who believed that liberty sprang from economic liberalism. However, it’s more and more clear that our pursuit of monetary profit and gain is destroying the world: our consumerism is environmentally deleterious. The CEOs of multi-national mining or petrochemical firms are raking it in while their companies rape the earth; their ill-gotten gains are spent on cars and foreign holidays and all the material things that it behoves rich people to have. The markets are geared towards consumerism and a growth economy, but these are, in the long-run, unsustainable: the values of today will have, at some point, to change.
And I am not sure that one can separate value and merit quite so finally, and that redistribution of wealth is based on envy. To take the latter first, redistribution of wealth perhaps recognises that the value put on things by the markets are not necessarily the value put on things by society – the value, not the wealth. Let us take a CEO, on £100K a year. His (for he is probably a he) mother, whom he loves, and who gave him his unmeritoriously fine and privileged start in life, is infirm and in a nursing home. She is cared for by a female carer (of African origin) who earns £10K a year. The value to the CEO – or his company – of the carer is immense: his looking after his mother would, on his estimated hourly rate, cost £50 rather than the £5-an-hour paid to Flora the carer. He might argue that his salary is because he generates lots of wealth, but surely we have to question what that wealth is for. If it is for providing us, individually, with a nice life, then surely carers ought to be rewarded for providing us with care which affects us profoundly, but which we are loath to think about because the healthy never do want to contemplate being unhealthy, as the living rarely contemplate dying. Following Hayek’s argument, the carer has a job worthy of merit, but not of value. However, perhaps we’ve got value wrong: perhaps it cannot be just up to the markets to establish value, and perhaps the setting-aside of value-judgements by liberals is itself a value-based judgement.
Is it possible to be an environmentally-friendly liberal? Possibly not, in that putting the environment first necessarily means curbing some of our consumerist freedoms. But can we not have a ‘green’ framework, just as now we have a free(ish) market framework? If we placed environmental value on things, then mining would decrease, travelling would decrease, consumerism would decrease. It’s an interesting world to consider, but probably far too frightening for most people to do so.
(By the way, there’s an excellent radio article on the value and merit of CEOs here.)