How do markets optimise the delivery of social services and social welfare? This question surfaces many of the challenges for the Austrian School, the philosophy that free markets and the price mechanism can do a remarkable job in managing people and their behaviour. While initially Friedrich Hayek’s theorising argued that the role of the State should be minimal, he ultimately conceded that some State regulation was required in order to maintain markets, and some other functions. For example, ‘[t]o prohibit the use of certain poisonous substances, or to require special precautions in their use, to limit working hours or to require certain sanitary arrangements, is fully compatible with the preservation of competition. The only question here is whether in the particular instance the advantages gained are greater than the social costs they impose.’ (The Road to Serfdom, p.38/9) The ultimate question of Hayekian liberalism is how much does the government have to interfere? What is the minimum possible function of government?
Property, and – as philosophers might refer to it – the claim to possession and ownership of externalities, has long been a source of some disquiet. Jean Jacques Rousseau in the Second Discourse (The Discourse on Inequality) begins the second part with the dramatic opening line ‘[t]he first man who, having enclosed a piece of ground, bethought himself of saying This is mine, and found people simple enough to believe him, was the real founder of civil society.’ Plato before him and Marx later both advocated collectivisation, but Rousseau was no communist. The reality of what man had become made such reconstruction impractical. Yet the concept of property has led to inequalities that threaten capitalist society. Slavoj Zizek suggested that ‘…today’s global capitalism [may] contain antagonisms which are sufficiently strong to prevent its indefinite reproduction…’ including what he called ‘…the inappropriateness of private property…‘ especially intellectual property. Rousseau’s prescription was The Social Contract, and the abstraction of the General Will, an investiture of political legitimacy in the sovereign.