 In this paper I propose accordingly to examine one or two conservative or socialist arguments against the market order. Not in terms of arguments, not in terms of efficiency but other values which it is alleged its supporters cannot take into account. I will do this with special reference to Hegel, the German philosopher, as he seems to inspire many contemporary non-Marxian critics of capitalism. The problem with the market order with capitalism as perceived by Hegelians is this. If society is to be legitimate, there has to be universality, as Hegel said. In other words, a sense of citizenship or people identifying with the state. But in capitalism, or as Hegel called it, civil society, there is only particularity. Human relationships are based on serve interest, on the mutual fulfilling of needs, not on any common identity. Civil society is a society of strengths. Thus a sense of loss or alienation is created, some members of the community do not feel as its members. They experience the community as something external and incomprehensible. There is, therefore, a conflict between what Atta Smith called the commercial spirit and ethical community in which man can fulfill his role as man. It is a conflict between civil society and the state, which can only be overcome by Hegelian afhebung of civil society into the state. Translated into modern terms, this means an interventionist state, the welfare state, correcting the outcomes of the blind play of the market forces. Hegel thought that the unhumpered free market had two undesirable consequences. In the first place, the individual was deprived of the intellectual development, which was only possible within a community. Hegel agreed, then, with Arthur Ferguson and Atta Smith, that the divisional labor, although on the whole beneficial, had some undesirable social consequences, which again meant that the legitimacy of the liberal order was inherently questionable. Hence, modern Hegelian's argument, despite the affluence of contemporary capitalist states, they are seating with discontent. Space doesn't permit us to provide an adequate response to this argument. It does not, however, appear as convincing now as ten or fifteen years ago, when the new left was in fashion. Let me, however, note four points about this particular argument. First, the problem seems to be somewhat exaggerated. The intellectual development offered to the common man in pre-capitalist society was not very great indeed. Second, if the liberal order lacks legitimacy, why do people everywhere try to move from less to more liberal societies? They go from Mexico to the United States, from East Germany to West Germany and from China to Hong Kong, not the other way around. Third, the discontented group in our societies does not consist as much of ordinary citizens as intellectuals who cannot easily find a market for their services. It is not the alienation which they describe in such detail, their own alienation. Fourth, and this is the point to which I will return later in this paper, civil society may be able itself, within itself, to generate the identification, fellow feeling and social monitoring which may be necessary for its maintenance. This it may achieve through voluntary associations, different communities, churches, localities and the like. Hence the tension between liberty and stability seen or envisioned by many socialists and conservatives may not exist. The other undesirable consequence of the unhumped market according to Hegel was that the individual became prey of blind and uncontrolled market forces in all their unpredictability and uncertainty. All the production forced people into poverty, turning them into a rappel of purpose, as Hegel said, creating alienation again. Hegel wrote, this inner dialectic of civil society thus drives it, or at any rate drives a specific civil society to push beyond its own limits and seek markets and so its necessary means of subsistence, in other lands which are either deficient in the goods it has overproduced or else generally backward in industry. For Hegel, as Michael Oakeshott has remarked, poverty is the counterpart of modern wealth rather than a sign of personal inadequacy. Hegel was of course well aware of the fact that poverty had existed before capitalism and he was familiar with the classical economists' argument that capitalism created wealth, not poverty. His thesis was rather that in the context of progressive society the existence of poverty was a social problem whereas in pre-capitalist society it might have been an individual problem. Poverty was relative rather than absolute. It was the position which the poor occupied in society. By their membership in a progressive society the poor had come to form certain expectations which were legitimate, Hegel believed, but which were not fulfilled. In this paper I will concentrate on this particular Hegelian argument so often made both by conservatives and socialists. Now what is the argument? First, there is the idea of poverty as relative deprivation which has to be relieved by the state. Second, we have the notion that socially generated expectations are legitimate and that the state has therefore to step in and to fulfill those expectations. The inner dialectic of civil society consists then, as I understand Hegel and his followers, in its creation of needs which it is not able to satisfy so it is pushed beyond its own limits. The liberal state, the state as confined to civil society is not enough. It is in the Hegelian scheme almost a contradiction in terms. Underlying the argument there is a conception of man as a being who can only capture his essence in the state as a member of the Hegelian community a community of shared ideals and ends. Man is free only in so far as he is a member of such a community participating in what Hegel called its Zittlikite. As a citizen of the state he has duties towards his fellow citizens but he has also rights against them which transcend the contractual rights of civil society. The welfare state and the recognition of social justice is therefore rational indeed inescapable. Hegel's arguments have, as I just said, recently been restated by communitarian critics of liberalism. On the right, Dr. Rotsius Gríton, Prof. Ervin Kristol and Sir Ian Gilmar accuse Hayek and other liberals of endorsing the uncertainty which can only see the bonds of loyalty between individuals and society. The income has to have crystal contents a meaningful moral content otherwise it would always be seen as illegitimate. On the left, Prof. Charles Taylor, Prof. Raymond Plante and others argue that liberals have an impoverished notion of human beings perceiving them as utilitarian maximizers and calculators and therefore being unable to provide a satisfactory theory of their loyalty to society. Let me try to respond to this common Hegelian argument on three levels historical, philosophical and economic. On the historical level, liberals can question the claim that pauperisation was a consequence of capitalism. In the early 1950s, a meeting of the Montpellian society was devoted to the treatment of capitalism by historians, some of the papers being published in a remarkable book in 1945, 54, Capitalism and the Historians. There, the authors reached the conclusion on the basis of their analysis of the movements of age and prices in the 18th and 19th century that there was a slow and irregular progress of the working class during this period. This conclusion has since been reinforced by the research of Marx, Hartwell and others. In his introduction to capitalism and the historians, Hayek tries to explain why the opposite view came to be dominant, why people came to believe that poverty was a consequence of capitalism. In the first place Hayek contends, there was evidently an increasing awareness of facts which before had passed unnoticed. The very increase of wealth and well-being which had been achieved raised standards and aspirations. Secondly, and perhaps more importantly, the land-owning class had a vested interest in depicting the conditions in the industrial areas of the north of England as darkly as possible. In its political struggle with the capitalist class. Finally, most of the historians who were interested in economic history in the 19th century were sympathetic to socialism or interventionism. They had certain preconceptions, and of course found ample evidence to support them as all historians who seek out such evidence. But Hegelians can point out that this does not dispose of their thesis. They are concerned not about absolute, but about the relative poverty and about the resulting estrangement of the poor from society. And they are right. The Hayekian reading of history, if correct, only serves to change some of their preconceptions to bring some balance into the picture. But it doesn't show that the Hegelian worry about loyalty is groundless. Shoot hard working, conscientious people risk losing their jobs, or at least suffering worse living standards because of a change in fashion or a technical innovation in another country, they ask. Ásats people, not the victims of circumstances, indeed victims of the market forces. And perhaps more importantly, shoot whole communities that have existed for centuries be allowed to go under, lose their identity, their history, the traditions and the values which they have developed. This brings us to the second response to the Hegelian argument, a response which is philosophical. It pertains to how people can come to have legitimate expectations. In his treatment of this problem in Aniki State and Utopia, Prof. Robert Notzik asserts that it depends on whether or not the fulfillment of such expectations requires the violation of the rights of other people to choose. If the expectations of some people remain unfulfilled, simply because other people have chosen other things than those people provide, then those people have not justified complaints. Their expectations have not been legitimate. As Notzik says, taking an example, Arturo Toskanini, after conducting the New York Philharmonic Orchestra, conducted an orchestra called the Symphony of the Air. That orchestra's continued functioning in a financially lucrative way depended upon his being the conductor. If he retired, the other musicians would have to look for another job and most of them probably would get a much less desirable job. Since Toskanini's decision as to whether to retire would affect their livelihood significantly, did all of the musicians in that orchestra have a right to say in that decision? Of course not. It was his decision. Their expectations were not legitimate if they violated his right to choose. And is there any essential difference between these cases and those mentioned by Hegel and the Hegelians? If the good which I produce diminishes in value because of a change in fashion, then presumably it is because people are choosing other things. It is difficult to see on what grounds they should be enforced to choose my good or rather to pay for it as if they had chosen it. Would that not be real deprivation? The deprivation of their freedom to choose? If my good diminishes in value because of an innovation in another country, then presumably it is because this innovation is cheaper or better than my good. Why should my country may not be able to enjoy this innovation from another country? Nótsik is by his observations pointing to a very important aspect of the problem. It is that there are other people around and my life is of course affected by their choices which they are entitled to make. But it doesn't mean that I am entitled to thought their choices when they turn out to be different from what I expected. Nótsik is with his observation making visible the multitude of people who affect my life and whose choices I have to respect. What perhaps appears to an individual as the blind play of the market forces is in fact the outcome of their choices or the choices that they are perfectly entitled to exercise. A possible Hegelian response to this argument is that these considerations may apply to purely contractual relationships but that many social relationships are not contractual and that people are interdependent and that the needs of the poor are shaped by society or in other words partly by those who then refuse to accept the goods of the poor by their services and that it is in this sense that the poor are victimized. Our rejointer must be this. First, those human relationships which are interesting from a moral point of view are voluntary, are contractual. It is your and your wife's joint decision whether the two of you marry. There is a joint acceptance of you by society and by society of you, otherwise you emigrate or you lose your citizenship. If resources are transferred to take an example from Norwegian taxpayers to physical folk in the north in order to sustain their community then Norwegian taxpayers have been deprived of something without their direct consent. They have lost while the physical folk have gained. Second, even if it is right that people are interdependent in civil society, it doesn't follow that they are equally interdependent. It is precisely their market value, their price as agreed in voluntary transactions that reflects the dependence of other people on them. If they carry a lower price than expected it only shows that society is not as dependent upon them as they had thought themselves. They labor under an illusion as to their own worth. This is not to say however that such people are worthless in the eyes of society and totally ejected by society. Everybody can carry a price in the Hegelja system of needs but it may be very low. It is undoubtedly true that by living in a progressive society people come to have greater needs than in a primitive society. They therefore feel deprived even if their standard of living is better than in a primitive society. Hegelja is a surely right that poverty can sometimes be relative or subjective. In modern affluent society poverty is not as much starving as not being able to keep up with the Joneses. Our answer must then be a rather Hegelja one. It must be that people have to come to understand that they cannot expect the Joneses to slow down. They have to run faster themselves or perhaps they should choose another race where they will be better than the Joneses. It is a misunderstanding that the only race in modern society is the competition for pecuniary worlds. Modern society is pluralistic. There are many games going on simultaneously. Scholars, scientists, athletes and artists all the usually welcoming pecuniary worlds are not pursuing their careers in order to obtain them. Again Hegelja may offer some responses. They may point out that the transfer of resources from the Norwegian taxpayers to the Fisifork is perhaps not a question of one community losing and another gaining. The Norwegian taxpayers do not constitute a community as such. They do not perceive themselves in any meaningful sense as the community of taxpayers. Self-awareness is, to some extent, communitarians could argue, a necessary condition of a community. The reminder to this Hegeljan argument must I submit, focus on the relationship between a fisherman and another Norwegian within the Norwegian community. The real and independent community in our example is more of a itself. In it, all citizens are supposed to be equal. Yet some are subsidised at the expense of others. This is a violation of the communitarian principle that there must be some kind of consensus behind political decisions and that everybody is to count for one. Moreover, the whole idea of community seems to lose its attractiveness if the community is not self-sufficient or autonomous in some sense or another. If a part of the population becomes dependent upon another part of it for its livelihood, it soon loses its independence of mind, its service team, its moral autonomy. Is the spirit of the poor part really worth preserving? Moreover, the Hegeljan argument may you follow through have some pervers consequences. If the legitimate expectations of communities are dependent not on their absolute but on their relative standard of living, then this means that the very affluent community in Beverly Hills in California is us justified in claiming subsidies to maintain their relative standard of living as the physical fork in Finmark or the British miners. If they suffer a loss because the demand for the services has fallen relative to the demand for other services, for example because films have been superseded by other forms of entertainment, then they are apparently on at least the communitarian principles entitled to have enough resources transferred to them from others to enable them to live their usual kinds of lives. In the constitution of liberty, Hayek focuses on the moral arbitrariness of our membership in a community where usually members by chance, not choice. The demand of subsidies to communities, Hayek says, is in curious conflict with the desire to base distribution of personal merit. There is clearly no merit in being born into a particular community and no argument of justice can be based on the accident or particular individuals being born in one place rather than another. A relatively wealthy community in fact regularly confers advantages on its poorest members and known to those born in poor communities. There is no obvious reason, Hayek, continues, why the joint effort of the members of any group to ensure the maintenance of law and order and to organize the provision of certain services should give the members a claim to a particular share in the wealth of this group. So much for the philosophical response. On an economic level the response to the Hegelian critique is that in all systems, always and everywhere, some expectations have to be disappointed. And it is necessary that there are in all economic systems there has to be a process in which people are assigned to the tasks for which they are deemed qualified. In all systems, those who make mistakes have to be made to realize this themselves. Otherwise they will not be able to correct these mistakes. And the socialism or interventionism, everybody is supposedly assigned to that station in life where he can best realize his capacities. But the rulers may make mistakes as well as others and the ruled may want to do something which has not been assigned to them. And the capitalism on the other hand, nobody is directly assigned to any one station in life, it is left to him or her to decide and then he and she gets a feedback from society in the form of his or hers market price. If he is a miner's son in Wales, then he chooses whether or not to become a miner himself in the light of the information available to him. If he is a fisherman in Finmark, the same applies. The feedback may be positive, it may be negative, what is essential however is that there should be some feedback because otherwise he doesn't obtain any information about his performance, about the success of his choice. The main point is this. If you make a choice, you also have to understand and accept the fact that others make choices. And the real question is the following. Which is on balance a better alternative in Hegelian terms, that is to say, less likely to create alienation to have your station in life chosen by others in a direct manner or to choose it yourself there by having to accept the similar choices of others. There is little doubt that the second alternative is less likely to create estrangement from society to see where the links of loyalty. An aspect of the problem has however been bypassed and solved by those considerations. The problem is not that some unfulfilled expectations are legitimate, but that some people will feel that their unfulfilled expectations are legitimate and turn against the free market. The problem can be put in different terms. Much more information is available to many people about their possible losses than their gains in the market game. And hence this game will in their eyes come to lack legitimacy. People who are experiencing a diminished demand for their services know that they are losing but they do not know what they may be gaining for example if they would rapidly adapt. They are not aware of the opportunities provided by the market. The process will appear unintelligible, the market forces will seem external to them. And this can surely explain much of modern economic history. Those who perceive themselves to be on the losing side in the market game, for example farmers and some big corporations, have combined to try to ensure their relative security from competition, by legislation or other political coercive means. Then one intervention has made another necessary, a vicious circle has developed and an invisible hand has led people to an ever increasing state. The process is, in a sense, made intelligible by Hegelian arguments by the subjective false consciousness developed in the market order. The demand by interest groups for government intervention has been an inevitable although perhaps misconceived reaction to the vicissitudes of the market forces. Simply because people have a better sense of such vicissitudes than of the benefits conferred upon them by those same market forces. Hegel's inner dialectic of civil society can then be interpreted, not as a policy for the welfare state but as the dialectic of excessive expectations or words as an explanation of the transformation of the liberal order into our welfare state. What is to be done? Hegel's own dilemma was that he wanted at the same time to retain civil society and to reform it. He recognized that on the one hand the particularity of civil society implied freedom, variety and individuality. On the other hand he thought that it implied the alienation of those who were deprived by civil society or the fulfillment of needs which civil society had generated in them. This seems to be an argument for the modern welfare state where the market forces are allowed to operate but where government corrects its operation by intervention. But Hegel was acutely aware that such a welfare state might in fact create as well as solve problems. It might be true that civil society caused the alienation of those who were not chosen by the market but charity, whether voluntary or involuntary also caused alienation. As Hegel said in either case however the needy would receive subsistence directly not by means of their work and this would violate the principle of civil society and the feeling of individual independence and as a respect in its individual members. Another solution toyed by Hegel and almost Keynesian was the creation of jobs through public works. But there was a problem about that Hegel thought. In this event the volume of production he wrote would be increased but the evil consists precisely in an excess of production and in the lack of proportionate number of consumers who are themselves also producers. So civil society could not ensure the consumption of its production as it intended according to Hegel to overproduction. Hegel also mentioned that civil society might tend to extend its boundaries to what is nowadays called the underdeveloped nations but such kind of imperialism was only of course a temporary solution. It seems then that Hegel was unable to come up with a solution to modern poverty a relative subjective poverty which in its turn let people not to identify with the community within its own system. We have discussed his three attempts to three unsuccessful attempts of a solution of the problem but let us make a few comments on the Hegelian scheme. In the first place Hegel believed that markets do not clear his denial of sales law is highly controversial. The concept of a price is curiously absent from his analysis. If people are willing to lower their price they will be accepted. In other words there is no such thing as overproduction or in this particular context oversupply of labor. There is only production at a price which other people are not willing to pay. There is also of course occasional discoordination in the economy which is ascribed by the Austrians to a lack of information about available opportunities. Even if the price of good is lowered potential buyers may not be aware of the goods. The task of the state should then on Austrian principles if we accept Hegel's premise to try to eliminate rigidities in the labor market and other markets under distortion of information this it can only do accomplished by allowing the market forces freely to operate. In the second place the money spent by government on public works would alternatively be spent by profit seeking individuals. Non-cansion economic theory per as more widely accepted today than during the last few decades tells us that such profit seeking individuals are more likely to find opportunities for growth and hence for wealth creation than government officials. This is not primarily because they have a greater incentive although that is certainly true but mainly because they operate under a more efficient feedback system where mistakes are costly and eventually lead to the elimination through bankruptcy of those who persist in making mistakes. Thirdly and most importantly while a permanent grapple of paupers is created by charity as Hegel saw those who are rejected by the market are only rejected as long as they try to exact the price for their services which is deemed unreasonable by the rest of society. As soon and as I said this before as soon as they lower their price or alternatively improve their services they are accepted again by the market. On balance a Hegelian should prefer bankruptcies by a few businessmen and the temporary hardship of those hit by market forces to the permanent pockets of poverty in the slums and bronze or in some of the mercicide communities where individuals have lost all sense of responsibility and do nothing but collect weekly checks from government. The important thing here is that the market is an adjustment process. It allows those who make mistakes to correct them, hence it gradually eliminates alienation. Our conclusion then is that Hegel's economics are deeply flawed just as the economics of conservatives and socialists are and that the poverty problem can be solved within civil society so a few poor people will always be with us such as the permanently handicapped. Let us however turn to an interesting idea which Hegel entertained about at least a partial solution of the problem. This was by individual membership in social classes or estates as Hegel called them and in corporations. By such a membership the individual could gain social identity begin to feel at home in the world. Such classes and corporations given freedom of entry and exit may not be very different from the autonomous associations described by Tocqueville in Democracy in America or the competing utopias described by Nozik in the last part of Arnegir State and Utopia. By such a membership the individual could enjoy security from losses in the market and of course forsake some gains. The Hegelian idea seems to be implemented to a certain extent in Japan where workers and management in big corporations form what can almost be described as an organic unity. It seems also to be manifested on workers' cooperatives like the Israeli kipputs. Private insurance companies autonomous associations and families of course also fulfil some such functions. Secret societies and corporations are supposed also to be informal insurance companies of some kind. It is an open question whether there are any alternatives to the possible alienation in civil society which are not worse than it. It is surely a shortcoming of some of the communitarian theories about alienation and serve expression through participation that it do not include a viable model of politics. I suggest communitarian conservatives and socialists might learn something from the neo-hopsian analysis of politics pursued by the Virginia School of Economics. What is emphasised by this school of thought is that man does not change his nature by moving from a market setting to a non market setting. Much follows from this apparently trivial point. It is difficult to see for example why we should not expect service behaviour from bureaucrats if we expect it from managers of private enterprises. And if we are allowed to postulate moral constraints in non market settings why should we not also postulate them in market settings. Recent experience of public enterprises labour unions and the bureaucracy does not suggest that we can be as optimistic about their public spiritness as some Hegelian conservatives and socialists may be. Liberals have won the argument from efficiency. Therefore we have to prepare for another kind of argument. The argument from identity. The argument not about what we have but about what we are. In this paper I have dealt with one or two such arguments. I am aware that I have barely scratched the surface of deep problems which dropped the thinkers like Adam Smith, Adam Ferguson and Hegel. I also know that there are many strong arguments besides those offered here which liberals can employ. But let me by way of summing up say this. Surely we need community. Of course the market has to be granted in a specific morality. Per a best approach in the family maxim hónnæste vi veri ne minum ledere svum kvíke ver tribu eri. That is to live honourably to harm no one to allow to each their own. But our community has to be community without coercion as talk will emphasise. Our morality must be voluntarily chosen or accepted by individuals not imposed upon them. My contention is that the liberal order has the means to cope with problems generated by the market forces and that as many of you will agree here as elsewhere government is not the solution but the problem.