Social Justice Abolishes Free Trade

Hayek writes in Social or Distributive Justice, "To assure the same material position to people who differ greatly in strength, intelligence, skill, knowledge and perseverance as well as in their physical and social environment, government would clearly have to treat them very differently to compensate for those disadvantages and deficiencies it could not directly alter."

Government's attempt to make everyone on the same level field would abolish the spontaneous aggregation of free trade arrangements. We all learned in economics about the one farmer who is more productive than another. He can produce meat and potatoes more than the other farmer. However, the less productive farmer can produce potatoes at a lower opportunity cost than the first farmer. As Hayek describes they "differ greatly in strength, intelligence, skill, knowledge and perseverance as well as in their physical and social environment".

If left alone they spontaneously choose to trade. The first farmer could specialize in meat and the second in producing just potatoes. Together they produce more meat and potatoes by trading and specializing than the sum of their individual production alone. Their differences in ability while one greater than the other were mutually beneficial. The differences in comparative advantage made them mutually attractive to create a spontaneous trade relationship.