Chapter 15c

The Rights of Small States

Father of Neoliberalism

Hayek Hayek
5 min read
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Those who are so ready to ride roughshod over the rights of small states are, of course, right in one thing: we cannot hope for order or lasting peace after this war if states, large or small, regain unfettered sovereignty in the economic sphere. But this does not mean that a new super-state must be given powers which we have not learnt to use intelligently even on a national scale, that an international authority ought to be given power to direct individual nations how to use their resources. It means merely that there must be a power which can restrain the different nations from action harmful to their neighbours, a set of rules which defines what a state may do, and an authority capable of enforcing these rules. The powers which such an authority would need are mainly of a negative kind: it must above all be able to say “no” to all sorts of restrictive measures.

I Professor C. A. W Manning, in a review of Professor Carr’s Conditions of Peace in the International Affairs Review Supplement, June 1942. 2 It is significant in more than one respect that, as was recently observed in one of the weekly journals, “one had already begun to expect a touch of the Carr flavour in the New Statesman pages as well as in those of The Times” (“Four Winds” in Time and Tide, February 20, 1943).

Far from its being true that, as is now widely believed, we need an international economic authority while the states can at the same time retain their unrestricted political sovereignty, almost exactly the opposite is true. What we need and can hope to achieve is not more power in the hands ofirresponsible international economic authorities, but, on the contrary, a superior political power which can hold the economic interests in check, and in the conflict between them can truly hold the scales, because it is itself not mixed up in the economic game. The need is for an international political authority which, without power to direct the different people what they must do, must be able to restrain them from action which will damage others. The powers which must devolve on an international authority are not the new powers assumed by the states in recent times, but that minimum of powers without which it is impossible to preserve peaceful relationships, Le. essentially the powers of the ultraliberal “laissez-faire” state. And even more than in the national sphere, it is essential that these powers of the international authority should be strictly circumscribed by the Rule of Law. The need for such a super-national authority becomes indeed greater as the individual states more and more become units of economic administration, the actors rather than merely the supervisors of the economic scene, and as therefore any friction is likely to arise not between individuals but between states as such.

The form of international government under which certain strictly defined powers are transferred to an international authority, while in all other respects the individual countries remain responsible for their internal affairs, is, of course, that of federation. We must not allow the numerous ill-considered and often extremely silly claims made on behalf of a federal organisation of the whole world during the height of the propaganda for “Federal Union” to obscure the fact that the principle of federation is the only form of association of different peoples which will create an international order without putting an undue strain on their legitimate desire for independence.

1 Federalism is, of course, nothing but the application to international affairs of democracy, the only method of peaceful change man has yet invented. But it is a democracy with definitely limited powers. Apart from the more impracticable ideal of fusing different countries into a single centralised state (the desirability ofwhich is far from obvious) it is the only way in which the ideal of international law can be made a reality. We must not deceive ourselves that in calling in the past the rules of international behaviour international law we were doing more than expressing a pious wish. When we want to prevent people from killing each other we are not content to issue a declaration that killing is undesirable, but we give an authority power to prevent it. In the same way there can be no international law without a power to enforce it. The obstacle to the creation of such an international 1 It is a great pity that the flood offederalist publications which in recent years has descended upon us has deprived the few important and thoughtful works among them of the attention they deserved. One which in particular ought to be carefully consulted when the time comes for the framing of a new political structure of Europe is Dr. W Ivor Jennings’s small book on A Federation for Western Europe (1940).

power was very largely the idea that it need command all the practically unlimited powers which the modern state possesses. But with the division of power under the federal system this is by no means necessary.

This division of power would inevitably act at the same time also as a limitation of the power of the whole as well as of the individual state. Indeed many ofthe kinds of planning which are now fashionable would probably become altogether impossible. 1 But it would by no means constitute an obstacle to all planning. It is, in fact, one of the main advantages of federation that it can be so devised as to make most ofthe harmful planning difficult while leaving the way free for all desirable planning. It prevents, or can be made to prevent, most forms of restrictionism. And it confines international planning to the fields where true agreement can be reached-not only between the “interests” immediately concerned, but among all those affected. The desirable forms of planning which can be effected locally and without the need of restrictive measures, are left free and in the hands of those best qualified to undertake it. It is even to be hoped that within a federation, where there will no longer exist the same reasons for making the individual states as strong as possible, the process of centralisation of the past may in some measure be reversed and some devolution of powers from the state to the local authorities become possible.

It is worth recalling that the idea of the world at last finding peace through the absorption of the separate states in large federated groups and ultimately perhaps in one single federation, far from being new, was indeed the ideal of almost all the liberal thinkers ofthe nineteenth century. From Tennyson, whose much quoted vision of the “battle of the air” is followed by a vision of the federation of the people which will follow their last great 1 See on this the author’s article on “Economic Conditions of Inter-State Federation”, The New Commonwealth Quarterly, vol. V, September 1939.

fight, right down to the end ofthe century the final achievement of a federal organisation remained the ever-recurring hope of a next great step in the advance of civilisation. Nineteenth-century liberals may not have been fully aware how essential a complement of their principles a federal organisation of the different states formed 1; but there were few among them who did not express their belief in it as an ultimate goal. 2 It was only with the approach of our twentieth century that before the triumphant rise of Realpolitik these hopes came to be regarded as unpracticable and utopian.

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