1. Justice in Hegel’s Political Philosophy

In regard to Hegel’s political philosophy, I adhere to an interpretation that the spheres of civil society and the state cannot be meaningfully separated as the latter’s responsibilities necessitate its constant intervention in the former (Cristi Reference Cristi1989: 729; Jackson Reference Jackson2014: 347–349; Pelczynski Reference Pelczynski and Pelczynski1972: 10; Vieweg Reference Vieweg2012: 499–504). For the state to function in accordance with its principle of freedom (Hegel Reference Hegel1991 [1820]: § 258 Add.; Vieweg Reference Vieweg2012: 345–349), it must be informed by a theory of justice that evaluates which inequalities constitute a threat to this freedom.

I contend that an exclusive focus on the more explicit notion of Hegelian legal justice, which emphasizes equality before the law (Neuhouser Reference Neuhouser2000: 148; Taylor Reference Taylor1975: 407f.; Wood Reference Wood1990: 255), is insufficient. In this view, justice is understood as the procedurally correct administration of the law, whereas injustices are defined as violations of state law (Marmasse Reference Marmasse2004: 331f.). When conceptualized as the safeguarding of legally owned property (Eecke Reference Eecke1983: 208; Weber Reference Weber2014: 196), justice would merely preserve the status quo, and in this way may contradict socioeconomic interpretations of it. Socioeconomic inequalities would simply be a consequence of natural inequalities between humans. It may therefore appear that Hegel espouses a classical liberal or even libertarian notion of justice, wherein a Lockean understanding of property as an inviolable right is coupled with a meritocratic logic of distribution (Locke Reference Locke1963: 304–306; Nozick Reference Nozick1974: 150–152, 174–177). In this perspective, the state is confined to the role of safeguarding the existing property distribution, as any intervention beyond this would constitute an infringement on citizens’ rights.

However, as others have pointed out, it is insufficient to attribute the root of inequality to the contingent natural differences in humans’ abilities, preferences, and needs that are simply amplified by modern market conditions (Bourdin Reference Bourdin2001; Herzog Reference Herzog2013: 105f.; Vernes Reference Vernes1998: 700). By focusing on the natural aspects of inequality, we would acknowledge only one aspect of the more complex considerations Hegel develops to explain inequality. This approach risks overlooking the nuances of the different forms of inequality that are considered in Hegel’s political philosophy. As Hegel notes, ethical society constitutes a form of “second nature” (Hegel Reference Hegel1991 [1820]: § 151) for its members. This notion extends to the influence that such a society exerts over both the form and extent of economic inequalities. Natural inequalities are not only amplified but transformed in market society.

Hegel’s theory of justice is not merely of historical relevance. The modern discourse on economic inequality mainly revolves around two opposing positions of, first, a broadly Rawlsian liberal egalitarianism that requires every inequality to be justified by demonstrating how it benefits the least advantaged (Rawls Reference Rawls2001: 42f.), and second, a broadly libertarian perspective that deems inequality justifiable when the transfer of goods is arranged in accordance with the participants’ free choice (Nozick Reference Nozick1974: 150–152, 174–177). In a similar vein, much of the political and academic debate surrounding socioeconomic inequality and social welfare centers either on the need to reduce inequality, as it represents an indefensible problem of justice, or on the apprehension that an excessive problematization of inequality may result in regulatory overreach by the state, ultimately stifling individual freedom and economic innovation (Peterson Reference Peterson2017).

Hegel’s theory of justice presents a balanced perspective between a Rawlsian approach that problematizes each instance of inequality and a Nozickian approach that accepts inequality due to natural differences and market forces, without acknowledging its detrimental impact on society. On the one hand, Hegel provides an answer to the question of which types of inequality constitute a problem of justice. An inequality is considered problematic insofar as it is a “disadvantage for which the sufferer cannot be held responsible, since it does not appropriately reflect choices that he has made or is making or would make” (Cohen Reference Cohen1989: 916) and thus severely hinders the individual’s freedom of self-actualization in market society. On the other hand, Hegel characterizes this freedom as both the rationale and the constraint of social welfare. Any inequalities that exceed the fundamental requirements for self-actualization are not considered to be matters of justice.

In this sense, Hegel’s theory of justice contributes to the theory of sufficientarianism. Sufficientarianism asserts that once a threshold level of equality is attained, any subsequent inequalities that exceed that level do not constitute a moral problem (Shields Reference Shields2020: 1f.): “If everyone had enough, it would be of no moral consequence whether some had more than others” (Frankfurt Reference Frankfurt1987: 21). For a theory of justice, this means that there are two distinct categories of inequality. The first category encompasses those inequalities that are considered to be fundamentally detrimental to the concept of justice and therefore fall within the domain of social welfare. Beyond this threshold, the remaining inequalities are not regarded as a matter of justice. One possible criterion to separate these two categories is the “freedom from duress, […] the freedom from significant pressure against succeeding in central aspects of human life” (Axelsen and Nielsen Reference Axelsen and Nielsen2015: 406).

Hegel’s perspective aligns with the idea that true freedom lies in self-actualization within ethical society (Manchisi Reference Manchisi2022: 219–221; Neuhouser Reference Neuhouser2000: 22f.; Siep Reference Siep and Siep2010 [2002]: 331–346; Taylor Reference Taylor1979: 16). In market society, citizens are free to pursue their own subjective needs and wants and thus their individual plans of self-actualization (Eecke Reference Eecke1983: 195–207, 212; Hegel Reference Hegel1991 [1820]: § 189, §§ 192f.). Property constitutes the central resource for participation in the market (Hegel Reference Hegel1991 [1820]: § 200, § 237). What makes the distribution of property such an important issue for a Hegelian theory of justice is its role in this process of self-actualization. Hegel posits that property is a crucial element in the formation of the world (Hegel Reference Hegel1991 [1820]: § 45; Ritter Reference Ritter2014: 63). As a result of the objectification of what was previously merely a subjective will, humans are able to perceive themselves as free beings and are thus able to actualize their inner selves (Hegel Reference Hegel1991 [1820]: § 41 Add.; Teichgraeber Reference Teichgraeber1977: 53). Such individuals experience themselves as free, with the capacity to actualize their conceptions of a good life and their own personalities. Hegel maintains that this process is not merely an exercise in introspection. Instead, self-actualization occurs within a social context, shaping both the individual and the social environment concurrently (Manchisi Reference Manchisi2022: 219–221; Neuhouser Reference Neuhouser2000: 22f.). Such a process cannot be limited to an exclusively inward attitude or some form of spiritual self-discovery, as this would render it a purely subjective experience devoid of any tangible effect on the external reality. For successful self-actualization, the self must be present in the real world through concrete objects. Therefore, self-actualization requires a material basis. Accordingly, a Hegelian theory of justice seeks to identify which inequalities impede the fundamental freedom of self-actualization.

2. Natural Inequalities: Capabilities and Family

Natural inequality can be further divided into inequality of capabilities and familial inequality. Inequality of capability means that humans possess disparate physical and mental abilities that may confer an advantage or a disadvantage when performing specific actions. For Hegel, these capabilities, which he terms Geschicklichkeiten (Hegel Reference Hegel1991 [1820]: § 67), constitute an essential personal asset that individuals can utilize to acquire property in market society and thereby objectify their subjective preferences and actualize themselves (Hegel Reference Hegel1991 [1820]: § 200). These skills are therefore indispensable for acquiring the property required to live a free life. However, they are not distributed equally and depend on contingent circumstances.

In modern market society, citizens are free to pursue their individual needs and wants by making use of their particular capabilities (Hegel Reference Hegel1991 [1820]: § 189). Inequalities in individual capabilities and inherited property contribute to the socioeconomic inequality in society. However, at first glance, inequalities of capability and family do not appear to be inherently problematic from a standpoint of justice. The capabilities and skills of individuals are important personal characteristics that cannot and should not be altered by regulatory policy. Such an alteration would constitute a significant encroachment on civil rights and is therefore unacceptable within the framework of the modern liberal constitutional state.

Familial inequality is the disparity that emerges from the contingent circumstances of a citizen’s family. The contingency of one’s family—the randomness of one’s birth—has a significant impact on the extent to which innate talents and capabilities can be successfully fostered in children. The family provides for the individual’s future free life in market society “by giving him the means and skills he requires in order to earn his living from the universal resources” (Hegel Reference Hegel1991 [1820]: § 238). In addition, familial inequality has a material aspect: families are expected to provide their children with a certain degree of initial capital through inheritance (Hegel Reference Hegel1991 [1820]: § 178). This capital is required as a resource for participation in market society (Hegel Reference Hegel1991 [1820]: § 200).

The state’s capacity to intervene in family matters is limited. First, the family has its origins partly in elements that Hegel considers natural: love as the emotional connection between two partners in marriage (Hegel Reference Hegel1991 [1820]: § 163), and the procreation of children within the framework of the nuclear family (Hegel Reference Hegel1991 [1820]: § 173). Hegel identifies the subjective freedom to love as the fundamental principle of the modern family (Hegel Reference Hegel1991 [1820]: § 162 Add., § 172). Consequently, the family is founded upon a combination of natural and subjective moral elements. It would be impossible for the state to intervene in the former, and such intervention would result in the destruction of individual freedom in the latter. As an “ethical root” (Hegel Reference Hegel1991 [1820]: § 255) of the state, the family enjoys special protection. However, as we shall see subsequently, this somewhat isolated perspective on the family’s role is subject to challenge when we examine its position within the context of market society.

Up to this point, it seems that Hegel’s theory of justice tells a rather simple story: humans possess different capabilities, preferences, and material starting conditions that enable them to participate in market society with varying degrees of success. Therefore, societal inequality can be seen to emerge as a direct consequence of natural inequality. Market society merely reinforces the natural differences between individuals (Bourdin Reference Bourdin2001; Herzog Reference Herzog2013: 105f.; Vernes Reference Vernes1998: 700). As all these aspects of inequality are contingent, they do not constitute an issue of justice. Let us call this the naturalistic narrative of socioeconomic inequality. In this narrative, the role of the state is limited to safeguarding the rights and property of its citizens (Hegel Reference Hegel1991 [1820]: §§ 209–229; Eecke Reference Eecke1983: 208; Marmasse Reference Marmasse2004: 331f.; Weber Reference Weber2014: 196), with the objective of enabling them to live a free life in accordance with their subjective moral beliefs (Neuhouser Reference Neuhouser2000: 148). Property, as a means to this end, is understood as an absolute right originating from sources external to the state’s responsibility (Fatton Reference Fatton1986: 580). In this kind of liberal constitutional state, socio-economic justice plays no role, as prevailing inequalities are regarded as natural: “One cannot speak of an injustice of nature in the unequal distribution of possessions and resources, for nature is not free and is therefore neither just nor unjust” (Hegel Reference Hegel1991 [1820]: § 49). From a sufficientarian perspective, any inequality that exceeds the formal equality guaranteed by the law is not regarded as a matter of justice.

3. The Transformation of Natural Inequalities in Market Society

While the naturalistic narrative described above partially explains socioeconomic inequalities in the Hegelian state, it does not provide the full picture. In order to gain a full understanding of the role of socioeconomic inequalities in the Hegelian state, first, it is necessary to examine whether the assessment of these inequalities changes once they impact the sphere of the state’s responsibility. Second, we need to analyze whether modern market society results in the emergence of additional inequalities that cannot be simply reduced to natural inequalities, and if so, to ascertain how these are included in Hegel’s theory of justice.

Once natural inequalities are considered within the context of market society and the state, a change occurs in how they are assessed. Previously, they belonged to extralegal spheres that were beyond the scope of state responsibility and, as a result, were not included in a theory of justice. However, on Hegel’s view, their status undergoes a transformation when they become societal forces that are subject to the principles and goals of the state. If we take seriously the role of the Hegelian liberal constitutional state as the primary guarantor of freedom in the modern age, it cannot ignore the influence of inequality on the freedom of its citizens. Consequently, Hegel reassesses the previously extralegal status of inequalities: “No one can assert a right against nature, but within the conditions of society hardship at once assumes the form of a wrong inflicted on this or that class” (Hegel Reference Hegel1991 [1820]: § 244 Add.).

Accordingly, social welfare, as a means of addressing problematic inequalities, becomes a significant component of state intervention. The concept of justice is extended from a mere safeguarding of property and rights to the inclusion of socioeconomic aspects that affect an individual citizen’s welfare:

The inclusion of socioeconomic aspects in the concept of justice becomes evident in Hegel’s evaluation of the natural inequalities that exist within civil society. He first challenges the notion that these inequalities are purely natural, instead characterizing them as societal forces that exert a significant impact on individuals’ opportunities for participation in market society:

In the context of market society, capabilities or skills are no longer regarded as purely natural attributes. They appear as being embedded within a complex and self-reinforcing relationship with property. In accordance with the naturalistic narrative of inequality, an individual’s available skills influence the property they are able to accumulate. Conversely, the accumulation of property or capital can also influence the acquisition of skills, creating a virtuous or vicious cycle.

This intergenerational cycle perpetuates inequality over time. Hegel indicates that the development of skills is contingent upon the socioeconomic status of the family: “The poor man cannot have his children taught any skills, any knowledge” (Hegel 1974 [1824/1825]: 606). Capabilities are not purely natural, but can be at least partly acquired through practical education (Hegel Reference Hegel1991 [1820]: § 197). Education can thus serve to compensate for a natural inequality in capabilities and becomes a matter of social welfare, as it mitigates the effects of natural inequalities. This is evident from Hegel’s assertion that children should be placed in public educational institutions, even if their parents object (Hegel Reference Hegel1991 [1820]: § 239).

The emphasis on education as a means of at least partly escaping from the “arbitrariness and contingency on the part of the parents” (Hegel Reference Hegel1991 [1820]: § 239) is part of a broader transformation of the family’s role in civil society. This transformation does not entail the elimination of the family, but rather its contextualization within the broader sphere of civil society. As individuals develop their personality, they become members of civil society, which is their normal sphere of living in modernity (Hegel Reference Hegel1991 [1820]: § 238). Therefore, issues of inequality that initially appear to be products of natural, moral, and familial extralegal inequality—such as disparities in education and capital—become issues of societal inequality.

Within the sphere of civil society, natural inequalities are transformed in two distinct ways. First, they lose the absoluteness they possessed as aspects of pre-state spheres. They are no longer regarded as immutable destinies that fall beyond the scope of the state’s accountability. Capabilities and property do not appear as purely natural contingencies anymore, but rather as results of past market processes. Hegel therefore challenges the strict dichotomy between natural and social inequality, demonstrating that the latter has a substantial impact on the former (Lewens Reference Lewens2010). Consequently, they are presented as malleable through state action. Second, natural inequalities are re-evaluated concerning their effect on the state’s goal of freedom. Insofar as natural inequalities interfere with the state’s objective of freedom when they affect individuals’ lives within market economy, they become matters of justice.

In sum, the distribution of property resulting from natural inequality and further exacerbated and reproduced by societal inequality becomes a matter of justice because it has a significant impact on the ability of citizens to actualize their freedom. Hegel underscores the pivotal role of property in the context of socioeconomic justice: “it is false to maintain that justice requires everyone’s property to be equal; for it requires only that everyone should have property.” (Hegel Reference Hegel1991 [1820]: § 49 Add.). While an inequality of property does not inherently contravene the principles of justice, a complete absence of property and the concomitant impossibility of freedom undoubtedly does. Hegel does highlight this issue when examining the problem of poverty and ‘the rabble.’ According to Hegel, ‘the rabble’ is detached from the opportunities afforded by the freedoms associated with civil society due to their lack of the capabilities and property that are necessary to participate in the market (Hegel Reference Hegel1991 [1820]: § 241).

From a sufficientarian position, the mere influence of natural inequalities on market society is not enough to constitute a problem of justice. Instead, the individual’s possibility of self-actualization must be significantly constrained by the unequal distribution of property resulting from natural inequalities. In other words, in order to develop a Hegelian theory of justice, we must illustrate how these inequalities affect the process of market society and to what extent these effects constitute an unacceptable limitation of the possibility of self-actualization. In essence, our objective is to show how Hegel’s analysis of market society can be enhanced by employing the lens of justice and inequality, which is already implicit within his political philosophy.

4. Contingencies in Market Society

In Hegel’s political philosophy, natural inequalities of ability and family are contextualized when their effects are assessed in the realms of civil society and the state. When evaluating whether they impede the freedom of citizens, these inequalities are subject to the scrutiny of the state’s theory of justice and, consequently, of state intervention. However, in addition to the natural inequalities that originate from pre-state spheres, market society also gives rise to further inequalities.

The distinguishing factor between the sphere of market society and the pre-state spheres of capabilities and family is the presence of market processes. These processes are based on the mutual interdependency of citizens who act as free individuals in accordance with their subjective morality and their individual needs and wants. As they are no longer constrained by the basic necessities of survival, citizens are free to develop new and more refined desires:

Simultaneously, this increase in desires leads to greater socioeconomic inequality. In order to identify the mechanism of market society that is responsible for this rise of inequality, we must first consider the structural interdependency of the market and then proceed to a more detailed analysis of the economic process as described by Hegel.

In market society, citizens are

We can differentiate three types of such contingencies. The first type encompasses the natural inequalities and their effects in market society, i.e., inequalities of capabilities and family as well as of education, skills, and inherited property. The second type comprises external factors that affect the market on a fundamental level. These can be further subdivided into natural and societal causes. In this context, external natural causes refer to fundamental conditions, such as the availability of natural resources or the specific geography of a region (Hegel Reference Hegel1991 [1820]: § 189 Add.). External societal influences encompass shifts in consumer behavior, prevailing social trends, and advancements in technology (Henderson and Davis Reference Henderson and Davis1991: 193). Such factors have the potential to exert a significant influence on the market:

The third type of contingencies comprises the effects resulting from the interdependence of market actors. In the “system of all-round interdependence” (Hegel Reference Hegel1991 [1820]: § 183), the individual’s satisfaction of needs and wants always depends on others (Hegel Reference Hegel1991 [1820]: §§ 182f.). Consequently, citizens are economically intertwined, and their actions extend beyond the personal sphere, inevitably impacting others: “Through this universal aspect, private actions become a contingent matter which passes out of my control [Gewalt] and which can wrong or harm other people or actually does so” (Hegel Reference Hegel1991 [1820]: § 232). In market society, processes may emerge from a multitude of individual actions that were not (fully) intended by any of the participants, yet collectively have systemic consequences. This macro level of the economic system cannot be reduced to the micro level, but rather is defined by its own logic of structural processes, which in turn affect the micro level (Gräbner and Kapeller Reference Gräbner, Kapeller, Jo, Chester and D’Ippoliti2017: 145–159; Howitt Reference Howitt2016). Consequently, inequality becomes a structural issue that cannot be reduced to natural inequality or individual morality:

What may appear to be natural circumstances that could be justified by appealing to natural inequalities, are in fact structural contingencies of the market (Melamed Reference Melamed2001: 27). Due to the pervasive interdependence in market society, individuals are not solely or even primarily dependent on their natural inequalities but rather on the contingent will of others. Given the inherent limitations of exercising control over the effects of one’s own will within the complex processes of market society, the phrase ‘my will’ in the aforementioned quote does not imply any deliberate (malicious) intent on the part of others but merely denotes a structural consequence.

5. Inequalities Arising from Economic Interdependency in the Market

In order to ascertain the particular inequalities that result from the structural interdependency within the market, we must analyze their emergence within the broader economic process that Hegel addresses. We will see that within the context of market activity, Hegel does not merely identify inequalities in property, but also in labor, which represents a challenge to his conception of the modern liberal state. In short, we seek an answer to the question: What is the causal relationship between the accumulation of wealth and inequality in market society? In Hegel’s words:

Let us begin by defining some key terms. First, recall that market society is the sphere in which citizens are free to pursue their own subjective needs and wants and thus their individual plans of self-actualization (Eecke Reference Eecke1983: 195–207, 212; Hegel Reference Hegel1991 [1820]: § 189, §§ 192f.). This is achieved through the interdependent production and consumption of goods. Second, property in the form of marketable capital constitutes the central resource through which citizens participate in the market (Hegel Reference Hegel1991 [1820]: § 200, § 237). Third, citizens are born with unequal starting conditions due to the natural inequalities previously described. For the sake of simplicity, let us reduce these complex individual circumstances to two ideal-typical groups: the advantaged who have profited from inequalities of property and skills, and the disadvantaged who have not.

We saw above, that as citizens develop increasingly refined needs, they “expand their desires […] and extend them to false [schlechte] infinity” (Hegel Reference Hegel1991 [1820]: § 185 Add.). Let us assume that in applying this to the market, Hegel implies that citizens would have a drive towards increased production. For this increase in production to have an impact on inequality, it is necessary for the goods produced to be consumed by others. In the case of produced goods that are not consumed, there would initially be no effect on inequality, since this would merely represent a transformation of property from capital and resources into products.

In light of these definitions and assumptions, what are the connections that can be identified between increased production and an increase in inequality within the economic process? In order to examine this phenomenon, let us first look at the supply side in isolation, assuming that demand exists independently. Both the advantaged and the disadvantaged produce goods for the market, which they seek to sell to acquire property to satisfy their needs and for self-actualization. On this Hegelian picture, there will be a distinction in the relative productive capacity of the two groups. The advantaged can expend more of their property as capital for further production, resulting in higher profits compared to the disadvantaged. This process is self-perpetuating, as the higher profits of the advantaged can be reinvested. In addition, the advantaged can afford lower profit margins because their subsistence is not directly threatened (Hegel Reference Hegel and Ilting1974 [1824/1825]: 494f). The inverse is true for the disadvantaged. Because they must rely on less capital, the number of products they can supply is smaller and their profit is lower. The result is a market process that structurally increases inequality.

Thus far, we have not considered the role of demand. In Hegel’s economic theory, the relationship between supply and demand ultimately leads to economic crisis. Hegel identifies the fundamental economic crisis as the crisis of overproduction (Priddat Reference Priddat1990: 50–68). This occurs when the production of goods exceeds consumption:

Overproduction occurs, among other things, when the advantaged invest capital in production with the intention of increasing their wealth, but the resulting products cannot be consumed (Priddat Reference Priddat1990: 66–68).

For Hegel, the advantaged inevitably create a crisis of overproduction when they increase production beyond demand. However, they are better positioned to withstand crises due to their larger quantity of property. Conversely, the disadvantaged are more severely affected by crises due to their limited property, which leaves them vulnerable to poverty. Furthermore, the disadvantaged are at risk of losing their employment as they are unable to compete with the supply surplus of the wealthy. This gives rise to a further inequality inherent in the structure of market society: the inequality of work.

These considerations lead us back to the central issue of Hegel’s economic thought, namely the impact of processes in market society on citizens’ possibility of freedom. The contingencies of the market not only influence the inequality of property but also the inequality of work. In Hegel’s view, work is a process of world-formation (Hegel Reference Hegel1991 [1820]: § 52). This entails the actualization of one’s own free will through the shaping of property. Work on an object thus simultaneously means work on the actualization of the self. However, in a modern market society, work cannot be exclusively self-referential. The interdependence of market society implies that a substantial proportion of individual needs can only be satisfied through an exchange with others. Consequently, work in market society constitutes a subset of work understood as a human activity of self-actualization.

But, focusing on unemployment as the sole causal factor in socioeconomic issues and advocating for job creation as the sole solution risks overlooking the pivotal role that work and property play in Hegel’s political philosophy, namely, ensuring individual freedom within society. Thus, the unequal distribution of work in a society oriented toward freedom represents a significant social problem (Kaufman Reference Kaufman1997; Priddat Reference Priddat1990: 49). If structural market mechanisms result in a situation in which citizens are permanently unemployed, thereby denying them the opportunities for freedom that work affords, the functioning of civil society is threatened. The social crisis, as it appears in Hegel’s economic considerations, is therefore the causal chain of unemployment leading to poverty and the exclusion of the poor from society. As with general success in the market, the security of work is subject to market contingencies. Inequality of work—defined as the presence or absence of work—thus becomes a problem of justice as it impacts self-actualization and freedom.

6. Inequalities of Class Society

In our economic analysis we have thus far undertaken a simplification. The preceding arguments are valid under the assumption that we are dealing with the idea of a petit bourgeois artisan society whose market participants are predominantly independent producers. However, this ideal no longer corresponded to the reality of industrialization that became visible in Great Britain and, to some extent, in the German states (Deane Reference Deane1979: 2–5; Ogilvie Reference Ogilvie, Ogilvie and Cerman1996: 131–135).

Hegel acknowledges this economic transformation by explicitly distinguishing between the estate of craftmanship, which addresses individual needs, and the estate of manufacturers, which serves a more universal demand (Hegel Reference Hegel1991 [1820]: § 204). From an economic standpoint, a distinction emerged between capital owners and employers on the one hand, and producers and employees on the other. For Hegel, this is a distinction of classes.

The advantaged, as a result of their skills and education but primarily due to their (inherited) property, are able to accumulate capital within the market process, becoming what Hegel refers to as the “wealthier class” (Hegel Reference Hegel1991 [1820]: § 245): “As wealth grows, it concentrates in the hands of a few and once this difference that large capitals are in the hands of a few is established […] this difference grows ever greater” (Hegel 1974 [1824/1825]: 494). Conversely, the disadvantaged are progressively pushed out of the market as they are unable to compete with the wealthier class in the long term. As a result, they become a class tied to dependent and increasingly specialized labor (Hegel Reference Hegel1991 [1820]: § 243).

In this way, an early liberal petit bourgeois artisan society is replaced by an early class society, which in turn necessitates the division of classes into capital providers and workers (Fatton Reference Fatton1986: 586). Similar to Marx’s analysis, the workers or the dependent class are doubly free. They are free citizens and therefore possess the autonomy to determine the usage of their labor power, but they are simultaneously free from capital, which would enable them to engage in independent production (Marx 1962 [1867]: 182f).

Incorporating the changed economic conditions into our analysis of Hegelian economics, the following picture emerges: under the conditions of supply and demand as well as social classes, overproduction crises occur when increased production does not align with increased consumption. Since the majority of consumers belong to the dependent class, a form of Marxian exploitation is implied, whereby created surplus value (increased production) is appropriated by the wealthier class and is thus not available to the dependent class for consumption (Marx 1962 [1867]: 226–236). Hegel at least implies such a connection: “In case of great impoverishment, the capitalist finds many people working for low wages, thus his profit increases” (Hegel Reference Hegel and Ilting1974 [1824/1825]: 610). Within this framework, overproduction crises would then not be accidental events, but an intrinsic aspect of the economic process.

From the perspective of employers, retaining surplus value is necessary to generate profit and expand their property and freedom. Conversely, workers would lack the means to consume the products on offer (Arrighi Reference Arrighi1978: 3f.). As can be seen from the above considerations, this situation would be tolerable or even advantageous for the wealthier class, as competitors could be forced out of the market. But, as a consequence of the differentiation and refinement of labor in modern capitalist economy, the dependent class would be dependent on highly specialized industry (Hegel Reference Hegel1983 [1819/1820]: 159). Due to their specialized practical education and lack of capital for further education or independent production, members of this class would be particularly vulnerable to unemployment during periods of overproduction (Plant Reference Plant1977: 112).

In light of these considerations, the interconnection between Hegel’s economic approach and the inequality caused by the structure of the market becomes evident. In market society, inequalities are primarily rooted in unequal distribution of property, which is reinforced and reproduced by the economic events of production and consumption, as well as the emergence of a distinction between the wealthier and the dependent class.

7. Alienating Labor

The Hegelian concept of class difference is closely related to an inequality of labor. Recall that labor, for Hegel, is an essential component of self-actualization through property formation. The inequality of labor can be distinguished in further detail. The advent of modern industrialized modes of production was accompanied by significant changes in working conditions. The growing mechanization of labor is another factor contributing to the emergence of inequality, and thus ultimately contributing to the formation of ‘the rabble’ (Hegel Reference Hegel1991 [1820]: § 253). First, the work specialization associated with mechanization exacerbates the dependency of the dependent class on specific economic sectors, thereby increasing their vulnerability to unemployment during periods of economic crisis. Second, the introduction of mechanized and standardized work conditions gives rise to a novel form of inequality with regard to the quality of an individual’s labor.

In addition to the quantitative aspect of work, which can be defined in terms of employment or unemployment, we may identify a qualitative aspect of work. The degree to which different types of work fulfill the criteria of self-determination and self-actualization varies. In the context of modern industrialized market society, the following can be observed. The dependent class becomes

The shift towards mechanical work on increasingly specific product parts represents a departure from the ideal of a middle-class artisan society. In the latter, the relationship between the individual as a market actor, the product they create, and self-actualization through world formation is still reasonably clear. The individual and their property are directly linked, and the act of formation is clearly discernible. To illustrate, a table crafted by a carpenter is a product that can be attributed to that individual’s work and can be experienced as an immediate act of world formation.

In contrast, the connections between the individual worker and the product are more ambiguous in factory production, since the work often concerns only a specific part of the total product. The aspect of world formation is difficult to discern and, due to the mechanical nature of the work, can hardly be experienced as an expression of self-actualization by the worker. Such work that is detached from the individual may have a detrimental impact on the positive effects of market society.

Furthermore, the dissolution of the nexus between person, work, and property has the potential to impede the development of free will itself. Hegel initially does not view objectification through labor as negative, as it constitutes a step in the process of finding oneself (Hegel Reference Hegel1971 [1833–1836]: 42). To recognize oneself as a specific person with influence on the world, the spirit—which in itself is still absolute in its potential but equally indeterminate (Stern Reference Stern1989: 76f.)—must actualize itself in reality and become objective. In this way, the spirit experiences itself as effective in the world, as an agent instead of a mere potential. This process of free will as the basis of all freedom is a fundamental tenet of Hegel’s political philosophy. The link between person and property is not inherently disrupted by mechanization or, more broadly, by the nature of labor, provided that the individual can still grasp the ‘bigger picture’ of the work process (Hegel Reference Hegel1969 [1805/1806]: 214f). Hegel explicitly discusses the potential for expanding one’s sphere of action through the use of mechanical instruments in the context of property appropriation (Hegel Reference Hegel1991 [1820]: § 55).

The question thus arises as to whether Hegel’s position in the context of increasingly alienated labor would have to align with the understanding presented in Marx’s early work, which describes not only the alienation of workers from their products, but also their subsequent alienation from labor itself, from being human, and from society (Marx Reference Marx1968 [1844]: 511–520). Hegel addresses these issues primarily in his early Jena System (Jenaer Realphilosophie). In the Philosophy of Right, Hegel advocates the substitution of human labor by machine labor (Hegel Reference Hegel1991 [1820]: § 198). By recommending the utilization of machines for monotonous and spirit-deadening work, Hegel indicates the emancipatory potential of machines to liberate citizens from work that constrains their freedom. Nevertheless, this leaves the deadening quality of specific forms of labor unaddressed, as the substitution of this type of work through mechanization is merely one potential resolution among many. Consequently, if such an inequality between freedom-restricting and freedom-enhancing work is permitted to exist in society, it poses a problem of justice.

Given the similarities between Hegel’s assessment of the impact of inequalities in market society and the ideas associated with Max’s analysis of capitalism (Avineri Reference Avineri1967: 33–56; Levine Reference Levine2012: 298–313; MacGregor Reference MacGregor2014: 1–30), we should specify the manner in which this Hegelian analysis relates to Marxist thought. As previously indicated, there are significant parallels between the analyses of class differences, alienation, and economic crisis. Both Hegel and Marx recognize the existence of a class divide between the working class, which lacks property and is dependent on employment, and the capitalist class, which owns property. Both anticipate the phenomenon of alienation resulting from the dehumanizing effects of deadening work that would disrupt the causal link between work and self-actualization. Finally, both identify economic crises and the subsequent production of poverty as a structural aspect of market society. However, the two primary differences between a Marxist perspective and that of a Hegelian welfare state pertain to the inevitability and solvability of these problems.

For Marx, the class division itself represents a historical constant and a deficiency of capitalism that must be abolished to enable all individuals to live a truly free life (Marx and Engels Reference Marx and Engels1972 [1848]: 462–482). From a Marxist perspective, this class division represents the fundamental inequality of market society. Over time, this division will inevitably increase, resulting in a corresponding rise in alienation and poverty. A solution inside the capitalist economic system appears impossible, as the class division is understood to be rooted in market society itself and its concept of private property. For Marx, “private property is not the protector of will, or Self, but the basis of social classes and consequently of social oppression” (Levine Reference Levine2012: 196). Therefore, the only solution deemed sufficient is a revolution and the replacement of market society with a communist system that abolishes classes and private property. Marxists would suspect the welfare state of being merely a bourgeois tool to appease the proletariat and prevent a revolution at worst, and at best as a means of implementing socialist principles within a capitalist system (Pierson Reference Pierson, Gamble, Marsh and Tant1999: 175–194).

In contrast, from a Hegelian perspective, the inequalities we identified above are solvable within the framework of a modern market society regulated by a welfare state. From the perspective of a Hegelian welfare state, the negative phenomena of sharp class division, freedom-restricting alienation, and poverty that leads to exclusion from the market represent only one possible outcome of how market society could affect citizens, in the absence of sufficient regulation. A Hegelian welfare state would prioritize sufficientarian solutions with the aim of maximizing the beneficial aspects of market society while mitigating its adverse effects. A Hegelian welfare state would neither seek to abolish the market nor private property, as both are considered preconditions for the citizens’ freedom of self-actualization in modernity (Schmidt am Busch Reference Schmidt am Busch2015: 473–485). Instead, it would compensate for the negative effects that inequality of classes and property have on citizens’ freedom of self-actualization. Hegel’s analysis of socioeconomic inequalities, when considered in conjunction with his broader philosophy of freedom and self-actualization, is compatible with a welfare state that is not opposed to the market. Instead, it seeks to enable every citizen to benefit fully from the positive prospects offered by private property and market society.