Hayek argued for a stronger connection between inequality and economic progress in his 1960 work The Constitution of Liberty. “New knowledge and its benefits,” writes Hayek, “can spread only gradually, and the ambitions of the many will always be determined by what is as yet accessible only to the few . . . This means that there will always be people who already benefit from new achievements that have not yet reached others.”
Hayek’s basic point is simple: Before many social advancements become common, they first exists as luxuries. “The new things,” writes Hayek, “will often become available to the greater part of the people only because for some time they have been the luxuries of the few.” This applies to much of what the average person in a developed society today takes for granted: automobiles, air-conditioning, refrigeration, tablet computers, smart phones, and so on. Go back far enough, and we might even add clean water and basic sanitation to the list.