Does Hayek make any sense?

You say “Hayek’s theory of spontanious order does not itself imply a fundamental critique of existing government interventions.”

I believe that your analysis skipped over the central point if this is your conclusion. Although government institutions and laws may emerge as a part of spontanious organization, and indeed are part of the evolutionary process, institutions which interfere with other institutions (i.e. the private market) in their natural evolution and freedom of exchange are henceforth not part of a free society.

Just as my right to freedom stops at your rights – and I have no freedom to murder you – the existence of spontanious government is okay only so long as it allows the existence of the rest of the free society. Once an institution interferes with that freedom, it is no longer part of the free society and becomes an outside intrusion.

Dear Tyler,

Having read your short essay, I still cannot grasp what is troubling you about Hayek’s stance?

Hayek provides a rich theory of TAXIS (a made order), COSMOS (a grown or spontaneous order) and the interaction of taxis and cosmos. Agents of the spontaneous order such as firms will to a large extent be run in the manner of taxis. This is also true for agents that one might consider part of the public sector – law enforcing institutions, for example. Agents such as firms or courts or political bodies must, however, be allowed or induced to interact in such a way as to further rather than stifle the spontaneous order of the market or the rule of law or most generally the freedom of society. While being taxis-type of institutions (to some extent or even to a large extent), what matters is that their interaction obeys the requirements of a Great Society (Adam Smith?) or Open Society (Popper), i.e. that their interaction is not regulated by taxis-type rules but by cosmos-type rules. Thus, we may quite purposefully design an organisational framework for a law enforcing institution (thus engaging in taxis-type behaviour), however, only to make it as efficient as we can in safeguarding “general rules of just conduct”, which promote cosmos-type of behaviour, the very precondition of a free society. This is analogous to running, planing and organising a company (taxis-type behaviour) that in its interaction with other companies must observe “general rules of just conduct”, to guarantee the sponatenoeus order of the market (cosmos-type behaviour).

In my experience, reading “The Fatal Conceit” and no other book from the author, must leave anyone confused and “underfed” as to the full meaning of Hayek’s work. I was only able to come to grips with Hayek – very gradually, at that – when studying (over and over again) “Law, Legislation and Liberty” AND “The Constitution of Liberty”. In addition, it is very helpful to read his essays in the two volumes “Studies in…” and “New Studies in…” and the brilliant German papers collected in “Freiburger Studien” (I think, available only in German).

Hayek is tough and time consuming reading – but as you get more and more acquainted with the full width of his thinking the reward keeps growing.

While Marshall used to say (dubiously) of his own work: “It’s all in [Adam] Smith”, I tend to think with regard to a comprehensive and consistent liberal ( = libertarian) stance: It is all in Hayek.

Kind regards,

Igor Uszczapowski

I’ve gotten my Hayek secondhand, but my feelings on what I’ve heard are identical to Tyler’s.

Dear Liberty,

(1) Apologies for the “friendly fire”.

(2) This is the second time that I follow a blog-”thread” associated with a prestigious American University, only to encounter the same disappointing pattern. A big shot conferencier proposes a riddle (which is not really a riddle but a confusion on the part of the big shot). Comments are made, as an exercise in the “abuse of democracy from below” (“Hey, I got a right to an opinion, don’t I!” Disregarding the fact that with an endless range of things to have an opinion on, it should always be our striving to pronounce an opinion on matters that we have seriously looked into – unless FORCED to give an unsubstantiated opinion).

The big shot does not condescend to comment (presumably being busy to start the next fire and wise enough not to get entangled in an exchange that might damage his authority). And indeed, his authority (in the issue at hand) is never seriously questioned – partly because no one knows what they are talking about, partly because the courtier-commentators – cheeky and assertive as they may be – like to bask in the bigshot’s sunshine.

Characteristically, turning the “thread” into an election serves to nobilitate unsubstantiated opinion at the expense of intellectual substance. Or to put it differently: There is absolutely no need to vote on the issue (except for the doubtful reason just given). Instead, what is very much needed is the spelling out of arguments. But: in no time, everyone rushes on to the next droplet to repeat the subcultural exercise.

(3) Dear Liberty, I think I understand your position and agree with it. However, it is not fellicitous that you used an expression that represents a “contradictio in adjecto” in terms of Hayek’s terminology. He contrasts “oranisation(s)” against a “spontaneous order”, which is the very essence of the distinction between TAXIS and COSMOS. For everyone interested in some enlightenment on this question – do read Hayeks “Arten der Ordnung” (Freiburger Studien, p.32) or “Two kinds or order” (if I remember the English title correctly – one of the papers in either “Studies in…” or “New Studies in…”) – which should be readily available from the library of a prestigious American University.

Kind regards,

Igor

Igor: Notice that I spoke of two levels. As for dispersed knowledge, yeah, sure.

Dear Daniel,

You concluded:

Bottom line: “spontanoeus order” basically mean “voluntary order”.

To the contrary, in a planned society – toward which we have been moving for so long – we are trying to create a voluntary order, an order derived from and in line with our volition: Let no one make less than x $ an hour.

In a free society an “involuntary order” prevails, for no one expressly intends to bring about much higher income and wealth than in a planned society, yet this will be the result.

The first to see this was Mandeville and the most famous proponent of the idea was a certain Adam Smith.

Capitalism (an economic order dependent on a free society) cannot work in the absence of a genuine rule of law. To understand the true meaning of the rule of law, we need to comprehend the difference between taxis and cosmos type of rules.

I know of no other author, who has made the nexus more intelligible that exists between the institutions of liberty. Hayek has never looked around to see which department he belonged to and then looked at the world from the home perspective. He has stuck to the questions he had and let them take him to whatever department might be helpful in answering them. This is one of the reasons why he is so unpopular: He is too much of a jurist to the economist and vice versa, too much of an economist to the epistemologist, too much of an epistemologist to the political scientist and so on. What is really hard to come to grips with in Hayek is that he brings us from his journey among the worlds ideas that we are NOT USED TO. It is not the intricacy of his thoughts as such – it is that our thinking is so compartmentalised, so trained not to think in a truely interdiciplinary way. I cannot read Hayek without finding instructive messages I have missed before.

Kind regards,

Igor

James:

Hayek’s “spontaneous order” versus “designed order” is a typical false dichotomy that obscures the reality of evolutionary systems. Evolutionary systems develop due to accretion (among other things.) Take for example his claim ‘We have never designed our economic system. We were not intelligent enough for that’. That’s nonsense: our economic system is a product of accreted designs, selected deliberately by central planners who thought we needed stable property, stable currency, transparent financial institutions, and a host of other things. There are aspects that are spontaneous and aspects that are designed.

Igor:

If you don’t know which strand of the enlightenment Hume occupied, look it up. It’s pretty damned obvious.

David Stove’s point of view was that supposedly great thinkers were pathological. The quote was from his chapter “What is Wrong with Our Thoughts.” My view of Hayek is that his writings are pathological because of his fixation on propagandizing capitalism.

I’m far from the only person who thinks this way:
“[What Hayek] does not see, or will not admit, [is] that a return to “free” competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State. The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led, and since the vast majority of people would far rather have State regimentation than slumps and unemployment, the drift towards collectivism is bound to continue if popular opinion has any say in the matter.”
George Orwell, in a 1944 review of “The Road to Serfdom” by F.A. Hayek and “The Mirror of the Past” by K. Zilliacus

“But let us never forget, either, as all conventional history of philosophy conspires to make us forget, what the ‘great thinkers’ really are: proper objects, indeed, of pity, but even more, of horror.”
David Stove

Mike,

It isn’t false when read literally. The quote reads “We have never designed our economic system. We were not intelligent enough for that”
——
economic system

noun
the system of production and distribution and consumption [syn: economy]
——–

We have not and are not smart enough to design our system of production and distribution and consumption. To design a system of production and distribution and consumption, you would have to determine the inputs required for each sector of the economy, determine the level of output and means of distribution said output, etc. They tried it in the Soviet Union, it was a famous disaster.

Lee,

Is your field Complex Adaptive Systems? I am not much familiar with of the people that you mention but they seem to at least border complexity theory. In any case it is an emerging science which Hayek pioneered which does not presume that both sides of this dichotomy are helpful to complex systems such as the economy, ecological, biological and physical systems. Rather the theory of Complex Systems or Complexity Science finds that in each of these complex systems, interventions – such as wealth redistribution or price controls – into the natural or “spontaneous order” of the system will impede its development and its ability to find an equilibrium. Institutions which do not put controls on the system itself (such as organizations within the system – like a corporation) may exist, but institutions which try to control the flow of the spontaneous order (such as government which tries to set a price or take profits from one area and invest them in another) are not conducive to the health of the system.

Of course such a system may require basic laws which are natural to the ability for the system to spontaneously emerge – such as property rights and human rights laws. With such basic laws in the place the complex system will naturally come about as an emergent property of individual transactions. This is evidence that it is a complex system and that intervention into it by an outside coercive force which is able to affect the system broadly (such as government) will only cause unintended consequences by such intervention and cause the system to collapse.

You might find John Holland, The Santa Fe Institute, the work at Los Alamos, etc useful.

Dear Mike Huben,

(1)

You suggested to me:

“If you don’t know which strand of the enlightenment Hume occupied, look it up. It’s pretty damned obvious.”

If the issue is “pretty damned obvious” to grasp or easy to look up, why have Stove and Huben failed to do just that?

Treating the Enlightenment as an intellectual monolith and thinkers such as Voltaire and Rousseau, on the one hand, and Hume, on the other, as congenial is akin to regarding, say, Marx and Popper, as representatives of the same school of thought, because both believed themselves to be human beings rather than Mauritian dodos.

Lumping together the French philosophers Voltaire to Condorcet, on the one hand, and Scottish and English thinkers from Mandeville, Hume, Adam Smith to Edmund Burke, on the other, is to overlook the essential and irreconcilable differences between them, which are far more significant than any similarities.

Incisively, Hume has been portrayed as beating the (French) Enlightenment at its own game, pruning the boundless ambitions of reason by dint of rational analysis. True liberalism is about respecting reason by understanding and accommodating the limits of reason.

Unfortunately, the French interpretation of the ideals of political freedom has largely superseded the earlier, foundational British reading – which, I suspect, is why in the United States socialists and social democrats (supporters of the Democratic party) are called liberals, a term more appropriately applicable to those adhering to the ideas proposed by the British founding fathers of liberalism – above all Hume, whose work, preceding French “liberalism”, paved the way for the Scottish moral philosophers Adam Furgeson, Adam Smith, Dugald Steward, and the authors of the American Constitution, (and the adoption of the evolutionary paradigm by Charles Darwin for the purposes of the natural sciences).

Hume’s enlightenment deals with civilization as a growing order, whose quality and success depend on safeguarding the spontaneous forces underlying its development; the French enlightenment considers civilization an engineering feat of the human mind, it considers society an organization, whose quality depends on the degree to which man’s conscious design is efficacious in shaping it. French Enlightenment is cognitively primitive, it thinks of an abstract order (a complex society with hundreds of million of people, most of whom do not know each other) as immediately and concretely comprehensible and fruitfully regimentable as a tribe. Hume’s Enlightenment is about a complex society, where abstract rules of just conduct (rather than interested tribal commands) are required to promote the freedom and justice needed to benefit from the immense diversity of interests and values prevailing among millions of people.

Hume’s enlightenment is about the principled “rule of law” (to constrain any powers-that-be, among other functions of the rule of law); the French enlightenment is about the unprincipled “rule of men (who happen to be in power)”.

(2)

This is not the place to enlarge on why I object to Orwell’s
“fixation on propagandizing [anti-]capitalism…monopoly [see below]… State regimentation…and collecticism”. (from your quote above).

It is not clear what “unfree” competition is supposed to be – though I have a suspicion what Orwell is driving at. Suffice it to mention that the vices of “capitalism” are really the vices of a highly politicised society (“the rule of men”) that – in the absence of the rule of law – induces and depends on a rat-race for the provision of special interests and its stifling imposition on a spontaneous order, which results in monopolies and countless other “bads” such as illegitimate wars, economic depression, retarded economic development or insolvent nations.

There are numerous papers explaining convincingly why economic competition is not a zero-sum game. The most graphic counter-argument in the face of the zeo-sum proposition is the computer in front of your nose, your standard of living for which Hume, a rich man in his day, would envy you. Of course, one might regard, say, friendship a zero-sum game on the grounds that – to maintain a good relationship – friends (say, spouses) sometimes have to make painful concessions and adjustments to their (initial) plans – but that is as shortsighted as the idea that competition is a zero-sum game, because, say, GM would end up a looser if it tried to survive by making sedans (carried by “Chairmen” in the language of Adam Smith), rather than prospering by producing what people are prepared to spend their money on – these days. The false zero-sum claim is a convenient substitute for saying: “Having to make an effort, possibly incurring costs and losses, and the opportunity for someone else to be more successful than you is anti-social”.

Kind regards,

Igor

Dear Lee A. Arnold,

While our blog-thread has disappeared into the archive, and I feel, I have said what I had to say, let me take my leave by quoting Friedrich August (Hayek) to provide some clues that might help answer your last question:

“It is perhaps not surprising that men should have applied to joint efforts of the actions of many people, even where these were never foreseen or intended [see my Bill Gates and Igor U. example above, I.U.] the conception of justice which they had developed with respect to the conduct of individuals towards each other. ‘Social’ justice…came to be regarded as an attribute which the ‘actions’ of society, or the ‘treatment’ of individuals and groups by society, ought to possess. As primitive thinking usually does when first noticing some regular processes, the results of the spontaneous ordering of the market were interpreted as if some thinking being deliberately directed them, or as if the particular benefits or harm different persons derived from them were determined by deliberate acts of will, and could therefore be guided by moral rules. This conception of ‘social’ justice is thus a direct consequence of that anthropomorphism or personification by which naive thinking tries to account for all self-ordering processes. It is a sign of the immaturity of our minds that we have not yet outgrown these primitive consepts and still demand from an impersonal process which brings about a greater satisfaction of human desires than any deliberate human organization could achieve, that it conform to the moral precepts men have evolved for the guidance of their individual actions.” (Law, Legislation and Liberty (LLL),Volume 2, The Mirage of Social Justice,p. 62 ff, Chicago, 1978)

“Such statements which explicitly connect ‘social and distributive justice’ with the treatment by society of the individuals according to their ‘deserts’ bring out most clearly its difference from plain justice, and at the same time the cause of the vacuity of the concept: the demand for ‘social justice’ is addressed not to the individual but to society – yet society, in the strict sense in which it must be distinguisehed from the apparatus of government, is incapable of acting for a specific purpose, and the demand for ‘social justice’ therefore becomes a demand that the members of society should organize themselves in a manner which makes it possible to assign particular shares of the product of society to the different individuals or groups.” (item, p.64)

“It has of course to be admitted that the manner in which the benefits and burdens are apportioned by the market mechanism would in many instances have to be regarded as very unjust IF [change of character by I.U., I.U.] it were the result of a deliberate allocation to particular people. But this is not the case. Those shares are the outcome of a process the effect of which on particular people was neither intended nor foreseen by anyone when the institutions first appeared – institutions which were then permitted to continue because it was found that they improve for all or most the prospects of having their needs satisfied. To demand justice from such a process is clearly absurd, and to single out some people in such a society as entitled to a particular share evidently unjust. (item, p.64 f)

“The excpression ['social justice', I.U.] of course described from the beginning the aspirations which were at the heart of socialism. Although classical socialism has usually been defined by its demand for the socialization of the means of production, this was for it chiefly a means thought to be essential in order to bring about a ‘just’ distribution of wealth; and since socialists have later discovered that this redistribution could in a great measure, and against less resistance, be brought about by taxation (and government services financed by it), and have in practice often shelved their earlier demands, the realization of ‘social justice’ has become their chief promise. It might indeed be said that the main difference between the order of society at which classical liberalism aimed and the sort of society into which it is now being transformed is that the former was governed by principles of just individual conduct while the new society is to satisfy the demands for ‘social justice’ – or, in other words, that the former demanded just action by the individuals while the latter more and more places the duty of justice on authorities with power to command people what to do.” (item, p.65 f)

“The commitment to ‘social justice’ has in fact become the chief outlet for moral emotion, the distinguishing attribute of the good man, and the recognized sign of the possession of a moral conscience. Though people may occasionally be perplexed to say which of the conflicting claims advanced in its name are valid, scarcely anyone doubts that the expression has a definite meaning, describes a high ideal, and points to grave defects of the existing social order which urgently call for correction…But the near-universal acceptance of a belief does not prove that it is valid or even meaningful any more than the general belief in witches or ghosts proved the validity of these concepts. What we have to deal with in the case of ‘social justice’ is simply a quasi-religious superstition of the kind which we should respectfully leave in peace so long as it merely makes those happy who hold it, but which we must fight when it becomes the pretext of coercing other men. And the prevailing belief in ‘social justice’ is at present probably the gravest threat to most other values of a free cobilization.” (item, P.66 f)

“It is now necessary clearly to distinguish between two wholly different problems which the demand for ‘social justice’ raises in a market order.

The first is whether within an economic order based on the market the concept of ‘social justice’ has any meaning or content whatever.
The second is whether it is possible to preserve a market order while imposing upon it (in the name of ‘social justice’ or any other pretext) some pattern of remuneration based on the assessment of the performance or the needs of different individuals or groups by an authority possessing the power to enforce it.

The answer to each of these questions is a clear no.

Yet it is the general belief in the validity of the concept of ‘ social justice’ which drives all contemporary societies into greater and greater efforts of the second kind and which has a peculiar self-accelerating tendency; the more dependent the position of the individuals or groups is seen to become on the actions of government, the more they will insist that governments aim at some recognizable scheme of distributive justice; and the more governments try to realize some preconceived pattern of desireable distribution, the more they must subject the position of the different individuals and groups to their control. So long as the belief in ‘social justice’ governs political action, this process must progressively approach nearer and nearer to a totalitarian society.” (item, p 67 f)

Finally, let me ask a question, although we are not likely to receive an answer to it:

Tyler Cowen, do you feel you have been helped by our contributions to the present thread in deciding whether you are able to make sense of Hayek or not?

Kind regards,

Igor

Igor, that was the very first thing I asked you: whether you believe taxis and cosmos are concomitants.

2 The problems with democracy do not negate the needs for social action.

3 It is “freedom” that centralism stifles, not “spontaneous forces,” which is a scientism after physics. Misplaced concreteness.

4 You write that I think “that what is bad about the system is the result of capitalism.” That is wrong. Although historically, you should not doubt that capitalism brought atrocious conditions, only they got better in most areas, and partly because they were charged to do so, by movements for social justice. These got to the floor of Parliament several times. The employment of young children was knocked down from 12 to 10 hours, then 8 hours a day! How do you deny the necessity of non-market institutions, beyond those of law for property and contracts?

5 I think I’ll go with the “sensationalist propaganda lies from the 19th century” of Charles Dickens. Who achieved several different kinds of social good.

6 Pareto efficiency does NOT require any certain distribution of productivity gains, (a result nicely finessed by both Kaldor and Hicks,) so therefore, the concept of “rising welfare for all” means the poor eat out of better garbage cans. Meanwhile, at the other end of town, for the same reason, there will never be a one-to-one relationship between desert and entrepreneurial creativity.

7 If humans cannot have enough knowledge to know the whole, — which we all agree with — if no fool can know everything, then there will NOT be a spontaneous solution to all systemic problems, BECAUSE no one could see them coming in time. Spontaneous order does NOT cause the good of systems outside of economics, and these may impinge on the economic system. We see this in our new era of natural ecological, climatological constraints. (That is why The Rise of the West does not refer to historical economic growth as “sustainable growth.”) So you will need new institutions there too.

Or else, spontaneous order is communicated to you by God: Hayek’s system needs a Perfect New Hayekian Man, who is psychologically identical to the New Communist Man that would make communism work.

Or perhaps we should say: maybe Hayek doesn’t make sense on this issue, except to warn the “forces” of freedom against state ownership.

Dear Timothy (TJ Murphy),

It is difficult for me to pinpoint the meaning of your expressions “a ‘mind’ in a real sense” and “actual conscious intelligence”. The philosophy of mind is a vast and difficult subject-matter; I can do little more than suggest some literature pertinent to your questions: As for Hayek’s output, I recommend his books “The Sensory Order”, “The Counter-Revolution of Science”, various articles from his two volumes “Studies in Philosophy, Economics…” (I do not recall the exact titles of these two volumes) and “New Studies in Philosophy, Economics…” (including his “Theory of Complex Phenomena” and other articles of epistemological import) and always “The Constitution of Liberty” and the deepest and most complete book on the fundamental issues of the social sciences (including their epistemological implications) “Law, Liberty and Legislation”.

Lindblom I mentioned only because I find the first part of the book which is concerned with the coordinative capabilities of the market order remarkably graphic – I don’t seem to remember that the book is otherwise particularly concerned with the philosophy of mind.

A readable echo (and in many ways re-representation of Hayek) can be found in “Knowledge and Decision” (also epistemologically interesting) by Thomas Sowell, whose books on economics especially “Basic economics” and “Applied Economics” and Gwartney’s and Stroup’s textooks on economics are about the best and most one needs to know concerning the economic underpinnings (rather than wasting time doing an economics degree in the shallow, name dropping, narrow-minded and conceited environment of “everything-must-be-Economics-for-I-am-an-Economist”-types).

As for a theoretical framework, dear Timothy, you will find the above literatur useful, but also Karl Popper – especally his theory of Worlds 1, 2, and 3 (see for this also his last book with Eccles). The best introduction to Popper is his own “Objective Knowledge”, from which I personally derived the ideas of a “super-human” intelligence made possible not by any individual mind but by human language and the interaction of human minds mediated by it. I was totally fascinated by Popper’s idea (my reading) that objectivity does not mean “ultimate, indubitable truth” (in which way we often like to use the word) but simply “outside our own minds”, “the creation of an object of critical discourse”, which only man is capable of as other thinking animals are largely locked up in their subjectivity, severly limited, practically incapable of a critical exchange with other minds.

I hate to admit that I have never read Ayn Rand, but as I have implied somewhere above (in this thread), Hayek seems to be in agreement with her in that to him just or injust conduct is a quality reserved to human beings. One may discover certain analogies between an anonymous order (such as the market) and the human mind (or other animated entities), but for the purposes of moral discernment and responsibility, Hayek is adamant that there is “ as an entity”. It is a recurrent theme in Hayek to warn against anthropomorphism, personification, animism – which is a main barrier against an appreciation that order and great aggregate achievments (economic coordination and wealth, scientific progress, cultural and civilizatory advancement) may come about as a consequence “of human action but not of human design” and that the more complex an order is the more likely will it be the outcome of spontaneous processes rather than the realization of a blueprint.

Kind regards,

Igor

Correction,

The first < <<>>> in the above post should contain the quote: < <>>

Sorry; a rushed posting
TJ

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