Friedrich Hayek

Assesses John Tomasi's Free Market Fairness.

Friedrich Hayek’s defense of neoliberal free market capitalism hinges on the distinction between economies and catallaxies. The former are orders instituted via planning, whereas the latter are spontaneous competitive orders resulting from human action without human design. I argue that this distinction is based on an incomplete semantic history of “economy.” By looking at the meaning of “oikonomia” in medieval providential theology as explained by Giorgio Agamben and Joseph Vogl, I argue how Hayek’s science of catallactics is itself a secularization (...) of providential theology. This exposes Hayek to three criticisms: he unjustifiably neglects the possibility of tendencies toward spontaneous disorder in free markets, he condemns the “losers” of neoliberal competition to being providential waste on the road to general prosperity, and he imposes on people the duty to consent to a neoliberal order that hinders them from cultivating their inoperativity. (shrink)

How should we design our economic systems? Should we tax the rich at a higher rate than the poor? Should we have a minimum wage? Should the state provide healthcare for all? These and many related questions are the subject of distributive justice, and different theories of distributive justice provide different ways to think about and answer such questions. This book provides a thorough introduction to the main theories of distributive justice and reveals the underlying sources of our disagreements about (...) economic policy. It argues that the universe of theories of distributive justice is surprisingly simple, yet complicated. It is simple in that the main theories of distributive justice are just four in number, and in that these theories each offer a distinct, well-defined theoretical approach to distributive justice; yet it is complicated in that the main theories disagree at several distinct, fundamental levels, and in that it is possible to spin innumerable new theories from the elements of the four main theories. (shrink)

In his book The Sensory Order, Hayek anticipates many of the central ideas behind what we now call the connectionist paradigm, and develops on this basis a theory of the workings of the human mind that extends the thinking of Hume and Mach. He shows that the idea of neural networks is can be applied not only in psychology and neurology but also in the sphere of economics. For the mind, from the perspective of The Sensory Order, is a dynamic, (...) relational affair that is in many respects analogous to a market process. The mind, as Hayek puts it, is a 'continuous stream of impulses, the significance of each and every contribution of which is determined by the place in the pattern of channels through which they flow' , so that the flow of representative neural impulses can be compared 'to a stock of capital being nourished by inputs and giving a continuous stream of outputs'. (shrink)

In spite of the important discoveries made by Adam Smith and later by the economists of the Austrian School, Friedrich Hayek remained intellectually challenged by the miracle of the price mechanism. As it turned out there was still some pioneering to do in describing the price mechanism. This became clear when Hayek identified the dispersal of information relevant to exchange transactions as the central issue of economic study. In the context of his distinction between competition as a state of things (...) and as a process the price mechanism manifests itself as a powerful integrator of information which is at first sight hopelessly dispersed in modern society. In 1945 he pointed out another intellectual challenge which the miracle of the price mechanism poses: How could such a marvelous functionality come into existence? “I am convinced that if it [the price mechanism] were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind”. It is precisely because the free determination of prices is obviously not an invention, and because actors on the market in general do not realize that their decisions are at once also signals for the information-processing system that the market is, that in general this market order is not highly estimated. The market order is nevertheless the best illustration of the dual principle that the most beautiful forms of complex functionality are not deliberately created and are not deliberately maintained. (shrink)

Postmodernism is often characterized, among other things, as the belief in the unattainability of objective truth and as a rejection of teleological and reductionist, or essentialist, forms of thought. For instance, in his provocative book The Rhetoric of Economics, Donald McCloskey sketches the implications for economic methodology of Richard Rorty's rejection of the modernist quest for Truth, as represented by various rationalist and empiricist epistemologies. McCloskey describes modernist methodology as displaying a desire to predict and control, a search for objective–;which (...) often means measurable–;knowledge, and an attempt to develop a value-free inquiry, among other characteristics. This “methodological correctness,” McCloske suggests, is discredited by the postmodern dissatisfaction with traditional epistemology. Thus, in place of the modernist belief in a rule-guided path to truth, he advocates a “free market” approach to knowledge, in which participants in the variety of theoretical conversations agree to be earnest and listen politely to one another. (shrink)

F. A. Hayek's contributions to a variety of disciplines were decisively influenced by his career as an economist, running from early work in capital theory and business cycles to the economics of socialism and neo‐Austrian theories of competition. After reviewing his battle with Keynesian economics, this essay examines the socialist calculation debate, which altered Hayek's views of the central task of economics and led to a definite but disguised break with the views of Ludwig von Mises; and discusses the issue (...) of what, if anything, economics can predict, an area Hayek never thoroughly explored. An air of uncertainty therefore continues to hang over many of his fundamental ideas. (shrink)

The application of evolutionary ideas to socioeconomic systems has been an increasingly prominent theme in the work of Friedrich Hayek, and the motif has become dominant in his recent book. In an earlier issue of this journal, Viktor Vanberg raises two substantive criticisms of Friedrich Hayek' theory of cultural evolution that invoke some important questions concerning use of the evolutionary analogy in social science.

In this paper, I expound Philip Pettit’s political thought as an example of a ‘spontaneous and naturalistic’ view of politics and place his account within a liberal tradition of epistemological modesty which Pettit imagines he has transcended. To this end, I highlight the affinities between Pettit’s theory of freedom and a paradigmatically ‘modest’ social theory, namely, Hayek’s theory of the spontaneous social order. In light of the comparison with Hayek, I show that Pettit’s distinction between liberal and republican thought is (...) not as vivid as he suggests. My contention is that the republican ideal of freedom offers not so much the makings of a viable non-liberal theory of political association as the expression, under a ‘new’ language of citizenship, of specifically Hayekian intuitions that lie at the core of contemporary neoliberalism. (shrink)

L’idée la plus répandue est que dans les années 40 Hayek délaissa l’économie en général et la théorie du cycle des affaires en particulier. En fait, Hayek est demeuré fidèle à ses idées sur ce dernier point. Sa théorie du cycle économique diffère de celle de Mises : Hayek a mis l’accent sur les perturbations endogènes qui donnent naissance aux cycles. Selon Hayek et Wicksell, le système bancaire ne parvient pas à arrêter cette expansion illusoire. Les derniers travaux de Hayek (...) sur la concurrence et la monnaie sont dans la lignée de son objectif de stabilisation monétaire. Il ne propose pas une théorie du cycle des affaires mais plutôt une théorie à propos de l’absence de cycles, une théorie de l’anti-cycle.The most commonly held idea is that in the 1940s Hayek lost interest in economics in general and in trade cycle theory in particular. Hayek did not change his mind on this subject. His trade cycle theory differs from Mises’one: Hayek puts the stress on the endogenous disturbance at the beginning of the trade cycle. According to both Hayek and Wicksell, the banking system fails to stop the false expansion. His late works on competition and money remain in line with his objective of monetary stabilization. Hayek does not present a trade cycle theory but rather a theory about the absence of a cycle, an anticycle theory. (shrink)

Fascinating and thought-provoking, this book shows how the methodology of Austrian economics can be justified and strengthened by grounding it in the philosophy of Wittgenstein. Frege and Wittgenstein argued that whatever counts as thought must embody logical principles. Their arguments also support the conclusion that whatever constitutes action must embody economic principles. In this incisive text, the author shows that this confirms the claims of Austrian economists such as Mises and Hayek that the laws of economics are _a priori_ rather (...) than empirical. (shrink)

Despite her admiration for the economic theories of Ludwig von Mises, Ayn Rand rejects Mises's central concept of "praxeology," the science of human action. Yet the features of Misesian praxeology that Rand finds most objectionable— its aprioristic methodology, its value-subjectivism, and its claims about motivational psychology— can be reinterpreted in ways that make them congenial to Rand's philosophical principles while still preserving the essential points that Mises wishes to make.

Karl Polanyi's double movement is a dialectical process characterized by a continuous tension between a movement towards social marketization and a movement towards social protectionism. Notably, Polanyi condemns the former movement while defending the latter. Without using the term " double movement " , F.A Hayek's theory of social evolution acknowledges the same phenomenon but reaches different normative conclusions. While for Polanyi the marketization of society is a utopia with dystopian consequences, Hayek's evolutionary explanation of this dialectical process asserts that (...) there is no alternative to a market oriented society. Both authors defend that their favoured movement is the one that truly supports the continuity of life. This article compares the authors' normative readings of the double movement and concludes that, from an evolutionary perspective, Polanyi's conclusion possesses a robustness that Hayek's postulate lacks. (shrink)

This volume is the first of three dealing with the subjects in the title. Although Professor Hayek has defended liberal constitutionalism in earlier books, he here provides a more elaborate analysis of it and seeks to uncover the basic misconceptions that have eroded its support. The main reason for the decreased support is the belief that institutions serve human purposes only if they have been deliberately designed for those purposes, and that a society which does not serve our purposes should (...) be redesigned to do so. In opposition to such "constructivist" views, Hayek supports an evolutionary view of society’s institutions; he believes that institutions and practices first adopted accidentally or for other purposes are preserved if experience proves them valuable. He contends that society should be allowed to evolve slowly since the vast knowledge necessary to design properly its institutions is unavailable. (shrink)

In Hayek, there is an epistemological stance idealizing the general theory which favors practical knowledge over theoretical one and value in conclusion, which refers to the restrictions of the mind. This standing point establishes a binding institutional ground for the views which have to be defended as a social justice critique and a rational alternative to the regime. Especially the distinction between practical and theoretical knowledge has a characteristic weight on the critiques of central planning and social justice. In this (...) article, the Hayekian attitude regarding the market reaching to a unique superiority by processing local data will be criticized. Moreover, the propositions “Justice principles can not be overcome” and, if it occurs, “The result will be necessarily a totalitarian at the preventive covering of the state” will be a subject for criticism. Consequently, it will be argued that the desire for regulating democratic state in the name of liberal state means a conservative conspiracy to hide the inequalities. (shrink)

Friedrich Hayek is one of the most influential political philosophers of the twentieth century. A 1974 Nobel Prize winner for Economics, Hayek argues for the superiority of the free society over totalitarian, planned societies. Although Hayek arguably hit his target, he missed the bull’s-eye, because he failed to explain government and its prudential limits with reference to a complete view of human nature. This is partly because he failed to recognize that Christianity is the essence of Western civilization.

Bruce Caldwell has disputed a number of points in my earlier account of the development of the Austrian school of economics from Carl Menger to Ludwig von Mises and F.A. Hayek. The issues in contention regard Friedrich von Wieser’s intellectual affiliation with Hayek and his influence on the formation of Hayek’s economic thought; Wieser’s status as a general equilibrium theorist; and the reason for Hayek’s early flirtation with general equilibrium theory. In this article I argue that Hayek was a self-conscious (...) adherent of the Wieserian tradition and remained so even after he received the Nobel Prize in 1974 and that he distinguished between this tradition and the Böhm-Bawerkian tradition followed by Ludwig von Mises. I also contend that Wieser used the construction of a general equilibrium economy subject to a single will as both a normative benchmark by which to appraise the performance of the real-world market economy and as an analytical tool to explain the formation of market prices. Finally, I argue that Hayek concerned himself with the problems of the Wieser-type general equilibrium economy beginning with his earliest writings as a professional economist, years before he began to focus on the theoretical problems of money and the business cycle.Bruce Caldwell a discuté un certain nombre de points de mon article récent sur le développement de l’école autrichienne d’économie de Carl Menger en passant par Ludwig von Mises et F.A. Hayek. Les controverses concernant l’affiliation intellectuelle de Hayek vis-à-vis de Friedrich von Wieser et l’influence de ce dernier sur la pensée économique de Hayek, le statut de Wieser en tant que théoricien de l’équilibre général, et les raisons pour lesquelles le jeune Hayek flirta avec la théorie de l’équilibre général.Dans cet article je défends la thèse selon laquelle Hayek était conscient du fait qu’il s’inscrivait dans la tradition Wieserienne et qu’il l’était toujours même après sa réception du prix Nobel en 1974 et quand il fît la distinction entre cette tradition et la tradition inaugurée par Böhm-Bawerk et poursuivie par Mises. L’article affirme aussi que Wieser utilisa la construction d’une économie en équilibre général sujette à une volonté unique à la fois comme standard normatif pour évaluer les performances des marchés dans le monde réel et comme outil analytique pour expliquer la formation des prix marchands. Enfin, l’article argumente que Hayek s’intéressa aux problèmes relevant d’une économie en équilibre général à la Wieser dans ses premiers écrits en tant qu’économiste et cela bien avant qu’il ne se concentrât sur les problèmes théoriques de la monnaie et du cycle des affaires. (shrink)

The paper challenges Joseph Salerno’s recent revisionist account in “The Place of Human Action in the Development of Economic Thought” of the relationship between Friedrich von Wieser and F.A. Hayek and of their views on equilibrium theory. The paper argues, contra Salerno, that Wieser was not a proponent of general equilibrium theory, so could not have influenced Hayek in the manner Salerno suggests; that there was not a concerted effort by Schumpeter, Wieser, Mayer, and Hayek to advocate general equilibrium theory (...) in the prewar and inter-war years among the Austrians; and finally, that Hayek’s early attraction to what he called “equilibrium analysis” had causes independent of those alleged by Salerno.Cet article récuse l’interprétation révisionniste récente de Joseph Salerno dans son article “The Place of Human Action in the Development of Economic Thought” à propos des relations entre Friedrich von Wieser et Friedrich Hayek, et de leurs visions au sujet de l’équilibre. S’inscrivant en cela en opposition avec ce qu’avance Salerno, cet article suggère que Wieser n’était pas un partisan de la théorie de l’équilibre général et, en conséquence, ne peut avoir influencé Hayek comme le suggère Salerno ; qu’il n’y a eu aucun effort concerté entre Schumpeter, Wieser, Mayer et Hayek pour promouvoir la théorie de l’équilibre général parmi les autrichiens durant les années d’avant-guerre et celles de l’entre-deux guerres ; et enfin, que l’intérêt du jeune Hayek dans ce qu’il appelait “l’analyse de l’équilibre” avait des causes autres que celles évoquées par Salerno. (shrink)

En post-scriptum de la Constitution de la Liberté, Friedrich Hayek situa le coeur de ses convictions où il perçut qu’était leur place dans l’histoire des idées. Il était, il insistait, “simplement un vieux Whig impénitent”, en insistant sur le “vieux”. Le Whiggisme, il venait de le soutenir, était le nom du seul et unique courant de pensée qui s’opposa sérieusement à tout pouvoir arbitraire. En mettant en avant le fait que le “vrai libéralisme” n’avait pas de nom reconnaissable afin de (...) le distinguer du “faux libéralisme”, Hayek suggéra celui de “vieux Whig” – bien qu’il sembla plus proche de sa validité historique que de son utilité dans le monde réel. Cet essai tente d’illustrer ce qu’Hayek voulait dire en s’appelant lui même vieux Whig ou Whig Burkéen, comme il se décrivit plus tard. Il soulève des questions quant à la validité de la conception qu’Hayek avait de lui, et quant à la vraie nature des vieux Whig historiques. Cet article explore le modèle historique créé par Hayek, centré sur l’événement clé de la Révolution Française, pour expliquer ce qu’il appela une “contre-renaissance” en faveur du collectivisme.In is postscript to The Constitution of Liberty, Friedrich Hayek placed his core beliefs into what he perceived as their proper place in the history of ideas. He was, he insisted, ‘simply an unrepentant Old Whig – with the stress on the “old”. Whiggism, he went on to assert, was the name of the only set of ideals that had consistently opposed all arbitrary power. Highlighting the fact that ‘true liberalism’ had no recognisable name with which to distinguish itself from ‘false liberalism’, Hayek tossed ‘Old Whig’ into the ring as his suggestion – though he seemed more confident of its historical validity than its real-world usefulness. This essay attempts to illustrate just what Hayek meant by calling himself an Old Whig, or Burkean Whig, as he later described himself. It raises some questions about the validity of Hayek’s self-conception, and the true nature of the historical Old Whigs. It also explores the historical model that Hayek created, centred on the key event of the French Revolution, to explain what he called a ‘counterrenaissance’ in favour of collectivism. (shrink)

L’article est un essai qui propose de faire trois additions à la théorie évolutionniste hayékienne.La première pour éclairer l’émergence des règles, sociales, zone d’ombre chez Hayek, en introduisant le concept “ d’espaces relationnels ”, embryons des espaces institutionnels.La seconde pour faire apparaître le rôle de l’action humaine dans l’évolution des règles sociales : des individus ou groupes d’individus jouent un rôle “ entrepreneurial ” et cherchent à changer des institutions qui ne conviennent pas à leurs exigences éthiques.La dernière pour réintroduire (...) une référence à l’ordre naturel qu’Hayek avait voulu éliminer, mais qui valide le processus hayékien à condition de retenir une approche subjective du droit naturel par opposition aux approches objectives courantes.This paper tries to add three elements to Hayek’s theory of evolution.The first element sheds light on a moot point in Hayek’s thought, the emergence of social rules. It does so by introducing the concept of “relational spheres”, deemed as incipient institutional spheres.The second element tries to make the role of human action conspicuous in the evolution of social rules: individuals or groups of individuals play an “entrepreneurial” role and seek to alter institutions which are no longer in harmony with their ethical moorings.The last element introduces a reference to natural order which Hayek discarded in his thought. This reference validates the Hayekian process as long as a subjective approach to natural law is retained in contrast to contemporary objective approaches. (shrink)

L’article cherche à contrer les critiques formulées à l’encontre de la théorie évolutionnaire de Hayek en mettant en évidence les apports des théories de la complexité. Cela permet tout d’abord de comprendre que la méthode de Hayek n’est pas un holisme mais un anti-réductionnisme. Cette méthode est constante chez l’auteur, que ce soit dans son approche du marché ou de l’évolution culturelle : il n’y aurait donc aucune incohérence dans sa pensée.De surcroît, la prise en compte de l’ignorance individuelle comme (...) des phénomènes d’émergence ne permet plus d’utiliser la théorie des jeux pour corroborer ou réfuter les explications dites de “ main-invisible ”. La théorie de l’évolution culturelle aurait donc une plus grande portée descriptive que celle qui lui est généralement conférée.This paper tries to respond to criticisms raised against Hayek’s evolutionary theory by highlighting the salient features of theories of complexity. This allows us first to understand that Hayek’s method is not holistic but anti-reductionist. This method permeates Hayek’s whole oeuvre, whether it be his theory of the market or his ideas about cultural evolution. Hence, there is no inconsistency in his thought. Furthermore, taking individual ignorance and the phenomena of emergence into account no long allows us to use game theory in order to corroborate or refute “invisible hand” explanations. The theory of cultural evolution would hence have a greater scope than that traditionally acknowledged. (shrink)

Loin d’être un auteur mineur, thuriféraire d’un naïf “laissez-faire”, Bastiat apparaît comme le précurseur de la plupart des courants libéraux contemporains.Il est frappant de constater que le diagnostic porté par Bastiat sur le fonctionnement de la démocratie demeure d’une brûlante actualité.C’est donc injustement que Hayek a méconnu son devancier : une étude critique de la philosophie juridique et politique du Français lui aurait permis d’éviter quelques inconséquences, telle sa théorie des fonctions non coercitives de l’Etat.Far from being a minor economist, (...) or flattering some naive “laissez-faire”, Bastiat is indeed a precursor of most of the contemporaneous views defending liberalism.It is striking to note how much Bastiat’s diagnosis about the workings of democracy applies with acuity to the current world.Thus, Hayek unduly disregarded his precursor: a critical study of Bastiat’s philosophy and conception of law would have allow Hayek to not fall into some traps, such as his theory on the non-coercitive functions of government. (shrink)