Notes on Hayekian Social Thought

The concept of “dispersed knowledge” should be a commonplace!

2012-01-14T18:14:00.000Z

I dare to state that the world would be a better place to live in if the concept of “dispersed knowledge” were a commonplace. Perhaps it is an elusive idea and that is why every now and then political intervention regards itself as the saviour from the “chaos of the market”.

But what most people are used to call “chaos” is, in fact, “complexity”. Every single rational agent is an administrator of the bits of information gathered by him from the limited range of his experience, using devices of perception, such as senses, social values, norms, and technologies. The said devices are mostly common to other agents and thus contribute to make the compatibility of several individual plans, the most of them unknown to each other, possible –and the stability of the social order rests on the degree of such compatibility.

As we said, social spontaneous conventions as language, monetary economy, trade, morals, and law systems –along with many others- are devices used by the these agents to cope with the complexity of an order of things built on a framework of plans of multiple individuals, most of them yet undiscovered. It is a complex order of facts, but it is an order still: spontaneous conventions make of the multiple bits of information from the different individual plans a coordinated set of resources applied to carry out the most of them. It is a complex system of coordination of knowledge, with gaps and perturbations, but it is a system that can deal with a higher amount of information than any individual or committee would be able to do.

Since our concept of rationality is mostly instrumental, regarding as “rational” a set of resources deliberately applied to attain a known aim, it is easy to consider the complex order resulting from spontaneous coordination of individual plans as “irrational” -and this charaterisation gains strength with every new crisis. At this point, what we have to notice is that the net benefits rendered by the extended society –i.e.: the spontaneous coordination of the dispersed knowledge from multiple individual plans and institutions- are higher than what any other alternative system of organization of human beings could bring about. The consequence of the argument is that dispersed knowledge is both a burden to central planning and lever to the open society.

We know that almost the whole work of F. A. Hayek is devoted to this quest, but if I had to choose a single paper that keeps the kernel of this philosophy I would choose “The Use of Knowledge in Society”. This would be a good starting point to make the idea of “dispersed knowledge” part of our cultural background, like heliocentrism or Gödel’s theorem.

On the gist of "The Road to Serfdom"

2011-12-12T16:26:00.009Z

It is usual to summarise the gist of “The Road to Serfdom” as the thesis of that an increasing level of government intervention in markets inevitably leads to further interventions. A commonplace and an even more common error of interpretation. That thesis is not Friedrich Hayek’s, but Ludwig v. Mises’.

What is pointed out in “The Road to Serfdom” is that dirigisme requires quick and pragmatic solutions to problems arisen by the unintended consequences of its own interventions. In this scenario, the constitutional system of checks and balances appears as an obstacle to achieve an expedient solution to such problems –and this is indeed its proper function.

Thus, the constitutional requirement of passing a law by the Congress or Parliament is considered as too slow a process for dirigisme. In the road to serfdom, disregarding the constitutional proceedings to pass a law, both formal and substantial, the executive branch receives, increasingly, extraordinary faculties to legislate in order to solve the maladies that previous policies had engendered. That is how matters of expedience subdue reasons based on principles.

One could agree or not on the possibility or probability of that process to take place. Notwithstanding, that is the “road to serfdom” as Hayek stated it, not the misleading formulation that we usually find in several discussions related to him.

A Perennial Conflict

2011-09-16T23:38:00.000+01:00

Contrary to a warning recently heard, the present importance of “The Road to Serfdom” does not come from any current menace to Western democracy. Actually, the interest of the book emerges from the perennial conflict between rule of law and expediency.

The burden of duties placed on contemporary governments makes them divert from constitutional principles into matters of expedience. Since those legal principles condense a large amount of data concerning human affairs, fed into by different sources, the public policy arisen from matters of expediency, disregarding the whole picture and focused on the poor amount of data at hand for the policy maker, has a higher probability to fail than administration subject to the law.

Afterwards, the disarray thrown into by bad policy will lead to further anomalies and further public policies purely based on expediency, a sort of positive feedback system –and in that process consists the road to serfdom.

On Francis Fukuyama's coda to his article on Hayek in The New York Times

2011-05-07T19:48:00.000+01:00

Hayek did not actually criticise Cartesianism in itself, but rather “Cartesian Dualism”. In “Law, Legislation and Liberty”, Chapter I, paragraph “Reason and abstraction”, he explained his position on rationality, abstraction and evolutionism: abstraction is not a conscious operation of the agent upon reality, but it is what constitutes his perceptions of it –and what is subject to blind evolution. So, I do not see such contradiction in Hayek’s thought as Fukuyama does.

Competitive Order

2011-04-29T23:42:00.001+01:00

Following the advice of a friend of mine, I have just discovered the value of “ ‘Free’ Enterprise and Competitive Order”, the speech Friedrich Hayek had delivered in occasion of 1947’s Mont Pellerin Society meeting. I found it as a sort of piece of philosophy of public policy, very appropriate for the present years.

In that paper, Hayek states that the “continued movement toward more government control” is mostly due to the lack of “a consistent philosophy of the groups which wish to oppose it”, groups that advocate free enterprise but not a competitive order.

Hayek qualifies “the impression that abandonment of all harmful of unnecessary activity” is “the consummation of all political wisdom” as a “fatal tactical mistake”. In this sense, he calls for assuming that “demands for greater security and greater equality” will “determine action for a long time to come and carefully to consider how far a place can be found for them in a free society”.

Hayek presents the concept of competitive order as the political programme of making competition work, not by mere absence of intervention on free enterprise, but by an active prevention of monopolies. He also points out that the “preconditions of a competitive order” require a monetary and financial policy and some sort of provision to “be made for the unemployed and the unemployable poor”.

To summarize, Hayek claims to “pay deliberate attention to the moral temper of the contemporary man”, trying to canalize his “energies from the harmful policies to which they are now devoted to a new effort on behalf of individual freedom”.

A question open to a far reaching misinterpretation

2011-02-27T16:21:00.001Z

Most advocates of individual liberty who are fond of Hayek`s work usually show disregard for the value of written bodies of laws and praise the judge-made law systems. In fact, Hayek, at the beginning of chapter 5 of Law, Legislation and Liberty, stated that “the ideal of individual liberty seems to have flourished chiefly among people where, at least for long periods, judge-made law predominated.”

But this citation is moderated by the whole book which it is taken from. What Hayek posited was a matter subject to probability. Laws emerging from judiciary precedent are more likely to be purposeless and oriented to fulfill expectations of what is to be regarded as just conduct. Since the written law is sanctioned by a legislator, the temptation to provide the law with a certain purpose and a social design is hard to be resisted.

Nevertheless, Hayek admitted that the legislation must act in order to prevent judges from obeying certain interests of a particular group or class –in which case a judge-made law would be purpose-oriented and a menace to individual liberty. Furthermore, Hayek stated that it is possible for codified system of law to articulate a set of norms of just conduct so long as they were not orientated themselves towards any particular aim.

As we have said, this is not a problem of essences but of probabilities.

An Evolutionist Video on Net Neutrality

2010-12-22T13:59:00.001Z

We can find here an evolutionist approach to Net Neutrality. I think it resembles what Hayek could have said about the subject.

http://reason.com/blog/2010/12/20/will-neutrality-save-the-inter

Institutions & Evolution

2010-12-04T16:59:00.000Z

Although Hayek is an advocate of evolutionist rationalism, his works do not provide us with a conclusive statement about “what does evolve”. Concerning himself with not being mistaken for a Social Darwinist, he emphasizes that cultural evolution operates at the level of group selection, but he fails to draw up any further specification and too many questions remain unanswered.

From our point of view, the subjects of cultural evolution are the patterns of conduct –expressed in a complex of norms, i.e.: social and legal institutions. As Hayek pointed out in “Rules and Order”, the membership of a certain group depends on obeying the set of rules of conduct that are ascribed to it. Since social and legal institutions rule the expected behaviour of individuals and organizations, who continually adjust their plans to the changes of the others, we can regard institutions as a sort of “genetic code” of the society, which enable it to automatic responses to changes in the environment, correcting any maladjustment and preserving its stability.

Nevertheless, an inherited institution could become obsolete and then work as a positive feedback system, increasing each disturbance and risking the stability of the given order. The later works of Hayek cited the cases of some notions of justice coming from our tribal past as an example of that –but this is another story…

Patterns & Archetypes

2010-11-13T14:50:00.000Z

In “The Constitution of Liberty” Hayek enrolled his own philosophy in the anti-rationalism. Afterwards, in “Law, Legislation, and Liberty”, he tried to amend some misunderstandings by introducing his thought as “critical rationalism”. In any case, he rejected Cartesian dualism and any attempt to found justice values exclusively on reason. He argued that reason is built on a combination of patterns of conduct and perception that the individual acquires from his environment. Since those patterns are also the source of the sense of justice, reason cannot have a complete command of it –but what does not mean that it cannot at all. It is in this sense that Hayek regards himself as a “critical rationalist”. Since the different patterns of conduct and perception are incorporated into the “sensory order” each one as a whole, we might bring the Jungian term of “archetype” to the Hayekian thought.

Boundedly Rational Agents

2010-11-05T15:47:00.000Z

To regard a social order compounded by boundedly rational agents as unstable is an assertion that is very close to be a case of fallacy of composition. The Hayek’s essay “Economics and Knowledge” (1937) shows how the coordination of the individual plans of agents possessing just bits of information can provide of a system satisfactorily responsive to the changes in the environment. Resembling Mandeville’s Fable of the Bees, boundedly rational agents may bring a rational order –or moreover, the rationality of that order rests on the bounded rationality of its agents.

Robert Nozick on Reason and Evolution

2010-09-05T13:54:00.003+01:00

“Reason and Evolution” is the title of the first chapter of Hayek’s “Law, Legislation and Liberty” (1973). It could also be the name of a whole new discipline. Here I found a citation from “The Nature of Rationality” (1993), by Robert Nozick, that would fit under that label: “Principles help you to discover the truth by transmitting evidential support or probability from some cases to others. Principles also help you to overcome temptation by transmitting utility from some actions to others. Principles are transmission devices for probability and for utility. / Principles have various functions and effects: intellectual, intrapersonal, personal, and interpersonal. This is not to say that they have these effects in every possible situation. A temperature regulatory mechanism will work only within a certain range of temperature; beyond that range it will not be able to bring temperature back, and, depending upon its material, it may even melt or freeze. Why didn’t evolution give us better regulatory mechanism for body temperature? Given the small probability that such extreme cases will arise, that would be too costly in terms of energy and attendant sacrifice in other functions. A mechanism can perform its function pretty well, well enough, even if it will not work for some of the situations that might arise. Similarly for principles” (Princeton University Press, pages 35-36).

On Resilient Social Institutions

2010-08-19T03:58:00.004+01:00

According to Hayek´s thought, we might state that the price system is a sort of perception device which enables the spontaneous –or abstract- order to get knowledge of changes in the relative scarcities of economic goods and to proceed to an automatic and purposeless reallocation of them, working as a negative feedback system. But, in Hayek’s theory, the price system is not enough to fulfill the function of providing the spontaneous order with the necessary adaptation to the changes in the environment. Normative systems –both legal and social- and traditions are some of the many behavioral patterns that give a framework to the maximizing activity of the decision making agents, who have to cope with the fragmentation of information and the resultant costs of transaction. As we mentioned in a previous post, those systems are forces emerging from a natural selection process and fitted to the changes in the environment. Now, it is high time to acknowledge that, besides an expected time lag between the changes in the environment and the subsequent adaptations to them, it is very likely to be found that each sub-system responses to those changes at a different pace. Moreover, we can find a complex of resilient social institutions that remain unfitted to the new conditions the spontaneous order has to deal with.

Patterns of Perception and Behaviour

2010-07-28T00:07:00.000+01:00

Friedrich A. Hayek states that reason is conditioned by patterns of perception and behaviour. Those patterns are grown, not designed. They evolved as a result of a process of natural selection. This idea was present in Adam Smith’s works. Rotten food is both forbidden and distasteful not because of having anyone decreed so or of any quality of the rotten food concerning taste, but due to people who found it tasty or felt allowed to eat it did not survive. The population of those who avoided rotten food spread, while of those who did not diminished to extinction. The interrelation of those patterns of perception and behaviour which human reason is built of necessarily implies an order of a higher degree of complexity than human reason itself. That is why Hayek speaks of a complex order.

Orders & Forces

2010-07-08T00:07:00.000+01:00

Economic central planning supporters usually accuse market economy of being a chaotic system, or at least intrinsically unstable. In this confrontation, cultural evolutionary approach plays a major role. Evolutionism depicts different types of orders, defined by the characteristics of the forces prevailing among them. An unstable order is mostly conditioned by random forces. We also can find an order compounded with forces arranged by a decision making agent –that is the case of the firm or the government. In terms of Hayek’s social thought, the latter is a created or simple order. On the other side, a complex or spontaneous order –like the market- is made of forces emerging from a natural selection process, not random forces but fitted to the changes in the environment.

Law & Nature

2010-06-02T23:34:00.000+01:00

To ascertain whether Hayek is a natural law advocate or belongs to the legal positivism is an intricate task to perform. In the third volume of Law, Legislation and Liberty, he criticized Hans Kelsen for separating law from morals. Nevertheless, Hayek’s whole works reject neither the possibility of founding any legal system on a speculative construction of reason nor on a revealed code of conduct. Legal realism is not an option either, since he regarded it as too simplistic. In fact, the particular issue to address concerning Hayek’s jurisprudence is not law, but his idea of nature.

At the beginning...

2010-05-22T15:46:00.001+01:00

For Hayek, the law is logically and chronologically previous to the government. That is the meaning of the rule of law: a political order founded on the law. Since the political powers receive their legitimacy from the law, the latter is exogenous to the political subsystem. That is why Hayek regards the law as a spontaneous phenomenon. This is not a description of the political reality, but a theory on a political system based on the rule of law which the social scientist can derive normative statements from.

Impossibility Theorem

2010-05-05T21:34:00.000+01:00

It is amazing to reread “The Road to Serfdom” (1944) and to recall the paper “A Difficulty in the Concept of Social Welfare” (1950) by Kenneth J. Arrow. Specifically, Chapters 5 and 6 of Hayek’s book seem to be a philosophical statement about the consequences of Arrow’s impossibility theorem. Nonetheless, being both works close in time, the complexity of the ideas contained in them prevents us from suspecting any mutual influence, and we must conclude that the parallelism is mostly due to the zeitgeist.

Spontaneity

2010-02-08T16:54:00.000Z

Spontaneity, being understood as the automatic response of the social order to a change in the environment, is closely related to the concept of negative liberty, for coercion implies an arbitrary command or a lack of information. Since the individual is enabled to infer the spontaneous changes given in a social order from the knowledge of a fragment of it, he can adjust his plans to his own expectancies, not being coerced his will in such cases. This consideration is a bridge to be built between “The Constitution of Liberty” and “Law, Legislation and Liberty”.-

Spontaneous responses to stimuli

2009-12-03T23:31:00.000Z

What is spontaneous is not the historical origin of an order. Spontaneity is an attribute concerning the type of response of a given order to the changes in its environment. When the change in the disposition of the elements of an order is generated in response to changes in the input of data from the environment by an authority that seeks to obtain a certain effect in that environment, the said order is a created one. A spontaneous order changes the disposition of its elements in response to the stimuli from the environment following not any purpose of any conscious authority, but a pattern built as a negative feedback system. This pattern of response to the input of data from the environment may either come from tradition or be created by a legislator; it may either lack of a historical beginning or have one. What is important is that that pattern provides the order with a mechanism of automatic adjustment to the changes in the given data. In this sense, spontaneity does not mean absence of historical origin but of a purposive source of change.

Naturalistic Fallacy

2009-11-26T23:34:00.000Z

To distinguish between “spontaneous order” regarded as “Great Society” and “spontaneous order” as “any blind self-generated mechanism evolving in accordance with the changes in the environment” becomes essential when it is necessary to avoid the naturalistic fallacy. The “Great Society” is a spontaneous order provided with several sub-systems which behave as spontaneous orders in themselves, such as the law, morals, language, monetary systems and so on. The present legal system of a given society, although spontaneously evolved, is not necessarily the only possible spontaneous legal system to rule that society.

The Law and the Social Order

2009-11-25T23:04:00.000Z

That the law follows the evolution pattern of a spontaneous order –like the language or the monetary system also do- does not imply that the rules prevailing in any society -meant as a spontaneous order as well- have to be regarded as norms worth of being obeyed just because they emerge from the spontaneous social order. As we had already said, whether a norm acts as a negative or a positive feedback system, giving society a stabilization devise or not, is subject to being empirically proved. Once that problem is solved, we have to face with the question of if the stable order that that norm contribute to is also in accordance with our values, such as the importance of the individual liberty or of the equality before the law.

Stability

2009-11-20T22:34:00.000Z

Since rational agents are not fully aware of the rules which govern human action, no social institution can provide the spontaneous order with a complete stability. Moreover, the aptitude for providing stability for any social order is not a necessary attribute for every set of rules that compound an institution. Whether a particular social institution plays a role of a negative feedback system in the social order or not is a statement subject to empirical investigation.

Types of Rules

2009-10-23T15:11:00.000+01:00

The different types of rules of conduct are named by Hayek as “articulated”, “unarticulated” and “implicit” (see “Law, Legislation and Liberty”, Chapter 4), following progressive degrees of abstraction. The “command” is an articulated rule which conveys a concrete purpose. The norms of just conduct may be articulated or unarticulated, but in both cases they will be purposeless. A leading case would be that whose solution was implied in unarticulated norms of just conduct. The new precedent invokes a norm not enunciated before, but being considered as just once it is articulated by the judge, because it expresses an implicit feeling of justice previously shared by everyone. The most difficult task in the Hayekian theory of law is to explain convincingly the sphere of the implicit norms just conduct. The norms of that kind inform our notion of justice, notwithstanding they are insusceptible of ever being fully stated or provided of a complete rational justification. In the Chapter Four of Law, Legislation and Liberty, Hayek explains that even the already articulated norms of just conduct rest on a background of implicit norms, which give sense to the former. This is a central issue for Hayek’s critical rationalism, whose implications reach his theory of democracy.

Levels of abstraction

2009-10-16T00:14:00.000+01:00

In “The Sensory Order” and in “The Primacy of the Abstract”, Hayek suggests that the mind is made of the juxtaposition of several kinds of abstraction levels and systems of classification. Mind is part of the nature and the different levels of abstraction that compound it change in response to the changes in the environment. The rational agent is unaware of the highest levels of abstraction that condition his mind. These highest levels of abstraction are formed by social institutions, aesthetic values, “moral sentiments”, etc, and evolve following a natural selection pattern. That the rational agent is not able to choose or modify such levels of abstraction is at the core of the notion of “spontaneous order”.

Reason, institutions and evolution.

2008-09-09T15:47:00.000+01:00

The statement that institutions define different kinds of rationalities is a mislead conception of the evolutionary interaction between mind and its environment. Rationality is only of one type: the adjustment of means to ends. Although this instrumental notion of reason has its failures, is better than any paralogism. What institutions really do is to condition rational agent’s decisions to follow a certain pattern in order to maximize the utility of his resources. The result of this conditioning is a rational action according to the limitations imposed by institutions. Nevertheless, reason is always only one –what change are the different outcomes of its application in different environments. What evolve are the institutional frame and, specially, an important part of it: the strategies for adaptation to the environment. At this point, we need to feed the Hayekian social thought on game theory.

Feedforward Systems

2008-07-06T15:09:00.000+01:00

As Hayek stated in “Law, Legislation and Liberty” that society works as a negative feedback system, we can say that individuals and groups act as if they were feed-forward systems. At least, that is what we can conclude from reading Hayek´s essay “Economics and Knowledge”.

Feedback Systems

2008-06-28T23:26:00.000+01:00

Adolph Löwe pointed out that Hayek thought of the capitalistic economy as a negative feedback system, while J. M. Keynes and he saw it as a positive one. Institutions were at the core of the problem: For Löwe, property rights were the source of the anarchy of production. On the other hand, Hayek stated the legal systems based on them made the economy stable.

Post Rationalism

2008-04-12T15:13:00.000+01:00

We can define Hayek's thought as some kind of post-rationalistic philosophy.

Blind Machine

2008-03-11T15:02:00.000Z

We can picture the Hayek’s spontaneous order as a blind machine, which provides the subjects involved in it with a perception device. In this sense, Hayek social theory is similar to Deleuze’s explanation of Foulcault’s diagram. Notwithstanding, the origin of this coincidence is their empiricist common root.

Subjectivity

2008-02-27T13:30:00.000Z

Hayek opened his Sensory Order by inquiring: “What is mind?”. He could also have given this first chapter the title: “What is subjectivity?” –after all, he was an empiricist.-

Roots

2008-02-17T17:39:00.000Z

The rules of perception issue belongs to the Hume’s legacy to Hayek – also to Burke’s and Kant’s. In this sense, the Hayekian social theory is closely related to an aesthetical subject.
Nevertheless, the roots of the Hayekian thought are not to be traced back to the major modern philosophy. Despite the different countries he lived in, the waving course of his years, his frantic movements from one field of study to another, Hayek remained loyal to his master’s teaching, the haunting ideas which introduced him to the matters of biology, psychology, and disperse knowledge, those of Ernst Mach.

Rules of Perception

2008-02-08T21:30:00.000Z

The central issue of the philosophy of F.A. Hayek is the question of the rules of perception, even more important to his work than the most interesting Hayekian problem: the concept of spontaneous order. Once the former has been examined in detail -some kind of critique of judgment-, the latter will become clearer.