Spontaneous Orders are not Spontaneous Legal Systems

It is a commonplace the misinterpretation of the defence of a political system whose decisions are based on the principles of the spontaneous order as the promotion of a spontaneous legal system. A spontaneous order is not a spontaneous legal system. The former is a complex phenomenon made of an abstract structure of heterogeneous elements that allows us to make pattern predictions about the general behaviour of the set of the said elements. The later is a set of rules of conduct grown out of custom in a given society that is enforced by the State or by retaliation.

A spontaneous legal system concerns the legality of a particular action and its subsequent legal effects (for example, the legality of the retaliation); whereas the spontaneous order is related to the legitimacy of the political order that enforces the legal system (be it spontaneous or not). A government is legitimate as long as it fulfils the expectancies generated by the spontaneous order, which is achieved majorly by acting based on principles than based on expediency.

The main source of principles for the government to base its decisions on is the given spontaneous order. This principles may consist in the recognition of a given spontaneous legal system -as the lex mercatoria- or they may consist in the defence of the equality before the law, in which case the legislative activity may be required in some society. Since the spontaneous order is a concept related to the problem of legitimacy of a political system, it has no place in the legal theory. Or maybe it has a role to play in the case of the “state of exception”. After all, Friedrich Hayek renamed the Spontaneous Order as the “Abstract” Order, in a sort of counterpoint to Carl Schmitt’s Concrete Order.

Innovation and Dumb Luck

"The real power of free markets: not efficiency, but innovation and dumb luck" is the title of the article published by Rory Sutherland on The Spectator almost a month ago, and it can be praised for being a true "Hayekian manifesto".

In his note, Sutherland dismisses neo-classical economics and embraces two of the most polemical statements that can be found in Friedrich Hayek's works. The first one: competition has little to do with efficiency. In fact, there are more efficient processes than competition to allocate resources. Competition must be regarded as a discovery process of new goods to meet our needs –which some of them remain unknown to us. Competition could be efficient but in an "artificial way" (as David Hume called "justice" an "artificial virtue"): since the discovery process of competition is guided by the tendency for equalisation of the marginal value of relative scarce resources, the innovations brought about by the entrepreneur, despite threatening the stability of the economic order in the short run, stabilise the system in the long run.

The second statement is about meritocracy: again, here the market contributes to assign results in accordance to merit only in an "artificial way". Since the payrolls are related to the marginal contribution of each agent to the productive process, it is highly probable that, in the short run, we see very lucky people reaping huge unexpected profits, whereas other activities, more important but less scarce, are poorly remunerated. Theses processes work as way to equalise relative scarcities in the long run.

“Innovation” and “dumb luck” are two devices of the market to stabilise itself. They provide the economic order with a negative feed back process that allows it to adapt to the changing environment: new habits and tastes, life expectancy, cultural shifts, etc., etc., and this stabilisation via adaptation to the changes in the environment is nothing more and nothing less than evolution.

The Causes of Decentralization

            In the chapter fourteen of “Law, Legislation and Liberty”, published in 1979, F. A. Hayek cited three causes of the progressive centralization of government powers: the main one was the danger of war; the second one was the necessity of dealing with the effects of natural disasters; and, finally, the third one was the assurance of a certain minimum income as a compensation for the dissolution of the personal ties of the small communities, which formerly cared of the persons who could not earn their living in the market, brought about by the extended society.

            Today, in 2015, it is interesting to question whether the inverse statement holds true: the dissipation of the danger of war, the international cooperation in case of natural disasters, and the financial aid to countries by supra-national entities contribute to decentralize the government powers. We are thinking of the referenda that are held among the members of the European Union concerning the independence of some of their regions: the United Kingdom and the Kingdom of Spain, for example.

            The avoidance of war is the main objective of every supranational union and the humanitarian aid is now a moral duty of every country despite its affiliation to any international organization. The novelty that could imply a turn of events is the legal duty from the interstate union to provide its members with financial assistance. Normally, the financial aid to a country is based on the interest in preventing the dramatic social consequences of an economic collapse, i.e.: the third cause mentioned by Hayek of the process of progressive centralization of government powers.

            If the financial help to its members becomes a legal duty of the interstate union, then it will be more alluring for a region to leave the country it belongs to and switch to the direct assistance of the interstate union. Moreover, it will be easier for the interstate union to help a small region than it would be for a single member. In the case of The European Union, that is why we consider that the decisions to be made on the economic struggles of Greece will boost or diminish the process of fragmentation experienced by some of its members.

Law and Politics

The theory of spontaneous orders is a byproduct of Hayek's attempt to lay the foundations for his proposal to separate law from politics. The political is related to conflicts that are open to escalation, while the conflicts of the law are meant to be solved by the verdict of the judiciary courts. The former works with the logic of positive feedback systems and the latter is the very example of a negative one. That is why Hayek imagined two different legislative chambers to deal with political issues and to enact general laws. Politics is about expediency and law is based on abstract principles.

Nevertheless, what had once been conceived by Hayek as a tool to justify his project of a constitutional reform, gained a life of its own. Nowadays we can find several works that concerns Hayek's notion of spontaneous orders, but which disregards his proposal on institutional reform. This is not bad at all. After all, the theory of spontaneous orders shows the necessity of keeping separated law from politics. So, the more we develop the spontaneous orders theory, the closer we will be to achieve Hayek's constitutional program.

Notwithstanding the importance of the study of the complex phenomena, all Hayek's enterprise would be lost if we neglected the mission of building a division between politics and law. This topic has generally been worked by authors that intended to erase norms from politics, like Carl Schmitt, but Hayek remains to this day to be the main author to seek to prevent law from being captured by the political logic of solving disputes on an expediency basis. Perhaps we need more papers on law and politics. Those works will be "Hayekian" as long as they state the independence of law from politics, regarding the former as a negative feedback system which provides solutions based on principles to conflicts related to the interaction of different spheres of individual autonomy. In fact, this is the core of the spontaneous order notion: a normative system which does not depend on any political will to work and evolve.

Hume & Humboldt

Divergent dichotomies are not unusual to be found in Hayek’s writings. Besides the essay “Two Types of Mind”, we have his 1945 lecture “Individualism: True and False” on the difference between the British Enlightenment and the Continental Rationalism. Grounded in Edmund Burke’s Appeal from the New to the Old Whigs, Hayek traces the origin of true individualism to Bernard Mandeville, David Hume, Josiah Tucker, Adam Ferguson, Adam Smith and Edmund Burke himself. The XIX Century adds Lord Acton and Alexis de Tocqueville to the list. On the other hand, Hayek states that Jean Jacques Rousseau exemplifies the Rationalist individualism, which postulates isolated and self-contained individuals –whereas, for the former, the individual is determined by his existence in society. The “true variant” of individualism is the notion of “subject” of Hume’s philosophy: the outcome of repetitions, expectancies and habits. Finally Hayek concludes his lecture with the censure to the German type of individualism, rooted in Wolfgang v. Goethe and Wilhelm v. Humboldt: the individualism expressed in the original development of the personality and defended in J. S. Mill’s On Liberty.

Notwithstanding in this 1945 lecture Hayek claims that this German individualism of self-development has nothing to do with what he regards as true individualism and it is “an obstacle to the smooth working of an individualistic system”, much later, in “Law, Legislation, and Liberty”, he will restate his opinion on Wilhelm v. Humboldt’s legacy.

This reconsideration of the value of liberty as the development of the unique and particular character of an individual will be acknowledge not only regarding legal theory but as well in his 1976 proposal of denationalization of currency. In his late writings, Hayek will endorse the development of the originality of character as an important trait for the competition to work as a discovery process.

The key to understand his shift onto this new type of individualism is closely related to Hayek’s involvement into the ideas of cultural evolution. The “true individualism” was important to state how a society can achieve certain order. The “Humboldt’s individualism” is needed to explain the dynamic of the evolution of that order. Hume’s notion of subject is related to the ideas of integration and convergence, to how an order may emerge. Humboldt’s ideal of self-development of the unique and original character of each individual implies differentiation and divergence. These two traits are the key to the adaptation to the changes in the environment that defines the notion of blind evolution. A social and political system that assures the development of differences has keen aptitudes to survive to the changes in its environment. At the level of the “true individualism”, individuals are made of institutions, repetitions and expectancies. But at the level “Humboldt´s individualism”, successful institutions are made of differences, divergent series of facts and adaptation.

Abstraction, Evolution, & Rationality

The late Hayek –the Hayek of the third volume of “Law, Legislation, and Liberty”, not the Hayek of the Fatal Conceit, that would be the apocryphal one- was concerned with terminological matters related to his own works. He lamented that he had employed “knowledge” instead of “information” at the beginning of his career and blamed the confusion on a semantic shift experienced in English language from the 1930’s to the 1970’s. He claimed that he never attempted to use “knowledge” as “theoretical knowledge”, but as, more precisely, “information”, as it was understood forty years before.

 But even a terminological shift occurs from the first volume of “Law, Legislation, and Liberty” (1973) to the third one (1979). In the latter, Hayek claimed that the term “abstract order” was more accurate than “spontaneous order” to convey the meaning of what he wanted to state.  Given some sort of environment –biological, legal, geographical-, the social orders which will survive and develop will be those in which the conduct of the individuals follows some sort of patterns (other orders, with different patterns of social conduct, will disappear or never emerge). For example, if the end of the world will be in a year’s time, a society of defaulters will be more adapted to the environment than a society whose members accomplish their long term duties.  Those patterns are spontaneous because nobody mandates to obey them, but also are abstract because its acknowledgement depends on an intellectual operation. Their recognition does not rely on the senses but on the identification of regularities.

This concept of “abstract order” is the place where Hayek’s legal studies (Law, Legislation and Liberty) connect with his work on theoretical psychology (The Sensory Order). The rationality of the individuals does not make a rational order, but it is the abstract order which delivers rationality to the individuals in it, since the given order is made of the norms that allowed it to survive and develop. The subjective rationality of the agents is bounded by a set of norms of conduct grown from the evolutionary process –and at this point Hayek meets Max Weber.

The question is whether we can determine any criteria to assert that some type of normative order is better than other one. Perhaps the answer is the Hayekian version of the invisible hand process: the better orders are those which allow the individuals to coordinate the bits of information they possess and employ to fulfil their own plans of life and, as an unintended consequence of this, the whole system, spontaneously, adapts itself to the changes in the environment.

Turner & Goethe

In the basement of Tate Britain Gallery one can find the studies of vision by J. M. W. Turner, regarding on how to produce on the eye of the observer a sensation of colour by just printing onto a lithography a set of tiny black lines, one close to another, leaving a white background. The eye, as a perception device, does not register each black fine line, but receives a spectrum of different colours from the decomposed white background, cut by the said black lines. In that exhibition you are learnt that, at the same time, J. W. Goethe was also studying this kind of phenomena. In fact, he wrote two books related to the matter: one essay, “Theory of Colours” (Zur Farbenlehre) and one novel “Elective Affinities” (Die Wahlverwandtschaften) –the latter concerning how chemistry has influence over human passions and institutions.

Similar subjects were analyse in F. A. Hayek’s “The Sensory Order”, where he stated that “There exists, therefore, no one to one correspondence between the kinds (or the physical properties) of the different physical stimuli and the dimensions in which they can vary, on one hand, and the different kinds of sensory qualities which they produce and their various dimensions on the other”. This formulation can be taken as an enunciation of the Hayekian critic to the Cartesian Dualism, which he would later refer to in Law, Legislation and Liberty. That is why “The Sensory Order” cannot be just regarded as a book on theoretical psychology. It is a book concerning how a system of information can adapt to its environment despite it does not carry completely accurate information about it  –just the degree of accuracy it needs to survive and reproduce.

We can recognize continuity –although heterogeneous continuity- along Hayek’s works. In his celebrated paper “The Use of Knowledge in Society”, he remarks that it does not matter if the rise in the price of a commodity may obey to an increasing demand or a falling supply of it –in any case, an increasing relative scarcity- and that it is relevant that it does not matter at all. The decisions of the economic agents are taken on the base of profits and losses, disregarding the subjacent movements in the supply and demand of commodities that caused the change in the relative scarcities of them. That is how a social system can survive and adapt to the changes of its environment, allocating its resources spontaneously, although none of its members can achieve a complete knowledge of the variables operating on it. The same as we enjoy a work of art by Turner or the time we spend with our friends, ignoring the secret resorts that make them so attractive to us.

On the Epistemic Value of Liberty

We would not hesitate to endorse Fritz Machlup as one of the most accurate analyst of Hayek’s works. Here, writing about Hayek’s papers afterwards The Constitution of Liberty, he states: “This great work done, Hayek did not rest. He could not let go of a topic on which he found so much more to do. In an article in German (“Die Ursachen der ständigen Gefährdung der Freiheit”, Ordo, 12, 1961) he asks why it is that personal liberty is in continual jeopardy and why the trend is toward its being increasingly restricted. The cause of liberty, he finds, rests on our awareness that our knowledge is limited. The purpose of liberty is to afford us an opportunity to obtain something unforeseeable; since it cannot be known what use individuals will make of their freedom, it is all the more important to grant freedom to everybody (p. 103). Liberty can endure only if it is defended not just when it is recognized to be useful in particular instances but rather continuously as a fundamental principle which may not be breached for the sake of any definite advantages obtainable at the cost of its suspension (p. 105). It is not easy to convince the masses that they should sacrifice foreseeable benefits for unforeseeable ones.” (Machlup, Fritz, "Hayek's Contribution to Economics", edited in Essays on Hayek, Routledge & Kegan Paul, London, 1977)

Machlup’s summary of Hayek’s statement on the value of individual liberty offers a reason that is neither substantialist nor instrumental. In this context, although the “instrumental reason” would lead us to a disregard of  the individual liberty in order to achieve a concrete end, his defense of liberty is not based on a substantial truth, but on an epistemic value.

Does Classical Liberalism Belong to the Fantastic Genre?

In 1970, Tzvetan Todorov characterised the fantastic genre as a subjective, doubtful, and fugitive branch of literature. As soon as the reader finishes a fantastic story, his mind is full of uncertainties on the explanation of its ending. He doubts whether the story conveys a super natural element or it could be understood as an oddity, something strange but realistic. Todorov stated that the story belonged to the fantastic genre only during the time the reader took to choose the former or the latter explanation. Since he inclined towards one of them, the story shifted either onto the fantastic marvellous genre or onto the fantastic uncanny one.

I think Classical Liberalism has much of the sort. To use Hayek's terminology, it navigates between the waters of Constructivism and Conservatism. Classical Liberalism tends to distrust on the involvement of government in education, but at the same time it promotes the individual intellectual emancipation. Classical liberals endorse a competitive economic system, but are not fond of anti-trust policies. Almost in every relevant matter we could find these crossroads. It seems Classical Liberalism walks on "the edge of the razor". We are tempted to state that Classical Liberalism lasts the time we are pondering whether to take a Constructivist or a Conservative approach.

I think the“Constructivist explanation” and the “Conservative explanation” are both shortcuts to cope with the complexity of the social order disregarding change. On the other hand, the Classical Liberalism Friedrich Hayek tried to restate was a cultural evolutionist one. An Evolutionist Classical Liberalism is made of principles which adjust their relative positions in response to the changes in the environment. Sometimes this adjustment is made by a theorist, but most of the times it is the social reality itself, acting as a sort of feedback system, that provokes the shift in the balance of principles. The main point to keep in mind is that this process of weighing principles is blind. So, no one could assess “the course of the History” (a common point of view to Conservatism and Constructivism, by the way).

In resume, Classical Liberalism will keep its own identity as long as it remains loyal to its evolutionist trait.

Two Ideals of Constitution

For every Hayekian is a hard task to explain to his critics why the political process described in The Road to Serfdom did not finally lead to a totalitarian state, as book had warned it would happen if economic dirigism kept on growing in the United Kingdom, for example. To many of its critics, The Road to Serfdom states a failed prediction. In this post, I will try to formulate some sort of "hypothesis ad hoc" to rehabilitate "the road to serfdom" as a prediction.

As we had noted in a previous post, the core of Hayek's book is not related to the assertion "every economic intervention means limitations to individual liberty that lead to further economic intervention and so on to a totalitarian state". That is a misled conclusion to Hayek's idea. What Hayek tried to convey was that economic dirigism distorts the relative prices of the economy, what causes an economic crisis, and that the urgency to solve that crisis demands solutions on the basis of expediency. In those situations, it is easy to fall in the mistake to consider constitutional procedures as burdens to be lightened in order to overcome the crisis. Then, the process could be summarise as follows: "An economic intervention distorts relative prices, which generates a crisis. The urgency to solve the crisis authorises exceptions to constitutional procedures in order to apply new economic interventions. Those new measures cause new crises, which demand further expedient solutions -and the subsequent erosion of the rule of law".

My proposal is related to the late Hayek and his investigations on the role of unwritten law in the defence of individual liberty. In this regard, Hayek noted that individual liberties flourished in countries where the law was formed mainly by judiciary precedents and that statutory law could empower legislatures to enlarge the political intervention into every side of individual life (see "Law, Legislation and Liberty"). Besides now this is a very contemporary discussion -the clash between democracy and human rights-, it inspired me a different approach to the question. We can note that countries with high respect to individual freedom have short or unwritten constitutions, and countries with poor records in respect to individual rights have extensive and sophisticated written constitutions.

What I would like to state is that, along the 20th democracies, we could find two different ideals of political constitution. In countries with a tradition of individual liberties, the political constitution is considered as a limit by the rule of law to the political power. In countries where individual freedom was threaten or attacked, political constitutions are considered as instruments of political power. Notwithstanding to have written procedures to exercise political powers is a limit to the latter and it is better than not to have any legal procedure at all, we can see that this concept of constitution is more exposed to follow the pattern stated by Hayek in his book "The Road to Serfdom".

I think we have here a contention subject to empirical test: we have to identity countries with political constitutions regarded as limits to the political power imposed by the law and countries with political constitutions considered as attributions bestowed by the law upon political powers. Then, we have to verify the correlation between each of those countries and the degree of respect to individual liberties fulfilled in them. Since the identification of the ideals of constitution -limitation to political powers by the law vs. attribution of legality to political power- is the most difficult task, we could take the extension or sophistication of the constitution as an indicator of each type.

 

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

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"

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

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

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

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

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

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

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

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

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.