Arnold Kling  

Hayek and Fusionism

McFadden on the Prescription D... Computers, Growth, and Google...

Ed Feser writes,

The foundation of Hayek's thought is an emphasis on the severe limitations on human knowledge, especially where human social institutions and other complex phenomena are concerned. For Hayek, even the knowledge we do have is dispersed and fragmented, directly available only to scattered individuals rather than to society at large, its governmental representatives, or would-be social-scientific experts; and much of it is embodied in practice, habit, and "know how" which it is impossible to convey in explicit propositional form. The economic implication of this is that central planning of the socialist kind is impossible, for no would-be planner could have the knowledge requisite to doing the job. Only prices generated in a capitalist economy can encapsulate the scattered and otherwise ungatherable information needed for rational economic activity, and individuals responding to price signals in the marketplace ensure the most efficient allocation of resources as is practically possible. But there are moral and social implications as well. For tradition, in Hayek's view, plays a role similar to that of the price system, embodying the inchoate moral insights of millions of individuals scattered across countless generations, and sensitive to far more information than is available to any individual reformer or revolutionary. The radical moral innovator, who falsely assumes he can design from scratch new institutions superior to existing ones, suffers from a hubris analogous to that inherent in socialism.

Thus, Feser argues, Hayek is able to reconcile conservatism with libertarianism. Tyler Cowen is not so sure.

Comments and Sharing

CATEGORIES: Political Economy

COMMENTS (6 to date)
James writes:

The problem with Feser's position is that his argument doesn't reflect what he actually believes.

Feser would probably agree that prices transmit knowledge as it exists at any point in time, but that there is no particular reason to oppose a change to those prices, or to resist new prices. I'm quite sure that Feser would recognize that the array of prices existing in the future might will be the appropriate prices to reflect whatever knowledge exists in society at that time. And I'm sure Feser would never buy some argument for establishing price controls at current prices as a means of preserving society's distributed knowledge. If prices were frozen at their present levels, or at the levels of 1962, or 1903, or 1788 or any other time, they would cease to be useful carriers of information.

When it comes to tradition, Feser will argue, correctly, that traditions, like prices, are a means of transmitting information through society. But it doesn't follow from this that the traditions of whatever period ought to be preserved, any more than the transmission mechanism of prices proves that prices ought to be frozen at current levels.

Taimyoboi writes:

"Feser will argue, correctly, that traditions, like prices, are a means of transmitting information through society. But it doesn't follow from this that the traditions of whatever period ought to be preserved..."

I think you are being a bit loose in which definition of tradition you are using. The traditions in the first half of your sentence are the institutional traditions that convey wisdom about proper moral ordering, and the traditions in the second half of your sentence are some of the peculiar wisdom that is conveyed.

You're right that the second kind may be modified or abandoned, but that leaves other more important questions unanswered like whether that wisdom should give way to our modern understanding.

Here I think Chesterton said it best when he noted that tradition is democracy that includes the vote of the dead. If we were to follow his advice, then rarely will tradition not have a supramajority backing.

James writes:


My argument doesn't rest on any definition of tradition, so it shouldn't matter if I got that wrong. Rather, my argument is that traditions, whatever that word may happen to mean, only transmit information if people are free to deviate from them, or to propose new ones. You know, like prices.

Concerning GKC, I don't recognize in the deceased, or in the living for that matter, any entitlement to make allocative decisions with other people's belongings.

Jody writes:

James: reconsider your criticism of Feser if instead of using the word "tradition" Feser had used "popular culture".

While that "pop culture" is a loaded term because of its use in other contexts, I think the government interference analogy dramatically improves. The link between tradition and pop culture comes from tradition being the core of popular culture.

Boonton writes:

The prices here are not static but dynamic entities. You look at the temperature before you decide what to wear and you look at prices as you decide what you buy. The TV station wouldn't make your life easier if they decided to 'set' the temperature at a constant 68 degrees all the time because all they would really be doing is taking away the information you use to start your day.

I'm more uncertain about the reconciliation of conservatism and Hayek. Yes the mechanism of tradition is similiar to that of prices. But unlike prices there seems to be no neat way to boil down a tradition's strength or weakness into a simple metric like price that we can all understand. Hayek understood that prices are not supposed to remain constant, they are supposed to change. Well traditions are as well since at every moment the insights and experiences of people today informs and refines the earlier traditions of yesterday. Perhaps this boils down to just beware of radical changes to tradition. Even there, though, how useful is that really? Prices can radically change and that is seen as a good thing. They can respond quickly to new information. Radical changes to tradition may likewise be justified by new information and resistence to that may be as coutnerproductive as the price-controller seeking to stop a quick rise or fall in a particular price.

Boonton writes:

Another consideration for Kling,

Doesn't this imperfect knowledge problem exist for economics as well. How often does economics come upon a simple policy that it demonstrates to be bad such as the minimum wage or labor unions yet there is fierce resistence to changing the policy. Could some of these policies also have hidden benefits that the economist cannot detect so easily with theory and analysis?

For example, perhaps min. wage laws also have an element of zoning in them as well. They are enacted not only to keep wages higher for those with low end jobs but also to keep too many businesses opening whose model depends on very cheap labor. Perhaps such businesses often have characteristics that communities have learned carry unwanted external costs with them such as crime, public health problems, etc.

Comments for this entry have been closed
Return to top