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The Fatal Conceit: The Errors of Socialism
Hayek gives the main arguments for the free-market case and presents his manifesto on the "errors of socialism." Hayek argues that socialism has, from its origins, been mistaken on factual, and even on logical, grounds and that its repeated failures in the many different practical applications of socialist ideas that this century has witnessed were the direct outcome of these errors. He labels as the "fatal conceit" the idea that "man is able to shape the world around him according to his wishes."
"The achievement of The Fatal Conceit is that it freshly shows why socialism must be refuted rather than merely dismissed—then refutes it again."—David R. Henderson, Fortune.
"Fascinating. . . . The energy and precision with which Mr. Hayek sweeps away his opposition is impressive."—Edward H. Crane, Wall Street Journal
F. A. Hayek is considered a pioneer in monetary theory, the preeminent proponent of the libertarian philosophy, and the ideological mentor of the Reagan and Thatcher "revolutions."
"The achievement of The Fatal Conceit is that it freshly shows why socialism must be refuted rather than merely dismissed—then refutes it again."—David R. Henderson, Fortune.
"Fascinating. . . . The energy and precision with which Mr. Hayek sweeps away his opposition is impressive."—Edward H. Crane, Wall Street Journal
F. A. Hayek is considered a pioneer in monetary theory, the preeminent proponent of the libertarian philosophy, and the ideological mentor of the Reagan and Thatcher "revolutions."
194 pages, Paperback
First published January 1, 1988
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About the author
Friedrich A. Hayek
259 books1,734 followersFriedrich August von Hayek CH was an Austrian and British economist and philosopher known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought. He is considered by some to be one of the most important economists and political philosophers of the twentieth century. Hayek's account of how changing prices communicate signals which enable individuals to coordinate their plans is widely regarded as an important achievement in economics. Hayek also wrote on the topics of jurisprudence, neuroscience and the history of ideas.
Hayek is one of the most influential members of the Austrian School of economics, and in 1974 shared the Nobel Memorial Prize in Economics with Gunnar Myrdal "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." He also received the U.S. Presidential Medal of Freedom in 1991 from president George H. W. Bush.
Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938.
Hayek is one of the most influential members of the Austrian School of economics, and in 1974 shared the Nobel Memorial Prize in Economics with Gunnar Myrdal "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." He also received the U.S. Presidential Medal of Freedom in 1991 from president George H. W. Bush.
Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938.
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July 17, 2012
This ranks highly as one of the most impactful and important books of my lifetime.
I read it at an opportune moment — less than two years after returning from an exchange scholarship behind the former Iron Curtain and about a year after the Fall of the Wall.
It explained so much of what I saw, as well as what I was encountering since my return, including the kind of conduct I was witnessing in, of all places, Ivy League faculty meetings. This "fatal conceit," the epistemological hubris that enables one to think that one knows more than one does (or can) is anathema to today's intellectuals an the élite that it is "breeding."
Now with the current political climate tilted so perversely toward the pseudo-morality of collectivism, it is abundantly clear that we are harvesting the fruit of the complete neglect and denial of the European experiment with redistributive justice and socialist politics from 1789-1989 — the bloody lesson of Hayek's book writ in base human conduct.
Hayek's Fatal Conceit is certainly more synthetic and more high-flying than Ludwig von Mises's mordant catalog of the "errors" of socialism in his 1922 Die Gemeinwirtschaft, only published in English a decade later as Socialism. At the same time, it is less chronologically and ideologically constrained as his now classic The Road to Serfdom: Text and Documents--The Definitive Edition.
However, it should come with a warning label in red across the cover — it has been subject to devastating criticisms concerning the editorial practices of the late W. W. Bartley, III.
If you are interested in this book — and it deserves a good look — one must first also consult Hayek biographer Alan Ebenstein's systematic examination published in Liberty as "The Final Deceit," linked below:
It is certainly worth reading "Hayek," but one also must read Ebenstein now as well.
http://mises.org/journals/liberty/Lib...
I read it at an opportune moment — less than two years after returning from an exchange scholarship behind the former Iron Curtain and about a year after the Fall of the Wall.
It explained so much of what I saw, as well as what I was encountering since my return, including the kind of conduct I was witnessing in, of all places, Ivy League faculty meetings. This "fatal conceit," the epistemological hubris that enables one to think that one knows more than one does (or can) is anathema to today's intellectuals an the élite that it is "breeding."
Now with the current political climate tilted so perversely toward the pseudo-morality of collectivism, it is abundantly clear that we are harvesting the fruit of the complete neglect and denial of the European experiment with redistributive justice and socialist politics from 1789-1989 — the bloody lesson of Hayek's book writ in base human conduct.
Hayek's Fatal Conceit is certainly more synthetic and more high-flying than Ludwig von Mises's mordant catalog of the "errors" of socialism in his 1922 Die Gemeinwirtschaft, only published in English a decade later as Socialism. At the same time, it is less chronologically and ideologically constrained as his now classic The Road to Serfdom: Text and Documents--The Definitive Edition.
However, it should come with a warning label in red across the cover — it has been subject to devastating criticisms concerning the editorial practices of the late W. W. Bartley, III.
If you are interested in this book — and it deserves a good look — one must first also consult Hayek biographer Alan Ebenstein's systematic examination published in Liberty as "The Final Deceit," linked below:
It is certainly worth reading "Hayek," but one also must read Ebenstein now as well.
http://mises.org/journals/liberty/Lib...
June 8, 2009
My favorite part was the chapter on the loss of meaning in our language. He examines how different groups hijack terms and alter them to suit their own meaning. Particularly, he looks at the word 'society'. He shows how it was co-opted to mean 'government' by Marx for his purposes, then it became a word you could put in front of 120+ other words as an adjective to the point that we don't even know what the word means any more.
He talks about how order rises from chaos naturally through competition (survival of the fittest). He uses evolution to demonstrate this. Markets work in the same manner. Successful ideas/products/businesses will prosper and flourish, while poor ones die. Attempting to author the "extended order" (socialism) is futile. It portend the fall of our civilization. He has a lot of interesting Hume quotes in there, too.
Hayek is agnostic, yet he warns rationalists and others against throwing out the tradition of religion and inherited morals simply because they can't provide a basis of logic for their existence. He is in favor of societal morals (not government) that have survived the tests of time and does not represent an infringement on the rights of others.
Oh, it also seems that he really, really hates Keynes (self proclaimed immoralist).
He talks about how order rises from chaos naturally through competition (survival of the fittest). He uses evolution to demonstrate this. Markets work in the same manner. Successful ideas/products/businesses will prosper and flourish, while poor ones die. Attempting to author the "extended order" (socialism) is futile. It portend the fall of our civilization. He has a lot of interesting Hume quotes in there, too.
Hayek is agnostic, yet he warns rationalists and others against throwing out the tradition of religion and inherited morals simply because they can't provide a basis of logic for their existence. He is in favor of societal morals (not government) that have survived the tests of time and does not represent an infringement on the rights of others.
Oh, it also seems that he really, really hates Keynes (self proclaimed immoralist).
October 24, 2007
Socialism fails because no one is smart enough to determine the wants, needs, and desires of society. Only the individual can determine those things for him or herself.
July 6, 2023
I’ve read Hayek’s The Road to Serfdom and other books but hadn’t read The Fatal Conceit. I’ve heard good things from others, and the read certainly matched the hype. Sure, it’s a bit dense, as that’s how Hayek wrote, but there is much packed in this relatively short book.
There is an excellent overview of his defense of capitalism, which is based on spontaneous order, and offense against socialism. The key points about the failure of the knowledge problem and the calculus problem with socialism is on full display.
While economists may try to design an economic system by planning, they would be wise to read this book and understand the limited nature of their understanding in what they are able to achieve with their design. Given the false logic that socialism supports prosperity in its recent comeback in popularity, Hayek’s arguments against socialism are timely.
I give this book 5 stars and highly recommend it. (Read two times and learned more both times)
There is an excellent overview of his defense of capitalism, which is based on spontaneous order, and offense against socialism. The key points about the failure of the knowledge problem and the calculus problem with socialism is on full display.
While economists may try to design an economic system by planning, they would be wise to read this book and understand the limited nature of their understanding in what they are able to achieve with their design. Given the false logic that socialism supports prosperity in its recent comeback in popularity, Hayek’s arguments against socialism are timely.
I give this book 5 stars and highly recommend it. (Read two times and learned more both times)
August 29, 2019
"Notting I'm claiming can be justified and only my fellow pseudo-scientists can speak on this so just shutup."
You have to consider the function of Hayek, specifically in the theological context for the faithful, if you're to fully appreciate the fact he isn't exactly clarifying any problematic in the most straightforward manner here but providing a sermon on political morality. What he's doing is attempting to instil respect for imposed constraints deriving from his value judgements and doesn't want his economics to be held to more normal scientific methodological standards. Note the childish polemics against Keynes's attempt at a more nuanced operational understanding of saving and investment which is so offensive to traditional conservatives. He's reading backwards a lot into the quite undynamic thinking of Adam Smith while ignoring real evolutionary takes on economics. Despite his insistence he's a liberal of sorts we have to consider that this may just be a ruse.
What Hayek knows may not be so and what he thinks we can't know may be necessary to discover or else we're going to face some real problems that changes in prices won't solve. He knows he can safely deduce the history of all institutional developments logically and ignore any problematic empirical data pointing towards the role of design and organized imposition in the emergence and staying power of market and other orders. For someone so concerned about the "long run" he has contributed much to the popular build up of faith in the idea markets can fully capture and inform us alone on all the dangers of the unquantifiable unknowns out there.
You have to consider the function of Hayek, specifically in the theological context for the faithful, if you're to fully appreciate the fact he isn't exactly clarifying any problematic in the most straightforward manner here but providing a sermon on political morality. What he's doing is attempting to instil respect for imposed constraints deriving from his value judgements and doesn't want his economics to be held to more normal scientific methodological standards. Note the childish polemics against Keynes's attempt at a more nuanced operational understanding of saving and investment which is so offensive to traditional conservatives. He's reading backwards a lot into the quite undynamic thinking of Adam Smith while ignoring real evolutionary takes on economics. Despite his insistence he's a liberal of sorts we have to consider that this may just be a ruse.
What Hayek knows may not be so and what he thinks we can't know may be necessary to discover or else we're going to face some real problems that changes in prices won't solve. He knows he can safely deduce the history of all institutional developments logically and ignore any problematic empirical data pointing towards the role of design and organized imposition in the emergence and staying power of market and other orders. For someone so concerned about the "long run" he has contributed much to the popular build up of faith in the idea markets can fully capture and inform us alone on all the dangers of the unquantifiable unknowns out there.
November 16, 2020
It deserved one star for the absolutely hackish quality of every single statement on the history or functioning of capitalism. His observations on stigmergy, self-organization, emergence, etc., brought it up to two. His claims about the spontaneous origin of capitalism and its functioning as an unplanned system, his denial that modern private property rules were created out of conscious class interest, etc., are so historically illiterate as to be beneath contempt.
February 12, 2019
This book deepened my understanding of why socialists believe what they do, and why socialism is premised on the titular “fatal conceit.” Hayek criticizes socialism not for its effects (a common practice these days), but for its premise: rational constructivism, or in other words, the idea that a perfect or near-perfect society can and should be designed using human reason.
Free market capitalism, Hayek notes, was not so designed. Rather, it evolved organically over millennia by natural selection. Early human tribes were socialistic: small groups that operated based on the human instincts of altruism, collectivism, and authoritarianism. Gradually, however, some groups began adopting practices consistent with principles of private property, voluntary trade, and contract, and passing those practices on to their progeny as learned traditions. Those groups, as it happened, turned out to be far more adept at expanding the tribe out to what Hayek refers to as the “extended order,” thereby supplanting the socialistic tribes. Voilà, non-biological natural selection at work. The single fact that natural selection favored free market traditions over socialistic instincts should be persuasive if not conclusive evidence that socialism is poorly suited to the large, extended order.
It was not to be. Inspired by the modern philosophies of rationalism and constructivism, intellectuals began to believe that a society built from the ground up by rational (and of course, educated and elite) human minds would be more productive and beneficial than those based on unreasoned and seemingly oppressive traditions. Given the intellectuals’ assumption that collectivism and altruism are morally superior to notions of private property and voluntary trade, and their derision for all modes of tradition, socialism was reborn — though this time not through instinct but through reason.
In so doing, Hayek explains, socialists commit the “fatal conceit” of assuming that reason is necessarily superior to tradition and organically evolved ordering. There was no design or purpose to the prevailing extended order, nor is there any true understanding of why it works as well as it does. Nor need there be: as social scientists have demonstrated, humans have always passed on (and continue to pass on) practices, codes of conduct, and learned morals without knowing *why* they work — only *that* they work. Hayek observes the ironic lack of self-awareness in the socialists’ rejoinder that our current societal ordering “doesn’t work” — a claim they make while they themselves live long past the age of 30 (in fact, while they live *at all*) amongst an abundance made possible only by free and wide trade, and that is becoming increasingly available to those in the most remote and ecologically inhospitable regions of the world.
Free market capitalism, Hayek notes, was not so designed. Rather, it evolved organically over millennia by natural selection. Early human tribes were socialistic: small groups that operated based on the human instincts of altruism, collectivism, and authoritarianism. Gradually, however, some groups began adopting practices consistent with principles of private property, voluntary trade, and contract, and passing those practices on to their progeny as learned traditions. Those groups, as it happened, turned out to be far more adept at expanding the tribe out to what Hayek refers to as the “extended order,” thereby supplanting the socialistic tribes. Voilà, non-biological natural selection at work. The single fact that natural selection favored free market traditions over socialistic instincts should be persuasive if not conclusive evidence that socialism is poorly suited to the large, extended order.
It was not to be. Inspired by the modern philosophies of rationalism and constructivism, intellectuals began to believe that a society built from the ground up by rational (and of course, educated and elite) human minds would be more productive and beneficial than those based on unreasoned and seemingly oppressive traditions. Given the intellectuals’ assumption that collectivism and altruism are morally superior to notions of private property and voluntary trade, and their derision for all modes of tradition, socialism was reborn — though this time not through instinct but through reason.
In so doing, Hayek explains, socialists commit the “fatal conceit” of assuming that reason is necessarily superior to tradition and organically evolved ordering. There was no design or purpose to the prevailing extended order, nor is there any true understanding of why it works as well as it does. Nor need there be: as social scientists have demonstrated, humans have always passed on (and continue to pass on) practices, codes of conduct, and learned morals without knowing *why* they work — only *that* they work. Hayek observes the ironic lack of self-awareness in the socialists’ rejoinder that our current societal ordering “doesn’t work” — a claim they make while they themselves live long past the age of 30 (in fact, while they live *at all*) amongst an abundance made possible only by free and wide trade, and that is becoming increasingly available to those in the most remote and ecologically inhospitable regions of the world.
June 26, 2022
I suppose one of the main reasons I like this book is because it supports one of my main theories about life: we evolved the capacity for self-awareness and abstract thought by accident of history, and there is therefore no reason to expect happiness, satisfaction, justice, or any other moral, emotional, or complex good to be achievable or maintainable in our lives, let alone in society as a whole. (Summarized as briefly as I could).
So one of Hayek's main contentions is that: achieving many things that are widely desirable - peace, safety, availability of food, health care, shelter, etc for large numbers of people, in short, a stable society - cannot really be brought about without circumventing many of our strong natural urges and instincts. Them's just the breaks, and thus there is some inherent conflict between our everyday, moment-to-moment, personal desires and actions, and that which apply to society at large, or as Hayek calls it, the extended order.
This speaks to me particularly, due to my recent descent into a standard working life and the accompanying lifestyle, which has only served to enhance my previously held interest in maybe running away to live in the mountains, eventually forgetting language, tool-use, and tact. But instantly upon feeling this impulse, I fall in the hole of how is this sustainable, not everyone can have free range in the wilderness, also medicine and the internet. So for all the hollowness and distress and anxiety of civilization, it's gotten to where it is because it works.
The titular conceit is that we are clever enough to design, from scratch, from our own brains, a superior system to those that evolve. Sure, we're quite clever. We've got some science here. We can perceive how things work, make predictions, figure out and engineer some pretty complex stuff. But in systems as enormously complex and chaotic as an entire civilization, with billions of agents contributing to its behavior, let alone non-agenty factors, it's just not practical to think that we can sit down and work it all out.
Part of this is something I become more and more aware of in myself. Putting aside worries that it means I'm inferior, let's say it's perfectly normal and acceptable: my ability to reason things through, abstractly, is all but pathetic. My recall may as well not exist. But my recognition and response are actually pretty ok. Once I start poking around in a system, trying things out, then I can find where all the pieces are, then I can start to gather information and get an idea of how it's going to act. But I have to try it out. And even once I'm familiar with a system - even something as completely simple and controllable as my company's code base - I still can't foresee every possible implication of a given action. There's too many steps, too many layers, between one change here and what relies on it. Maybe there's an obscure trick of implementation in some third-party software, maybe it's details of the system I just wasn't aware of, maybe it's something I built myself that I've just forgotten about.
And of course this doesn't show that nobody can be much better about this than I - of course many people can do better, remember and predict better, understand more complex systems. I'm obviously not the measuring stick to use for humanity here. But there may be something to the general observation that not all information is or can be stored in one place, either in a single person's head, or even among a team of people.
And so, what Hayek drills into us repeatedly in this book, is that the way that information gets communicated is the market. Yes, there are things about it that grate against our sensibilities. Yes, there are pernicious side effects. But it works - you can't expect any one person, group, organization, or institution, to be able to design and coordinate a system as complex as a civilization or economy. In order to know what actions are best taken, there needs to be information exchange, and that information just can't all be available in a timely and accurate manner to a central body. Different people have different perspectives, different expertise, different things they'll remember or focus on. Sometimes there's relevant information that they don't realize is relevant until it comes up - they recognize its import but didn't recall it until prodded. And that's not good enough for the level of organization needed to support the number of people needed to provide the variation needed to allow for specialization, improvement, and the increase in things that most people probably want - peace, stability, food, etc.
Hayek does make a lot of claims about what is and is not possible, without really providing solid evidence to support these claims, but he bring up many solid points that are worth chewing on, to figure out exactly why or why not they are correct. And he definitely gained my respect and willingness to hear him out by his focus on actual effects and knowledge, and his eschewing of the temptation to rationalize choices and actions, as exemplified by this quote:
"Virtually all the benefits of our civilization, and indeed our very existence, rest, I believe, on our continuing willingness to shoulder the burden of tradition. These benefits in no way 'justify' the burden. But the alternative is poverty and famine."
So one of Hayek's main contentions is that: achieving many things that are widely desirable - peace, safety, availability of food, health care, shelter, etc for large numbers of people, in short, a stable society - cannot really be brought about without circumventing many of our strong natural urges and instincts. Them's just the breaks, and thus there is some inherent conflict between our everyday, moment-to-moment, personal desires and actions, and that which apply to society at large, or as Hayek calls it, the extended order.
This speaks to me particularly, due to my recent descent into a standard working life and the accompanying lifestyle, which has only served to enhance my previously held interest in maybe running away to live in the mountains, eventually forgetting language, tool-use, and tact. But instantly upon feeling this impulse, I fall in the hole of how is this sustainable, not everyone can have free range in the wilderness, also medicine and the internet. So for all the hollowness and distress and anxiety of civilization, it's gotten to where it is because it works.
The titular conceit is that we are clever enough to design, from scratch, from our own brains, a superior system to those that evolve. Sure, we're quite clever. We've got some science here. We can perceive how things work, make predictions, figure out and engineer some pretty complex stuff. But in systems as enormously complex and chaotic as an entire civilization, with billions of agents contributing to its behavior, let alone non-agenty factors, it's just not practical to think that we can sit down and work it all out.
Part of this is something I become more and more aware of in myself. Putting aside worries that it means I'm inferior, let's say it's perfectly normal and acceptable: my ability to reason things through, abstractly, is all but pathetic. My recall may as well not exist. But my recognition and response are actually pretty ok. Once I start poking around in a system, trying things out, then I can find where all the pieces are, then I can start to gather information and get an idea of how it's going to act. But I have to try it out. And even once I'm familiar with a system - even something as completely simple and controllable as my company's code base - I still can't foresee every possible implication of a given action. There's too many steps, too many layers, between one change here and what relies on it. Maybe there's an obscure trick of implementation in some third-party software, maybe it's details of the system I just wasn't aware of, maybe it's something I built myself that I've just forgotten about.
And of course this doesn't show that nobody can be much better about this than I - of course many people can do better, remember and predict better, understand more complex systems. I'm obviously not the measuring stick to use for humanity here. But there may be something to the general observation that not all information is or can be stored in one place, either in a single person's head, or even among a team of people.
And so, what Hayek drills into us repeatedly in this book, is that the way that information gets communicated is the market. Yes, there are things about it that grate against our sensibilities. Yes, there are pernicious side effects. But it works - you can't expect any one person, group, organization, or institution, to be able to design and coordinate a system as complex as a civilization or economy. In order to know what actions are best taken, there needs to be information exchange, and that information just can't all be available in a timely and accurate manner to a central body. Different people have different perspectives, different expertise, different things they'll remember or focus on. Sometimes there's relevant information that they don't realize is relevant until it comes up - they recognize its import but didn't recall it until prodded. And that's not good enough for the level of organization needed to support the number of people needed to provide the variation needed to allow for specialization, improvement, and the increase in things that most people probably want - peace, stability, food, etc.
Hayek does make a lot of claims about what is and is not possible, without really providing solid evidence to support these claims, but he bring up many solid points that are worth chewing on, to figure out exactly why or why not they are correct. And he definitely gained my respect and willingness to hear him out by his focus on actual effects and knowledge, and his eschewing of the temptation to rationalize choices and actions, as exemplified by this quote:
"Virtually all the benefits of our civilization, and indeed our very existence, rest, I believe, on our continuing willingness to shoulder the burden of tradition. These benefits in no way 'justify' the burden. But the alternative is poverty and famine."
June 8, 2018
I've been trying to read more authors whom I disagree with lately, and reading Hayek is part of that. I really appreciate that Hayek engages with socialism's problems, not on political and/or ideological terms, but addresses them directly. However, as someone with socialist (not communist-- pure communism is as harmful as pure capitalism) leanings, I don't think these problems are permanent and unsolvable. His assertion that the market is an entity beyond the control of any one person or group of persons is one I particularly dislike--for example, look at Amazon's dominance of online commerce and try to tell me it is *not* the work of one man, Jeff Bezos. Hayek's antagonism towards economic planning and design also strikes me as rather simplistic-plans can be changed and designs can incorporate a variety of potential outcomes and structures that can adapt to society's ever-changing needs--providing for society's needs while creating failsafes against the cracks that inevitably form in the individuals actions which collectively make up the capitalist system.
Furthermore, after the 2008 financial crisis, his claim that governments will inevitably handle money in a corrupt manner while private institutions will always handle it honorably falls flat on its face--left to their own devices, the financial institutions engaged in highly risky practices that inevitably socialized that risk (in the form of the government bailouts and the surge in foreclosures and unemployment) while privatizing the gains (the profits and massive bonuses that executives managed to come away with AND the fact that CEO pay remains unchecked even as we still suffer from the economic consequences of their actions). The bailouts do not indicate that the government is a bad actor, but rather that a massively deregulated market will fail eventually. To me, capitalism without any sort of guiding framework is like a car without brakes or a steering wheel--it'll go fast and get you far, but you'll eventually lose control and drive off a cliff. Hayek does make some important, true observations about human nature, but his assertion that the economy is the best outlet for human energy, spirit, and innovation rings false--the economy is, to me, a system by which goods and services are allocated in a society--and I don't think human creativity and spirit should be considered goods and/or services, as those things cannot be commodified. Finally, books like this one perpetuate the false dilemma between capitalism and socialism--they can exist side by side and complement one another, making society prosper and thrive in ways that maximize individual talent and creativity while ensuring that no one is left behind to fend for themselves. Overall, "The Fatal Conceit" is perhaps the best critique of socialism that I've read thus far, and while it hasn't aged well and conflates the economy of a society with society as a whole, it is (as you can see from this review) quite thought-provoking and refreshingly non-political in its critiques (there's very little of the "don't tread on me" or "welfare queen" cliches/tropes present in his writing, at least in my view). If you're more socialist in your leanings, this book will challenge you thinking in ways that will make your arguments stronger, and if you're more libertarian in your leanings, you will find much to agree with here, and perhaps even pick up more arguments in your favor.
Furthermore, after the 2008 financial crisis, his claim that governments will inevitably handle money in a corrupt manner while private institutions will always handle it honorably falls flat on its face--left to their own devices, the financial institutions engaged in highly risky practices that inevitably socialized that risk (in the form of the government bailouts and the surge in foreclosures and unemployment) while privatizing the gains (the profits and massive bonuses that executives managed to come away with AND the fact that CEO pay remains unchecked even as we still suffer from the economic consequences of their actions). The bailouts do not indicate that the government is a bad actor, but rather that a massively deregulated market will fail eventually. To me, capitalism without any sort of guiding framework is like a car without brakes or a steering wheel--it'll go fast and get you far, but you'll eventually lose control and drive off a cliff. Hayek does make some important, true observations about human nature, but his assertion that the economy is the best outlet for human energy, spirit, and innovation rings false--the economy is, to me, a system by which goods and services are allocated in a society--and I don't think human creativity and spirit should be considered goods and/or services, as those things cannot be commodified. Finally, books like this one perpetuate the false dilemma between capitalism and socialism--they can exist side by side and complement one another, making society prosper and thrive in ways that maximize individual talent and creativity while ensuring that no one is left behind to fend for themselves. Overall, "The Fatal Conceit" is perhaps the best critique of socialism that I've read thus far, and while it hasn't aged well and conflates the economy of a society with society as a whole, it is (as you can see from this review) quite thought-provoking and refreshingly non-political in its critiques (there's very little of the "don't tread on me" or "welfare queen" cliches/tropes present in his writing, at least in my view). If you're more socialist in your leanings, this book will challenge you thinking in ways that will make your arguments stronger, and if you're more libertarian in your leanings, you will find much to agree with here, and perhaps even pick up more arguments in your favor.
January 8, 2015
Is it proper to put books you've discarded when you were halfway through them on the "read" shelf?
I listened to (half of) this book on Audible and honestly found it increasingly hard to bear. It is a spectacle of rambliness.
I picked it up because I wanted to give Hayek a proper chance by reading an entire book by him. I agree with Hayek's main theses as I understand them, but had been puzzled for a while about why many people revere his work as much as they do. It seems difficult to find much of substance that's attributed to him. (Other than his contributions to business cycle theory which do seem quite substantial to me.)
This may not have been the best choice of book for that purpose. It is said that it may have been written in large part by William Warren Bartley. F.A. Hayek was very old and mentally unfit at the time of its writing.
I picked it because it was the only Hayek book available on audible.de.
As you can tell by now, I remain puzzled by people's reverence for Hayek's work.
I recognise that distributed information and spontaneous order are powerful ideas that are sort of difficult to grasp and to apply to different issues. So there may be great merit in formulating this idea in many different ways and many different contexts.
But does Hayek succeed in making these ideas and their applicability clearer?
I don't think he (or Bartley?) does in this book. And I certainly don't think the gains in clarity justify the length of his elaborations.
One the plus side, the writing is very clear. None of the convoluted sentence structures that Hayek's writing is infamous for. Maybe thanks to Bartley?
I listened to (half of) this book on Audible and honestly found it increasingly hard to bear. It is a spectacle of rambliness.
I picked it up because I wanted to give Hayek a proper chance by reading an entire book by him. I agree with Hayek's main theses as I understand them, but had been puzzled for a while about why many people revere his work as much as they do. It seems difficult to find much of substance that's attributed to him. (Other than his contributions to business cycle theory which do seem quite substantial to me.)
This may not have been the best choice of book for that purpose. It is said that it may have been written in large part by William Warren Bartley. F.A. Hayek was very old and mentally unfit at the time of its writing.
I picked it because it was the only Hayek book available on audible.de.
As you can tell by now, I remain puzzled by people's reverence for Hayek's work.
I recognise that distributed information and spontaneous order are powerful ideas that are sort of difficult to grasp and to apply to different issues. So there may be great merit in formulating this idea in many different ways and many different contexts.
But does Hayek succeed in making these ideas and their applicability clearer?
I don't think he (or Bartley?) does in this book. And I certainly don't think the gains in clarity justify the length of his elaborations.
One the plus side, the writing is very clear. None of the convoluted sentence structures that Hayek's writing is infamous for. Maybe thanks to Bartley?
February 7, 2021
I have been a long-time admirer of F. A. Hayek. His book The Road to Serfdom made me understand why central planning could never work for an economy. This is because economic decisions have to be made locally, responding to customers’ needs and local situations. Regardless of how much computing power we have, a central planner sitting in the capital city could not foresee the need for local organic food or a new fad for green smoothies. This is why government-owned enterprises are ill-equipped to handle market demand, and always lose money (such as Amtrak in the U.S.).
This book (The Fatal Conceit) addresses the errors of socialism from its theoretical foundation. Hayek pointed out that idea of socialism arose from the belief that we can design the society with the “best” blueprint. Such belief fails to see that our society is an organic system that evolves, not from intentional design. The collective results of individual interactions led to the creation of language, law, and trade. None of these was intentionally designed, but came out of necessity and human survival. Believing that we can create a “perfect” society is the conceit that we have fully understood how the society evolves and where it goes.
The novel concept from Hayek in this book is cultural evolution (or “social evolution”). The customs and rules we see today were adopted in the past through trial and error. This includes the democratic system that are adopted by most counties today (even though there are still a few authoritarian countries like North Korea). This also includes paper money, international trade, religions and so on. Such a process of trial and error is very much like biological evolution. But it is not totally Darwinian. In biological evolution, only the fittest survive. The social evolution, people who are not fit benefitted from a better system or social rule. In the end, all the people in this system fair better than before. This is particularly true when commerce spreads to every corner of the earth.
On the other hand, cultural evolution has a lot of similarities to biological evolution. This includes adaption to new situations, variations based on local environments, and competition among different customs. Through this process, social conventions that help individuals survive were adopted and continued. Using religion as an example, those who believe “Thou shall not kill. Thou shall not steal.” are more likely to survive in the long run than those who don’t hold such beliefs. Thus Christianity serves an important function in the social evolution. A society based on democracy such as the United States outlived one that was based on suppression such as the Soviet Union, as suppression stifled individual creativity and ultimately prosperity.
How did social evolution occur? Hayek used the example of property rights. Tracing back to the Greek and Roman times, Hayek showed that property rights protected individual freedom, and ensured the fairness of trade and commerce. “Where there is no property right, there is no justice.” Hayek reviewed ancient Egypt and feudal China, where there were initial property rights and flourishing commerce, but then powerful kings squashed such rights and these two civilizations went into decline. On the contrary, the European civilization benefited from the continuing rise of property rights, which enabled more trade, first in Northern Italy then in Britain.
How does a good solution spread in the society? It’s through imitation, or cultural transmission. People learn from each other, and adopt what they consider as a beneficial practice. Hayek emphasized that imitation is not instinct as we are learning social rules that are not “natural”. Nor is imitation reasoning as it is not driven by conscious selection, but by circumstance and by learning from others.
The unnatural feeling from certain culture norms is best seen from the example of property rights. The early humans lived in small tribes and shared their things, as much as today’s small families share household stuff among their members. But with the expansion of human contact, and trade, the notion of property rights arises. This “right” is not natural, but it is necessary. It did not come from design (reason), but from necessity. For this reason, Hayek cautioned against using our reason or rational judgment to decide what is best for society. That’s because we simply don’t know enough about the inner mechanism of a complex society.
Our civilization is the product of an evolution process. This process and its possible results are beyond each person’s comprehension. For example, a person tries to make a living or make a profit by going to work. His motive is solely for himself, but his work benefits someone who he doesn’t even know. He packs the eggs and earns his wage. But that eggs end up nourishing someone. Therefore, an action from a selfish motive could have end result that is altruistic. An unintended consequence from our action can be the opposite of our original motives. The reverse is also true: People who try to do “good”, such as socialists who create a central planning system, could end up hurting people and causing death. This is what happened with China’s Great Leap (a 3-year effort) that led to 30 million people starving to death, and the Greek economy near bankrupt from the government’s socialistic management.
The fatal conceit of socialism is lacking understanding of the limitation of our individual knowledge. With their best intention, socialists can create great harm to people they try to help. We have seen the suffering caused by socialist experiments in the last century in various countries. Today we need to guard against such fatal conceit, so that our precious society and its very fabric (defined by tradition) will not be destroyed.
This book (The Fatal Conceit) addresses the errors of socialism from its theoretical foundation. Hayek pointed out that idea of socialism arose from the belief that we can design the society with the “best” blueprint. Such belief fails to see that our society is an organic system that evolves, not from intentional design. The collective results of individual interactions led to the creation of language, law, and trade. None of these was intentionally designed, but came out of necessity and human survival. Believing that we can create a “perfect” society is the conceit that we have fully understood how the society evolves and where it goes.
The novel concept from Hayek in this book is cultural evolution (or “social evolution”). The customs and rules we see today were adopted in the past through trial and error. This includes the democratic system that are adopted by most counties today (even though there are still a few authoritarian countries like North Korea). This also includes paper money, international trade, religions and so on. Such a process of trial and error is very much like biological evolution. But it is not totally Darwinian. In biological evolution, only the fittest survive. The social evolution, people who are not fit benefitted from a better system or social rule. In the end, all the people in this system fair better than before. This is particularly true when commerce spreads to every corner of the earth.
On the other hand, cultural evolution has a lot of similarities to biological evolution. This includes adaption to new situations, variations based on local environments, and competition among different customs. Through this process, social conventions that help individuals survive were adopted and continued. Using religion as an example, those who believe “Thou shall not kill. Thou shall not steal.” are more likely to survive in the long run than those who don’t hold such beliefs. Thus Christianity serves an important function in the social evolution. A society based on democracy such as the United States outlived one that was based on suppression such as the Soviet Union, as suppression stifled individual creativity and ultimately prosperity.
How did social evolution occur? Hayek used the example of property rights. Tracing back to the Greek and Roman times, Hayek showed that property rights protected individual freedom, and ensured the fairness of trade and commerce. “Where there is no property right, there is no justice.” Hayek reviewed ancient Egypt and feudal China, where there were initial property rights and flourishing commerce, but then powerful kings squashed such rights and these two civilizations went into decline. On the contrary, the European civilization benefited from the continuing rise of property rights, which enabled more trade, first in Northern Italy then in Britain.
How does a good solution spread in the society? It’s through imitation, or cultural transmission. People learn from each other, and adopt what they consider as a beneficial practice. Hayek emphasized that imitation is not instinct as we are learning social rules that are not “natural”. Nor is imitation reasoning as it is not driven by conscious selection, but by circumstance and by learning from others.
The unnatural feeling from certain culture norms is best seen from the example of property rights. The early humans lived in small tribes and shared their things, as much as today’s small families share household stuff among their members. But with the expansion of human contact, and trade, the notion of property rights arises. This “right” is not natural, but it is necessary. It did not come from design (reason), but from necessity. For this reason, Hayek cautioned against using our reason or rational judgment to decide what is best for society. That’s because we simply don’t know enough about the inner mechanism of a complex society.
Our civilization is the product of an evolution process. This process and its possible results are beyond each person’s comprehension. For example, a person tries to make a living or make a profit by going to work. His motive is solely for himself, but his work benefits someone who he doesn’t even know. He packs the eggs and earns his wage. But that eggs end up nourishing someone. Therefore, an action from a selfish motive could have end result that is altruistic. An unintended consequence from our action can be the opposite of our original motives. The reverse is also true: People who try to do “good”, such as socialists who create a central planning system, could end up hurting people and causing death. This is what happened with China’s Great Leap (a 3-year effort) that led to 30 million people starving to death, and the Greek economy near bankrupt from the government’s socialistic management.
The fatal conceit of socialism is lacking understanding of the limitation of our individual knowledge. With their best intention, socialists can create great harm to people they try to help. We have seen the suffering caused by socialist experiments in the last century in various countries. Today we need to guard against such fatal conceit, so that our precious society and its very fabric (defined by tradition) will not be destroyed.
October 25, 2020
While the road to serfdom is much better known, ostensibly because it can more easily be caricatured and laughed at, this book truly does sound like Hayek’s magnum opus and I am surprised how it seems to be much less known. Hayek makes an epistemological attack on socialism first and foremost, when he states that: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account.”
While it seems to be economists who are facing Hayek’s polemic here, the attack can be easily extended to any top down designer/constructionist. His citing of the example of Soviets asking who and where decides how many bread loaves should be made in London cements this reasoning. He argues that traditions, values and principles such as importance placed on private property, trade, etc. are realized values – they are a product of trial and error realized over time by societies, not products of planning, and he thus warns against erosion of such traditions: “To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection – the comparative increase of population and wealth – of those groups that happened to follow them.” Arguing that the wealth creating engine that we call capitalism cannot be dumbed down simplistic causal connections, and as such price mechanisms play a crucial part in this system as a means of knowledge exchange – an idea that can arguably be said to have originated with Hayek: “The creation of wealth is not simply a physical process and cannot be explained by a chain of cause and effect. It is determined not by objective physical facts known to any one mind but by the separate, differing, information of millions, which is precipitated in prices that serve to guide further decisions.”
He reserves particular ire towards rationalist – top down intellectuals: “Morals, including especially, our institutions of property, freedom and justice, are not a creation of man’s reason but a distinct second endowment conferred on him by cultural evolution - runs counter to the main intellectual outlook of the twentieth century. The influence of rationalism has indeed been so profound and pervasive that, in general, the more intelligent an educated person is, the more likely he or she now is not only to be a rationalist, but also to hold socialist views (regardless of whether he or she is sufficiently doctrinal to attach to his or her views any label, including ‘socialist’). The higher we climb up the ladder of intelligence, the more we talk with intellectuals, the more likely we are to encounter socialist convictions. Rationalists tend to be intelligent and intellectual; and intelligent intellectuals tend to be socialist. One’s initial surprise at finding that intelligent people tend to be socialist diminishes when one realises that, of course, intelligent people will tend to overvalue intelligence, and to suppose that we must owe all the advantages and opportunities that our civilisation offers to deliberate design rather than to following traditional rules, and likewise to suppose that we can, by exercising our reason, eliminate any remaining undesired features by still more intelligence reflection, and still more appropriate design and ’rational coordination’ of our undertakings. This leads one to be favorably disposed to the central economic planning and control that lie at the heart of socialism… And since they have been taught that constructivism and scientism are what science and the use of reason are all about, they find it hard to believe that there can exist any useful knowledge that did not originate in deliberate experimentation, or to accept the validity of any tradition apart from their own tradition of reason. Thus [they say]: ‘Tradition is almost by definition reprehensible, something to be mocked and deplored’.
I have barely scratched the surface here, there is much of value in this book (especially places where Hayek talks about the loss of meaning of words as they are deployed by different actors to mean different things – words such as society, etc.) , and it should pretty much be a mandatory read at least in my part of the world where his ideas aren’t well known and where national socio political conversations revolve around different variants of collectivist ideas.
While it seems to be economists who are facing Hayek’s polemic here, the attack can be easily extended to any top down designer/constructionist. His citing of the example of Soviets asking who and where decides how many bread loaves should be made in London cements this reasoning. He argues that traditions, values and principles such as importance placed on private property, trade, etc. are realized values – they are a product of trial and error realized over time by societies, not products of planning, and he thus warns against erosion of such traditions: “To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection – the comparative increase of population and wealth – of those groups that happened to follow them.” Arguing that the wealth creating engine that we call capitalism cannot be dumbed down simplistic causal connections, and as such price mechanisms play a crucial part in this system as a means of knowledge exchange – an idea that can arguably be said to have originated with Hayek: “The creation of wealth is not simply a physical process and cannot be explained by a chain of cause and effect. It is determined not by objective physical facts known to any one mind but by the separate, differing, information of millions, which is precipitated in prices that serve to guide further decisions.”
He reserves particular ire towards rationalist – top down intellectuals: “Morals, including especially, our institutions of property, freedom and justice, are not a creation of man’s reason but a distinct second endowment conferred on him by cultural evolution - runs counter to the main intellectual outlook of the twentieth century. The influence of rationalism has indeed been so profound and pervasive that, in general, the more intelligent an educated person is, the more likely he or she now is not only to be a rationalist, but also to hold socialist views (regardless of whether he or she is sufficiently doctrinal to attach to his or her views any label, including ‘socialist’). The higher we climb up the ladder of intelligence, the more we talk with intellectuals, the more likely we are to encounter socialist convictions. Rationalists tend to be intelligent and intellectual; and intelligent intellectuals tend to be socialist. One’s initial surprise at finding that intelligent people tend to be socialist diminishes when one realises that, of course, intelligent people will tend to overvalue intelligence, and to suppose that we must owe all the advantages and opportunities that our civilisation offers to deliberate design rather than to following traditional rules, and likewise to suppose that we can, by exercising our reason, eliminate any remaining undesired features by still more intelligence reflection, and still more appropriate design and ’rational coordination’ of our undertakings. This leads one to be favorably disposed to the central economic planning and control that lie at the heart of socialism… And since they have been taught that constructivism and scientism are what science and the use of reason are all about, they find it hard to believe that there can exist any useful knowledge that did not originate in deliberate experimentation, or to accept the validity of any tradition apart from their own tradition of reason. Thus [they say]: ‘Tradition is almost by definition reprehensible, something to be mocked and deplored’.
I have barely scratched the surface here, there is much of value in this book (especially places where Hayek talks about the loss of meaning of words as they are deployed by different actors to mean different things – words such as society, etc.) , and it should pretty much be a mandatory read at least in my part of the world where his ideas aren’t well known and where national socio political conversations revolve around different variants of collectivist ideas.
January 10, 2023
მთელი წიგნი სოციალისტური იდეოლოგიის კრიტიკაა. განსაკუთრებით იგი უპირისპირდება რუსოს და მე-18 საუკუნის განმანათლებლებს. ჰაიეკი გვევლინება ნეოლიბერალიზმის ფუძემდებლად, რაც სახელმწიფოს მხრიდან კატეგორიულ ჩაურევლობას განსაზღვრავს. თუ მაინცდამაინც ჩარევა გახდა საჭირო,მას ადამიანთა შორის კონკურენციის პირობების დახვეწა და უზრუნველყოფა უნდა დაევალოს. კლასიკური ლიბერალიზმში კი სახელმწიფოს ზოგ შემთხვევაში შეეძლო ადამიანების საქმიანობასა და თავისუფლებაში ჩარევა. ნეოლიბერალიზმის პოლიტიკის გამტარებელი კლასიკური მაგალითები იყვნენ მარგარეტ ტეტჩერი და რონალდ რეიგანი.
ჟან ჟაკ რუსო ფიქრობდა, რომ ადამიანი იბადება თავისუფალი, და შემდეგ ცივილიზაცია ართმევს ამ თავისუფლებას. ცივილიზაციაში იგულისხმება კანონი, მორალური ინსტიტუტები და ასე შემდეგ. ხოლო ჰაიეკი კი რუსოს საწინააღმდეგო აზრზე იყო. მისი აზრით ცივილიზაცია აუცილებელია ადამიანის თავისუფლებისთვის და მისი პრიმიტიული მრისხანე ინსტიქტების მოსათვინიერებლად. ამ მოთვინიერების შემდეგ კი თვითონ ცივილიზაციაც განვითარდება. ცივილიზაცია ექსპერიმენტებისა და შეცდომების შედეგად ვითარდება.
ჟან-ჟაკ რუსოს აზრით ცხოველური ინსტიქტი არის უკეთესი მეგზური ადამიანებს შორის მოწესრიგებული თანამშრომლობის მისაღწევად, ვიდრე ტრადიცია და გონება. მისი აზრით ჩვენი ბუნებრივი ინსტიქტები და არა მათი შეზღუდულობა შეგვაძლებინებს “სამყაროს დამორჩილებას”.
ხოლო ჰაიეკი ფიქრობდა, რომ გაფართოებული წესრიგის შექმნამ შესაძლებელი გახადა კაცობრიობის არსებობა დღევანდელი სიმრავლითა და ფორმით. ასეთი წესრიგი არის თანდათან ჩამოყალიბებული ადამიანის ქცევის წესები (განსაკუთრებით ისინი, რომლებიც ეხება სხვადასხვა სახის საკუთრებას, პატიოსნებას, სიტყვის შესრულებას, გაცვლას, ვაჭრობას, კონკურენციას, მოგებასა და კერძო ცხოვრებას). ეს წესები ვრცელდება ტრადიციის მეშვეობით, სწავლითა და მიბაძვით და არა ინსტიქტის საშუალებით და მათ აქვთ უმეტესად აკრძალვის ფორმა (არ ქნა!) რითაც შემოისაზღვრება ინდივიდუალური გადაწყვეტილების მიღების სფერო. წესების ჩამოყალიბებით და მათდამი დამორჩილების სწავლით კაცობრიობამ შექმნა ცივილიზაცია ( ჯერ ტერიტორიულ ჯგუფებში და შემდეგ უფრო ფართო სივრცეზე). ეს წესები მათ ხშირად უკრძალავდა იმის კეთებას, რასაც მოითხოვდნენ მისი ინსტიქტები და იგი აღარ იყო დამოკიდებული ვითარების საერთო აღქმაზე.ეს წესები ქმნიან მორალს და თრგუნავენ და ზღუდავენ იმ ბუნებრივ მორალს ანუ იმ ინსტიქტებს, რომლებიც მცირე ჯგუფების წევრებს ერთმანეთთან აკავშირებდნენ და მათ შორის თანამშრომლობას უზრუნველყოფდნენ, ჯგუფის ზრდის დაბრკოლების ხარჯზე.
ჰაიეკის აზრით, კანონი არის წესების ნაკრები, რომელიც “სპონტანურად”, დაუგეგმავად და წინასწარი განზრახვის გარეშე ყალიბდება. კანონი იქმნება ყოველდღიურ ცხოვრებაში რიგითი ადამიანების ურთიერთთანამშრომლობის შედეგად. ამის საპირისპიროდ, კანონმდებლობა არის წესებისა და ბრძანებების მთელი რიგი, რომელიც მთავრობამ მიზანმიმართულად შეიმუშავა და დაადგინა. ჰაიეკის აზრით, ყველა კარგმა საზოგადოებამ უნდა გამოიყენოს კანონიცა და კანონმდებლობაც, მაგრამ დიდი ბოროტებაა თუ მათი აღრევა ხდება.
კიდევ ბევრი საკითხია. როგორებიცაა: როგორ ხდება ცოდნის მიღება?, რა არის ინტელექტი?, რა არის ვაჭრობა და რატომ ითვლებოდა სამარცხვინოდ ყოველთვის?, რა კავშირშია ერთმანეთთან მოსახლეობის ზრდა და ეკონომიკური წინსვლა? და კიდევ უამრავი.
პ.ს. მოკლედ, ძალიან სერიოზული ნაშრომია. ერთი მინუსი ჩვეულებრივი მკითხველისთვის ის აქვს, რომ ზედმეტად აკადემიური ენითაა ნაწერი და გაგება რბილად რომ ვთქვათ ჭირს. რამდენიმეჯერ მიწევდა ბევრი რამის გადაკითხვა ხშირად, აზრი რომ გამეგო. ბასტიასავით ლაკონურად რომ ეწერა, ვინ იცის იქნებ მეტი მკითხველიც ჰყოლოდა არასამეცნიერო წრეებში.
ჟან ჟაკ რუსო ფიქრობდა, რომ ადამიანი იბადება თავისუფალი, და შემდეგ ცივილიზაცია ართმევს ამ თავისუფლებას. ცივილიზაციაში იგულისხმება კანონი, მორალური ინსტიტუტები და ასე შემდეგ. ხოლო ჰაიეკი კი რუსოს საწინააღმდეგო აზრზე იყო. მისი აზრით ცივილიზაცია აუცილებელია ადამიანის თავისუფლებისთვის და მისი პრიმიტიული მრისხანე ინსტიქტების მოსათვინიერებლად. ამ მოთვინიერების შემდეგ კი თვითონ ცივილიზაციაც განვითარდება. ცივილიზაცია ექსპერიმენტებისა და შეცდომების შედეგად ვითარდება.
ჟან-ჟაკ რუსოს აზრით ცხოველური ინსტიქტი არის უკეთესი მეგზური ადამიანებს შორის მოწესრიგებული თანამშრომლობის მისაღწევად, ვიდრე ტრადიცია და გონება. მისი აზრით ჩვენი ბუნებრივი ინსტიქტები და არა მათი შეზღუდულობა შეგვაძლებინებს “სამყაროს დამორჩილებას”.
ხოლო ჰაიეკი ფიქრობდა, რომ გაფართოებული წესრიგის შექმნამ შესაძლებელი გახადა კაცობრიობის არსებობა დღევანდელი სიმრავლითა და ფორმით. ასეთი წესრიგი არის თანდათან ჩამოყალიბებული ადამიანის ქცევის წესები (განსაკუთრებით ისინი, რომლებიც ეხება სხვადასხვა სახის საკუთრებას, პატიოსნებას, სიტყვის შესრულებას, გაცვლას, ვაჭრობას, კონკურენციას, მოგებასა და კერძო ცხოვრებას). ეს წესები ვრცელდება ტრადიციის მეშვეობით, სწავლითა და მიბაძვით და არა ინსტიქტის საშუალებით და მათ აქვთ უმეტესად აკრძალვის ფორმა (არ ქნა!) რითაც შემოისაზღვრება ინდივიდუალური გადაწყვეტილების მიღების სფერო. წესების ჩამოყალიბებით და მათდამი დამორჩილების სწავლით კაცობრიობამ შექმნა ცივილიზაცია ( ჯერ ტერიტორიულ ჯგუფებში და შემდეგ უფრო ფართო სივრცეზე). ეს წესები მათ ხშირად უკრძალავდა იმის კეთებას, რასაც მოითხოვდნენ მისი ინსტიქტები და იგი აღარ იყო დამოკიდებული ვითარების საერთო აღქმაზე.ეს წესები ქმნიან მორალს და თრგუნავენ და ზღუდავენ იმ ბუნებრივ მორალს ანუ იმ ინსტიქტებს, რომლებიც მცირე ჯგუფების წევრებს ერთმანეთთან აკავშირებდნენ და მათ შორის თანამშრომლობას უზრუნველყოფდნენ, ჯგუფის ზრდის დაბრკოლების ხარჯზე.
ჰაიეკის აზრით, კანონი არის წესების ნაკრები, რომელიც “სპონტანურად”, დაუგეგმავად და წინასწარი განზრახვის გარეშე ყალიბდება. კანონი იქმნება ყოველდღიურ ცხოვრებაში რიგითი ადამიანების ურთიერთთანამშრომლობის შედეგად. ამის საპირისპიროდ, კანონმდებლობა არის წესებისა და ბრძანებების მთელი რიგი, რომელიც მთავრობამ მიზანმიმართულად შეიმუშავა და დაადგინა. ჰაიეკის აზრით, ყველა კარგმა საზოგადოებამ უნდა გამოიყენოს კანონიცა და კანონმდებლობაც, მაგრამ დიდი ბოროტებაა თუ მათი აღრევა ხდება.
კიდევ ბევრი საკითხია. როგორებიცაა: როგორ ხდება ცოდნის მიღება?, რა არის ინტელექტი?, რა არის ვაჭრობა და რატომ ითვლებოდა სამარცხვინოდ ყოველთვის?, რა კავშირშია ერთმანეთთან მოსახლეობის ზრდა და ეკონომიკური წინსვლა? და კიდევ უამრავი.
პ.ს. მოკლედ, ძალიან სერიოზული ნაშრომია. ერთი მინუსი ჩვეულებრივი მკითხველისთვის ის აქვს, რომ ზედმეტად აკადემიური ენითაა ნაწერი და გაგება რბილად რომ ვთქვათ ჭირს. რამდენიმეჯერ მიწევდა ბევრი რამის გადაკითხვა ხშირად, აზრი რომ გამეგო. ბასტიასავით ლაკონურად რომ ეწერა, ვინ იცის იქნებ მეტი მკითხველიც ჰყოლოდა არასამეცნიერო წრეებში.
March 25, 2018
This one took a while. A short book, but dense with thoughts and insight supporting the case for free markets and pointing out the "errors of socialism". At a time when many young Americans increasingly identify with socialism, Hayek's "Fatal Conceit" is a valuable counter-argument in favor of evolved systems of cooperation and exchange known as the extended order. I was first exposed to Hayek's arguments in college, in summary form, and later in reading "The Road to Serfdom". The Fatal Conceit is a long form argument about the evolution and moral basis of the extended order of a market system citing numerous other sources and arguments for support.
"one of the most influential political movements of our time, socialism, is based on demonstrably false premises, and despite being inspired by good intentions and led by some of the most intelligent representatives of our time, endangers the standard of living and life itself of a large proportion of our existing population."
Exchange is productive; it does increase the satisfaction of human needs from available resources. Civilization is so complex - and trade so productive - because the subjective worlds of the individuals living in the civilized world differ so much. Apparently paradoxically, diversity of individual purposes leads to a greater power to satisfy needs generally than does homogeneity, unanimity and control - and, also paradoxically, this is so because diversity enables men to master and dispose of more information Only a clear analysis of the market process can resolve these apparent paradoxes.
"it seems that after learning of the works of Jevons and Menger, Karl Marx himself completely abandoned further work on capital. If so, his followers were evidently not so wise as he."
"one of the most influential political movements of our time, socialism, is based on demonstrably false premises, and despite being inspired by good intentions and led by some of the most intelligent representatives of our time, endangers the standard of living and life itself of a large proportion of our existing population."
Exchange is productive; it does increase the satisfaction of human needs from available resources. Civilization is so complex - and trade so productive - because the subjective worlds of the individuals living in the civilized world differ so much. Apparently paradoxically, diversity of individual purposes leads to a greater power to satisfy needs generally than does homogeneity, unanimity and control - and, also paradoxically, this is so because diversity enables men to master and dispose of more information Only a clear analysis of the market process can resolve these apparent paradoxes.
"it seems that after learning of the works of Jevons and Menger, Karl Marx himself completely abandoned further work on capital. If so, his followers were evidently not so wise as he."
August 12, 2015
Para ser el último libro de Hayek no está mal tomarlo como inicio y referencia a las críticas hacia el socialismo y mostrar las bondades del capitalismo, el cual lo ve como algo generado mediante el orden espontáneo y que de manera evolutiva se ha mantenido como el mejor mecanismo para el progreso de la sociedad, al contrario de otras ideologías de caracter racional y científico que entorpecen este mismo progreso, el libro me hizo comprender más la idea libertaria, a lo largo de este libro Hayek ataca al socialismo desde puntos de vista tanto sociales como económicos, resaltando los puntos que lo hace totalmente inviable para la búsqueda de una sociedad próspera y ordenada.
4.5/5
4.5/5
December 8, 2008
The problem with the masses is that they don't read stuff like this, and even if they did chances are they'd still rather ignore than accept it.
June 26, 2020
The Hidden Knowledge
A late, indeed posthumous, work by the author of The Road to Serfdom, in some ways even more authoritative, contrarian and profound.
A late, indeed posthumous, work by the author of The Road to Serfdom, in some ways even more authoritative, contrarian and profound.
August 3, 2023
Llevo años sin que un libro me impacte de esta manera.
No puedo entender cómo los pensamientos de este hombre son más conocidos.
Lejos de cuestiones políticas, el libro es apasionante.
No puedo entender cómo los pensamientos de este hombre son más conocidos.
Lejos de cuestiones políticas, el libro es apasionante.
January 3, 2022
Det är sällan jag säger ett hårt ord om Hayek: denna gång gör jag det delvis. Kärnan i hans argument är sund - moral är evolutionärt gynnsamt, och i grunden irrationellt. Denna irrationalitet, liksom andra traditioner, utgör kärnan i våra interaktioner och möjliggör genom denna kärna av ömsesidigt uppfyllda förväntningar förtroende, vilket är grunden för marknadens distribuerade makt. En makt som bygger på förtroendet att fånga tillfället i flykten, med hjälp av den information som finns som inte andra har tillgång till, trots osäkerhet i utgång. Socialisterna fattar inte detta, eftersom de får för sig att planering är en förutsättning för interaktion - att vi bara gör saker när vi vet vad som händer, vilket skulle möjliggöra reglering av marknaden för det allmänna bästa, om det bara vore sant. Om, om, om.
Det som istället händer är att rationaliteten kväver skapelseglädjen, och därmed förmågan att agera.
I bästa fall - de andra scenarierna involverar rädsla att straffas som korrumperad, ond, eller slarvig med information, vilket är ännu mer effektivt för att hindra folk från att agera.
Så långt sant, och belagt med gott om källor. Framförallt nedsablingen av Rousseau är välkommen - den intellektuella dagfjärilen har fått för många ursäkter för sina nedrigheter alldeles för länge.
Var jag tycker att Hayek gör det lätt för sig, är i fördömandet av den aristotelisk-thomistiska traditionen, som han gör en halmdocka av.
Precis som de flesta halmdockor finns det något som vagt liknar sanning där - både Thomas och Aristoteles var skeptiska mot handelns effekt på samhällsmoral, och menade att det stabila samhället måste vara autarkiskt, men det är inte samma sak som att förneka nyttan med specialisering. Visst att de inte artikulerade den samma men det gjorde Luis de Molina på thomistisk grund, och Aristoteles förnekar aldrig vinstmotivet som till och med (pseudo)Platon skriver fram.
I appendix A visar det sig varför - Aristotelianism ställs mot Evolutionism, där Hayek vill att moral skall förstås evolutionärt. Detta är slarvigt, för det ställer upp ett falskt dilemma: Aristoteles stod inte emot irrationell evolutionism. Jag kan som Aristotelesnörd inte annat än att hänvisa till A.:s "De generatione et corruptione", samt påpeka att Thomas Aquinas uttryckligen använder evolutionär moral som grund för sitt argument.
Nu är Hayek död, och hade knappast läst min recension, men i alla fall. Till övriga läsare.
Jag rekommenderar denna bok som en översikt. Den förklarar på ett bra sätt kärnan i konflikten mellan etatister och mer frihetligt folk, och varför vi frihetligare har mer rätt än de, statskramarna. Däremot kommer personer som har läst annat i skolbildningen kring Hayek förmodligen känna att Hayeks egen karaktärisering av boken som en debatthandledning var mer på pricken än vad han själv kanske önskat.
Det som istället händer är att rationaliteten kväver skapelseglädjen, och därmed förmågan att agera.
I bästa fall - de andra scenarierna involverar rädsla att straffas som korrumperad, ond, eller slarvig med information, vilket är ännu mer effektivt för att hindra folk från att agera.
Så långt sant, och belagt med gott om källor. Framförallt nedsablingen av Rousseau är välkommen - den intellektuella dagfjärilen har fått för många ursäkter för sina nedrigheter alldeles för länge.
Var jag tycker att Hayek gör det lätt för sig, är i fördömandet av den aristotelisk-thomistiska traditionen, som han gör en halmdocka av.
Precis som de flesta halmdockor finns det något som vagt liknar sanning där - både Thomas och Aristoteles var skeptiska mot handelns effekt på samhällsmoral, och menade att det stabila samhället måste vara autarkiskt, men det är inte samma sak som att förneka nyttan med specialisering. Visst att de inte artikulerade den samma men det gjorde Luis de Molina på thomistisk grund, och Aristoteles förnekar aldrig vinstmotivet som till och med (pseudo)Platon skriver fram.
I appendix A visar det sig varför - Aristotelianism ställs mot Evolutionism, där Hayek vill att moral skall förstås evolutionärt. Detta är slarvigt, för det ställer upp ett falskt dilemma: Aristoteles stod inte emot irrationell evolutionism. Jag kan som Aristotelesnörd inte annat än att hänvisa till A.:s "De generatione et corruptione", samt påpeka att Thomas Aquinas uttryckligen använder evolutionär moral som grund för sitt argument.
Nu är Hayek död, och hade knappast läst min recension, men i alla fall. Till övriga läsare.
Jag rekommenderar denna bok som en översikt. Den förklarar på ett bra sätt kärnan i konflikten mellan etatister och mer frihetligt folk, och varför vi frihetligare har mer rätt än de, statskramarna. Däremot kommer personer som har läst annat i skolbildningen kring Hayek förmodligen känna att Hayeks egen karaktärisering av boken som en debatthandledning var mer på pricken än vad han själv kanske önskat.
October 1, 2020
Everyone should read this book. It should be a standard part of every public school curriculum.
I find it horrifying and tragic that economics is not a central focus in the education of our young people. If the purpose of public school is to churn out dutiful, effective citizens, then having them versed in the mechanics of what they're going to be voting for would seem to be of crucial importance. Of course, that's precisely why public schools cannot allow books like this to occupy the minds of young thinkers.
And so I submit to you, Hazlitt-style, Civics in One Lesson: "moral hazard. The end."
Hayek literally wrote the book on how and why to oppose socialism. At least twice, in fact. This is his second book constructed primarily as an argument against socialism (third, if you count The Constitution of Liberty, which is a bit more expansive in its scope). In The Road to Serfdom, he focuses on the political apparatus required to properly emplace and enforce socialism, and how this apparatus has a strong tendency to erode personal freedom and can trend, sometimes quite rapidly and violently, toward totalitarianism. This book is less chilling, more genial, and more accessible overall, focusing entirely on the economic problems inherent in replacing a free market with a centrally-planned system.
He makes it clear that this book was written to serve as a summary of his arguments for purposes of engaging in debate with socialists. As such, it serves wonderfully as a Cliff's Notes package for every one of us who has to engage in such debates. At fewer than 200 pages, there is simply no excuse for any freedom- or capitalism-loving individual to not become thoroughly familiar with the material. Read it once, then brush up on it every couple years or so when you find your arguments become stale or repetitive. It's essential.
The "conceit" of the socialists is the belief that we can design an economy, and beyond that, design a society, to order. This conceit comprises several individual errors, including the much-vaunted Information Problem. We've seen the consequences of this particular error play out time and again over the course of the 20th and 21st centuries: misallocation of resources, leading to scarcities and public unrest, in some cases leading to regime change.
One starts to wish that people would learn these particular lessons *before* socialism is imposed on them, so that they could save themselves the trouble of experiencing it firsthand...
I find it horrifying and tragic that economics is not a central focus in the education of our young people. If the purpose of public school is to churn out dutiful, effective citizens, then having them versed in the mechanics of what they're going to be voting for would seem to be of crucial importance. Of course, that's precisely why public schools cannot allow books like this to occupy the minds of young thinkers.
And so I submit to you, Hazlitt-style, Civics in One Lesson: "moral hazard. The end."
Hayek literally wrote the book on how and why to oppose socialism. At least twice, in fact. This is his second book constructed primarily as an argument against socialism (third, if you count The Constitution of Liberty, which is a bit more expansive in its scope). In The Road to Serfdom, he focuses on the political apparatus required to properly emplace and enforce socialism, and how this apparatus has a strong tendency to erode personal freedom and can trend, sometimes quite rapidly and violently, toward totalitarianism. This book is less chilling, more genial, and more accessible overall, focusing entirely on the economic problems inherent in replacing a free market with a centrally-planned system.
He makes it clear that this book was written to serve as a summary of his arguments for purposes of engaging in debate with socialists. As such, it serves wonderfully as a Cliff's Notes package for every one of us who has to engage in such debates. At fewer than 200 pages, there is simply no excuse for any freedom- or capitalism-loving individual to not become thoroughly familiar with the material. Read it once, then brush up on it every couple years or so when you find your arguments become stale or repetitive. It's essential.
The "conceit" of the socialists is the belief that we can design an economy, and beyond that, design a society, to order. This conceit comprises several individual errors, including the much-vaunted Information Problem. We've seen the consequences of this particular error play out time and again over the course of the 20th and 21st centuries: misallocation of resources, leading to scarcities and public unrest, in some cases leading to regime change.
One starts to wish that people would learn these particular lessons *before* socialism is imposed on them, so that they could save themselves the trouble of experiencing it firsthand...
January 17, 2024
Reread the book this time in English.
I see this an excellent classic on the evolutionary approach to social science. Hayek's legacy as an evolutionist is quite strong as illustrated e.g. how a left-wing ecologist DS Wilson and a left-wing economist Samuel Bowles discuss him. https://evonomics.com/hayek-evolution... "How Hayek’s Evolutionary Theory Disproves His Politics"
Wilson: "As an evolutionist critiquing the field of economics, I felt like a disciplinary outsider until I encountered the work of Friedrich Hayek. The Austrian economist was himself critical of Walrasian general equilibrium theory and proposed a radical alternative: Economic systems are a form of distributed intelligence that evolved by cultural group selection. They work without having been designed by anyone.
... I had to admire Hayek as a pioneer, especially since group selection was a heresy and the study of human cultural evolution was in its infancy when he wrote. Nevertheless, both topics have advanced by leaps and bounds since then and do not support his view that economic systems work best in the absence of regulations. Instead, cultural group selection theory points to a middle road between laissez faire and centralized planning that is rich with possibilities.
More recently, three distinguished economists—Samuel Bowles, Alan Kirman, and Rajiv Sethi–have made their own assessment in a retrospective titled Friedrich Hayek and the Market Algorithm published in the Journal of Economic Perspectives (https://www.aeaweb.org/articles?id=10...) (And their Vox post The Market Algorithm and the Scope of Government: Reflections on Hayek (https://cepr.org/voxeu/columns/market...))"
Bowles: "His 1945 paper – “The use of knowledge in society” — is in my top ten all time contributions to economics. It came in the late innings of the “planning versus the market” debate instigated by Great Depression and the apparent success of the Soviet Union’s first five-year plans. By the end of the thirties the anti-planning side was down by 5 runs at least; even the arch opponent of socialism Joseph Schumpeter had conceded: “Can socialism work? Of course it can. There’s nothing wrong with the pure theory of socialism.” Just in the nick of time: Hayek saved the day, coming up with a clinching argument: central planners could not possibly know enough to plan an economy well."
I see this an excellent classic on the evolutionary approach to social science. Hayek's legacy as an evolutionist is quite strong as illustrated e.g. how a left-wing ecologist DS Wilson and a left-wing economist Samuel Bowles discuss him. https://evonomics.com/hayek-evolution... "How Hayek’s Evolutionary Theory Disproves His Politics"
Wilson: "As an evolutionist critiquing the field of economics, I felt like a disciplinary outsider until I encountered the work of Friedrich Hayek. The Austrian economist was himself critical of Walrasian general equilibrium theory and proposed a radical alternative: Economic systems are a form of distributed intelligence that evolved by cultural group selection. They work without having been designed by anyone.
... I had to admire Hayek as a pioneer, especially since group selection was a heresy and the study of human cultural evolution was in its infancy when he wrote. Nevertheless, both topics have advanced by leaps and bounds since then and do not support his view that economic systems work best in the absence of regulations. Instead, cultural group selection theory points to a middle road between laissez faire and centralized planning that is rich with possibilities.
More recently, three distinguished economists—Samuel Bowles, Alan Kirman, and Rajiv Sethi–have made their own assessment in a retrospective titled Friedrich Hayek and the Market Algorithm published in the Journal of Economic Perspectives (https://www.aeaweb.org/articles?id=10...) (And their Vox post The Market Algorithm and the Scope of Government: Reflections on Hayek (https://cepr.org/voxeu/columns/market...))"
Bowles: "His 1945 paper – “The use of knowledge in society” — is in my top ten all time contributions to economics. It came in the late innings of the “planning versus the market” debate instigated by Great Depression and the apparent success of the Soviet Union’s first five-year plans. By the end of the thirties the anti-planning side was down by 5 runs at least; even the arch opponent of socialism Joseph Schumpeter had conceded: “Can socialism work? Of course it can. There’s nothing wrong with the pure theory of socialism.” Just in the nick of time: Hayek saved the day, coming up with a clinching argument: central planners could not possibly know enough to plan an economy well."
March 2, 2023
La 1ª mitad me resultó pesada, un rollo que está sintetizado en el prólogo. Es mejor leer solo el prólogo. Sin embargo, la 2ª mitad sí aporta ideas frescas para mí. Sobre todo, la idea y fundamentación de cómo el incremento de la población es fuente de riqueza, mediante la división y especialización del trabajo. Cómo si hubiese un holocausto y la población se redujese, a pesar de contar con toda la información en una biblioteca digital, habría un retroceso de la civilización hasta que la población aumentase considerablemente. Cómo un país, cuanto más población tenga, más facilidad tiene para generar riqueza, tanto por la mayor especialización del trabajo como por la economía de escala en gestión y administración política (legislar y gobernar para muchos cuesta casi lo mismo que para pocos).
De una entrevista a Hayek:
El socialismo supone que una autoridad central única puede utilizar todo el conocimiento disponible. Pasa por alto que la sociedad moderna, a la que ahora llamo el orden extensivo, que supera la capacidad de cualquier mente individual, se basa en la utilización del conocimiento ampliamente disperso.
Y una vez que somos conscientes de que podemos sacar un gran provecho de los recursos disponibles solo porque utilizamos el conocimiento de millones de hombres, queda claro que la suposición del socialismo de que una autoridad central puede disponer de todo este conocimiento simplemente no es correcta.
El socialismo, al criticar la producción para el beneficio en vez de para el uso, se opone a lo que hace posible la sociedad abierta.
La producción para el uso solo sería posible en una sociedad donde todo el conocimiento estuviese dado. Pero llegar a una situación en la que todos trabajamos para gente que no conocemos y somos sostenidos por el trabajo de gente que no nos conoce es posible porque producimos para obtener beneficios. El beneficio es la señal que nos dice qué debemos hacer para servir a gente que no conocemos. De hecho, podemos producir lo suficiente como para mantener a toda la población actual del mundo solo gracias a un proceso espontáneo, un mecanismo que nos permite usar infinitamente más información de la que posee ninguna autoridad central.
De una entrevista a Hayek:
El socialismo supone que una autoridad central única puede utilizar todo el conocimiento disponible. Pasa por alto que la sociedad moderna, a la que ahora llamo el orden extensivo, que supera la capacidad de cualquier mente individual, se basa en la utilización del conocimiento ampliamente disperso.
Y una vez que somos conscientes de que podemos sacar un gran provecho de los recursos disponibles solo porque utilizamos el conocimiento de millones de hombres, queda claro que la suposición del socialismo de que una autoridad central puede disponer de todo este conocimiento simplemente no es correcta.
El socialismo, al criticar la producción para el beneficio en vez de para el uso, se opone a lo que hace posible la sociedad abierta.
La producción para el uso solo sería posible en una sociedad donde todo el conocimiento estuviese dado. Pero llegar a una situación en la que todos trabajamos para gente que no conocemos y somos sostenidos por el trabajo de gente que no nos conoce es posible porque producimos para obtener beneficios. El beneficio es la señal que nos dice qué debemos hacer para servir a gente que no conocemos. De hecho, podemos producir lo suficiente como para mantener a toda la población actual del mundo solo gracias a un proceso espontáneo, un mecanismo que nos permite usar infinitamente más información de la que posee ninguna autoridad central.
May 4, 2022
I have mixed feelings about this book. I guess it's fairly simple though. I agree with Hayek's general arguments. However, his method of dissection is convoluted, inefficient and often misleading. He makes more sense than most economic philosophers, at least in terms of being right. I mean, socialists themselves just have their heads in the clouds for example.
But honestly, as wise and welcome as some of Hayek's insights are, he's just not on the level of Sowell or Friedman. They're much more thorough, logical, clear, etc. Maybe that's not a fair comparison. You could have a decent film composer but of course they pale in comparison to John Williams. Good bands don't come near The Beatles. But the thing is, Hayek is one of the most prominent and influential economists. I think his ideas are right, broadly, but he's overrated.
For this book, his main point is that socialism is not nearly as easy as its supporters think it is. Which is obviously true. To centrally plan a whole economy, or even a particular industry, would require a huge amount of knowledge. But Hayek is still missing the point on a fundamental level.
It's not just that huge organisations can't function. That's clearly false. And that's where Hayek's reasoning is basically wrong. Plenty of huge companies, corporations, institutions, etc., function successfully on a large scale, even in (relatively) free markets. Perhaps in ways even he couldn't predict. Pooling knowledge together CAN be done. Thousands of people working towards a similar goal under one CEO or small number of elite decision makers CAN work.
The key is not simply whether organisation can occur. But how. The problem with socialism is that it requires force. That's the fatal flaw. In a free market, a business only grows large if it actually satisfies lots of customers. If it actually works. It the whole is greater than the sum of its parts. It's not a question merely of size, necessarily. It doesn't matter whether you understand how a large business works. If it's voluntary and can make profits, then that's all that matters.
Socialism forces organisation. The decision-makers face no consequences. Some ideas might actually work, but the test would be in a free market. If leftists think workers are "underpaid", then hire them! Pay them more! If companies could be run more efficiently, then start your own company and beat them in the free market. Or offer your wisdom to them for a small fee and profit from it.
Any idea which ACTUALLY WORKS can make you a lot of money in the free market. If you have to force something, then you've already crossed a critical moral line (overruling the freedom of others) and you have no longer earned your status by demonstrating practicality, instead your ideas will be tried whether they work or not.
Hayek's explanations tend to be long-winded and vague. He gets side-tracked. He doesn't use as much evidence as he could, both to illustrate what he's talking about and make it more vivid, but also to help prove it. Reality does matter, no matter how solid you think your logic is.
At one point, he lists words which are meaninglessly paired with "social" to sound smarter. But this list goes way further than necessary. Far more interesting would be to criticise a few and analyse them while acknowledging others which might have some utility. Eg) "Social justice" is vague and is often just used to justify racial discrimination, while "social skills" is a pretty reasonable term with a clear and useful meaning.
Hayek's right that many values we now have may have come from tradition without us knowing why. But he seems to almost go to the opposite extreme. As if we can't possibly know why. Reason is very valuable. We CAN understand and justify many moral principles. Just because some new, cool-sounding ideas are wrong doesn't prove that rational, logical arguments can never be right. That's largely how he supports his views, anyway. These days, clearly most successful societies use a combination of traditions and explicit systems which were designed. Computers are not traditional, they are designed. Both deliberate conscious activity and unplanned evolution can result in useful ideas or patterns, like in the ways people interact. You needn't commit to one or the other.
I'm also not a big fan of Hayek's insistence on phrases like "extended order" rather than the more conventional "society", "free markets" or "the economy". His term is just as vague. In science, we can always define terms to have precise meanings. By all means, he can clarify what free markets actually are and dispel misconceptions. But using a term which only he uses is just confusing. The same for "several property". Why not just property? I AGREE with Hayek and even I don't know what he's talking about!
I agree with him on religion. That it can be useful. But he takes a long time to make that simple point. Actions and results are what matter. Two basketball players might be completely different. One prays before every game, has tattoos and jewellery reflecting his religion. The other parties and jokes around before games. Dennis Rodman comes to mind. But all that matters is the end result. Whatever works for you.
Similarly, if some people need to fear God to avoid stealing, murder, lying, etc., then fine. If others are 100% atheist but behave similarly, what's the problem? Don't worry about what's in other people's minds. Worry about their actions. And again, whether those moral values came from religion, rational thought, imitation, family, a book - it doesn't matter. Origins of ideas are often irrelevant. What matters is whether they hold up under the scrutiny of evidence AND reason.
By and large, Hayek is right. But this book could be boiled down to perhaps 50 pages of reasonable ideas and explanations. The rest is fluff, ambiguous and/or clumsy.
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
This is perhaps the clearest sentence in the book and even it is a bit clunky and misleading. Consider the Burj Khalifa, modern movies, the pyramids of Egypt, the internet and a million other human inventions. Humans CAN design amazing things and CAN work together in mass numbers. But it works when it isn't forced - when the benefits outweigh the costs, as determined by those directly involved. It also often involves many independent layers or components, like water finding its level despite being made of millions of millions of independent unthinking molecules.
But honestly, as wise and welcome as some of Hayek's insights are, he's just not on the level of Sowell or Friedman. They're much more thorough, logical, clear, etc. Maybe that's not a fair comparison. You could have a decent film composer but of course they pale in comparison to John Williams. Good bands don't come near The Beatles. But the thing is, Hayek is one of the most prominent and influential economists. I think his ideas are right, broadly, but he's overrated.
For this book, his main point is that socialism is not nearly as easy as its supporters think it is. Which is obviously true. To centrally plan a whole economy, or even a particular industry, would require a huge amount of knowledge. But Hayek is still missing the point on a fundamental level.
It's not just that huge organisations can't function. That's clearly false. And that's where Hayek's reasoning is basically wrong. Plenty of huge companies, corporations, institutions, etc., function successfully on a large scale, even in (relatively) free markets. Perhaps in ways even he couldn't predict. Pooling knowledge together CAN be done. Thousands of people working towards a similar goal under one CEO or small number of elite decision makers CAN work.
The key is not simply whether organisation can occur. But how. The problem with socialism is that it requires force. That's the fatal flaw. In a free market, a business only grows large if it actually satisfies lots of customers. If it actually works. It the whole is greater than the sum of its parts. It's not a question merely of size, necessarily. It doesn't matter whether you understand how a large business works. If it's voluntary and can make profits, then that's all that matters.
Socialism forces organisation. The decision-makers face no consequences. Some ideas might actually work, but the test would be in a free market. If leftists think workers are "underpaid", then hire them! Pay them more! If companies could be run more efficiently, then start your own company and beat them in the free market. Or offer your wisdom to them for a small fee and profit from it.
Any idea which ACTUALLY WORKS can make you a lot of money in the free market. If you have to force something, then you've already crossed a critical moral line (overruling the freedom of others) and you have no longer earned your status by demonstrating practicality, instead your ideas will be tried whether they work or not.
Hayek's explanations tend to be long-winded and vague. He gets side-tracked. He doesn't use as much evidence as he could, both to illustrate what he's talking about and make it more vivid, but also to help prove it. Reality does matter, no matter how solid you think your logic is.
At one point, he lists words which are meaninglessly paired with "social" to sound smarter. But this list goes way further than necessary. Far more interesting would be to criticise a few and analyse them while acknowledging others which might have some utility. Eg) "Social justice" is vague and is often just used to justify racial discrimination, while "social skills" is a pretty reasonable term with a clear and useful meaning.
Hayek's right that many values we now have may have come from tradition without us knowing why. But he seems to almost go to the opposite extreme. As if we can't possibly know why. Reason is very valuable. We CAN understand and justify many moral principles. Just because some new, cool-sounding ideas are wrong doesn't prove that rational, logical arguments can never be right. That's largely how he supports his views, anyway. These days, clearly most successful societies use a combination of traditions and explicit systems which were designed. Computers are not traditional, they are designed. Both deliberate conscious activity and unplanned evolution can result in useful ideas or patterns, like in the ways people interact. You needn't commit to one or the other.
I'm also not a big fan of Hayek's insistence on phrases like "extended order" rather than the more conventional "society", "free markets" or "the economy". His term is just as vague. In science, we can always define terms to have precise meanings. By all means, he can clarify what free markets actually are and dispel misconceptions. But using a term which only he uses is just confusing. The same for "several property". Why not just property? I AGREE with Hayek and even I don't know what he's talking about!
I agree with him on religion. That it can be useful. But he takes a long time to make that simple point. Actions and results are what matter. Two basketball players might be completely different. One prays before every game, has tattoos and jewellery reflecting his religion. The other parties and jokes around before games. Dennis Rodman comes to mind. But all that matters is the end result. Whatever works for you.
Similarly, if some people need to fear God to avoid stealing, murder, lying, etc., then fine. If others are 100% atheist but behave similarly, what's the problem? Don't worry about what's in other people's minds. Worry about their actions. And again, whether those moral values came from religion, rational thought, imitation, family, a book - it doesn't matter. Origins of ideas are often irrelevant. What matters is whether they hold up under the scrutiny of evidence AND reason.
By and large, Hayek is right. But this book could be boiled down to perhaps 50 pages of reasonable ideas and explanations. The rest is fluff, ambiguous and/or clumsy.
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
This is perhaps the clearest sentence in the book and even it is a bit clunky and misleading. Consider the Burj Khalifa, modern movies, the pyramids of Egypt, the internet and a million other human inventions. Humans CAN design amazing things and CAN work together in mass numbers. But it works when it isn't forced - when the benefits outweigh the costs, as determined by those directly involved. It also often involves many independent layers or components, like water finding its level despite being made of millions of millions of independent unthinking molecules.
August 18, 2016
At first this seemed like an interesting critique of socialism but in reality it is just a huge straw man argument. And boring.
August 16, 2020
According to Hayek, most of the intellectuals tend to hold rationalist and socialist beliefs. He argues that these intellectuals despise the traditions and customs, which have enabled us to survive and have created the extended order, which feeds millions of people all around the world. The chief reason for this is that they overvalue the intelligence and the reason, supposing a better design is achievable for human lives. However, this is untrue for Hayek, since he thinks the reason is not the mere cause of what humans created but just a byproduct of the cultural evolution. There is no such reason which can incorporate all the inputs to plan the economy.
The influence of rationalism has indeed been so profound and pervasive that, in general, the more intelligent an educated person is, the more likely he or she now is not only to be a rationalist, but also to hold socialist views. The higher we climb up the ladder of intelligence, the more we talk with intellectuals, the more likely we are to encounter socialist convictions. Rationalists tend to be intelligent and intellectual; and intelligent intellectuals tend to be socialists.
One’s initial surprise at finding that intelligent people tend to be socialists diminishes when one realizes that, of course, intelligent people will tend to overvalue intelligence, and to suppose that we must owe all the advantages and opportunities that our civilization offers to deliberate design rather than to following traditional rules, and likewise to suppose that we can, by exercising our reason, eliminate any remaining undesired features by still more intelligent reflection, and still more appropriate design and ‘rational coordination’ of our undertakings. This leads one to be favorably disposed to the central economic planning and control that lie at the heart of socialism.
Descending in the modern period from René Descartes, this form of rationalism not only discards tradition, but claims that pure reason can directly serve our desires without any such intermediary, and can build a new world, a new morality, a new law, even a new and purified language, from itself alone. Although the theory is plainly false, it still dominates the thinking of most scientists, and also of most literati, artists, and intellectuals.
Everywhere, in the name of liberation, people disavow practices that enabled mankind to reach its present size and degree of cooperation because they do not rationally see, according to their lights, how certain limitations on individual freedom through legal and moral rules make possible a greater – and freer! – order than can be attained through centralized control.
They assume that, since people had been able to generate some system of rules coordinating their efforts, they must also be able to design an even better and more gratifying system.
This is the fatal conceit for Hayek: not being able to understand what have enabled us to survive. There is a sweet pot between instinct and reason which have helped us to continue our activities by not knowing all the details in the system and still be a part of it. Reason alone cannot centralize all the info dispersed in the extended system and benefit from it. In order to use the most of the info in the system, a decentralized and self-ordering system should be in work. The inequality it brings is inevitable but necessary to move things forward.
The title of the present chapter, ‘Between Instinct and Reason’, is meant literally. I want to call attention to what does indeed lie between instinct and reason, and which on that account is often overlooked just because it is assumed that there is nothing between the two. That is, I am chiefly concerned with cultural and moral evolution, evolution of the extended order, which is, on the one hand (as we have just seen), beyond instinct and often opposed to it, and which is, on the other hand (as we shall see later), incapable of being created or designed by reason.
Our moral traditions, like many other aspects of our culture, developed concurrently with our reason, not as its product. Surprising and paradoxical as it may seem to some to say this, these moral traditions outstrip the capacities of reason.
The unknown, can be achieved more effectively by decentralizing decisions, and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account. This is the main reason for rejecting the requirements of constructivist rationalism. For the same reason, only the alterable division of the power of disposal over particular resources among many individuals actually able to decide on their use – a division obtained through individual freedom and several property – makes the fullest exploitation of dispersed knowledge possible.
We are led – for example by the pricing system in market exchange – to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant; and we in turn constantly live on the services of other people of whom we know nothing. All this is possible because we stand in a great framework of institutions and traditions – economic, legal, and moral – into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood in the sense in which we understand how the things that we manufacture function.
Prices and profit are all that most producers need to be able to serve more effectively the needs of men they do not know. They are a tool for searching—just as, for the soldier or hunter, the seaman or air pilot, the telescope extends the range of vision. The market process gives most people the material and information resources that they need in order to obtain what they want.
Mankind could neither have reached nor could now maintain its present numbers without an inequality that is neither determined by, nor reconcilable with, any deliberate moral judgements. Effort of course will improve individual chances, but it alone cannot secure results. The envy of those who have tried just as hard, although fully understandable, works against the common interest. Thus, if the common interest is really our interest, we must not give in to this very human instinctual trait, but instead allow the market process to determine the reward.
My comment would be that the difficulty in central planning of the economy is the main weakness in the socialist economy and this criticism is all over the place. What makes this book still interesting is that it gives a plausible explanation to why intelligent people, artists, journalists or any renowned intellectuals tend to be a socialist and why they might be wrong. Second, the analogy between the biological evolution and capitalist economy seems valid to me since their working mechanisms are similar. Evolution is not just; the capitalist economy is not either. And this is sad for most of us.
*italics are quoted from the book.
The influence of rationalism has indeed been so profound and pervasive that, in general, the more intelligent an educated person is, the more likely he or she now is not only to be a rationalist, but also to hold socialist views. The higher we climb up the ladder of intelligence, the more we talk with intellectuals, the more likely we are to encounter socialist convictions. Rationalists tend to be intelligent and intellectual; and intelligent intellectuals tend to be socialists.
One’s initial surprise at finding that intelligent people tend to be socialists diminishes when one realizes that, of course, intelligent people will tend to overvalue intelligence, and to suppose that we must owe all the advantages and opportunities that our civilization offers to deliberate design rather than to following traditional rules, and likewise to suppose that we can, by exercising our reason, eliminate any remaining undesired features by still more intelligent reflection, and still more appropriate design and ‘rational coordination’ of our undertakings. This leads one to be favorably disposed to the central economic planning and control that lie at the heart of socialism.
Descending in the modern period from René Descartes, this form of rationalism not only discards tradition, but claims that pure reason can directly serve our desires without any such intermediary, and can build a new world, a new morality, a new law, even a new and purified language, from itself alone. Although the theory is plainly false, it still dominates the thinking of most scientists, and also of most literati, artists, and intellectuals.
Everywhere, in the name of liberation, people disavow practices that enabled mankind to reach its present size and degree of cooperation because they do not rationally see, according to their lights, how certain limitations on individual freedom through legal and moral rules make possible a greater – and freer! – order than can be attained through centralized control.
They assume that, since people had been able to generate some system of rules coordinating their efforts, they must also be able to design an even better and more gratifying system.
This is the fatal conceit for Hayek: not being able to understand what have enabled us to survive. There is a sweet pot between instinct and reason which have helped us to continue our activities by not knowing all the details in the system and still be a part of it. Reason alone cannot centralize all the info dispersed in the extended system and benefit from it. In order to use the most of the info in the system, a decentralized and self-ordering system should be in work. The inequality it brings is inevitable but necessary to move things forward.
The title of the present chapter, ‘Between Instinct and Reason’, is meant literally. I want to call attention to what does indeed lie between instinct and reason, and which on that account is often overlooked just because it is assumed that there is nothing between the two. That is, I am chiefly concerned with cultural and moral evolution, evolution of the extended order, which is, on the one hand (as we have just seen), beyond instinct and often opposed to it, and which is, on the other hand (as we shall see later), incapable of being created or designed by reason.
Our moral traditions, like many other aspects of our culture, developed concurrently with our reason, not as its product. Surprising and paradoxical as it may seem to some to say this, these moral traditions outstrip the capacities of reason.
The unknown, can be achieved more effectively by decentralizing decisions, and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account. This is the main reason for rejecting the requirements of constructivist rationalism. For the same reason, only the alterable division of the power of disposal over particular resources among many individuals actually able to decide on their use – a division obtained through individual freedom and several property – makes the fullest exploitation of dispersed knowledge possible.
We are led – for example by the pricing system in market exchange – to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant; and we in turn constantly live on the services of other people of whom we know nothing. All this is possible because we stand in a great framework of institutions and traditions – economic, legal, and moral – into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood in the sense in which we understand how the things that we manufacture function.
Prices and profit are all that most producers need to be able to serve more effectively the needs of men they do not know. They are a tool for searching—just as, for the soldier or hunter, the seaman or air pilot, the telescope extends the range of vision. The market process gives most people the material and information resources that they need in order to obtain what they want.
Mankind could neither have reached nor could now maintain its present numbers without an inequality that is neither determined by, nor reconcilable with, any deliberate moral judgements. Effort of course will improve individual chances, but it alone cannot secure results. The envy of those who have tried just as hard, although fully understandable, works against the common interest. Thus, if the common interest is really our interest, we must not give in to this very human instinctual trait, but instead allow the market process to determine the reward.
My comment would be that the difficulty in central planning of the economy is the main weakness in the socialist economy and this criticism is all over the place. What makes this book still interesting is that it gives a plausible explanation to why intelligent people, artists, journalists or any renowned intellectuals tend to be a socialist and why they might be wrong. Second, the analogy between the biological evolution and capitalist economy seems valid to me since their working mechanisms are similar. Evolution is not just; the capitalist economy is not either. And this is sad for most of us.
*italics are quoted from the book.
August 21, 2025
A ideia central desta obra-prima de Hayek é que o socialismo assenta numa arrogância fatal: a crença de que a “sociedade” pode ser desenhada e organizada segundo planos conscientes, ignorando que as instituições que sustentam a civilização – como a propriedade privada, o comércio e o funcionamento de mercado – são fruto de um longo processo evolutivo, não de uma engenharia deliberada. Para Hayek, essa “ordem espontânea” é o verdadeiro motor do progresso humano, e tentar substituí-la por projetos coletivistas conduz inevitavelmente ao atraso económico, à tirania e à destruição cultural. O tom do livro é duro e combativo, com poucas concessões a visões alternativas, e que acaba por ser mais uma denúncia do que uma proposta positiva: há pouca ênfase em sugerir caminhos, mas uma insistência quase obsessiva em demonstrar os erros do adversário. Este estilo, frio e por vezes reacionário, reflete bem o rigor austro-germânico de Hayek, mas também cria distanciamento para leitores que procuram um liberalismo mais aberto. Apesar destes apontamentos, o livro é uma defesa magistral da “catalaxia” liberal, e uma crítica demolidora à tentação de reformar a sociedade com base em ideologias construtivistas racionais, uma vez que o conhecimento é disperso e, por isso, impossível de planificar. É um livro que consolida o estatuto de Hayek como um dos maiores pensadores liberais de sempre.
April 22, 2021
Tämä taloustieteen nobelistin puheenvuoron perusargumentti on mielenkiintoinen: vaistonvarainen toimintatapamme juontaa juurensa ajalta, jolloin ihmisen oli mahdollista tuntea paitis oma ryhmänsä myös kaikkie ne muut, joiden kanssa oma ryhmä oli kanssakäymisissä. Nämä säännöt eivät enää toimi maailmassa, jossa toiminta optimoituu globaalissa verkostossa hajatetun markkinamekanismin kautta. Tuo hajautettu markkinamekanismi (~kapitalismi) on evoluoitunut vuosituhansien kuluessa toimivaksi, eikä sitä ole mahdollista korvata millään toimivalla ihmisen varta vasten suunnittelemalla mekanismilla (kuten esimerkiksi suunnitelmatalous).
Mielenkiintoisesta ja ajatuksiaherättävästä premissistä huolimatta kirja tuntuu kuitenkin vähän tunkkaiselta (1988, Hayekin Nobel vuodelta 1947) aikansa jäänteeltä. Hayek sivuuttaa kovin huolettomasti lyhyissä sivulauseissa sen, että toki kapitalisimin kehittyessä on ollut kaikkea väärintekemistä ja kitkaa, ja varmaan jotkut ovat olleet etuoikeutetumpia kuin toiset. Myös ympäristökustannukset sivuutetaan teoksessa täysin. Kirja on myös hyvin vaikealukuinen sillä lauseet ovat pitkiä ja polveilevia. Mutta se argumentti, ettei ihmisen isoja toimintatapaverkostoja voi varsinaisesti suunnitella, antaa kyllä ajattelemisen aihetta.
Mielenkiintoisesta ja ajatuksiaherättävästä premissistä huolimatta kirja tuntuu kuitenkin vähän tunkkaiselta (1988, Hayekin Nobel vuodelta 1947) aikansa jäänteeltä. Hayek sivuuttaa kovin huolettomasti lyhyissä sivulauseissa sen, että toki kapitalisimin kehittyessä on ollut kaikkea väärintekemistä ja kitkaa, ja varmaan jotkut ovat olleet etuoikeutetumpia kuin toiset. Myös ympäristökustannukset sivuutetaan teoksessa täysin. Kirja on myös hyvin vaikealukuinen sillä lauseet ovat pitkiä ja polveilevia. Mutta se argumentti, ettei ihmisen isoja toimintatapaverkostoja voi varsinaisesti suunnitella, antaa kyllä ajattelemisen aihetta.
November 9, 2024
Absolute banger!
This is not just an economics book, it is a book about the history of cultural evolution and how it led to the rise of civilizations.
Highly complex, dense, and conceptual, but definitely worthwhile!
This is not just an economics book, it is a book about the history of cultural evolution and how it led to the rise of civilizations.
Highly complex, dense, and conceptual, but definitely worthwhile!
October 19, 2021
I went into this already convinced that socialism is flawed, but I still found the book to be based on nothing empirical and just completely anecdotal, fleeting thoughts. It certainly would not have convinced me socialism isn't a useful mechanism if I weren't already of that persuasion. Honestly I was shocked at the lack of rigour in the book for such an acclaimed thinker.
March 7, 2019
Awesome!
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