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interesting info on Hayek

[Topics under debate]: Free Citizen, Long Term Vision, Preamble
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an interesting tidbit from HAYEK-L@MAELSTROM.STJOHNS.EDU. Always like
reading works by him and on him. i hope all members of IPI have read and
understood the 1945 paper by Hayek permission for whose public
dissemination i had obtained from the AEA. the paper is in the
publications page of IPI.


 In resurrecting Barone's 1908 article, Hayek realized that the Mises
attack on the socialist position was untenable.  As a result, in several
famous articles - notably, "Economics and Knowledge" (1937) and "On the
Use of Knowledge in Society" (1945) - Hayek composed a response which
advanced the "Socialist Calculation" debate to a new level.  
Succinctly, he claimed, countering Lange, that prices are not merely
"rates of exchange between goods", but rather "a mechanism for
communicating information" (Hayek, 1945).

Hayek argued that people have little knowledge of the world beyond their
immediate surroundings and this is what forces them to be price-takers - the
crucial ingredient that makes the price system work. If, on the other hand, a
particular agent's knowledge were greater, agents would then refuse to act as
price-takers but rather make decisions in a way which would manipulate their
environment to their advantage thereby destroying the price system.

In a complex, uncertain environment, Hayek argument, agents are not able to
predict the consequences of their actions, and only this way could the price
system work.  In Hayek's words, the "fatal conceit" of the Oskar Lange and
other "Socialists" in the calculation debate was that they believed this order
could be "designed" by a planner who just gets the prices right, without
realising that a price system evolved spontaneously as a result of lack of
knowledge.  The same limited knowledge which afflicts the agent's predictive
power must necessarily constrain the planner's as well.  Hayek enhanced this
argument with considerations of "spontaneous order" - the idea that a
harmonious, evolving order arises from the interaction of a decentralized,
heterogeneous group of self-seeking agents with limited knowledge.  This
order, he claimed, was not "designed" nor could be "designed" by a social
planner, even a very wise one, but merely "emerged" or evolved spontaneously
from a seemingly complex network of interaction among agents with limited

Hayek's elaborations on this complex, evolving spontaneous order are found in
various places (e.g. 1952, 1964). Hayek continued with his work on "evolving
order", linking it with his work on political and legal theory (e.g. 1960,
1973).  In tackling the evolution of political, social, legal and economic
institutions, Hayek is rightly conceived as one of the founding fathers of
"evolutionary economics".

In many ways, one can see how the work of the social "evolutionist" and
skeptic philosopher, David Hume was particularly influential on Hayek.
Indeed, Hayek's scholarly work on the history of economic thought - e.g. on
John Stuart Mill, Richard Cantillon and the Bullionist Debates - often echoed
his search for bedfellows in the past, those who had resisted the "rational",
calculable worldviews and simplistic solutions ever-so-present within
intellectual circles. In his work on the philosophy of science (1952), Hayek
traces the intellectual roots of the rational-socialist tendencies of
economics to the theories of Comte and Saint-Simon in the 19th Century.
Hayek's efforts were nonetheless ignored in the Keynesian mainstream which
then dominated economics.

Finding a deaf ear in economics, he looked elsewhere.  In an apparently
bizarre interlude, Hayek turned his attention to psychology - turning out an
anti-behaviorist (and Hume-drenched) tract, _The Sensory Order_ (1952), which
fit into his "group selection" type of evolution he had applied to his
"spontaneous order" in economics.  All this led to one of his most famous
works, the _Constitution of Liberty_ (1960) bringing all his previous work on
political theory together into one magnificent defense of "Old Whig" political
doctrine and a return attack on the Saint-Simon-Comte collectivism. Having
seen his old idea of a "commodity reserve currency" (1943) fail to generate
much interest, Hayek turned in the 1970s to champion the cause of a "free
banking system" and the devolution of monetary control away from the central
banks and into the hands of private banks (1978).  This drew upon him the
opposition of Milton Friedman and the Chicago Monetarists.

After spending many fruitful years at the L.S.E., Hayek joined the Committee
on Social Thought (not the economics department) of the University of Chicago
in 1950.

In 1962, Hayek left for the University of Freiburg in Germany and subsequently
Salzburg, where he spent his remaining years. Hayek shared the Nobel Prize
with Gunnar Myrdal in 1974 in one of the more controversial and surprising
awards ever made (controversial because Myrdal had called for the abolition of
the Nobel prize as a result of it having been awarded to Hayek and Friedman,
and surprising for, at that time, Hayek was virtually forgotten in the
economics profession).

Interest in Hayek and his work increased after the 1974 award (his Nobel
speech being a reiteration of his Counterrevolution thesis) and has kept on
that track until today - his stock being enormously boosted by the collapse of
Communism in Eastern Europe."

E. J. Dodson, "Friedrich von Hayek (1899-1992)"

E. J. Dodson teaches at Henry George School of Social Science in
Philadelphia and hosts "The School of Cooperatative Individualism" on the
web at: http://www.geocities.com/Athens/Acropolis/5148/index.html

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