The world in which we live is more diverse than most of us are able to handle. For simplicity, we group ideas and people into categories. While this simplifies matters, it also causes us to miss the nuance which is buried in our taxonomies.
Thus, Democrats are good (or bad) while Republicans are bad (or good) depending on which team you root for. In reality, whichever side you favor likely contains views you consider inappropriate. Clearly that is the case when we talk about liberals and conservatives. Whatever these terms might mean to you, there are many variations within each that we likely disagree with.
True knowledge comes from understanding the distinctions and contradictions within any position or philosophy. Economic philosophies are especially perplexing. Most people dichotomize economics and economists into free-market or mixed-market types. But there is incredible diversity within each category. Some of the differences are subtle and some not. Yet it is important to understand these differences in order to evaluate policies.
While these comments refer to economics, they are as true for philosophers, psychologists, war strategists etc. What I found fascinating regarding the following article is that it contrasts the philosophical underpinnings that lead strict free marketers to similar conclusions (at least for the layman). It deals with four Austrian economists and Ayn Rand. (It would have been interesting to have included Milton Friedman in this mix because most of his conclusions are similar although his philosophical and methodological basis for arriving there differs from the others.)
I am unaware of the author although he blogs at a site called Hayekian. I intend to familiarize myself with his other posts.
Perhaps the biggest ideological difference which sets F.A. Hayek apart from other prominent free-market thinkers like Ayn Rand and fellow economists of the so-called ‘Austrian School’ like Ludwig von Mises, Murray N. Rothbard and more recently Hans-Hermann Hoppe, is, as Hayek mentioned “the evolutionary aspect”
Let’s quote Hayek:
“We understand now that all enduring structures above the level of the simplest atoms, and up to the brain and society, are the results of, and can be explained only in terms of, processes of selective evolution…” (Hayek F. , 1981, p. 158)
[Little side-note…Although I have chosen Hayek vs. other thinkers for this essay’s title, it really comes down to something more profound. It comes down to grounding one’s understanding of the world upon evolutionary concepts vs. rejecting, overlooking, being unaware of, or not recognizing the significance of this evolutionary worldview. We continue…]
As Hayek’s quote implies, Hayek was thoroughly grounded in an evolutionary perspective. His understanding of the vital role that cultural evolution played in creating the language/laws/morals/institutions which themselves play a key role in shaping how humans perceive the world and thus act, allowed him to provide a relatively superior and more profound understanding of the world compared to these other men, especially the latter two.
To Hayek, the market process and its various aspects like trade, money, competition, profit/loss calculation, banking/finance and interest rate coordination, the state as the enforcer of the rules/laws that sustain these things and how all of these things interact to create the social order, or as Herbert Spencer called ‘The Social Organism’… had less to do with man’s reason and intentions, and more to do with “cultural evolution”, where different cultures inadvertently compete with each other, leading to the sort of natural selection of rules/customs/institutions which lead to the most growth/fitness. Just like natural selection created the mechanism of biological evolution with genes being the main knowledge-carriers leading to biological order, Hayek saw natural selection sort of inventing/evolving ‘the market process’ with human brains (and now software) as being the knowledge-carriers that guide the actions of our complex social order. But again, the market process itself, just like biological evolution, was not rationally designed by people. [More on Hayek’s cultural evo here]
The human body is the result of the actions of 30 trillion human cells and another 40 trillion bacteria, yet it is obviously not the result of any conscious planning or design on their part. When it comes to biological orders we have good ideas as to how natural selection evolved/designed all the relevant systems(nervous, respiratory, etc.), yet among the aforementioned giants, only Hayek firmly grasped the same evolutionary forces creating/designing “the market process” and resulting social order.
The closest thing we have to an all-encompassing treatise from Hayek is his “Law, Legislation and Liberty” trilogy. The very titles of the initial sections of Hayek’s and Mises’ treatises are somewhat revealing. Mises’ monumental edifice of economic reasoning, “Human Action”, begins with ‘Chapter 1. Acting Man’, and the first sub-section is titled ‘Purposeful Action and Animal Reaction’. Hayek’s first volume is sub-titled ‘Rules and Order’, and in his own words:
“The central concept around which the discussion of this book will turn is that of order, and particularly the distinction between two kinds of order which we will provisionally call ‘made’ and ‘grown’ orders. Order is an indispensable concept for the discussion of all complex phenomena…” (Hayek F. A., 1973, p. 35)
Other sub-titles from Hayek’s initial volume are:
“The concept of order”
“The two sources of order”
“The distinguishing properties of spontaneous orders”
“Spontaneous orders in nature”
Hayek was laying the groundwork for an evolutionary approach that could explain not just human action and the subsequent social order, but “all complex phenomena”, ultimately leading to our first quote. Hayek placed special focus on the evolution of culture (law/language/morals/institutions/religions) which sort of provided the software that led to man’s actions and his social order.
When discussing what he considers are his differences with Mises, Hayek told economist Jack High in 1978:
“…in most instances I found he was simply right; but in some instances, particularly the philosophical background — I think I should put it that way — Mises remained to the end a utilitarian rationalist. I came to the conclusion that both utilitarianism as a philosophy and the idea of it — that we were guided mostly by rational calculations — just would not be true. That led me to my latest development, on the insight that we largely had learned certain practices which were efficient without really understanding why we did it; so that it was wrong to interpret the economic system on the basis of rational action. It was probably much truer that we had learned certain rules of conduct which were traditional in our society. As for why we did, there was a problem of selective evolution rather than rational construction.”[i]
In another occasion, he said that Mises:
“had great influence on me, but I always differed, first not consciously and now quite consciously. Mises was a rationalist utilitarian and I am not. He trusted the intelligent insight of people pursuing their known goals, rather disregarding the traditional element, the element of surrounding rules… He would believe that the legal system — no, he wouldn’t believe that it was invented; he was too much a pupil of Menger for that. But he still was inclined to see [the legal system] as a sort of rational construction. I don’t think the evolutionary aspect, which is very strongly in Menger, was preserved in the later members of the Austrian school. I must say ’til I came, really, in between there was very little of it.”[ii] (bold emphasis mine)
So according to Hayek it came down to “the evolutionary aspect”, which definitely existed in Mises, but perhaps not as much as Hayek felt it should have. Hayek also highlights the fact that Menger too was firmly grounded in an evolutionary framework, which ultimately helped Menger make one of his greatest contributions to economics via his explanation of the evolution of money.
Mises’ focus on the individual, and thus “Human Action” is far more compatible with Rothbard’s concept of “natural law” (which both Mises and Hayek ignore) and other concepts which are inadvertently more attractive to a mind that grows up with religion and the concepts of good/bad/evil, which helps explain why Rothbard and his moralist approach which sees the government/state as “nothing more nor less than a bandit gang writ large” is so dominant in the worldviews preached by mises.org, the Foundation for Economic Education(FEE), the Future of Freedom Foundation, and other leading libertarian institutions that are largely populated by people with religious backgrounds. Congressman and presidential candidate in 2008 and 2012 Ron Paul helped spread an understanding of economics to many and I would also guess that thanks to his strong Christian background, he too never brings up Hayek’s evolutionary views, and seems more sympathetic to Rothbard’s more moralist approach that sees the state as some immoral entity.
The Hayekian/Mengerian/Spencerian/etc. “evolutionary approach” has important ramifications. For example, Hayek was well aware of the fact that the source of mankind’s troubles, given the rise of Socialism and all the misery that is related, was caused by massive economic ignorance and what he referred to as “intellectual error”. In a great speech given in honor of Leonard Read who was the founder of the great Foundation for Economic Education (FEE), Hayek mentions:
“I believe that what the Foundation for Economic Education, with Leonard Read at its head, and all his co-fighters and friends are committed to is nothing more nor less than the defence of our civilisation against intellectual error”[iii]
He even dedicated his classic book “The Road to Serfdom” “To the socialists of all parties” and wrote things like :
“It is necessary to realize that the sources of many of the most harmful agents in this world are often not evil men but high-minded idealists, and that in particular the foundations of totalitarian barbarism have been laid by honourable and well-meaning scholars who never recognized the offspring they produced.” (Hayek F. A., 1973, p. 70)
“Most people are still unwilling to face the most alarming lesson of modern history: that the greatest crimes of our time have been committed by governments that had the enthusiastic support of millions of people who were guided by moral impulses. It is simply not true that Hitler or Mussolini, Lenin or Stalin, appealed only to the worst instincts of their people: they also appealed to some of the feelings which also dominate contemporary democracies.” (Hayek F. A., 1976, p. 134)
To Hayek, since the social order and the market process that created it was the result of an evolutionary process most people were unaware of, it made perfect sense that they could inadvertently destroy it, which is precisely what happened as the market process took the European/American social order to bewildering levels of complexity, inadvertently motivating the spread of various economic fallacies which led many to believe that the social order could be improved via central planning which inadvertently destroys the market process and the social order built/sustained by it. Hayek writes:
“We have never designed our economic system. We were not intelligent enough for that. We have stumbled into it and it has carried us to unforeseen heights and given rise to ambitions which may yet lead us to destroy it.” (Hayek F. A., 1981, p. 164)
Hayek’s sort of ‘blameless approach’ is very different from that of the Rothbard-influenced more moralist approach. The last thing Rothbard, and especially some of his most famous pupils like Hans-Hermann Hoppe and Walter Block, would do, is dedicate a book to people they refer to as criminals.
The focus on the individual and away from the evolutionary perspective which Hayek focuses on, also plays a factor in the relative growth of disastrous intellectual errors based on misapplied “race realism” which play an important role in the growth of the so-called ‘Alt-Right’. For example, Hoppe writes that:
“More specifically, he realistically notices that libertarianism, as an intellectual system, was first developed and furthest elaborated in the Western world, by white males, in white male dominated societies. That it is in white, heterosexual male dominated societies, where adherence to libertarian principles is the greatest and the deviations from them the least severe (as indicated by comparatively less evil and extortionist State policies). That it is white heterosexual men, who have demonstrated the greatest ingenuity, industry, and economic prowess. And that it is societies dominated by white heterosexual males, and in particular by the most successful among them, which have produced and accumulated the greatest amount of capital goods and achieved the highest average living standards.”[iv]
This is all true, yet this sort of rhetoric, is dangerous because it overlooks the more important factor which ultimately leads to the validity of his statements. The ‘the market process’, and the cultural-evolutionary process that took white Europeans to prominence had little to do with the biological characteristics of white Europeans which these statements hint at. One of the intellectual leaders of the so-called ‘Alt-Right’, Richard Spencer, who is a big fan of Hoppe, goes all in on this dangerous fallacy. He is asked by Al Jazeera :
Al Jazeera: So what is it that makes America great that other races don’t have or share.
Spencer: Well, only Europeans can be the first ones to go to space. Only Europeans could build something as magnificent as Saint Paul’s cathedral, or Saint Peter’s cathedral, only Europeans could engage in the kind of scientific discovery the we engage with. That will to kind of keep going, that will to follow reason to its very limit even if it shatters everything you’ve thought before. Only Europeans went through these tumults, of reformation, of enlightenment, turning on ourselves. Only Europeans can be like this…. Being an emigrant, is kind of pathetic. You are kind of shuffling off from your own country and you’re just entering another one, and you’re just kind of taking advantage of what other people have built. Just coming up, washing up on our shore. Give me a break, I would not be proud of a nation of immigrants. I’ll be proud of a nation of frontiersmen, a nation of colonizers, a nation of conquerors.[v]
Spencer is most widely known for video clips of his speech cheered on by Nazi salutes where he mentions the following:
“Hail Trump, hail our people, hail victory!…. To be white is to be a striver, a crusader, and an explorer, and a conqueror. We build, we produce, we go upward…We don’t exploit other groups, we don’t gain anything from their presence, they need us and not the other way around…America was until this past generation a white country designed for ourselves and our posterity, it is our creation, it is our inheritance and it belongs to us.”
It is very easy for people to see the recent relative prosperity which arose in Europe and make the mistake that such prosperity is significantly tied to relative differences in biology (Whites vs. non-whites) as Spencer’s remarks clearly show. The image below, which shows the contrast in prosperity between North and South Korea, is the classic example showing how differences in genes plays an insignificant role in socioeconomic prosperity.
As numerous great free-market thinkers like Mises, Robert Higgs[vi], and Ralph Raico[vii] just to name a few have shown, during the last couple thousand years different groups of people in widely dispersed locations like, the Middle East, Asia, and Europe, traded the sort of title for most socioeconomically advanced places in the planet. For example, with respect to the momentary lead in terms of civilization that China had, Hayek writes:
“And the history of China provides many instances of government attempts to enforce so perfect an order that innovation became impossible. This country, technologically and scientifically developed so far ahead of Europe that, to give only one illustration, it had ten oil wells operating on one stretch of the river Po already in the twelfth century, certainly owed its later stagnation, but not its early progress, to the manipulatory power of its governments. What led the greatly advanced civilisation of China to fall behind Europe was its government’s clamping down so tightly as to leave no room for new developments, while, as remarked in the last chapter, Europe probably owes its extraordinary expansion in the Middle Ages to its political anarchy”
These temporary leads and the relative quick advantage that Europeans have recently enjoyed has little if anything to do with biological differences. The cultural (NOT biological) evolutionary process which has created ‘the market process’ is much, much faster than the slow genetic biological evolution thus rendering it largely irrelevant. As Hayek tells us:
“With respect to what we mean by cultural evolution in a narrower sense, that is, the fast and accelerating development of civilization…Since it differs from genetic evolution by relying on the transmission of acquired properties, it is very fast, and once it dominates, it swamps genetic evolution” (Hayek F. A., 1981, p. 156)
“…biological evolution would have been far too slow to alter or replace man’s innate responses in the course of the ten or twenty thousand years during which civilisation has developed…. Thus it hardly seems possible that civilisation and culture are genetically determined and transmitted. They have to be learnt by all alike through tradition.” (Hayek’s ‘The Fatal Conceit’ page 16)
And with respect to a culture of enterprise, Hayek again:
“those who are inclined to argue that competition will not work among people who lack the spirit of enterprise: let merely a few rise and be esteemed and powerful because they have successfully tried new ways, even if they may be in the first instance foreign intruders, and let those tempted to imitate them be free to do so, however few they may be in the first instance, and the spirit of enterprise will emerge by the only method which can produce it. Competition is as much a method for breeding certain types of mind as anything else: the very cast of thinking of the great entrepreneurs would not exist but for the environment in which they developed their gifts.” (Hayek F. A., 1981, p. 76)
The intellectual error Spencer makes is obviously the same error made by Hitler which helps explain why Spencer and the Alt-Right are oftentimes labeled as Nazis. Unfortunately, this error is still widely shared by many people. Spencer and the ‘Alt-Right’ are simply people who have the courage to voice their views. Views which should be debated using freedom of speech and intellectual debates instead of simply insulting and vilifying this often-times highly courageous individual.
Spencer erroneously focuses on race instead of focusing on the economic ignorance that leads to centralized planning and massive government bureaucracies that are truly destroying the social order. Praising white people for “inventing” capitalism and cultural concepts that helps sustain it is just as absurd as blaming them for “inventing” Socialism, World Wars, and atomic annihilation. Anyone who truly understands the market process and the already mindbogglingly complexity of the social organism is well aware that all human beings are dependent on a massive division of knowledge/labor that unites most of the world. The Internet and its vital role in the continuing evolution of mankind could not have existed had it not been for this massive division of labor that allowed cheap computers/phones/electronics to be manufactured in China/etc. Overpaid/overweight unionized “master race” white guys would not have led to the creation of the Internet.
The sort of white nationalism many people want to see would be better achieved by simply focusing on teaching economic freedom and even going against Spencer’s own erroneous socioeconomic understanding of the world. As long non-whites believe that they need to be connected or dependent on white people, or see their relative lack of success as being the fault of some white people’s dislike or racism (which sadly many do), the more they will continue to blame ‘white men’ for ‘exploitative capitalism’ and all kinds of popular nonsense and make it even harder for these white people to be left alone. So even the key to Spencer’s white nationalism to various degrees lies in abandoning his socioeconomic errors. The black people who from the bottom of their hearts and deep in their bellies have no fear of white nationalism and will even encourage the freedom of white nationalists to do their thing, are those who had the fortune of stumbling upon a solid understanding of the free market/‘market process’ and thus understand that economic freedom, not ‘white people’ is the key to prosperity. Perfect examples of this are the famous black economists like Walter Williams and Thomas Sowell, and also young popular libertarians like musician Eric July, and commentator Taleed Brown.
Ayn Rand’s hyper-rationalist approach and its 100% focus on the individual completely ignores the fact that the market process is more important than the individual. Again, it is freedom and the market process that allows great human accomplishment as the two Koreas show. Any ideology that greatly focuses on the individual at the expense of ‘the market process’ and its evolution can easily lead to thinking along the lines of “which individuals are superior/inferior”, and the just discussed “race realist” fallacies. This helps understand why some fans of her work seem to be these white-CEO-types who think that their success is due to their perceived relative superiority in whatever it might be. Rand’s lack of a more nuanced and complete evolutionary approach and sheer ignorance of history was on full display on a Phil Donahue show appearance in 1979 where she was asked about US’s foreign policy with respect to the Israeli/Palestinian conflict. She burst out with a simplistic and ignorant rant stating that “if you mean whose side one should be on, Israel or the Arabs, I would certainly say Israel because it’s the advanced, technological, civilized country amidst a group of almost totally primitive savages who have not changed for years”. The Ayn Rand Institute, a “think-tank” which supposedly attempts to spread her philosophy, likewise preaches naive “civilized vs. uncivilized” type of thinking with “scholars” justifying preemptive nuclear strikes against “terrorist countries” like Iran and others.[viii]
Quick disclaimer… Mentioning that the evolutionary approach makes it easier to focus on intellectual error does not mean that Mises, Rothbard, and Hoppe did not recognize the importance of combating such ignorance because they certainly have, and a case can be easily made that Mises and especially Rothbard did a far better job of teaching economics to a general audience. As Mises said:
“Economics deals with society’s fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen.”
I am only trying to show how a general more “individual” as opposed to “evolutionary” approach attracts a certain mindset and helps lead to certain intellectual errors.
Similar and related topics, as well as an introduction to the market process and cultural evolution are introduced in “Against Intellectual Error”
[i] I stumbled upon quote in (Ebenstein, Hayek’s Journey, p. 54) which refers to “Nobel Prize-Winning Economist Friedrich A. von Hayek,” Oral History Program, University of California at Los Angeles (1983) p. 176–77
[ii] Again, first saw quote in (Ebenstein, Hayek’s Journey, p. 55) which refers to “Nobel Prize-Winning Economist Friedrich A. von Hayek,” Oral History Program, University of California at Los Angeles (1983) p. 241–42
[iii] (Italics in original) Published in What’s Past Is Prologue: A Commemorative Evening to the Foundation for Economic Education on the Occasion of Leonard Read’s Seventieth Birthday (Irvington-on-Hudson, N.Y: The Foundation for Economic Education, 1968), pp 37–43. The speech on which this essay was based was given on October 4, 1968, at the Waldorf Astoria Hotel, New York.
[iv] “A Realistic Libertarianism” By Hans-Hermann Hoppe, September 30, 2014
[v] “White nationalist Richard Spencer talks to Al Jazeera” Minute 7:35
[vi] 03/23/2011 Robert Higgs ,mises.org mentions: [This article originally appeared in the Freeman in July 2002. An MP3 audio file of this article, narrated by Colin Hussey, is available for download.]
[vii] “The European Miracle” 05/10/2013 Ralph Raico… According to mises.org : [This essay originally appeared as “The Theory of Economic Development and the European Miracle” in The Collapse of Development Planning, edited by Peter J. Boettke.] https://mises.org/library/european-miracle-0