. . .distributed intelligence

Steve Horowitz channels Hayek and Sowell in his posting over on the NPR blog. The ASET book club is reading Knowledge and Decisions and I see echoes of Sowell's thesis throughout Horowitz.

Sowell compares and contrasts informal decision making processes (marriage) with formal decision making process (the draft. His point, I believe is not to judge the desired ends or even the process, but to evaluate the process in terms of costs and benefits. And, he takes the Hayekian stance that individual agents, voluntarily and independently acting will typically select the process that aligns both with value in society and with wealth creation, while a centralized, hierarchial, tops down selection will typically result in decisions withe perverse and unintended consequences that are, clearly unintended by the man or woman at the top making the decision.

I am excited to be reading this book and looking forward to our discussion.

Greg

Four Problems with Spontaneous Order

This is the December 2009 discussion over on the CATO blog and is provocative. Well worth a read.

F. A. Hayek on the Decline of the Rule of Law

New To The Internet — F. A. Hayek on the “Decline of the Rule of Law” (part 1)

Posted using ShareThis

Hayek makes a key point, one that resonates today:

"That the law should be an instrument to be used by the individuals for their ends and not an instrument used upon the people by the legislators is the ultimate meaning of the Rule of Law."

All-Hayekian Fantasy Economics Team?

This is a great post over at Taking Hayek Seriously:

Larry Elliott, economics editor of the Guardian, takes a look at the economics profession and sees a professoriate detached from reality and incapable of fielding an “Fantasy Football” team of living All-Stars to fill out a modern “TEAM KEYNES” or contemporary “TEAM HAYEK”. You’ll find a bit of Elliott’s case quoted below. But I’m not so sure Elliott is right, as least in the instance of Hayek, even by Elliot’s own criteria. What Elliott is looking for are top notch modern day Hayekian or free market economists keenly interesting in explaining how the world actually works, with a healthy skepticism toward mathematical models or formalism for its own sake. Here are my own top ten draft picks for “TEAM HAYEK”. You can add your own in the comments.

No. 1 Draft Pick: DOUGLASS NORTH

No. 2 Draft Pick: ROBERT HIGGS

No. 3 Draft Pick: ISRAEL KIRZNER

No. 4 Draft Pick: VERNON SMITH

No. 5 Draft Pick: ROGER GARRISON

No. 6 Draft Pick: PETER BOETTKE

No. 7 Draft Pick: LAWRENCE WHITE

No. 8 Draft Pick: JAMES BUCHANAN

No. 9 Draft Pick: GEORGE SELGIN

No. 10 Draft Pick: HERNANDO DE SOTO

Individualism and Economic Order

The Mises Institute has made a free PDF edition of F. A. Hayek’s book Individualism and Economic Order available for download here. The collection includes some of the most influential articles every written in economics.

Hayek and the spontaneous order

The discovery that there exist in society orders of another kind which have not been designed by men but have resulted from the action of individuals without their intending to create such an order, is the achievement of social theory—or, rather, it was this discovery which has shown that there was an object for social theory. It shook the deeply-ingrained belief of men that where there was an order there must also have been a personal orderer. It had consequences far beyond the field of social theory since it provided the conceptions which made possible a theoretical explanation of the structures of biological phenomena.4 And in the social field it provided the foundation for a systematic argument for individual liberty.

This kind of order which is characteristic not only of biological organisms (to which the originally much wider meaning of the term organism is now usually confined), is an order which is not made by anybody but which forms itself.

It is for this reason usually called a “spontaneous” or sometimes (for reasons we shall yet explain) a “polycentric” order. If we understand the forces which determine such an order, we can use them by creating the conditions under which such an order will form itself.


Source: New Individualist Review, editor-in-chief Ralph Raico, introduction by Milton Friedman (Indianapolis: Liberty Fund, 1981). Chapter: F. A. HAYEK, Kinds of Order in Society
http://oll.libertyfund.org/index.php?option=com_content&task=view&id=1269&Itemid=280

General rules

In reading Smith's Theory of Moral Sentiments I am struck by the infuence he played on the idea of emergent and evolutionary order and Hayek's analysis of order and general rules.

It seems clear that these "important rules of conduct" which Smith ties to duty and Hayek to justice have shaped the development of society. In developing countries, these general rules have evolved in such a way to shape wealth enhancing incentives.

Smith writes:

"But upon the tolerable observance of these duties, depends the very existence of human society, which would crumble into nothing if mankind were not generally impressed with a reverence for those important rules of conduct."(http://www.econlib.org/cgi-bin/searchbooks.pl?searchtype=BookSearchPara&id=smMS&query=generally+impressed+with+a+reverence)

Hayek write:

"Men in society can successfully pursue their ends because they know what to expect from their fellows. Their relations, in other words, show a certain order. How such an order of the multifarious activities of millions of men is produced or can be achieved is the central problem of social theory and social policy."

and

"And it is an order which, though it is the result of human action, has not been created by men deliberately arranging the elements in a preconceived pattern. These peculiarities of the social order are closely connected, and it will be the task of this essay to make their interrelation clear. We shall see that, although there is no absolute necessity that a complex order must always be spontaneous and abstract, the more complex the order is at which we aim, the more we shall have to rely on spontaneous forces to bring it about, and the more our power of control will be confined in consequence to the abstract features and not extend to the concrete manifestations of that order."

Source: New Individualist Review, editor-in-chief Ralph Raico, introduction by Milton Friedman (Indianapolis: Liberty Fund, 1981). Chapter: F. A. HAYEK, Kinds of Order in Society

The New Socialism: Global Collectivist Society Is Coming Online

My colleague Debbie Henney forwarded to me the following article from Wired.


http://www.wired.com/culture/culturereviews/magazine/17-06/nep_newsocialism?currentPage=1

The author of the article writes:

But there is one way in which socialism is the wrong word for what is happening: It is not an ideology. It demands no rigid creed. Rather, it is a spectrum of attitudes, techniques, and tools that promote collaboration, sharing, aggregation, coordination, ad hocracy, and a host of other newly enabled types of social cooperation. It is a design frontier and a particularly fertile space for innovation.


In my reply to her I wrote:

This is an interesting, if very confused article. The author talks about the libertarian elements of digital communities and the collaboration that wiki and blogs foster seem more in line with the Hayekian emergent and evolutionary search than any socialist collectivism.

I guess where this author lost me was his failure to distinguish between the coercion that lies at the heart of socialism and the personal liberty that lies at the heart of a system of natural liberty. I see the internet as an example of the latter and not the former.

What Does Social Theory Study?

From Taking Hayek Seriously

The discovery that there exist in society orders of another kind which have not been designed by men but have resulted from the action of individuals without their intending to create such an order, is the achievement of social theory — or, rather, it was this discovery which has shown that there was an object for social theory. It shook the deeply-ingrained belief of men that where there was an order there must also have been a personal orderer. It had consequences far beyond the field of social theory since it provided the conceptions which made possible a theoretical explanation of the structures of biological phenomena. And in the social field it provided the foundation for a systematic argument for individual liberty.

From F. A. Hayek, “Kinds of Order in Society”, New Individualist Review.

Hayek's 109 birthday

From Cafe Hayek:

F.A. Hayek was born on this day in 1899. To mark this occasion, I offer a brief passage from page 104 of Hayek's 1973 book Law, Legislation, and Liberty, Vol. 1: Rules and Order:

Maintaining the overall flow of results in a complex system of production requires great elasticity of the actions of the elements of the system, and it will only be through unforeseeable changes in the particulars that a high degree of predictability of the overall results can be achieved.