We still have to consider the question whether it is conceivable that we should ever be in a position discursively to describe all or at least any one we like of these rules, or whether mental activity must always be guided by some rules which we are in principle not able to specify. If it should turn out that it is basically impossible to state or communicate all the rules which govern our actions, including our communications and explicit statements, this would imply an inherent limitation of our possible explicit knowledge and, in particular, the impossibility of ever fully explaining a mind of the complexity of our own.
Hayek goes on to observe of the inability of the human mind reflexively to grasp the most basic rules which govern its operations that "this would follow from what I understand to Georg Cantor's theorem in the theory of sets according to which in any system of classification there are always more classes than things to be classified, which presumably implies that no system of classes can contain itself. The third source of influence on Hayek's skeptical Kantianism, which I have ascribed primarily to the work of his relative Wittgenstein, plainly comprehends other influences as well.
Hayek cites Ryle in support of his observations that "'know how' consists in the capacity to act according to rules which we may be able to discover but which we need not be able to state in order to obey them," and glosses the point with reference to Michael Polanyi. Nothing is said in Ryle or Polanyi thus far about rule-governedness as a distinctive mark of human and, it may well be, not only human but also animal intelligent behavior.
It is for the insight that practical knowledge is transmitted mimetically through the absorption of social rules that we need to turn to Wittgenstein, from whom Hayek may have taken it. There are, to be sure, contrasts between Hayek's view of rule-governed behavior and Wittgenstein's, particularly in regard to the skepticism about rule-following expressed in Wittgenstein's On Certainty and the dependency of social rules upon forms of life, stressed in Wittgenstein but not discussed by Hayek; but these contrasts need not concern us here.
What is original and novel in Hayek's account, and so far as I know is nowhere to be found in Wittgenstein, is his account, firstly, of the hierarchy of rules in perception and action, with the most fundamental rules being meta-conscious rules beyond the possibility of identification and articulation; and, secondly, Hayek's systematic exploration of the selection of these rules in a process of evolutionary adaptation. But secondly, all of these rules, including even the most fundamental of them are products of a process of evolutionary selection, by which they may be further altered or eliminated.
Systems of rules conferring successful behavior are adopted by others without conscious reflection. It is this disposition to emulate or copy successful behaviors which explains the cultural evolution of which Hayek speaks, and which though he recognizes its primitive beginnings in the social lives of animals Hayek regards as the distinguishing mark of human life. I began by noting the striking Kantian attributes of Hayek's epistemology and philosophy of mind - aspects which Hayek himself does not stress, perhaps because he conceives the formative influence of Kantian philosophy on his thought to be self-evident.
As he puts it himself in a footnote to his discussion in a recent volume of the government of conscious intellectual life by super-conscious abstract rules: "I did not mention. Hayek's Kantianism is seen, first in his repudiation of the empiricist view that knowledge may be constructed from a basis of raw sensory data and, second, in his uncompromising assertion of the view that the order we find in the world is a product of the creative activity of the human mind rather than a recognition of natural necessity.
His Kantian view is distinctive in that it anticipates Popper in affirming that our mental frameworks by which we categorize the world are neither universal nor invariant, but alterable in an evolutionary fashion; his Kantian view also follows Wittgenstein in grasping the role of social rules in the transmission of practical knowledge. Hayek's Kantian view is original, finally, in recognizing a hierarchy in the rules that govern our perceptions and actions, and in insisting that the most fundamental of these rules are "super-conscious" and beyond any possibility of specification or articulation.
Hayek himself is emphatic that these insights in the theories of mind and knowledge have the largest consequences for social theory. The inaccessability to reflexive inquiry of the rules that govern conscious thought entails the bankruptcy of the Cartesian rationalist project and implies that the human mind can never fully understand itself, still less can it ever be governed by any process of conscious thought.
The considerations adduced earlier, then, establish the autonomy of the mind , without ever endorsing any mentalistic thesis of mind's independence of the material order. Where Hayek deviates from Descartes' conception of mind, however, is not primarily in his denying ontological independence to mind, but in his demonstration that complete intellectual self-understanding is an impossibility.
Hayek's conception of mind is a notion whose implications for social theory are even more radical than are those of Hayek's Kantianism. It is the chief burden of the latter, let us recall, that no external or transcendental standpoint on human thought is achievable, in terms of which it may be supported or reformed. In social theory, this Kantian perspective implies the impossibility of any Archimedean point from which a synoptic view can be gained of society as a whole and in terms of which social life may be understood and, it may be, redesigned.
As Hayek puts it trenchantly: "Particular aspects of a culture can be critically examined only within the context of that culture. We can never reduce a system of rules or all values as a whole to a purposive construction, but must always stop with our criticism of something that has no better grounds for existence than that it is the accepted basis of the particular tradition. Hayek goes beyond Kantianism, however, in his recognition that, just as in the theory of mind we must break off when we come to the region of unknowable ultimate rules, so in social theory we come to a stop with the basic constitutive traditions of social life.
These latter, like Wittgenstein's forms of life, cannot be the objects of further criticism, since they are at the terminus of criticism and justification: they are simply given to us, and must be accepted by us. But this is not to say that these traditions are unchanging, nor that we cannot understand how it is that they do change.
In social theory, Hayek's devastating critique of Cartesian rationalism entails that, whatever else it might be, social order cannot be the product of a directing intelligence. It is not just that too many concrete details of social life would always escape such an intelligence, which could never, therefore, know enough. Nor though we are nearer the nub of the matter here is it that society is not a static object of knowledge which could survive unchanged the investigations of such an intelligence.
No, the impossibility of total social planning does not rest for Hayek on such Popperian considerations,  or, at any rate, not primarily on them. Such an impossibility of central social planning rests, firstly, on the primordially practical character of most of the knowledge on which social life depends. Such knowledge cannot be concentrated in a single brain, natural or mechanical, not because it is very complicated, but rather because it is embodied in habits and dispositions and governs our conduct via rules which are often inarticulable.
But, secondly, the impossibility of total social planning arises from the fact that, since we are all of us governed by rules of which we have no knowledge, even the directing intelligence itself would be subject to such government. It is naive and almost incoherent  to suppose that a society could lift itself up by its bootstraps and reconstruct itself, in part at least because the idea that any individual mind - or any collectivity of selected minds - could do that, is no less absurd.
If the order we discover in society is in no important respect the product of a directing intelligence, and if the human mind itself is a product of cultural evolution, then it follows that social order cannot be the product of anything resembling conscious control or rational design. As Hayek puts it:. The errors of constructivist rationalism are closely connected with Cartesian dualism, that is, with the conception of an independently existing mind substance which stands outside the cosmos of nature and which enabled man, endowed with such a mind from the beginning, to design the institutions of society and culture among which he lives The conception of an already fully developed mind designing the institutions which made life possible is contrary to all we know about the evolution of man.
The master error of Cartesian rationalism  lies in its anthropomorphic transposition of mentalist categories to social processes. But a Cartesian rationalist view of mind cannot explain even the order of mind itself. Hayek himself makes this point when he remarks on "the difference between an order which is brought about by the direction of a central organ such as the brain, and the formation of an order determined by the regularity of the actions towards each other of the elements of a structure.
Michael Polanyi has usefully described this distinction as that between a monocentric and a polycentric order.
The first point which it is in this connection important to note is that the brain of an organism which acts as the directing centre for the organism is in turn a polycentric order, that is, that its actions are determined by the relation and mutual adjustment to each other of the elements of which it consists. Hayek states his conception of social theory, and of the central importance in it of undesigned or spontaneous orders, programmatically and with unsurpassable lucidity:. It is evident that this interplay of the rules of conduct of the individuals with the actions of other individuals and the external circumstances in producing an overall order may be a highly complex affair.
The whole task of social theory consists in little else but an effort to reconstruct the overall orders which are thus formed. It will also be clear that such a distinct theory of social structures can provide only an explanation of certain general and highly abstract features of the different types of structures. Of theories of this type economic theory, the theory of the market order of free human societies, is so far the only one which has been developed over a long period.
Because it is undesigned and not the product of conscious reflection, the spontaneous order that emerges of itself in social life can cope with the radical ignorance we all share of the countless facts on knowledge of which society depends. This is to say, to begin with, that a spontaneous social order can utilize fragmented knowledge , knowledge dispersed among millions of people, in a way a holistically planned order if such there could be cannot. The significance of this process is most obvious and was at first stressed in the economic field.
Examples abound in Hayek's writings of spontaneous orders apart from the market order. The thesis of spontaneous order is stated at its broadest when Hayek says of Bernard Mandeville that "for the first time [he] developed all the classical paradigmata of the spontaneous growth of orderly social structures: of law and morals, of language, the market and money, and also the growth of technological knowledge. For applying what Hayek illuminatingly terms "the twin ideas of evolution and of the spontaneous formation of an order"  to the study of human society enables us to transcend the view, inherited from Greek, and, above all, from Sophist philosophy, that all social phenomena can be comprehended within the crude dichotomy of the natural physis and the conventional nomos.
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Hayek wishes to focus attention on the third domain of social phenomena and objects, neither instinctual in origin nor yet the result of conscious contrivance or purposive construction, the domain of evolved and self-regulating social structures. It is the emergence of such self-regulating structures in society via the natural selection of rules of action and perception that is systematically neglected in much current sociology though not, it may be noted, in the writings of Herbert Spencer,  one of sociology's founding fathers.
It is because he thinks that the sociobiologists view social order as being a mixture of instinctive behavior and conscious control, and so neglect the cultural selection of systems of rules, that Hayek has subjected this recent strain of speculation to a sharp criticism. The central claim of Hayek's philosophy, as we have expounded it so far, is that knowledge is, at its base, at once practical and abstract. It is abstract inasmuch as even sensory perception gives us a model of our environment which is highly selective and picks out only certain classes of events, and it is practical inasmuch as most knowledge is irretrievably stored or embodied in rules of action and perception.
These rules, in turn, are in Hayek's conception the subject of continuing natural selection in cultural competition. The mechanism of this selection, best described in Hayek's fascinating "Notes on the Evolution of Systems of Rules of Conduct,"  is in the emulation by others of rules which secure successful behavior. It is by a mimetic contagion that rules conferring success - where success means, in the last resort, the growth of human numbers  - come to supplant those rules which are maladapted to the environment. Finally, the convergence of many rule-following creatures on a single system of rules creates those social objects - language, money, markets, the law - which are the paradigms of spontaneous social order.
It is a general implication of this conception that, since social order is not a purposive construction, it will not in general serve any specific purpose. Social order facilitates the achievement of human purposes: taken in itself, it must be seen as having no purpose. Just as human actions acquire their meaning by occurring in a framework that can itself have no meaning,  so social order will allow for the achievement of human purposes only to the extent that it is itself purposeless.
Nowhere has this general implication of Hayek's conception been so neglected as in economic life. In the history and theory of science, to be sure, where the idea of spontaneous order was as Hayek acknowledges put to work by Michael Polanyi, false conceptions were spawned by the erroneous notion that scientific progress could be planned, whereas, on the contrary, any limitation of scientific inquiry to the contents of explicit or theoretical knowledge would inevitably stifle further progress.
It supported the illusion that the whole realm of human exchange was to be understood after the fashion of a household or an hierarchical organization, with limited and commensurable purposes ranked in order of agreed importance. This confusion of a genuine hierarchical 'economy' - such as that of an army, a school or a business corporation - with the whole realm of social exchange, the catallaxy , informs many aspects of welfare economics and motivates its interventionist projects via the fiction of a total social product.
This confusion between 'catallaxy' and 'economy' is, at bottom, the result of an inability to acknowledge that the order which is the product of conscious direction - the order of a management hierarchy in a business corporation, for example - itself always depends upon a larger spontaneous order. The demand that the domain of human exchange taken as a whole should be subject to purposive planning is therefore, the demand that social life be reconstructed in the character of a factory, an army, or a business corporation - in the character, in other words, of an authoritarian organization.
Apart from the fateful consequences for individual liberty that implementing such a demand inexorably entails, it springs in great measure from an inability or unwillingness to grasp how in the market process itself there is a constant tendency to self-regulation by spontaneous order. When it is unhampered, the process of exchange between competitive firms itself yields a coordination of men's activities more intricate and balanced than any that could be enforced or even conceived by a central planner. The relevance of these considerations to Hayek's contributions to the question of the allocation of resources in a socialist economic order is central, but often neglected.
It is, of course, widely recognized  that one of Hayek's principal contributions in economic theory is the refinement of the thesis of his teacher, Ludwig von Mises , that the attempt to supplant market relations by public planning cannot avoid yielding calculational chaos. Hayek's account of the mechanism whereby this occurs has, however, some entirely distinctive and original features. For Hayek is at great pains to point out that the dispersed knowledge which brings about a tendency to equilibrium in economic life and so facilitates an integration of different plans of life, is precisely not theoretical or technical knowledge, but practical knowledge of concrete situations - "knowledge of people, of local conditions, and of special circumstances.
One way of putting Hayek's point, a way we owe to Israel Kirzner rather than to Hayek himself but which is wholly compatible with all that Hayek has said on these questions, is to remark as follows: if men's economic activities really do show a tendency to coordinate with one another, this is due in large part to the activity of entrepreneurship. The neglect of the entrepreneur in much standard economic theorizing, the inability to grasp his functions in the market process, may be accounted for in part by reference to Hayek's description above of the sort of knowledge used by the entrepreneur.
As Kirzner puts it, "Ultimately, then, the kind of 'knowledge' required for entrepreneurship is 'knowing' where to look for 'knowledge' rather than knowledge of substantive market information. It is the neglect of how all economic life depends on this practical knowledge which allowed the brilliant but, in this respect, fatally misguided Joseph Schumpeter to put a whole generation of economists on the wrong track, when he stated in his Capitalism, Socialism and Democracy that the problem of calculation under socialism was essentially solved.
All such efforts are bound to fail, if only because the practical knowledge of which Hayek speaks cannot be programmed into a mechanical device. They are bound to fail, also, because they neglect the knowledge-gathering role of market pricing. Here we must recall that, according to Hayek, knowledge is dispersed throughout society and, further, it is embodied in habits and dispositions of countless men and women. The knowledge yielded by market pricing is knowledge which all men can use, but which none of them would possess in the absence of the market process; in a sense, the knowledge embodied or expressed in the market price is systemic or holistic knowledge, knowledge unknown and unknowable to any of the elements of the market system, but given to them all by the operation of the system itself.
No sort of market simulation or shadow pricing can rival the operation of the market order itself in producing this knowledge, because only the actual operation of the market itself can draw on the fund of practical knowledge which market participants exploit in their activities. Three further points may be worth noting in respect of Hayek's refinements of the Misesian calculation debate. First, when Hayek speaks of economic calculations under socialism as a practical impossibility, he is not identifying specific obstacles in the way of the socialist enterprise which might someday be removed.
Socialist planning could supplant market processes only if practical knowledge could be replaced by theoretical or technical knowledge at the level of society as a whole - and that is a supposition which is barely conceivable. The kind of omniscience demanded of a socialist planner could be possessed only by a single mind, entirely self-aware, existing in an unchanging environment - a supposition so bizarre that we realize we have moved from any imaginable social world to a metaphysical fantasy in which men and women have disappeared altogether, and all that remain are Leibnizian monads, featureless and unhistorical ciphers.
Fortunately, such a transformation is possible, if at all, only as a thought-experiment. In practice, all supposedly socialist economies depend upon precisely that practical knowledge of which Hayek speaks, and which though dispersed through society is transmitted via the price mechanism. It is widely acknowledged that socialist economies depend crucially in their planning policies on price data gleaned from historic and world markets.
Less often recognized, and dealt with in detail only, so far as I know, in Paul Craig Roberts' important Alienation in the Soviet Economy ,  is that planning policies in socialist economies are only shadows cast by market processes distorted by episodes of authoritarian intervention. The consequence of the Hayekian and Polanyian critiques of socialist planning is not inefficiency of such planning but rather its impossibility: we cannot analyze the "socialist" economies of the world properly, unless we penetrate the ideological veil they secrete themselves behind, and examine the mixture of market processes with command structures which is all that can ever exist in such a complex society.
The third and final implication of Hayek's contribution to the calculation question is his clear statement of the truth that the impossibility of socialism is an epistemological impossibility. It is not a question of motivation or volition, of the egoism or limited sympathies of men and women, but of the inability of any social order in which the market is suppressed or distorted to utilize effectively the practical knowledge possessed by its citizens.
Calculational chaos would ensue, and a barbarization of social life result, from the attempt to socialize production, even if men possessed only altruistic and conformist motives. For, in the absence of the signals transmitted via the price mechanism, they would be at a loss how to direct their activities for the social good, and the common stock of practical knowledge would begin to decay.
Only the inventiveness of human beings as expressed in the emergence of black and gray markets could then prevent a speedy regression to the subsistence economy. The impossibility of socialism, then, derives from its neglect of the epistemological functions of market institutions and processes. Hayek's argument here is the most important application of his fundamental insight into the epistemological role of social institutions - an insight I will need to take up again in the context of certain similarities between Hayek's conception of liberty under law and Robert Nozick's meta-utopian framework.
Hayek's conception of knowledge, when taken in conjunction with the idea of a spontaneous social order, has important implications for the proper method for the practice of social science. To begin with, Hayek's affirmation of "the primacy of the abstract" in all human knowledge means that social science is always a theory-laden activity and can never aspire to an exhaustive description of concrete social facts. More, the predictive aspirations of social science must be qualified: not even the most developed of the social sciences, economics, can ever do more than predict the occurrence of general classes of events.
Indeed, in his strong emphasis on the primacy of the abstract, Hayek goes so far as to question the adequacy of the nomothetic or nomological model of science i. At least in respect of complex phenomena, all science can aim at is an "explanation of the principle," or the recognition of a pattern - "the explanation not of the individual events but merely of the appearance of certain patterns or orders. Whether we call these mere explanations of the principle or mere pattern predictions or higher level theories does not matter. In his most important later statement on these questions, "The Theory of Complex Phenomena," [bibliography, A ], Hayek tells us that, because social life is made up of complex phenomena, "economic theory is confined to describing kinds of patterns which will appear if certain general conditions are satisfied, but can rarely if ever derive from this knowledge any predictions of specific phenomena.
Social phenomena are non-physical, and Hayek has stated that "Non-physical phenomena are more complex because we call physical phenomena what can be described by relatively simple formulae. A number of points may be made briefly about Hayek's conception of method in social and economic theory.
First, whereas he follows his great teachers in the Austrian tradition in emphasizing the subjective aspects of social phenomena, Hayek's methodology of social and economic science does not belong to that Austrian tradition in which social theory is conceived as an enterprise yielding apodictic truths.
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Specifically - contrary to T. Hutchinson, who periodizes Hayek's work into an Austrian praxeological and a post-Austrian Popperian period, and also contrary to Norman P. Barry who sees both trends running right through Hayek's writings - Hayek never accepted the Misesian conception of a praxeological science of human action which would take as its point of departure a few axioms about the distinctive features of purposeful behavior over time. In the Introduction to Collectivist Economic Planning [ E-5 , ] and elsewhere in his early writings, Hayek had as Hutchinson notes insisted that economics yields "'general laws,' that is, 'inherent necessities determined by the permanent nature of the constituent elements.
It is clear from the context of the quotations cited by Hutchinson that, in speaking of the general laws or inherent necessities of social and economic life, Hayek meant to controvert the excessive voluntarism of historicism, which insinuates that social life contains no unalterable necessities of any sort, rather than to embrace the view that there can be an apriori science of society or human action.
To this extent Barry is right in his observation that, "there is a basic continuity in Hayek's writings on methodology. At the same time, there seems little warrant for Barry's claim that throughout his work Hayek tries "to combine two rather different philosophies of social science; the Austrian praxeological school with its subjectivism and rejection of testability in favour of axiomatic reasoning, and the hypothetico-deductive approach of contemporary science with its emphasis on falsifiability and empirical content.
Again, as we have seen, Hayek's view that the social sciences are throughout deductive in form antedates Popper's influence and is evidenced in the Introduction to Collectivist Economic Planning [ E-5 , ]. Hayek's real debts to Popper are, I think, different from those attributed to him by Hutchinson and Barry. It is not that Hayek under Popper's influence abandoned an apodictic-deductive method that was endorsed in different versions, Kantian and Aristotelian by Mises and Menger, but rather that he came to adopt Popper's proposal that falsifiability be treated as a demarcation criterion of science from non-science.
Even in these Popperian influences, it is to be noted, there are differences of emphasis from Popper himself. Hayek anticipates Lakatos in perceiving that the theoretical sciences may contain a "hard core" of hypotheses, well-confirmed and valuable in promoting understanding of the phenomena under investigation, which are highly resistant to testing and refutation.
It is undoubtedly a drawback to have to work with theories which can be refuted only by statements of a high degree of complexity, because anything below that degree of complexity is on that ground alone permitted by our theory. Yet it is still possible that in some fields the more generic theories are the more useful ones. Where only the most general patterns can be observed in a considerable number of instances, the endeavour to become more 'scientific' by further narrowing down our formulae may well be a waste of effort. In general, then, it seems fair to hold that Hayek acknowledges that the proper method in social and economic studies, as elsewhere, is the hypothetico-deductive method of conjectures and refutations set out by Popper.
On the other hand, he continues to recognize that in respect of complex phenomena such as are found in the social studies, testability may be a somewhat high-level and protracted process, and the ideal of high empirical content captured in a nomothetic framework - a demanding and sometimes unattainable ideal. Hayek's view that we can at best attain abstract models of social processes, whereas the concrete details of social life will always largely elude theoretical formulation, has large and radical implications in the field of public policy.
In brief, it entails that the object of public policy should be confined to the design or reform of institutions within which unknown individuals make and execute their own, largely unpredictable plans of life. In a free society, in fact, whereas there may be a legal policy in respect of economic institutions, there cannot be such a thing as economic policy as it is presently understood, for adherence to the rule of law precludes anything resembling macroeconomic management. Here I do not wish to take up this point, which I will consider later, but rather to spell out the connection between Hayek's methodological views and his belief that most, if not all economic policy as practiced in the postwar world has had a self-defeating effect.
We have seen that, for Hayek, the most we can hope for in understanding social life is that we will recognize recurring patterns. Hayek goes on to observe:. Predictions of a pattern are. Since the theory tells us under which general conditions a pattern of this sort will form itself, it will enable us to create such conditions and to observe whether a pattern of the kind predicted will appear.
And since the theory tells us that this pattern assures a maximisation of output in a certain sense, it also enables us to create the general conditions which will assure such a maximisation, though we are ignorant of many of the particular circumstances which will determine the pattern that will appear. Hayek's view stands in sharp opposition to any idea of a policy science or a political technology aimed at producing specific desired effects. Such a policy science demands the impossible of its practitioners, a detailed knowledge of a changing and complex order in society. Even Popper's conception of "piecemeal social engineering," Hayek tells us, "suggests to me too much a technological problem of reconstruction on the basis of the total knowledge of the physical facts, while the essential point about the practical improvement is an experimental attempt to improve the functioning of some part without a full comprehension of the structure of the whole.
Hayek's critique of the constructivistic or engineering approach to social life parallels in an intriguing way that of Michael Oakeshott and of the Wittgensteinian philosopher Rush Rhees. Consider Oakeshott's statement: "The assimilation of politics to engineering is, indeed, what may be called the myth of rationalist politics. Even the most important 'problems of production' are not problems in engineering. These general views illuminate much of the rationale of Hayek's opposition not only to Keynesian policies of macroeconomic demand management but also to Friedmanite monetarism.
Of course, in the great debates of the Thirties, Hayek had argued forcefully that Keynes in no way provided a general theory of economic discoordination. Again, Hayek always argued that the policies Keynes suggested, depending as they did for their success upon institutional and psychological irrationalities which their very operation would undermine, were bound over the longer run to be self-defeating. In particular, Hayek maintained that Keynesian policies of deficit financing depended for their success upon a widespread money illusion which the policies themselves could not help but erode.
Hayek's further objection to Keynesian policies is that, in part because they depend on a defective understanding of the business cycle which is seen as expressing itself in aggregative variations in total economic activity rather than in a discoordination of relative price structures brought about by a governmental distortion of the structure of interest rates Keynesian policy-makers, because of their holistic and aggregative bias, find it hard to avoid committing a sort of fallacy of conceptual realism: statistical artefacts or logical fictions are allowed to blot out the subtle and complex relationships which make up the real economy.
Now there is plainly much in Hayek's subtle account of the business cycle, and in his contributions to capital theory, which is difficult and disputable, and to comment on such questions is in any case beyond my expertise. Quite apart from its technical details, however, it is clear that Hayek's critique of Keynesian policies is of a piece with his emphasis on the primacy of the abstract and with his insight into the indispensability of conventions for the orderly conduct of social life. Policies of macroeconomic demand management ask more in the way of concrete knowledge of the real relationships which govern the economy than any administrator could conceivably acquire, and their operation is in the longer run self-defeating.
More generally, Hayek's challenge to Keynesian theory is a demand that Keynesians specify in detail the mechanisms whereby an unhampered market could be expected to develop severe discoordination. Only if such mechanisms could be clearly described and crucially given a plausible historical application, would a serious challenge to Hayek's own Austrian view - in which it is governmental intervention in the economy which is principally responsible for discoordination - enter the realm of critical debate.
In respect to Friedman's proposals for monetary regulation by a fixed rule, Hayek has argued that in a modern democracy no governmental or quasi-governmental agency can preserve the independence of action essential if such a monetary rule is to be operated consistently. More fundamentally, such a policy of adopting a fixed rule in the supply of money is opposed by Hayek on methodological grounds.
Such a policy calls for an exactitude in modeling and measuring economic life, and an unambiguity in the definition of money, which it is beyond our powers to attain. Hayek's own objection to Friedman's monetarist proposals is, then, most substantially that money is not the sort of social object that we can define precisely or control comprehensively; Hayek has even suggested that, in recognition of the elusiveness of the monetary phenomenon, we should treat "money" as an adjectival expression,  applicable to indefinitely many distinct and disparate instruments. Hayek's proposals in this area clearly open up technical questions in monetary theory which I am unqualified to adjudicate.
It seems clear, though, that Hayek's proposal favoring currency competition by the private issuance of money would be found objectionable by Friedmanites who would argue that Hayek exaggerates the effect such competition would have in preventing currency debasement and by advocates of the classical gold standard. It is clear, nonetheless, that in arguing for the establishment of a monetary catallaxy Hayek has illuminated questions both in monetary theory and in political economy which had hitherto gone largely neglected, but which it is critical that supporters of the market order now examine.
One objection to Hayek's view may be worth addressing at this point. There is much in Hayek's account of the business cycle, as in his more general account of spontaneous social order, to suggest that he believes economic discoordination results always from institutional factors, so that at any rate large-scale disequilibrium would be impossible in a catallaxy of wholly unhampered markets. Against this view, Hayek's brilliant and largely neglected pupil, G.
Shackle, has argued  that the subjectivity of expectations must infect the market process with an ineradicable tendency to disequilibrium. It must be allowed that, if we accept Hayek's view of equilibrium as a process in which men's plans are coordinated by trial and error over time, there can be nothing apodictically certain about this process: conceivably, under some conditions of uncertainty in which hitherto reliable expectations are repeatedly confounded, large scale discoordination could occur in the market process. Three counter-observations are in order, however.
First, nothing in Shackle's argument tells against the point, defensible both on theoretical grounds and as an historical interpretation, that in practice by far the most destabilizing factor in the market process is provided by governmental intervention. Secondly, and relatedly, it is unclear that the kind of disequilibrium of which Shackle speaks - disequilibrium generated by divergency in subjective expectations - could amount to anything resembling the classical business cycle, which is more plausibly accounted for in Austrian and Hayekian terms as a consequence of governmental intervention in the interest rate structure.
And thirdly, it is unclear that Shackle's argument shows the presence in the market process of any tendency to disequilibrium. What we have in the market process is admittedly a 'kaleidic' world, in which expectations, tastes, and beliefs constantly and unpredictably mutate. Yet, providing market adaptation is unhampered, what we can expect from the market process is an uninterrupted series of monetary equilibrium tendencies, each of them asymptotic - never quite reaching equilibrium - and each of them soon overtaken by its successor.
In this kaleidic world there may well be no apodictic certainty that we shall never face large-scale, endogenous discoordination, but we are nevertheless on safe ground in preferring that the self-regulating tendencies of the process be accorded unhampered freedom and that governmental intervention be recognized as the major disruptive factor in the market process. We are on safe ground, then, in discerning in the tendency to equilibrium in the market process the formation of spontaneous order in the economic realm. Given that we recognize governmental intervention to be the greatest subverter of spontaneous order in the realm of economic exchange, what legal framework is to be adopted for the regulation of economic life?
Here we come to one of the most fascinating and controversial of Hayek's contributions to social philosophy, his account of individual liberty under the rule of law. Before we can address ourselves to some of the problems surrounding Hayek's contribution to philosophical jurisprudence, however, a few words must be said about Hayek's moral theory, since few aspects of Hayek's work are so often misunderstood.
Hayek has been characterized as a moral relativist, an exponent of evolutionary ethics and, less implausibly but nonetheless incorrectly, as a rule-utilitarian. Let us see if we can dissipate the confusion. In the first place, moral life for Hayek is itself a manifestation of spontaneous order. Like language and law, morality emerged undesigned from the life of men with one another: it is so much bound up with human life, indeed, as to be partly constitutive of it.
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- Hallowed Be Thy Name.
- The French Revolution and the Birth of Modernity;
The maxims of morality, then, in no way presuppose an authority, human or divine, from which they emanate, and they antedate the institutions of the state. But, secondly, the detailed content of the moral conventions which spring up unplanned in society is not immutable or invariant.
Moral conventions change, often slowly and almost imperceptibly, in accordance with the needs and circumstances of the men who subscribe to them. Moral conventions must or Hayek's account of them be seen as part of the evolving social order itself. Now at this point it is likely that a charge of ethical relativism or evolutionism will at once be levelled against Hayek, but there is little substance to such criticisms.
He has gone out of his way to distinguish his standpoint from any sort of evolutionary ethics. As he put it in his Constitution of Liberty :. It is a fact which we must recognize that even what we regard as good or beautiful is changeable - if not in any recognizable manner that would entitle us to take a relativistic position, then in the sense that in many respects we do not know what will appear as good or beautiful to another generation It is not only in his knowledge, but also in his aims and values, that man is the creature of his civilization; in the last resort, it is the relevance of these individual wishes to the perpetuation of the group or the species that will determine whether they persist or change.
It is, of course, a mistake to believe that we can draw conclusions about what our values ought to be simply because we realize that they are a product of evolution. But we cannot reasonably doubt that these values are created and altered by the same evolutionary forces that have produced our intelligence. Hayek's argument here, then, is manifestly not that we can invoke the trend of social evolution as a standard for the resolution of moral dilemmas, but rather that we are bound to recognize in our current moral conventions the outcome of an evolutionary process.
Admittedly, inasmuch as nothing in the detailed content of our moral conventions is unchanging or unalterable, this means that we are compelled to abandon the idea that they have about them any character of universality or fixity, but this is a long way from any doctrine of moral relativism. As Hayek observes in his remarks on the ambiguity of relativism:. We have no more ground to ascribe to them eternal existence than to the human race itself.
There is thus one possible sense in which we may legitimately regard human values as relative and speak of the probability of their further evolution. But it is a far cry from this general insight to the claims of the ethical, cultural or historical relativists or of evolutionary ethics.
To put it crudely, while we know that all these values are relative to something, we do not know to what they are relative. We may be able to indicate the general class of circumstances which have made them what they are, but we do not know the particular conditions to which the values we hold are due, or what our values would be if those circumstances had been different. Most of the illegitimate conclusions are the result of erroneous interpretation of the theory of evolution as the empirical establishment of a trend. Once we recognize that it gives us no more than a scheme of explanation which might be sufficient to explain particular phenomena if we knew all the facts which have operated in the course of history, it becomes evident that the claims of the various kinds of relativists and of evolutionary ethics are unfounded.
Hayek does not, then subscribe to any sort of ethical relativism or evolutionism, but it is not altogether clear from these statements if he thinks humanity's changing moral conventions have in fact any invariant core or constant content. In order to consider this last question, and to attain a better general understanding of Hayek's conception of morality, we need to look at his debts to David Hume, whose influence upon Hayek's moral and political philosophy is ubiquitous and profound.
Hayek follows Hume in supposing that, in virtue of certain general facts about the human predicament, the moral conventions which spring up spontaneously among men all have certain features in common or in other words exhibit some shared principles. Among the general facts that Hume mentions in his Treatise , and which Hayek cites in "The Legal and Political Philosophy of David Hume" in B , are men's limited generosity and intellectual imperfection and the unalterable scarcity of the means of satisfying human needs.
As Hayek puts it succinctly: "It is thus the nature of the se circumstances, what Hume calls 'the necessity of human society,' that gives rise to the 'three fundamental laws of nature': those of 'the stability of possessions, of its transference by consent, and of the performance of promises. Nor is the expression improper to call them Laws of Nature ; if by natural we understand what is common to any species, or even if we confine it to mean what is inseparable from the species.
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Hume's three rules of justice or laws of nature, then, give a constant content to Hayek's conception of an evolving morality. They frame what the distinguished Oxford jurist, H. Hart, was illuminatingly to call "the minimum content of natural law. There is in Hayek as in Hume, accordingly, a fundamental utilitarian commitment in their theories of morality.
It is a very indirect utilitarianism that they espouse, however, more akin to that of the late nineteenth-century Cambridge moralist Henry Sidgwick  than it is to Jeremy Bentham or John Stuart Mill. The utilitarian component of Hayek's conception of morality is indirect in that it is never supposed by him that we ought or could invoke a utilitarian principle in order to settle practical questions: for, given the great partiality and fallibility of our understanding, we are in general better advised to follow the code of behavior accepted in our own society.
That code can, in turn, Hayek believes, never properly be the subject of a rationalist reconstruction in Benthamite fashion, but only reformed piecemeal and slowly. In repudiating the claims that utilitarian principles can govern specific actions and that utility may yield new social rules, Hayek shows himself to be an indirect or system utilitarian , for whom the proper role of utility is not prescriptive or practical but rather as a standard of evaluation for the assessment of whole systems of rules. Again however, Hayek's utilitarian outlook is distinctive in that he explicitly repudiates any hedonistic conception of the content of utility itself.
Just how are we to assess different systems of rules in regard to their welfare-promoting effects? Here Hayek comes close to modern preference utilitarianism, but gives that view an original formulation, in arguing that the test of any system of rules is whether it maximizes an anonymous individual's chance of achieving his unknown purposes.
It will be seen that this is a maximizing conception, but not one that represents utility as a sort of neutral stuff, a container of intrinsic value whose magnitude may vary. Indeed, in taking as the point of comparison an hypothesized unknown individual, Hayek's conception as he recognizes  parallels John Rawls' model of rational choice behind a veil of ignorance as presented in Rawls' Theory of Justice. Mention of Rawls' contractarian derivation of principles of justice at once raises the question of how Hayek's indirect or system utilitarian argument is supposed to ground the rules of justice he defends, and, in particular, how Hayek's defense of the priority of liberty squares with his utilitarian outlook.
Several observations are apposite here. First, Hayek undoubtedly follows Hume in believing that, because they constitute an indispensable condition for the promotion of general welfare, the rules of justice are bound to take priority over any specific claim to welfare. Again, it is to be noted that Hume's second rule of justice, the transference of property by consent, itself frames a protected domain and so promotes individual liberty. Finally, Hayek argues forcefully that, if individuals are to be free to use their own knowledge and resources to best advantage, they must do so in a context of known and predictable rules governed by law.
It is in a framework of liberty under the rule of law, Hayek contends, that justice and general welfare are both served. Indeed, under the rule of law, justice and the general welfare are convergent and not conflicting goals or values. These claims regarding the relations between justice, liberty, and the rule of law encompass the most controversial and the most often attacked portion of Hayek's social philosophy.
Common to all criticisms of it is the objection that Hayek expects too much of the rule of law itself, which is only one of the virtues a legal order may display, and a rather abstract notion at that. Among classical liberals and libertarians, this objection has acquired a more specific character. It has been argued  that upholding the rule of law cannot by itself protect liberty or secure justice, for these values will be promoted only if the individual rights are respected.
Hayek's theory is at the very least radically incomplete, according to these critics, inasmuch as his conception of the rule of law will have the classical liberal implications he expects of it, only if it incorporates a conception of individual rights, which he seems explicitly to disavow. All these liberals and libertarians fasten upon Hayek's use of a Kantian test of universalizability to argue that such a test is almost without substance, in that highly oppressive and discriminatory laws will survive it, so long as their framers are ingenious enough to avoid mentioning particular groups or named individuals in them.
The upshot of this criticism is that, in virtue of the absence in his theory of any strong conception of moral rights, Hayek is constrained to demand more of the largely formal test of universalizability than it can possibly deliver, and so to conflate the ideal of the rule of law with other political goods and virtues.
This fundamental criticism of Hayek, stated powerfully by Hamowy  and Raz  and endorsed in earlier writings of my own,  now seems to me to express an impoverished and mistaken view of the nature and role of Kantian universalizability in Hayek's philosophical jurisprudence. It embodies the error that, in Hayek or indeed in Kant, universalizability is a wholly formal test. In his "Principles of a Liberal Social Order," A , in B Hayek tells us: "The test of the justice of a rule is usually since Kant described as that of its 'universalizability,' i.
It is sometimes suggested that Kant developed his theory of the Rechtstaat by applying to public affairs his conception of the categorical imperative. It was probably the other way round, and Kant developed his theory of the categorical imperative by applying to morals the concept of the rule of law which he found ready made in the writings of Hume.
Hayek's own argument, that applying Kantian universalizability to the maxims that make up the legal order yields liberal principles of justice which confer maximum equal freedom upon all, has been found wanting by nearly all his critics and interpreters. Heidegger's ontology is in fact 'political'.
Zizek most emphatically agrees with this definition of the political as an ontologically basic category, leading to an attitude of "fully assuming the consequences of the lack of ontological guarantee. However, the commitment to revolution does not yet decide the content of politics. Where Heidegger parts ways with almost everybody is in insisting-even after the war-that the Nazi movement had the right potential.
Zizek, too, thinks that a revolution, the October revolution, which went terribly wrong and produced large scale mass murder, had the right potential. Indeed, Zizek wants to present a very precise corrective move with regard to Heidegger's philosophy. He wants to follow Heidegger to the point where revolution is grounded in the historicity and finitude of Being, so that political commitment becomes one with thought, and personal life is submitted to sacrifice and leadership, but not to the point where a concrete Nazi twist is given to the commitment. Furthermore, he wants to present a theoretical antidote to the wrong twist.
The antidote is the concept of a universal, ahistorical subject.
The concept of the subject is also connected to Zizek's motivation for a leftist revolution, so the rehabilitation of the subject is not a provocative quirk, but rather the crucial "quilting point" of Zizek's philosophy, connecting the overall ontology and the particular, "communist" political content.
Consequently, if we do not want to participate in the rehabilitation of the subject, we have to respond to Heidegger's revolution in a way that does not necessitate the subject. This, at the same time, reduces the need for the rehabilitation. Schematically, we follow Zizek in accepting Heidegger's "ontologised politics" but part ways in suggesting-through a critique of Zizek's interpretation of Heidegger-a corrective that is asubjectivist, rather than subjectivist.
This, in turn, necessitates that we identify the problems of Heidegger's Nazism in a more realistic way than, for instance, Zizek does, and, at the same time, accept the "lack of ontological guarantees" also with respect to revolutions: they can go horribly wrong and no amount of theory is going to preclude that possibility.
The main upshot of Zizek's interpretation of Heidegger's Nazism, most elaborately presented in the long essay "Why Heidegger Made the Right Step in ,"4 is that contrary to the commonly held view, Heidegger's political activism was not an out-and-out mistake, but almost right. What was right was taking the step into everyday politics, making the connection between philosophy and concrete collective activism.
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