Was Hayek nuts or just immoral?

["Roger Koppl" <KOPPL@xxxxxxxxxxxxxxx>]

Greg Ransom has tried to defend Hayek on this board.  (He seems to
have been inspired by the Biblical story of Daniel.)  I wonder if an
outsider might interject even though he has not quite followed the
Hayek debate on this board?

I think Greg has tried to defend Hayek in a language that makes sense
only if you're a-singin' in the choir already.  When you read the
sort of grand syntetic statement that Greg attempted, it's easy to
get the idea that Hayek is motivated by some rather mysterious FAITH
in the coordinative prowess of markets and DISDAIN for the common
facts of experience.  I think both impression are false.

Hayek returned from WWI with the impression of most thinking people
under 40: The Western capitalist system is proved irrational and must
be supplanted by something better, by some form of socialism.  In the
hopes of working toward that better socialist future, Hayek studied
economics rather than psychology, a field he almost went into.  After
graduating from the U. Vienna where he studied under Weiser, Hayek
went to work for the Austrian Chamber of Commerce.  The head of
Chamber of Commerce was Ludwig von Mises, elder brother to the famous
defender of the frequentist theory of probability, Richard von Mises.
L. von Mises published a book (translated as "Socialism") that
attempted a fundamental epistemic critique of central planning.
Hayek was shocked.  He hadn't known Mises was writing the book.  And
when he read it, he was persuaded.  So Hayek, like many
"conservative" economist of his age cohort, began as a socialist and
was weaned from it by economic argument.

Hayek's has no disdain for the facts.  In spite of the influence of
Mises, famous for his apriorism, Hayek was always an empiricist.
>From an early date Hayek's empiricism was more or less anti-Machian.
But his ideas owe much to Mach and even the famous "Vienna Circle."
In his "Studies in Philosophy, Politics and Economics" [or something
like that] of 1967 (U. of Chicago press) Hayek has some essays on the
"theory of complex phenomena."  In these essays it comes out plainly
that the guy is an epistemological empiricist, though a unique
species of that genus.

Now a couple of comments on Bruce McFarlings response to Greg's post.
Bruce says,

>     It is important to note that market order is
> *not* spontaneously generated, any more than organisms
> are spotnaneously generated.

I'm not with you, Dr. McFarling.  Aren't biological organisms
"spontaneously generated" in the sense that a process of natural
selection led to the emergence of them without any designing mind
first imaging the result?

You can hide the institutions
> in the functional relationship and definitions of a
> mathematical model, you can pretend that they have been
> chosen in some hyper-rational way, but the likelihood of
> viable and sustainable market systems emerging spontaneously
> is quite remote.

The first part of this quote doesn't apply to Hayek.  Hayek is very
much the anti-rationalist.  Ted Burczak has a piece in a recent
Economics and Philosophy (April 1994?) arguing that Hayek is in many
important ways a post-modern hermeneut.  Ted's paper shows that
you just can't call Hayek a rationalist or modernist.  The second
part, I would have thought, doesn't fit with the first.  If an
institution was "chosen in some hyper-rational way," then how could
it be thought of as "emerging spontaneously"?  Aren't these more or
less opposites, rational choice and spontaneous evolution?

    And, beyond that, for a wide range of
> economic activities, centralized redistributive systems
> have been far more successful than market solution: these
> centralized redistributive systems are called corporations.
> No OECD nation has gotten to that level without a substantial
> corporate sector.

Hayek never, NEVER, denied the utility of planning.  He objected ONLY
to CENTRAL planning.  Coase might be invoked to get a sense for how
you could reject central planning while endorsing corporate planning.
The planning of a corporation carries costs and benefits.  If the
benefits of expanding the scope of a planning island should exceed
the costs, it seems likely that such and expansion will occur.  If
not, no such expansion occurs.  What do we see?  Many planning
islands of various size, no clear tendency toward the grand
unification of all corporate enterprise.  Indeed don't we have merger
waves followed by waves of the opposite type?

I offer this Coasian argument only as SUGGESTIVE of the possibility
that Hayek was neither nuts nor immoral in his opposition to central
planning and all forms of socialism.  He may certainly have been in
error, but he had serious arguments not easily swatted down by a
casual reference to, say, ancient civilizations.

I think I understand how easily one can get a false picture of Hayek.
If you start out from a very different set of operating assumptions
and you hear a phrase such as "spontaneous order" used to defend the
market system . . .  Well, Hayek starts to sound like some sort of
goofy dreamer who wants us all to JUST BELIEVE that SOMEHOW
everything will work itself out.  "Don't worry your pretty little head
over the sufferings of the poor," Hayek seems to say, "the market
will provide for them, it always has."  Such a position would not, of
course, be worth bothering about.  But that's not even close to the
Hayekian social theory some of us take very seriously.

Roger Koppl
Fairleigh Dickinson University