F. A. Hayek: Austrian Economics vs. Objectivism
I am giving a talk with Will Thomas at Atlas Summit 2016 on Austrian Economics. I have been assigned to discuss the Austrian economists Carl Menger and F A. Hayek. I will have about eight minutes for each Menger and Hayek. This post presents the basic ideas I will present on Hayek.
F. A. Hayek won the noble prize in economics. He is probably best known for his book The Road to Serfdom, which was written during world war two. In academic circles Hayek is best known for his work on how prices in a market economy provide information and result in a spontaneous order. This work is closely related to Adam Smith’s ideas about the “invisible hand.” Ayn Rand and Hayek never met, but Rand was highly critical of Hayek.
Hayek considered one of his great achievements his work on “cultural evolution”, which lays out his epistemology. One commentator summarizes Hayek’s cultural evolution this way
According to this theory, rules, norms and practices evolve in a process of natural selection operating at the level of the group. Thus, groups that happen to have more efficient rules and practices tend to grow, multiply, and ultimately displace other groups. The theory, of which Hayek himself was proud, is on all accounts central to his economic, social, and political project. (Emphasis Added)
The History of Hayek’s Theory of Cultural Evolution, Erik Angner
Dept. of History and Philosophy of Science
Hayek’s objection to central planning is not based on individualism, but on the fact that central planning substitutes the knowledge and decisions of a few people for that of the group. This disrupts the process of cultural evolution according to Hayek.
This group basis of evolution is based on Hayek’s belief that reason is limited at best.
Burke and Hayek, then, shared a common enemy as well as a common understanding: Enlightenment rationalism. Perhaps the most characteristic attribute of Enlightenment thought was its cavalier dismissal of ‘irrational’ tradition as mere superstition and prejudice. (Emphasis added)
The Liberalism/Conservatism Of Edmund Burke and F. A. Hayek: A Critical Comparison, Linda C. Raeder is Associate Editor of HUMANITAS and a Research Associate at the National Humanities Institute
David Kelley summarizes Hayek’s position on Capitalism best.
This case for market freedom is essentially negative. Hayek seems to think that if socialist planning were possible, socialism might be the morally ideal system. But the inescapable ignorance of would-be planners excludes that possibility: ―If there were omniscient men, if we could know not only all that affects the attainment of our present wishes but also our future wants and desires, there would be little case for liberty.‖10
Symposium: Rand and Hayek on Cognition and Trade
Rand versus Hayek on Abstraction
David Kelley The Atlas Society
Hayek also accepts the Austrian economics position of subjective values and as a result rejects a rational or scientific ethics. “No universally valid system of ethics can ever be known to us,‖3 which is obviously not consistent with her view.”
It is clear that Hayek is inconsistent with Ayn Rand’s metaphysics, epistemology, and ethics. Hayek’s support for “free markets” or capitalism is coincidental with Objectivism, not fundamental.
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