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F.A. Hayek Knew That The “Nobel Prize” In Economic Sciences Was A Propaganda Tool For Central Banks.

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The Nobel Prize in Economic Sciences is a dubious thing at best.

First, it’s not a “real” Nobel Prize in the sense the Nobel Foundation neither chooses nor pays the recipient(s). Technically, it’s the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel.” The award itself is of checkered provenance, created by Swedish central bankers hoping to bolster the scientific image of economics. It’s chosen by committee members who purposely apply the same principles used to determine winners in medicine, physics, and chemistry, thereby hoping the public won’t much notice its lack of connection to the late Alfred Nobel (or his surviving family, one of whom blasted the prize as a PR effort designed to improve the bad reputation of economists).

More importantly, though, the “Nobel Prize confers on an individual an authority which in economics no man ought to possess,” as none other than Friedrich Hayek exclaimed in his own remarkable acceptance speech upon receiving the award in 1974.

In Hayek’s view, the Prize threatened to create an aura of hard science certainty around the decidedly social science of economics. This veneer, he worried, would influence both government officials and the public to view economic theory more like laws of physics or properties of molecules.

This was dangerous, in the view of a man who had seen Europe and Russia collapse under “scientific” socialism and written extensively about political economy in The Road to Serfdom and The Constitution of Liberty. He understood the deadly combination of hubris and certainty, and hoped to impress upon the audience that economics remained a discipline that studied humans, with all their irrationalities and frailties. In this sense he demonstrated the degree of respect he still had for the praxeological foundation of his then recently-departed old mentor Ludwig von Mises.

Murray Rothbard, writing in Human Events, had fulsome praise for Hayek as the surprise winner who eschewed the mathematical orientation of previous recipients:

The Nobel award comes as a surprise on two counts. Not only because all the previous Nobel Prizes in economics have gone to left-liberals and opponents of the free market, but also because they have gone uniformly to economists who have transformed the discipline into a supposed “science” filled with mathematical jargon and unrealistic “models” which are then used to criticize the free-enterprise system and to attempt to plan the economy by the central government.

F.A. Hayek is not only the leading free-market economist; he has also led the way in attacking the mathematical models and the planning pretensions of the would-be “scientists,” and in integrating economics into a wider libertarian social philosophy. Both concepts have so far been anathema to the Nobel establishment.

Rothbard saw Hayek’s achievement not only as a refutation of the Keynesian orthodoxy regarding stumulative monetary policy, but also as a demolition of the whole socialist political program flowing from Keynes’s followers:

The political prescription that flows from the Hayekian theory is, of course, the diametric opposite of the Keynesian: stop the artificial inflationary boom, and allow the recession to proceed as fast as possible with its work of readjustment. Postponement and government attempts to stop or interfere with the recession process will only drag out and intensify the agony and lead to our current and probably future turmoil of inflation combined with lengthy recession and depression. The Mises-Hayek analysis is not only the only cogent theory of the business cycle; it is the only comprehensive free-market answer to the Keynesian morass of government planning and “fine tuning” that we are suffering from today.

But F.A. Hayek did not stop with this monumental contribution to economics. In the 1940s he widened his approach to the entire area of political economy. In his best-selling Road to Serfdom (1944) he challenged the prosocialist and pro-Communist intellectual climate of the day, showing how socialist planning must inevitably lead to totalitarianism, and demonstrating examples in the way in which the socialistic Weimar Republic paved the way for Hitler. He also showed how the “worst always get to the top” in a statist society.

So today let us celebrate Friedrich Hayek, the reluctant  and worthy Nobel winner—rather than this year’s recipient, William Nordhaus, an economist who once wrote this, in a textbook no less:

The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.

This article was originally published at mises.org

 

 

 

 

 

 

 

 

 

 

 

The Mirage Of Social Justice, Part 2: What Is Justice Anyway? It’s Not What SJW’s Want You To Think It Is.

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So what is justice? It’s not what we are led to believe it is by social justice warriors.

We must be able to define justice before we can determine how to pursue it. F.A. Hayek defined the emptiness of the concept of “social Justice” in Part 1 of The Mirage Of Social Justice. In Part 2, he proceeds to provide the meaning that is lacking in the typical use of the term.

What Justice Is Not.

First, he tells us what justice is not. Justice can not refer to outcomes. We can not refer to a state of affairs or a circumstance such as the distribution of income between people in a country, as either just or unjust. It is neither. It is a circumstance, a condition. It is an emergent property of the system by which we all live, one that has evolved over time based on individual human behavior.

When we apply the terms just or unjust to a state of affairs, we immediately start to look for someone to blame for bringing it about or allowing it to happen. That, says Hayek, is a very dangerous categorical mistake. It divides society. It makes us all enemies.

A bare fact, or a state of affairs which nobody can change, may be good or bad, but not just or unjust.

Justice Can Not Refer To Outcomes, Only To Human Behavior.

Justice is an attribute of human behavior. The term “just” can refer only to human actions and not to results. In spontaneous order, there are no rules that determine what anyone’s position will be. The particulars of the spontaneous order – the positions individuals actually occupy – cannot be called just or unjust

Justice lies not in the outcome of the system but in its norms of interpersonal behavior, what Hayek calls “rules of just conduct”. These are different from laws, which are enacted by legislatures and are manufactured rather than evolved collaboratively over time. The politicized decisions of the legislature do not determine what is just. Only human conduct – how each individual deals with each other individual – can be called just or unjust. Rules of just conduct refer to the actions of individuals that affect others.

The Rules Of Justice Tell Us What Not To Do.

Rules of just conduct are generally negative rules. They prohibit unjust conduct. Eight of the ten commandments are negative (thou shalt not). Nine of the first ten amendments to the US Constitution in the Bill Of Rights are negative (Congress shall make no law…..and so on). Rules of just conduct enjoin particular kinds of actions in order to help individuals be free to act as they choose. The test of the validity of these rules is universality – do they apply to everyone equally, as opposed to favoring one group over another.

These rules impose no positive duties on anyone, unless they themselves choose to incur such duties. They do not confer rights on any individual. They do not eliminate uncertainty. They do not assure success. They do not aim at a result. They are not the product of someone’s will; they emerge from acceptable human behaviors over time.

Professing To Use Concepts Of Justice To Determine Outcomes Is Socialist And Totalitarian.

Essentially, there are no positive criteria of justice. There is a strain of thinking among the intelligentsia that goes by the name of legal positivism. This means that laws can be written by the legislature and applied by the state bureaucracy to achieve particular results. This, to Hayek, is what is fundamentally unjust. Worse, this concept of law holds that it is legitimate for the state to use coercion in the service of pursuing these particular results, thus totally abandoning the rules of just conduct.

This is simply the ideology of socialism: to achieve total control over the social order because the governing elites believe it is in their power to design and determine future outcomes.

Social justice warriors have seized upon this apparent approval of unjust means to pursue their ends by adopting violent and intimidating methods, from strikes to marches to wild accusations, and even the use of weapons. In the struggle between individual sovereignty and the sovereignty of the omnipotent state, the social justice warriors take the side of the state, in order to intervene to compel individuals into approved behaviors.

Property, Contract And Tort.

We know there is a better alternative to this never-ending struggle. The lesson of history is that a system based on private property and contract tends to bring about the spontaneous order which favors individual human freedom with the appropriate rules of just conduct. Hayek notes that David Hume referred to:

the three fundamental laws of nature, that of stability of possession, of its transference by consent, and of the performance of promises, or, as a modern author sums up the essential content of all contemporary systems of private law, ‘freedom of contract, the inviolability of property, and the duty to compensate another for damage due to his fault.’

Private property and the freedom to transfer it within the rule of law are fundamental for a free and open society. Social justice warriors want private property to be eliminated or transferred without consent. Whatever that is, it is not justice.

The Mirage Of Social Justice, Part 1: Social Justice Warriors Claim Fine Sentiments, But They Are Entirely Dishonest.

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Empty. Meaningless. Thoughtless. Vacuous. Naïve. Hollow. Shameful. Fraudulent. Primitive thinking. Demagogy. Cheap journalism. Irresponsible. A grave threat. Destructive of the values of civilization.

These are some of the words and phrases F. A. Hayek use to describe the term – and the idea of – “social justice” and the people who employ it. These are not the words of a detached academic, but of someone who feels deeply and emotionally about the collapse of a great civilization threatened by those determined to destroy it, who will twist and invert both language and principle to achieve their goal. Hayek is driven by the spirit of resistance to these forces.

I believe indeed that the greatest service I can still render to my fellow men would be if it were in my power to make them ashamed of ever again using that hollow incantation. I felt it my duty to at least try and free them of that incubus which today makes fine sentiments the instruments for the destruction of all values of a free civilization.

Even Social Justice Warriors Can’t Define “Social Justice”.

The Mirage Of Social Justice is the title F.A. Hayek gave to Volume 2 of Law, Legislation and Liberty. It’ a book about the beneficence of the spontaneous order of the free enterprise society, and includes a withering take down of the claims of “social justice”. It was written over 40 years ago, well before the internet, and yet resonates perfectly in today’s world of political correctness and what Jordan Peterson calls “the elevation of moral posturing … over truth”.

Hayek starts by setting out his position: the term “social justice” is entirely empty and people who habitually employ the phrase can’t themselves define what they mean by it. They just use it as an assertion that a claim is justified without giving a reason for it.

“Social Justice” Is Moral Posturing.

Social justice, Hayek tells us, is

a dishonest insinuation that one ought to agree to a demand of some special interest which can give no real reason for it.  (The term is) the mark of demagogy or cheap journalism which responsible thinkers ought to be ashamed to use.
‘Social justice’ is little more than a pretext for making the interest of particular groups prevail over the general interest of all.

This is moral posturing of social justice that goes beyond politically correct speech codes to the economic demands of the self-identified oppressed sections of society upon the rest of us.

Politicians Jump On The Social Justice Bandwagon For Their Own Purposes.

The first problem with the concept is that it is indefinable. Consequently, it can be given almost any content by the social justice warriors. When that content is seen as marketable by the ruling political groups, they will favor it and claim to be supporting the “general welfare”. But the collective that is pressing for their “just desserts” is never the whole of society, but is always a special interest. As soon as government is expected to satisfy some particular collective, some of whose interests may be contrary to the general interests of society, then a friends-enemies political framework is established and a divisive fight ensues.

Democracy Worsens The Problem.

Worse, in a democracy, there is a tendency to define as a general interest anything that a majority will vote for or will lobby for, and it is a perversion of our ideals to define the general interest as whatever the majority desires. For example, union members, in a majority in many industrial settings, can vote for a strike or a restriction of production that is a collective good for all members but certainly not in the general interest. Climate activists can claim they are supporting not only the general welfare but the survival of the planet.

Coalitions of special interests organize to make their case, and politicians and civil servants can aim at securing the support of these interests by promising to implement their demands. In this, Hayek finds the key to the divisiveness of politics:

For the elected representative, a specific gift in his hands is much more interesting and a more effective key to power than any benefits he can procure indiscriminately for all.

The Alternative Is The Free Enterprise Society, Defined By General Rules Applicable To All.

What’s the alternative to “social justice”? In a free society, the general good consists principally in the freedom of the individual to pursue his or her own ends. The spontaneous order that emerges will result in individuals providing for each other’s needs in a way that authority could never devise or manage. It is both futile and counter-productive to aim for specific results for special groups. Justice consists in every individual having an equal chance, not in whether or not their group benefits from the outcome.

Hayek’s ideal to bring this about is to define general rules – he calls them abstract rules – of individual conduct which are required for the formation of spontaneous order. In the Hayekian world, this is a state in which individuals are allowed to use their own knowledge and their own private property for their own purposes, deciding on their actions on the basis of whatever knowledge they possess. The starting point is the information that’s available, including the market price of whatever service the individual feels qualified to offer to others. The market provides the opportunity to utilize dispersed, unique knowledge. The idea that government can determine the opportunities for individuals is in conflict with the whole rationale of a free society.

There are accidents and externalities we can’t control. The parents we are born to and the country and culture we are born in are accidental. No point in complaining. Government can not control the external circumstances from which these accidents of the market emerge.

Even traditions and national character are emergent features of the actions and preferences of the people. Even in concrete symbols like flags and monuments, they stand for abstract rules of behavior – what is acceptable to be done and what’s not acceptable in that society.

Serve Unknown Individuals, Not Collective Special Interests.

Whom do these general, abstract rules serve? Unknown individuals not specific groups. The best we can do for general welfare is to increase the opportunities for any unknown person picked at random. We do not know what outcome these opportunities will produce. They become merely the basis for the planning of individuals.

Long Term Thinking Is Morally Superior To Short Term Thinking.

Another consequence of these general rules, therefore, is that they always aim at the long run. Yet, politicians always aim for the short run in trying to bring about specific results for their constituents and supporters. Politicians aiming for specific results in the short run kill freedom in the long run. (See Chapter 7 of The Foundations Of Morality by Henry Hazlitt for a full exposition of this principle.)

Freedom means that, in some measure, we entrust our fate to forces which we do not control. As a result, changes can occur which are unpredictable and may be viewed as damaging to some interests – for example, when industries decline as a result of new knowledge that is not available to all, or not actionable by one group. This recognition that man can not control his own fate is intolerable to positivists and constructivists, who believe in the infinite power of their own reason. Only they, in their own minds, have the reasoning power to determine the outcome for the rest of us, and that’s what they call “social justice”.

Road To Serfdom

A New Perspective Becomes a Refreshing Journey on The Road to Serfdom

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About fifteen years ago, I read the Road to Serfdom. My exact reasons for picking it up are unclear, except to say that it had a compelling title. I also knew the reputation of the book and its author, Friedrich Hayek, to be stellar. One day something inspired me to order it online, and I remember that it was a challenging read. Of course it was written by an economist about economics, but I also remember there wasn’t any complicated economic theory or math. Instead, the book was about life writ large. And this was long before I read Ludwig von Mises proud assertion: “Economics is life.”

In the years that followed, I never had the opportunity to discuss it with anyone I knew personally or professionally. Among friends and family, one may have heard of the Road to Serfdom, but certainly none had read it, let alone have a clue about its place in 20th century history. Among colleagues, it just never came up. The only economics anyone cared about in the financial services industry were the latest GDP forecasts, the Fed, and trade deficits. Of course, that was centered on the economic theories of John Maynard Keynes, never Hayek or the business cycle theory of the Austrian School of economics.

The Need for Classics Made Simple

About 8 or 10 years ago, I heard Rush Limbaugh mention the Road to Serfdom on his radio broadcast. He asked a caller “Are you telling me that you’ve actually read the Road to Serfdom? I’ve never met anyone who has read it!” The point is that Rush understood that the book is a classic, and that its ideas are the backbone of free and prosperous societies. He knew the book to be an essential source of knowledge, that this knowledge breeds confidence, and it’s the kind of knowledge that is essential to fight back against the dominant collectivist agenda of the American media/education complex.

So how can the Road to Serfdom be made more accessible? Maybe if its language were more understandable (it was written by an Austrian-Brit in 1943), more people will read it. And if its ideas could be made relevant to people with little interest in economics, they would be armed with this knowledge. And what about the millennial generation – entrepreneurially inclined, knowledge oriented, and technologically savvy; what if they had access to a broader platform of ideas for human flourishing?

This is precisely what Brittany Hunter has done with her new e-book: A New Perspective On The Road to Serfdom. In its foreword, she plainly states her mission, and the daunting challenge she has taken on – to promote the universal morality of individualism.

My political science department was dominated by contemporary liberals and far-leftists convinced that collectivism was the only answer to the problems facing our country. But in the  midst of this leftist agenda, I managed to find one professor who challenged this viewpoint. Reading passages from Hayek’s Constitution of Liberty, I was floored at how this point of view had never been presented in any of my previous courses. I believed it was extremely important to present a modern, millennial approach to a book with a timeless message.

Economic Freedom Breeds Political Freedom

The ideas I still remember from reading The Road to Serfdom are the link between economic and political freedom (Chapter 7), the evolution of 20th century European socialism (Chapter 12), and the pathology of those who seek to dominate others (Chapter 10). There were also a couple of ideas in Hayek’s book that contradicted what I believed, such as universal basic income (Chapter 9). Brittany addresses all of them with greater insight than I was able to muster at the time, and she does it for a younger and larger audience.

For example, universal basic income is a hot political topic that resonates with today’s democratic socialism crowd. Yet we see in Brittany’s e-book that this idea is not new, and we learn that Hayek’s treatment of it is not widely admired by today’s free market advocates. As she explains, “while economic security may be appealing to many and ease our minds, it does not  come without a cost, and, in most instances, it is a loss of not only our economic freedom but freedom in general.”

A New Perspective explains why free people who are busy focusing on family, careers, and health also need to be aware of economics. After all, we are constantly engaged in economics, much like we are constantly engaged in breathing.

Integrating New Perspectives

The most revealing experience for me as I read A New Perspective, was to realize the powerful impact Hayek continued to have on me, and my ability to frame ideas. For example, I had totally forgotten about Chapter 11 – Hayek’s warning’s about state-controlled education. At the time, it validated my decision to enroll our young children in a Montessori program, and over the years it subconsciously became my knowledge base about public education.

Another important aspect is the last chapter in A New Perspective titled Postface: Five Lessons Learned from the Road to Serfdom.

The greatest enemy of individualism has always been and will always be collectivism, which is why Hayek touches on this theme over and over again in his writing. True equality comes from the individual’s ability to live, work, and function without a constant fear of state oppression. This equal access to happiness and fulfillment is the truest form of equality in existence.

When a literary milestone is transformed into a feature film, it is always best to read the original before viewing the movie. It leads to a greater understanding and appreciation of the film version. However, in the case of A New Perspective, Brittany reverses the direction. Her e-book is the prologue to reading and fully appreciating the original achievement that is Friedrich Hayek’s the Road to Serfdom.

 

Wikipedia and Hayekian Philosophy: The Knowledge Problem

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Wikipedia has become a staple in each of our lives. No matter what information we may be in search of, Wikipedia either provides what we are looking for or offers a great launching off point to further research. And while most of us routinely use the site to aid us on our quest for knowledge, few know that the site was born out of a deep respect for the work of economist, F.A. Hayek. 

The Knowledge Problem

As a college student at Auburn University, young Jimmy Wales, the founder of Wikipedia, had the pleasure of taking an economics course from Austrian economist, Mark Thornton. It was during this course that Wales was first introduced to the ideas of Hayek. Specifically intrigued by Hayek’s essay, The Use of Knowledge in Society.

In this essay, which was published in 1945, Hayek explains that one of the major problems with central planning is the amount of knowledge that would be required to make it work. Since information is dispersed among individuals, it would be impossible for central planners to set regulations that accounted for every single person’s wants and needs. They would simply not have enough information to answer to solve these problems.

If the main goal of was the organization of knowledge, then Wales, who is himself a subscriber to the Austrian school, believes there are two means of centralizing this information. First, governments and rulers around the globe could do their best to collect all this knowledge. Of course, once someone is the keeper of knowledge they also control who receives it. This, of course, is not decentralization at all. Even so, this is what has occurred for most of human history.

Access to state-gathered information has traditionally been guarded against reaching the masses of the people. Instead, the right to this knowledge was a privilege given to those in power, whether political or economic. Obviously, this was not an effective way to decentralize knowledge among the people. Additionally, while this is the best possible solution for those in power, with large populations of individuals it is unlikely that even force would yield the gathering of all information. There would still be an inefficient amount of knowledge—and an insufferable amount of state control.

The Wikipedia Solution

The second approach to the knowledge problem can be found by taking a closer look at Wikipedia. Since history has shown us that governments are not the best keepers of knowledge, it is best for this information to stay decentralized, but still accessible by all individuals. Wales explained Wikipedia by saying:

“Wikipedia begins with a very radical idea, that is for all of us to imagine a world in which every single person on the planet is given free access to the sum of all human knowledge. And that is what we are doing.”

Instead of state control, Wikipedia is managed by a voluntary community. Users are free to add information and edit. However, the edits are subject to review by the community itself. If there is a dispute over any of the information added to the site, the Wikipedia community utilizes private conflict resolution in which they discuss and debate amongst themselves, without the need for state authority. Wikipedia even has its own internal common law system to help settle any disagreements about site entries that may arise. So not only is Wikipedia making knowledge accessible to all, it is also paving the way for private dispute resolution methods that do not involve government courts.

And while Wales’ recognition of the knowledge problem would be impressive enough on its own, Hayek’s influence on Wikipedia does not end there. In the next installment, we will discuss how Wikipedia is yet another real-life example of spontaneous market order.

The Hayekian Nature Of The World Cup Penalty Shoot-Out.

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On July 7th, 2018, in Sochi, Russia, the Croatian national soccer team won a match against the Russian national soccer team in the FIFA World Cup tournament. At the end of the normal time assigned to the completion of a soccer game, 90 minutes, the score was tied at 1-1. At the end of the extra time assigned to achieve a decisive result in the knockout stage of the tournament, the score was tied at 2-2. The match was ultimately decided on a penalty shoot out. 5 players from each team take turns at attempting to make an uncontested shot into the goal defended by the opposing team’s goalkeeper. After 10 shots, 5 for each team, the team with the most goals advances to the next round, and the other team is eliminated. If the number of goals remains tied, alternate shots are taken until one side, having had the same number of shots as the other, has succeeded in scoring one more goal.

The penalty shoot out is tense, and entertaining and engaging for the fans. It guarantees an outcome. Only one side can win, and both sides accept the general rule that’s represented by the shootout mechanism. It’s devastating for the losing team who played their hearts out over 120 minutes of full-tilt soccer.

In Law, Legislation and Liberty, F.A. Hayek introduced us to the idea of general rules to govern society. The rules imposed by government institutions can not be designed to bring about particular future outcomes, because the future is unpredictable. They can not be designed to favor one group over another. They must give the same opportunity to everyone to succeed, even though it is impossible to predict how any individual or group will perform in the environment created by the general rule. The overall outcome depends on the use of knowledge (which way has the goalkeeper dived in his last five penalty save attempts?) and skills possessed by individuals (how do I fake the goalkeeper about which side of the goal I am shooting for?)

The shooters all share the same ends. They are all operating under the same general rules. It is in the choice of means and the use of knowledge and skills that the individuals differ. These are what Hayek calls the conditions of freedom.

All of the collective interests can not be satisfied – it is impossible for both Russia and Croatia to be happy with the ultimate outcome. No-one knew in advance which team would perform best in the penalty shoot-out. The laws of the shootout were the pre-condition for unpredictable spontaneous order to emerge: either Croatia or Russian would advance to the next round but not both.

The most telling point is that everyone in the society that constitutes FIFA, 211 countries according to wikipedia, agrees to the general rules of the game and the shootout, and accepts the result. Democracy could not have brought about the result in which Croatia defeated Russia; the latter country could easily outvote the former country, and by the framework of the 51% majority, could impose some different rules, such as that the team representing the country with the higher population goes through to the next round if the match is tied after 120 minutes. Nor would it provide a viable outcome for one group of countries to adopt one set of rules, and another group to adopt an alternative set. Everyone plays by the same set of rules. Everyone accepts that the outcomes are not predictable in advance.

Hayek did not anticipate the FIFA World Cup 2018. His point was that society must be designed in the same way. The essence of a free society is that there are general rules applied to all, and the makers of the rules must not favor one group over another, nor must they design the rules to accomplish any specific outcome. The rule makers have no idea in advance how individuals will perform within the rules, nor how they will behave. One penalty taker will bob and weave, and another will take a direct run at the ball. One goalkeeper will jump up and down to distract the penalty taker, another will stand still until the crucial moment. All these behaviors are permitted. Which will succeed? We don’t know, and can’t know. The rules are designed to facilitate unknown actions of individuals based on their own choice. Each individual’s outcome may be the result of skill, or knowledge, or luck.

Each individual is free, using individual knowledge and skill, to do his or her best within the general rules that apply to all, and is free to learn from the experience, and, if the experience is not what was intended, to try to succeed via a different approach next time. That is the essence of the free society.

Personal Responsibility: It’s A Key Feature Of Spontaneous Order, Not A Bug.

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Ralph Peters, writing in the New York Post, and comparing the freedoms we enjoy in the USA to the tyranny of Russia and other countries, refers to personal responsibility as “that great burden of democracy”.

He appears to believe that many of us would prefer tyranny because it’s easier to bear:

“Tyrants may oppress you. They may lead you into disastrous wars. But they don’t demand that you take personal responsibility, that great burden of democracy.”

For him, personal responsibility is a bug in our system. For F.A. Hayek, the great philosopher of freedom, it is a feature, and, in fact, one of the most important features of a free society. In a society of laws, we expect each individual to act in accordance with a moral code that has evolved over the centuries to guide behavior in such a way that each individual can strive for the best personal outcome, while at the same time serving his or her peers so as to contribute to the best outcome for the entire society. The first aspect of personal responsibility is to act individually in accordance with the moral code.

The second aspect, in Hayek’s thinking, is for each individual to accept the freedom of utilizing their own special individual knowledge and unique circumstances to achieve the best result for themselves. The opportunities for different individuals are different.

“It is because the circumstances in which the different individuals find themselves at a given moment are different, and because many of these particular circumstances are known only to them, that there arises the opportunity for the utilization of so much diverse knowledge.” (1)

It is the individual actions of each of us, embracing the responsibility of acting on our own personal circumstances and using our own unique individual knowledge, that bring about the spontaneous order of society: the self-organized system that is best for all participants precisely because each of us is free to act in our own personal interests.

Any concept of central planning, by a Russian tyrant or a Federal Reserve bureaucrat, not only impedes the advancement of a beneficial spontaneous order, it is contradictory to the underlying concept of freedom.

“The idea that government can determine the opportunities for all, and especially that it can ensure that they are the same for all, is therefore in conflict with the whole rationale of a free society.” (2)

For Hayek, the traditions and national character of a society are the result of “general rules”, of which the taking of personal responsibility is one, guiding the perceptions and behaviors of the people. Even concrete icons like flags and shrines and the leaders we choose are just symbols of the rules that we follow. The conditions of freedom are that individuals are allowed to use their own knowledge for their own purposes and take the responsibility of doing so, rather than seeking that the government determine their outcome. The rule of law is to provide the context in which private activity can be pursued, not to direct that activity to specific ends or to determine its outcome. The general welfare is the maintenance of spontaneous order, via the individual pursuit of an infinite variety of personal purposes, unknown to the authorities.

Ralph Peters is a retired US Army lieutenant colonel. He is imbued with the idea of top down authority designing outcomes, and telling everyone in the hierarchy exactly what they should do. Maybe that’s why he does not cherish personal responsibility quite so much as do private citizens.

Personal responsibility is no burden. It is a feature of a free society that we must all embrace with enthusiasm and gratitude – and a sense of its historical application that brought us to where we are today – if we are not to succumb to the blandishments of tyrants who urge conformity and dependence. Personal responsibility is the P.R. we should all seek for ourselves.

(1) Law, Legislation and Liberty; F.A. Hayek. Vol 2 The Mirage Of Social Justice.

(2) Ibid

Trump And Hayek: On The Same Page.

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“I am not a conservative.” We have not heard Donald Trump say those words, but many commentators have put them in his mouth by observation. For example The Federalist recently ran a story entitled Trump Is Not A Conservative – And That’s A Good Thing. And Pat Buchanan repeated the theme at lewrockwell.com.

Trump, says Frank Cannon in The Federalist, is “at war with the progressives who have co-opted American society”. Indeed, he is criticized by his detractors for his willingness to attack our nation’s institutions. Elite conservatives are offended, because their philosophy depends on maintaining unquestioning respect for these long-standing institutions and believing in them as a bedrock of our republic.

This conservative position is, in the word chosen by Mr. Cannon, naïve. (President Trump would probably coin a more vitriolic phrase.) The institutions of our republic have been undermined, corrupted and politicized in an unrelenting process of re-engineering that we call progressivism. Trump is therefore judged, logically, to be “anti-progressive”.

Anti-progressive is a great thing to be. Progressives have worked hard and worked systematically to subvert American institutions, and the shattered wrecks that are left deserve none of our respect. Institutions mediate between individuals and society – effectively today, between individuals and their government – with the role of reconciling divergent interests. What the progressives have done is to politicize our institutions so that they are rigged to favor specific special interests, i.e. corrupted them to the point of destruction. Progressives have politicized the family, religion, education, the economy and, worst of all, the justice system, from traffic court to the Supreme Court, and from local policing to the FBI.

Trump does not let himself be hampered by the Conservative rules about not criticizing institutions even after their progressive corruption is complete. This conservative tactic, says the Federalist, results in a perpetual state of losing. Instead, he calls out their illegitimacy, their capture by the forces of progressivism, and the distortion of their true purpose. Whether it’s the news media, the judicial system or the NFL, Trump is vocal and fearless in pointing to failures of trust and subversion of the republic.

Why Hayek Was Not A Conservative.

“I am not a conservative” are actual words of F.A. Hayek. A famous essay was extracted from his book The Constitution of Liberty and published under the title “Why I Am Not A Conservative”. The version that’s online at cato.org carries the author line: “By Nobel Laureate F. A. Hayek”. Perhaps there is a worry that someone stumbling across this paper might think it’s by our current President.

Anti-progressive And Anti-conservative.

In the essay, Hayek describes progressive movements as encroachments on liberty, and conservatism as opposition to change. He is opposed to both. For Hayek, the big problem with Conservatism is that it has no objective – “it cannot offer an alternative to the direction in which we are moving”. The best it can do is slow down undesirable developments, but it cannot prevent their continuance. Yes, it can defend long-established institutions, but since the progressives have more energy and more specific policies to “reconstruct all social institutions”, conservatism can not keep the tide of corruption and politicization at bay. In The Results Of Human Action But Not Of Human Design, Hayek points to one example of the damage that the subversion of institutions can do to civilization. Speaking of what progressives have done to the justice system, he says that they have “deprived law of all …connection with justice”.

Anti-intellectual.

Hayek does use the word “progressives” in identifying those he is accusing, but he also famously employed another epithet: intellectuals. In The Intellectuals And Socialism, he calls socialism a specific form of the destruction of traditional democratic institutions, and accuses intellectuals of directing their main effort towards this goal. They are people with an “absence of responsibility for practical affairs”, i.e. they know nothing of the real world. In fact, they disdain it. It’s deplorable. They are guided by abstract intellectual constructs – for example, material equality, which is a generalized concept free of any analytic evidence or particularity. It is to be achieved by design and by social engineering supported by legislation.

These intellectuals work very hard to recruit the right people to their ranks. They make sure that holding progressive views leads to high reputation and lucrative appointments. They expand the number of bureaucrats and functionaries at every opportunity.

Their goal is the entire reconstruction of society, and their views are a threat to civilization, says Hayek. Conservatives err when they try to maintain their own personal standing within the existing order without resisting this anti-civilizational crusade. Conservatives want to be “practical”, “sensible” and “realistic”. They are interested in the preservation of existing features of society even after are no longer defensible.

Trump, on the other hand, is a radical anti-progressive. He attacks the moral authority and legitimacy of co-opted institutions. Hayek would be by his side..

The Fight Continues: Keynes and Hayek on Prices

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F.A. Hayek and John Maynard Keynes are two of the most controversial economists in history. They are also the two that are most often mentioned in undergrad economics courses. But even though these two have managed to break through to the mainstream, many still do not fully understand the differences between the two economists’ beliefs. 

Previously, I  discussed how Hayek and Keynes differed in regards to their views on spending and planned economies. Hayek, whose views were closely aligned with the Chicago school of economics, believed that markets operate organically and, as such, should not be constrained to the confines of government orchestration. This led him to conclude that government intervention, including but not limited to the setting of prices, inhibits the free market from reaching its full potential.

Keynes, on the other hand, believed the exact opposite. For Keynes, the more government intervention the better. He believed that laissez-faire economics was dangerous for consumers and was destined to fail. This faith in government institutions would also transfer over to his views on price theory.

Keynes on Pricing

Like most things regarding the economy, Keynes was a huge advocate of government intervention. As George Selgin put it, Keynes’s believed that “government authorities should manage money so as to achieve a stable level of consumers’ prices.”

Expanding on this, Selgin says:

“But, although some of Keynes’s writings, and the General Theory especially, may have laid the groundwork for inflationary policies, Keynes himself regarded them as supporting a monetary policy that would stabilize consumers’ prices. The desirability of a stable consumers’ price index is a persistent theme of Keynes’s monetary writings, from the Economic Consequences of the Peace (1919) to How to Pay for the War (1940). In this respect at least Keynes saw eye-to-eye with several of his more important contemporaries, including Irving Fisher and such members of the “old” Chicago School as Loyd Mints and Henry Simons.”

Keynes believed that prices were closely tied to monetary policy. Selin says, “But, although some of Keynes’s writings, and the General Theory especially, may have laid the groundwork for inflationary policies, Keynes himself regarded them as supporting a monetary policy that would stabilize consumers’ prices.

Let the Market Do Its Thing

For anyone familiar with Hayek, it will not be surprising to learn that he believed that prices are an organic product of the market. Since Hayek believed that the market was capable of operating without constant government supervision, he thought it was unwise to give the government the power to determine prices.

Instead, he believed that prices were a response to market demand. If an item was proving itself to be of value to willing consumers, that demand would provide a basis for entrepreneurs to structure pricing. 

To explain this in more technical economic terms, Selgin explains that Hayek, “believed that the general level of output prices should be allowed to vary in response to changes in factor productivity, falling in response to both anticipated and unanticipated improvements in productivity, and rising in response to any productivity setback.”

Until demand dies down, and consumers are demonstrating their unwillingness to pay a certain price for an item or service, there was no reason to reduce prices. If, on the other hand, demand continues to climb, entrepreneurs and business owners may decide to raise the price of a good or service since it is proportional to the demand. Keynes would have never trusted the market enough to believe that prices could be set and stabilized through demand.

 

Preface: Why I Chose to Live-Blog The Road to Serfdom

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There can be no denying the important role that F.A. Hayek’s The Road to Serfdom has played on the study of free market economics. And while the book is responsible for swaying public opinion and presenting an alternative to centrally planned economies, the book was written in such a way that may be hard for many modern readers to comprehend. And many suspect that Hayek may have actually intended the book to be this way.

This is precisely why I decided to take it on as a liveblog challenge: I believed it was extremely important to present a modern, millennial approach to a book with a timeless message.

During the course of my undergrad career, I took several classes that presented a similar viewpoint of the world. As with most institutions of higher education, my campuses political science department was dominated by contemporary liberals and far-leftists convinced that collectivism was the only answer to the problems facing our country.

But in the midst of this leftists agenda, I managed to find one professor who challenged this viewpoint. And it was this professor who assigned the first Hayek reading that I was ever exposed to.

Reading passages from Hayek’s Constitution of Liberty, I was floored at how this point of view had never been presented in any of my previous courses. And while my professor spoke briefly of Hayek’s classic, The Road to Serfdom, it was never assigned to the class in its entirety.

I did not think much about Hayek again until I discovered the former Congressman from Texas, Ron Paul. When asked during an interview what young people should read in order to better understand free market economic principles, Paul listed The Road to Serfdom as essential reading.

And while I tried to complete the reading after this suggestion from the former congressman, I got swept up in the excitement of the 2012 elections and completely forgot that I had only made it three chapters into Hayek’s classic book.

As the 2016 elections came and went, I found myself once again in arguments with many leftist trying to condemn the free market in favor of socialist policies. As collectivism began running rampant on both sides of the political aisle, I realized it was time to tackle Hayek’s Road to Serfdom once and for all.

Do Not Give Into Collectivism

Each page of The Road to Serfdom is filled with Hayek’s wisdom. And while there are numerous themes that could be detected within the body of this book, Hayek’s real purpose is to warn against the abusive power of the collect.

Hayek is a staunch individualist. Any doubt of this can be remedied by reading his brilliant essay, “Individualism: True and False.” This unwavering belief in the importance of the individual is present throughout the Road to Serfdom and is viewed as the remedy for collectivism.

When I began liveblogging this book, the Charlottesville riot had just occurred. And while much was said about this event, what scared me the most was the collectivism present on both sides of the argument.

Whether supporting nationalism while yielding tiki torches or advocating for collective violence while carrying the communist flag, both crowds had given in to the dangerous groupthink.

This type of collectivism was particularly frustrating for Hayek.

In the wake of WWII, which saw horrific brutality committed at the hand of the collective, Hayek saw America heading in a similar direction. But the worst aspect of this trend was that collectivism had managed to rebrand itself in such a way that many people did not realize they were getting into bed with the same beast that created all the chaos in Europe.

Hayek wanted to use this book to warn the world that they were headed for disaster if they could not recognize that no matter what their preferred brand of collectivism may be, it would always lead to a loss of liberty for the individual.

How to Use This Series

This series is in no way a substitute for reading Hayek’s book, but it can serve as a modern guide. When writing each installment, I selected themes that were of particular interest to me. Usually, these themes were modern applications of Hayek’s lesson. In one installment, for example, I explain how Hayek warned about Obamacare long before its inception.

The book is filled with examples showing that Hayek’s warnings have already manifested themselves in our current political and economic climate. This is what makes The Road to Serfdom so timeless. As we drift further and further down this dangerous road, the book grows in importance.

But the most important lesson we can take away from The Road to Serfdom is that we are not doomed. Individuals are capable of altering our course at any time. The book is a call to action that asks readers to heed Hayek’s warnings and learn from history in order to ensure that the world does not become subject to complete state control and that the indivual is free to prosper. 

 

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