Sunday, January 23, 2011

Hayek in UCD

A recent edition of EconTalk featured an interview with Bruce Caldwell about Hayek. Well worth a listen. One of Hayek's papers discussed in the interview is Individualism: True and False - which subsequently became Chapter 1 of Hayek's book Individualism and Economic Order (you can download the pdf here).

What I hadn't realised, until I read it last week, was that Individualism: True and False was delivered by Hayek as the twelfth Finlay Lecture in University College, Dublin, on December 17, 1945. Keynes had previously delivered the first Finlay Lecture in April 1933. Caldwell suggests in a footnote to his biography of Hayek that the title of Hayek's lecture in UCD was likely a 'play' on Oscar Wilde's essay on socialism. As a gesture to his Irish audience perhaps.

But Hayek's paper addresses themes relevant far beyond Ireland. And indeed, themes still relevant to us in 2011. He was ahead of his time in relation to the present day interest of behavioural economists in 'choice architecture':
The chief concern of the great individualist writers was indeed to find a set of institutions by which man could be induced, by his own choice and from the motives which determined his ordinary conduct, to contribute as much as possible to the need of all others; and their discovery was that the system of private property did provide such inducements to a much greater extent than had yet been understood.
Though he would probably not have been too enamoured with the claimed originality of behavoural economics, given his view that:
For all practical purposes we can still learn more about the behavior of men from The Wealth of Nations than from most of the more pretentious modern treatises on "social psychology."
Hayek postulates an interesting relationship between religion and economics in his lecture:
To the accepted Christian tradition that man must be free to follow his conscience in moral matters if his actions are to be of any merit, the economists added the further argument that he should be free to make full use of knowledge and skill, that he must be allowed to be guided by his concern for the particular things of which knows and for which he cares, if he is to make as great a contribution to the common purposes of society as he is capable of making.
A recurring theme in his paper was that of the distribution of knowledge - and the inability of a small group of men to ever know enough in order to generally dictate the behaviour of all other men:
The fundamental assumption, here as elsewhere, is the unlimited variety of human gifts and skills and the consequent ignorance of any single individual of most of what is known to all the other members of society taken together. Or, to put this fundamental contention differently, human Reason, with a capital R, does not exist in the singular, as given or available to any particular person, as the rationalist approach seems to assume, but must be conceived as an interpersonal process in which anyone's contribution is tested and corrected by others. This argument does not assume that all men are equal in their natural endowments and capacities but only that no man is qualified to pass final judgment on the capacities which another possesses or is to be allowed to exercise.
In light of this classically Hayekian insight into the limits to human reason and knowledge, he sets forward a profound argument in the defence of liberty:
From the awareness of the limitations of individual knowledge and from the fact that no person or small group of persons can know all that is known to somebody, individualism also derives its main practical conclusion: its demand for a strict limitation of all coercive or exclusive power. Its opposition, however, is directed only against the use of coercion to bring about organization or association, and not against association as such. Far from being opposed to voluntary association, the case of the individualist rests, on the contrary, on the contention that much of what in the opinion of many can be brought about only by conscious direction, can be better achieved by the voluntary and spontaneous collaboration of individuals. The consistent individualist ought therefore to be an enthusiast for voluntary collaboration- wherever and whenever it does not degenerate into coercion of others or lead to the assumption of exclusive powers.
Hayek was not, however, advocating the 21st century concept of individualism as, essentially, libertinism. In fact, his case for individualism leads to the conclusion:
That true individualism affirms the value of the family and all the common efforts of the small community and group, that it believes in local autonomy and voluntary associations, and that indeed its case rests largely on the contention that much for which the coercive action of the state is usually invoked can be done better by voluntary collaboration need not be stressed further. There can be no greater contrast to this than the false individualism which wants to dissolve all these smaller groups into atoms which have no cohesion other than the coercive rules imposed by the state, and which tries to make all social ties prescriptive, instead of using the state mainly as a protection of the individual against the arrogation of coercive powers by the smaller groups.
And finally, Hayek warned his Irish audience about the danger of dismissing 'irrational' morality and social conventions as obstacles in the way of a more 'efficient' social order:
The belief that only a synthetic system of morals, an artificial language, or even an artificial society can be justified in an age of science, as well as the increasing unwillingness to bow before any moral rules whose utility is not rationally demonstrated, or to conform with conventions whose rationale is not known, are all manifestations of the same basic view which wants all social activity to be recognizably part of a single coherent plan. They are the results of that same rationalistic "individualism" which wants to see in everything the product of conscious individual reason. They are certainly not, however, a result of true individualism and may even make the working of a free and truly individualistic system difficult or impossible. Indeed, the great lesson which the individualist philosophy teaches us on this score is that, while it may not be difficult to destroy the spontaneous formations which are the indispensable bases of a free civilization, it may be beyond our power deliberately to reconstruct such a civilization once these foundations are destroyed.

Hayek's lecture in UCD is not, alas, available on the UCD website. But if there is a present day heir to Hayek in UCD - the philosopher not the economist - then that is undoubtedly Professor Gerard Casey. His advocacy of libertarian and Austrian philosophical thinking is unique in Ireland. There's a useful summary of his thinking here, and an interview with him about the current situation in Ireland here.

I find it reassuring that the values of individualism and liberty espoused by Hayek in Dublin on that winter's evening over 65 years ago should have a champion now ensconced on campus in UCD.


  1. I'm sure the time will come around again when the Austrian way of emphasising the behaviour and decision of individuals and of defining exchange value of money with respect to individual commodities rather than with respect to price level of one kind or another, will be what we most need to try and maintain economic equilibrium.

    But you should have spoken up during the boom. This was the opportune time for the emphasis you're calling for. Too late now, you missed your chance.

    Calling for it NOW, (at a time when we really need to inject new money (not debt based btw) to try and bring the system back into equilibrium), is essentially calling for positive feedback that will wildly exacerbate the current dynamic.

  2. Very interesting. I wonder is there a way to bring Hayek's views to a wider audience in Ireland?


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