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books:constitution_of_liberty

The Constitution of Liberty

F. A. Hayek
Friedrich A. Hayek
ISBN 9780226320847

Wikipedia article

Evolutionary Justification of Freedom

He argues that the best policy is minimal interference in individual decision-making because this allows more things to be tried, increasing the rate of cultural evolution and economic growth. He gives little attention to the traditional idea that freedom is good because people like it, possibly because the resulting social and economic change cause pain also (see below.)

It does indeed seem plausible that the greater productivity growth in the US compared to Europe may be a consequence of greater economic freedom, though this is hard to disentangle from the effects of US entrepreneurial values such as social admiration for wealth and preference for business success as the path to status advancement.

Of course, we can accept this argument without agreeing on what is the minimal practical level of government interference in individual and corporate behavior. It has long been accepted by most economists that pollution and resource over-exploitation (tragedy of the commons) are forms of market failure, where a free market doesn't give the best results for all, and that government intervention is needed for pollution control, fisheries regulation, etc. In Luxury Fever, Frank argues that status striving also creates market failure, both causing individuals to spend money on the things that least improve their happiness, and also slowing economic growth due to insufficient saving.

We can also regard progress via cultural evolution and economic growth as a good thing without accepting that this must be subordinated to all other concerns such as the intrinsic human desires for fairness, security and stability.

Social Evolution and Happiness

Hayek correctly observes that a rising standard of living seems to have little cumulative effect on happiness—it is hard to say that we are better off now than at some time in the past. Instead, the happiness value of growth comes from the growth itself. We appreciate the positive change in our standard of living and we appreciate the expanding opportunities that come with social progress and economic growth.

Though progress consists in part in achieving things we have been striving for, this does not mean that we shall like all of its results or that all will be gainers. And since our wishes and aims are also subject to change in the course of the process, it is questionable whether the statement has a clear meaning that the new state of affairs that progress creates is a better one. Progress in the sense of the cumulative growth of knowledge and power over nature is a term that says little about whether the new state will give us more satisfaction than the old.

He goes on to make the fairly strong statement:

The question whether, if we had to stop at our present state of development, we would be in any significant sense be better off or happier than if we had stopped a hundred or a thousand years ago is probably unanswerable.

Happiness research suggests that if a time machine were invented, few would choose to sacrifice their current standard of living by moving to the past. If we forced them to do so, they would at first show a decline in happiness due to the loss of accustomed gratifications (and no doubt the stress of adjustment), but any that survived for a couple years would have their happiness rebound pretty much back to where it was. In other words, people are better off now, but not happier.

He goes on to say:

The answer, however, does not matter. What matters is that the successful striving for what at each moment seems attainable. It is not the fruits of past success but the living in and for the future in which human intelligence proves itself. Progress is movement for movement's sake, for it is in the process of learning, and in the effects of having learned something new, that man enjoys the gift of his intelligence.

In other words, it is human nature to set goals to improve our circumstances, to strive for them, and to value achieving them.

He also sees that social change forces change on individuals and causes unhappiness by disrupting established ways of life:

The changes to which […] people must submit are part of the cost of progress, and illustration of the fact that it is not only the mass of men but, strictly speaking, every human being is led by the growth of civilization into a path that is not of its own choosing.

He neglects to equate this to the undesirable “coercion”, but goes on to say:

If the majority were asked their opinion of all the changes involved in progress, they would probably want to prevent many of its necessary conditions and consequences and thus ultimately stop progress itself. And I have yet to learn of an instance when the deliberate vote of the majority (as distinguished from the decision of some governing elite) has decided on such sacrifices in the interest of a better future as is made by a free-market society. This does not mean, however, that the achievement of most things men actually want does not depend on the continuance of that progress which, if they could, the would probably stop by preventing the effects which do not meet with their immediate approval.

In other words it is best the masses in a democracy don't understand how things work! It is the responsibility of the enlightened elites to protect the fragile flower of economic growth from being suffocated by the desire of the masses to avoid change and loss. It appears that he feels it is o.k. for the elites to subject the masses to the predictable occurrence of unintended consequences because it is in their best interests, though they are too shortsighted to realize this.

He doesn't observe that if this suffering caused by change and disruption is extreme it could entirely negate the supposed advantages of progress, where his arguments ultimately rest on the assertion that overall happiness is greater when growth and change are higher. Happiness might be maximized at some intermediate rate of growth.

Value of Economic Inequality

The usual economic argument for the value of inequality is that the possibility of becoming rich motivates people to innovate, thus increasing productivity and benefiting all. He makes the interestingly different evolutionary argument that the value of the rich is that they have enough money to test out cutting-edge lifestyles. Innovations that are found desirable can then be further developed and their cost reduced, eventually trickling down to the masses.

Both of these things may be true, but they don't constitute proof that any progressive taxation or any aid to the poor or sick is undesirable. How much inequality is necessary to attain these benefits? This must be offset against the basic human desires for fairness and security.

Cultural Evolution

He explains clearly, though without concrete detail, the process of cultural evolution, with references going back to the 1700's of people who noted that laws and institutions accreted over time, and that things that in the end work out well were done for reasons that now seem arbitrary or confused. Some even argued that not only do we not typically understand why laws are good at the time we create them, but also that we should be happy to follow laws that don't make any sense, secure in the knowledge that they serve us well (because they have endured.)

The term evolution was used, but as this was before Darwin, this only meant some unspecified unfolding through time. There didn't seem to be a clear concept of natural selection in the sense that Hayek advocates, that ideas, values and goals rise or fall together with the success of the groups that hold to those ideas, values and goals:

Which individuals and which groups succeed and continue to exist depends as much on the goals that they pursue, [and] the values that govern their action, as on the tools and capacities at their command. Whether a group will prosper or be extinguished depends as much on the ethical code it obeys, or the ideals it has learned or not learned to satisfy its material needs. Within any given society, particular groups may rise or decline according to the ends they pursue and the standard of conduct that they observe. And the ends of the successful group will tend to become the ends of all the members of the society.

In other words, that cultural variants (see Cultural Evolution) succeed not primarily because the majority see the wisdom of the ideas, but because the majority see that a group practicing this cultural variant is successful, so Prestige Bias and then Conformity Bias strongly lead people to adopt it.

Why I am not a Conservative

This postscript fairly clearly differentiates Hayek's views from contemporary American conservatism, and is a valid criticism of it, whatever your political views. Hayek fits fairly well into the libertarian camp. At that time (pretty much the height of the cold war and European socialism), Hayek felt more comfortable with American conservatives than liberals because the US had a tradition of political and economic freedom, and that was one of the things that conservatives were implicitly conserving. The situation is not so clear now when concern for civil liberties and government interference in our private lives is now seen as very much a liberal issue. Also, with the collapse of the USSR and the switch to a market economy in China, Marxism has lost most of its credibility as a political philosophy, so liberals are now more accepting of the market economy than they were then. The fact remains that there is no widespread understanding of cultural evolution via natural selection so it doesn't significantly influence contemporary political thinking

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books/constitution_of_liberty.txt · Last modified: 2012/01/21 18:51 by ram