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September 24, 2005
I find this Hayek quote, which I found on a Brian Tamanaha post over at Balkinization, interesting because it reminded me of the wooden insistance by some market liberals in Australia on the principle of laissez faire.
The fundamental principle that in the ordering of our affairs we should make as much use as possible of the spontaneous forces of society, and resort as little as possible to coercion, is capable of an infinite variety of applications. There is, in particular, all the difference between deliberately creating a system within which competition will work as beneficially as possible and passively accepting institutions as they are. Probably nothing has done so much to harm the liberal cause as the wooden insistence of some [conservatives] on certain rough rules of thumb, above all the principle of laissez faire.
The quote is from Hayek's classic polemical text Road To Serfdom, where he basically argued that central planning is by it's very nature inefficient, that only a free market allows for the exchange of information that can provide efficiency and that central planning inevitably leads to totalitarianism.
I would insist on using 'market liberal' here, as 'conservative' is just the wrong word, as Hayek is probably the most important liberal political economist in the 20th century. In his work economcis, law and politcs overlap around the problematic of coordination. That is what makes him a significiant figure as he explores the way that the coordination of economic activity takes place within institutional legal and political framework.
Brian quotes Hayek, again, and this highlights the classical liberal position on the limited and legimate role of govenment in capitalist modernity:
There can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody...
Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance...the case for the state's helping to organize a comprehensive system of social insurance is very strong....
To the same category belongs also the increase of security through the state's rendering assistance to the victims of such "acts of God" as earthquakes and floods. Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make provision for the consequences, such communal action should undoubtedly be taken.
Hayek's key idea is that of a spontaneous order" ----the idea that a harmonious, evolving order arises from the interaction of a decentralized, heterogeneous group of self-seeking agents with limited knowledge. This order was not "designed," nor could it be "designed" by a social planner. It has "emerged", or evolved spontaneously, from a seemingly complex network of interactiosn among agents with limited knowledge.
However, Hayek rejected the view that capitalism is a form of Social Darwinism, as he argued that a coherent and impartial legal system is required in order to make free markets function effectively:
It is important not to confuse opposition against...planning with a dogmatic laissez faire attitude. The liberal argument is in favor of making the best possible use of the forces of competition as a means of co-ordinating human efforts, not an argument for leaving things just as they are. It is based on the conviction that, where effective competition can be created, it is a better way of guiding individual efforts than any other. It does not deny, but even emphasizes, that, in order that competition should work beneficially, a carefully thought-out legal framework is required and that neither the existing nor the past legal rules are free from grave defects.
What we are not getting in Australia from the Howard Government's telecommunications and media reform is a carefully thought-out legal framework that would allow effective competition. The rules of the game are being written for the big end of town that uses its market power to prevent competition.
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