Interesting. I thought I should try to read Hayek someday, and you may have convinced me.

Are you familiar with the left-libertarianism of Phillippe van Parijs? Do you think that Hayek would be comfortable with this?

Actually, the whole Austrian school, though fundamentally wrong about economics, is wrong in interesting ways, starting with Boehme-Bawerk, whose "time-theory of production" abutted on what later were to be called macro-economic issues.

They all emphasised that economics is a matter of human activity, rather than imagining it could be reduced to automated equilibriating mechanisms in the manner of physics, they emphasized that markets frustrate most human purposes amongst participants rather than optimalize satisfactions and that market outcomes are entirely adventitious with respect to social justice, and they conceptualized markets in terms of aggregating and transmitting information rather than just optimalizing prices and quantities in terms of stable nominal prices, even if they fanatically misunderstood business cycles in terms of the need to squeeze out misallocated investment rather than in terms of the need to protect sound investments from the chained effects of liquidating bad investments.

Even "The Road to Serfdom" could be viewed less as a triumphant vindication of "free" markets as bastions of liberty than a valid argument about the impossibility of centrally planning an economy as a whole due to the necessary dispersion and inaccessibility of information, knowledge and know-how, that is, an argument in terms of (decentralized) epistemic possibility rather than optimal efficiency, even if it utterly failed to take into account the social and public externalities of markets and their different structures and possibilities of failure, in the name of their supremacy as a search mechanism.

But to me the most interesting thing about Hayek is the distant affinity of his conception of "spontaneous orders" and their necessary dispersion and Wittgenstein's later conception of "forms of life" with their tacit interweavings and subtle cross-dependencies. Something of the same Viennese accent?

Brian,
Hayek is well worth reading especially Hayek as the critical constitutional liberal who understands the necessity for a constitution for liberty to preserve individual freedom.

What Hayek grapples with is the idea of constitutionalism---that the powers of government should be exercised within strict limits---and the idea of modern democracy--that the will of the majority on any given issue should prevail.

It is on this faultline that Hayek the liberal, defending the delicate relationships of the market order and individual freedom from the coercive powers of the state, shifts to a conservative placing institutional limits around popular sovereignty in order to safeguard the market order and the development of a liberal civilization.

John,
I agree. Though the Austrian economic school is subjectivist in terms of value they made the shift to thinking of the market as a form of life in evolutionary and historical terms. They are such a welcome contrast to the mathematical orientated, model building neo-classical economics, which now dominates the economics profession. He also has no time for social contracts and states of nature associated with what he calls constructivist rationalism.

It's a conception of the market as an institutionalized way of life--freedom is an artefact of civilization---that I am comfortable with, even if the evolutionary bit is not that dialecticial. Tis more progress as an unfolding of human powers,higher forms of social and human existence, and the emergence of a more differentitated society.

I agree about significance of the form of life (as a grown spontaneous order); it is an ethical form of life as well.

Brian,
I don't really know enough about the left libertarianism of Phillippe van Parijs.I reall reading one of his books in the 1990s about unemployment and guaranteed income but I have read nothing since.

I would suspect that the faultline between the two would be the conception of reason. Phillippe van Parijs would be seen as a constructivist rationalist who reackoned that human societies can be mastered by human beings and modelled according to rational criteria or blueprint.

Hayek holds to the conservative view that human society is an enterprise that no individual or group can hope to fully understand, still less shape and direct. His is a limits of reason position.

A couple of other points about the Austrian school. It seems to me that their conservatism was rooted in an extreme more-than-Humean version of moral skepticism: that a very odd form of conservatism and an even odder notion of "legitimation". On the other hand, Austria, whether in the Hapsburg or rump version, was one of the most bureaucratized, hierarchical societies imaginable: their Anglophilic enthusiasm for "free" markets and entrepreneurship amounted to a kind of utopianism.

John,
yeah Hume was one of the good guys for Hayek.He quotes Hume on the 3 key rules that make the Great Society of the market order: stability of possession,(retitled as freedom of contract) transference of consent (retitled as inviolability of property) and the fulfilment of promises ( retitled as the duty to compensate another for dammages).If these are maintained then the market order will be just.

There is a sharp edge to this.The market order is a lottery--- a catallaxy---and hence there is no substantive social justice. Market order justice must be procedural--submitting to the rules which make the formation of the market order possible.

What of the inevitable casualities? Hayek tempers the harshness to acknowledge that the state ought to provide a floor level of resources below which no indivdual should fall, That is not the welfare state--it is vouchers.

Gary:

I'd wanted to bring out some of the strangeness of the Austrian school. Perhaps not so much with Hayek, who was the most Anglicized of the bunch, but you can find plenty of utterances among them referencing the necessity for hierarchy in the midst of expounding on the absolute value of individual freedom. There is an undertow of a peculiarly Austrian brand of deeply skeptical arch-conservatism, presumably with aristocratic, customary-feudal and Catholic apolegetic roots, that forms a counter-pole to the quasi-utopian enthusiasm for "free" markets, which is lost on the libertarian enthusiasm of their Anglo-Saxon adherents, for all that a latently disciplinary motive underlies right-libertarianism.

But as for "catallaxy", one of the prime fallacies of neo-classical economics is that markets are the prime, if not sole, source of efficiency and always optimalize it. In fact, the standard 101 textbook distinguishes between economic (or allocative) efficiency and technical efficiency, and rules the latter out of consideration, as exogenous and not a part of the subject matter. But, in fact, it's primarily technical improvements in production processes that raise the level of productivity, "capital deepening", that are the source of increases in real wealth, "economic growth", which are then redistributed through market mechanisms as the reallocation of productive resources. Then again, the price mechanism is not the sole determinant of optimal allocations, for behind the long-run relativities of supply and demand lie the costs of production.

The interesting thing about the Austrian epistemic, decentralized information-aggregation argument for market mechanisms is that it does not necessarily claim that markets optimalize efficiencies; rather they reduce inefficiencies by reducing the size, scope and duration of errors. And that is, indeed, the strongest argument for the functional virtues of markets and their retention. (It is also potentially a more general principle beyond its application to economics.)

But it doesn't follow that price mechanisms must never be interfered with all the way through to their long-run distributive consequences, lest the discovery function of price-signals be ruined. In fact, insofar as market outcomes and their recurrent distributive consequences contain a large amount of contingency, "luck", alongside any factors of diligence/intelligence, then there is no long-run reason why those recurrently favored by market distributions, the fortunate ones, would necessarily make better allocative investment decisions, ceteris paribus, than the others. In fact, the probability of successful decisions would be redistributed with each round, such that reversion to the mean would imply that those with large fortunes would likely make poorer decisions, ceteris paribus, than random others.

In other words, the epistemic decentralization/reduction of inefficiency argument could be used to underwrite social democratic policies of redistribution and social insurance, precisely on the grounds of improving the efficiencies of allocations, reducing the scope of errors, and increasing the probability of innovation. Hayek's argument for the sacrosanct nature of price signals as the supreme discovery mechanism, else all falls into ruin, depends on the projection of a kind of "bad infinity", whereby prices are the sole determinant of the distribution of productive resources and social knowledges, ignoring the multi-lateral and recurrent observations that go into social learning curves, as well as, the effects of concentrations of wealth on distorting the composition of social output.

The irony is that he sees price signals as necessary to the undoing of misallocated investment, without which there can only be a catastrophic accumulation of inefficiencies, when, by his own argument, the distributive outcomes of market processes would precisely lead a tendency toward misallocated investment.