Von Mises vs. Hayek

Week of Vexing Individuals: Day Seven — Not Conservative?

From January 25-31, I’ve looked at individuals who somehow complicate our ideas about property rights or capitalism — in alphabetical order.

Libertarian economists Ludwig von Mises and Friedrich Hayek (the latter a Nobelist) may seem interchangeable to foes of the free market, but there are important differences. Mises was more of a rationalist, more narrowly focused on economics, and more inclined to think that even if all of the decentralized, far-flung empirical facts about the economy could somehow be aggregated by the government’s central planners, any resulting prices the government decreed would be “meaningless” — would in some sense not even be prices. That’s because the central planners would still have no magical, telepathic way of aggregating or even measuring individuals’ preferences in the absence of an already-free market that revealed the relative strengths of those preferences.

This is why the Soviet economic planning bureau, rather embarrassingly, could fulminate all it wanted to about being more economically rational than the market but had to use Western shopping catalogues as a rough guide to setting prices. You simply don’t know how much the public — let alone specific individuals, let alone the same individual at different times — wants a ham relative to a hammer relative to a ham radio. Every government intervention in the economy distorts the price system and does harm, obscuring this crucial information. Mises was not technically an anarchist, but he was thoroughly laissez-faire, and his economic arguments lead logically to libertarianism.

Yet it’s Hayek — the relative moderate who wrote a chapter about “Why I Am Not a Conservative” — who is the most philosophically interesting. Not because his policy recommendations are any sounder than Mises — they are sometimes mushy and moderate, accepting of government emergency measures at the margins — but because his thinking went beyond econ to encompass and help explain civilization as a whole, and in a way that I think still holds out hope of unifying left, right, moderate, and libertarian someday. He is (in some sense) not a conservative because he recognizes that tradition changes and evolves over time, as do economies and law codes. In all three, there is an ongoing weeding-out process (when they are working well) that retains things that work well and discards the things that do not.

If economies, law codes, and tradition are valuable at all, it is precisely because of this weeding out, and we should be very nervous not only when people claim that tradition was perfect from the beginning and should never change but when anti-market activists and politicians claim that the harsh corrective of the market should never weed out failing, badly-run firms.

If that sounds like Social Darwinism — a blend of the progressive traditionalism of Edmund Burke and the laissez-faire attitude of the much-maligned Herbert Spencer — then it’s time to reconsider Social Darwinism’s good points. Even the vilified Spencer never wanted a world where the strong crush the weak but rather the gradual weeding out and discarding of violent as well as inefficient practices and thus continual improvement (and greater peace) in civilization over time.

Hayek, more so than Mises, introduces the important (and realistic, you might say) element of time to our picture of econ and of morality itself. You might say that compared to the “3D” thinking I described in the first Week of Vexing Individuals entry on Sunday, Hayek offers much-needed 4D thinking. Not just a static set of rules or even an occasionally-reconsidered set of rules but a picture of the human race continually getting better at everything it does. That’s the world we all want to live in.

The analogue in biology — though biological change lacks direction, teleology, or conscious purpose, I must stress — is natural selection, so this entry forms a good segue from this “Month of Liberty (i.e., Property)” to my February “Month of Evolution,” which begins tomorrow. Onward and upward.

AND NOTE: February also brings our Thur., Feb. 19 debate — for which I still need a “no” debater — on the question “Has the Right Hit Bottom Yet?” (though it appears Ken Silber will argue “yes” and Heather Wilhelm will offer some comments from the political-activist field). If you think the right is still headed to even greater humiliation, defeat, and marginalization, we want to hear from you at a bar on the Lower East Side in three weeks. E-mail me.