Freidrich Hayek's Impact on our Understanding of the Information Society - Essay Example

What might Friedrich Hayek bring to our understanding of the Information Society? In an era when academics are narrow specialists, scarcely venturing outside the narrow confines of a sub-section of their own subjects let alone mastering other disciplines, the breadth and range of Friedrich von Hayeks work is remarkable. Although originally a pure economic theorist (he was awarded the Nobel Prize for Economic Science in 1974), he has mastered several other equally daunting subjects: epistemology and philosophy, jurisprudence, the methodology of science, political theory and ethics, the history of ideas and theoretical psychology. Whatever differences there are between Hayek and, say, John Stuart Mill in substantive political philosophy (and there are many) the structures of their ideas display similar architectonic qualities. In fact, Hayek has suggested that an economist who knows only economics is more likely to be a hindrance than a help in the understanding of social phenomena (Kenneth Minogue 2000). Yet Hayeks career has not been entirely that of the dry, detached scholar; he was involved in some of the most important intellectual and policy debates of the twentieth century. In the 1930s he was engaged in an important controversy with Keynes over monetary theory and the limitations of governments anti-depression policy in 1944 Hayek achieved some notoriety with his The Road to Serfdom, and its grim prognosis that totalitarianism and the destruction of freedom were the likely consequences of even mild interferences with liberty under the rule of law; during the period of the social democratic consensus which ruled post-war Western democracies, he elaborated and modified his philosophy of classical liberalism with a stream of learned treatises and articles which eventually found favor with Western political leaders, including Mrs. Thatcher: if the world is ruled by ideas, which Hayek believed was the case (as did Keynes) then Western society may be about to be engulfed by a tide of Hayekian ideas just as it was once swamped by Keynesianism. Though one suspects that they are likely to find a more favorable reception in former communist regimes than in the West. This change of environment marks a redirection of Hayeks research activities. He increasingly started devoting himself to the philosophy of science and to problems of social and political philosophy. The first major result of this is The Road to Serfdom, which was published in 1944. Hayeks own account as to whether his reorientation was the result of a conscious decision, or that he more or less drifted into these fields spontaneously are somewhat contradictoryn (Hayek 1944). Despite the diversity of Hayeks intellectual endeavors, they are united by their concentration on one big idea: the explanation of that spontaneous order of events called, misleadingly, society, or more accurately, the extended order, and the scientific investigation of its aspects-economic, legal, political and moral. It is only through an understanding of the complexity of these interrelated phenomena can we expect our normative conclusions, our recommendations for public policy, to have any permanent hold on our intellects. Thus, although Hayek is publicly associated with the defence of the market, private property, the rule of law and the minimum state, this is not mere ideology, or even justified in straightforward utilitarian terms (as it is with Milton Friedman) but is deeply embedded in a philosophy of man. However, this philosophy was fully articulated after Hayeks economic and social views had become widely known. So the task is to reconstruct Hayeks thought by, in a sense, working backwards from the epistemology and philosophy to the more familiar policy statements (Hayek, 1949). A proper understanding of the Hayekian project of restating the conditions for the emergence and maintenance of the liberal order must take account of a number of important criticisms that have been made of his political philosophy and his justification of it. Such a consideration is necessary not only for the purposes of scholarship but also for the continued intellectual replenishment of the liberal tradition. At the foundational level of Hayeks critical philosophy is a complex and subtle appreciation of the roles of reason and tradition in human affairs. Since Descartes the Western intellectual tradition has presented a false dichotomy between reason and tradition; as if a rejection of the idea that an active human reason capable of determining the course of events and restructuring the world according to abstract principles irrespective of experience meant that mans behavior was governed by mere instincts, that our critical faculties are powerless. On the contrary our reason is itself dependent on tradition and the development of mind is an evolutionary process, just as social and economic institutions themselves must be so understood. Indeed, in Hayeks view, freedom itself necessitates a willingness to submit to traditional rules so long as one has no definite reason to the contrary (Hayek, 1949). The following of a tradition is contrasted with obedience to the personalized orders of a political superior. This argument has been expressed more forcibly in later writings where the following of traditional rules and practices is specifically linked to progress: Tradition is not something constant but the product of a process guided not by reason but success. Further, the fragility and limitations of the human mind imply that all progress must be based on tradition. The 1945 article The Use of Knowledge in Society elaborates his earlier epistemological arguments against socialist planning (Hayek 1945). In this synthesis of his thoughts on socialism over the past half-century he integrates his earlier critiques of socialism, scientism and constructivist rationalism with his epistemology and later theories on the benevolence of spontaneous institutions (especially the competitive market) and the growth of civilization through their selective evolution. Hayek’s original contributions to the debate therefore consist of two books and five articles. This is more than any other participant wrote on the subject, even when judged merely quantitatively. It may be said that he shaped the course of the socialist calculation debate to a large extent, both by the nature of his arguments and by the responses of his opponents. Had he, for instance, not brought forward the computation argument against the general-equilibrium models, the models of market socialism might not have been constructed and the controversy would have taken a different course. In The Road to Serfdom nine years later he supplied the theoretical basis for his conviction that there is no single scale of values (in terms of modern welfare theory: a non-cyclical social welfare function) valid for all individuals. Scales of values can only exist in the individual minds. Only individual scales of values exist, and they are different and often conflicting. Therefore each individual should be allowed to pursue his own preferences and not be dictated to by anyone else (Hayek 1944:60). It does not mean that social ends do not exist, but that these are merely the coinciding ends of many individuals. Only in the case when there is voluntary agreement on ends may the state direct economic activities. State control is bound to suppress individual freedom when there is no such agreement (Hayek 1944:60). It takes a dictatorship to make national central planning possible, because that is the most efficient instrument for the enforcement of collective ideals (Hayek 1944:70). However, when planners suppress the values of the individuals, they are likely to substitute their own in their stead (Hayek 1944:65). He concludes that socialism is bound to become totalitarian. When considering its political implications, this point of the uniform scale of values turns into criticism 4 listed above, the authoritarian nature of socialism. Hayek returns to this question in his AEA paper The Use of Knowledge in Society (1945). (In between these two dates he repeats his concept of equilibrium in The Pure Theory of Capital. But here he fails to see the fundamental conflict between the view that spontaneous actions of individuals do bring about beneficial results and the persistence of cyclical fluctuations in an economy. This is a paper which brings together the concerns from the planning debate and the 1937 paper. After an introduction as to the nature of the economic problem-that is, not what the Walrasian theory addresses but the problem of utilization of knowledge which is not given to anyone in its totality-he goes on to summarize the planning debate. This leads him to pose the relative merits of planning versus the market as follows: “Which of these systems is likely to be more efficient depends mainly on the question under which of them we can expect that fuller use will be made of the existing knowledge. This, in turn, depends on whether we are more likely to succeed in putting at the disposal of a single central authority all the knowledge which ought to be used but which is initially dispersed among many different individuals, or in conveying to the individuals such additional knowledge as they need in order to enable them to dovetail their plans with those of others” (Hayek 1945:79). Thus, instead of the hubristic rationalist model of society in which mind is deemed capable of restructuring the social world according to principles of its own making (constructivist rationalism), Hayek has attempted to restate that scepticism associated with David Hume and the Scottish Enlightenment. In this, the rejection of rationalism does not imply irrationalism, or blind faith, but entails the proposition that the proper use of reason is to whittle down the claims of reason. This philosophy is concretized in Hayeks, ultimately epistemological, objection to the presumptions of the economic planner: for the ideal of a rational organization of an economy does presuppose that the human mind can construct some measure of efficiency and, furthermore, that it can have access to that dispersed knowledge which is required to make the realization of that ideal possible. Yet, as Hayek has been at pains to show, economic knowledge (i.e. information about prices, costs, the state of technology, consumer preferences, and so on) does not exist in a centralized form precisely because a human society is inhabited by acting, choosing individuals who face a world of uncertainty. For reason to be of use in the evaluation of social affairs it must be a critical reason and informed by that limited knowledge which we have of social and economic processes. The fundamental difference between social science and physical science, which Hayek has constantly stressed, is that knowledge of the latter is objective and measurable; it is knowledge of stable, replicable systems. The former is subjective, and relates to the actions of decentralized agents. Thus the social scientist is limited to a reconstruction of the general features of social systems and his predictions are confined to the formation of patterned phenomena, such as the price system itself and not the particular movement of its parts. Such orders are logically reconstructed out of the actions of individuals. This doctrine of methodological individualism is to be contrasted with conceptual realism, the theory that aggregative concepts, such as class and state can be given an existence independently of human agents. Hayek is more explicit about scientific knowledge so called, the preserve of experts, but the knowledge of the particular circumstances of time and place. Each person has unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation (Hayek 1945: 80). Thus fragments of knowledge are here like named units of commodities in direct contrast to the assumption of homogeneity of all units of a commodity in the competitive equilibrium story. This knowledge fragment is usable but only in a fixed coefficient technology with the individual concerned. It cannot be alienated from him without his active co-operation. Only the individual can translate it in an alienable/exchangeable commodity/service. Indeed, the method by which such knowledge can be made as widely available as possible is precisely the problem to which we have found an answer (Hayek 1945: 81). The method is of course decentralization: We need decentralization because only thus can we insure that the knowledge of the particular circumstances of time and place will be promptly used (Hayek 1945: 84). That much is clear; indeed, it is implicit in the notion of knowledge as a named commodity which cannot be alienated from the named individual without his active co-operation. There is, however, a difference between the autarky of totally isolated independent and self-sufficient islands and a decentralized economic system. This is where the additional knowledge comes in: But the man on the spot cannot decide solely on the basis of his limited but intimate knowledge of the facts of his immediate surroundings. There still remains the problem of communicating to him such further information as he needs to fit his decisions into the whole pattern of changes of the larger economic system. (Hayek 1945: 84) In a sense, in the 1945 paper Hayek abandons the tough quest for a solution of the problem of equilibrium and substitutes a vision, highly suggestive but a vision rather than an analytical solution. The paper becomes a panegyric to the price system as a mechanism for communicating information...a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials in order to adjust their activities to changes of which they may never know more than is reflected in the price movement. (Hayek 1945:86-7) Work Cited Hayek (1944) The Road to Serfdom, Routledge & Kegan Paul 1976. Hayek 1945) The Use of Knowledge in Society, in F.A. Hayek, Individualism and Economic Order, London: Routledge & Kegan Paul, 1949, Ch. 4. Hayek (1949) Individualism and Economic Order, London: Routledge & Kegan Paul. Kenneth Minogue (2000), The escape from serfdom, Times Literary Supplement, January 14, pp. 11-13 Read More