PhD_05

 

Chapter 5: Friedrich Hayek: a Panglossian evolutionary theorist

 

Links to the other chapters:

 

Title page, dedication, contents, key words, abstract and acknowledgements

Chapter 1: Introduction: Holism versus reductionism in economic thought

Chapter 2: the Prisoners' Dilemma

Chapter 3: Arrow's Impossibility Theorem

Chapter 4: The Invisible Hand of God in Adam Smith

Chapter 5: Friedrich Hayek: a Panglossian evolutionary theorist

Chapter 6: Keynes’s methodological standpoint and policy prescription

Chapter 7: Conclusion; glossary; and bibliography

 

 

 

 

Chapter 5        Friedrich Hayek: a Panglossian evolutionary theorist[1]

 

 

“[C]omplex phenomena ... can be made intelligible only by ... a cosmology, that is, a theory of their evolution.” (SIP: 76)

 

 

5.1       Introduction

 

Chapters 2 and 3 of this thesis looked at the mid- and late-twentieth century response of political economy to two anomalies which have been perceived as challenges to the invisible hand hypothesis: the prisoners’ dilemma and Arrow’s impossibility theorem.  In Chapter 4 attention returned to the roots of this tradition in the writings of the eighteenth century father of nineteenth and twentieth century economics, Adam Smith.  The question addressed there was, how Smith saw the articulation between individual behaviour at the micro level and social outcomes at the macro level.  The answer I gave is that the articulating mechanism consisted in the agency of a deity.  Our behaviours at the micro level were always just what was required for the optimal macro outcome because that invisible deity always led us by the hand, through the pursuit of an amalgam of our own interests, our own illusions and fears, and our own fellow feeling for others, to perform just those actions required to fulfil the divine plan.  This is what Smith meant by the ‘invisible hand’. 

 

The implication I drew is that invisible hand theorists of more recent times, such as Friedrich Hayek, to the extent that, as representatives of a secular age, they cannot rely on an interventionist god, need an alternative mode of articulation between levels.  The most frequently invoked alternative, in so far as an explicit alternative is presented at all, is some form of evolutionary mechanism.  This amounts to replacing one form of Panglossianism with another.  In replacing God with evolution we move from justifying the belief that ‘what is, is best’ by the claim that it was selected by God, to justifying it by the claim that it was selected by nature.  We remain within the Leibnizian paradigm, that this is the best of all possible worlds, only replacing the explanation that it was selected by God all at once with the explanation that it was selected by Nature over a long period of time.

 

The purpose of the present chapter, therefore, is to investigate the deployment by Hayek of an evolutionary mechanism to argue that spontaneous aggregate level outcomes of our activity are intrinsically superior to any outcome we could achieve by conscious intervention at the macro level. 

 

The thesis of the chapter will be that, whatever Hayek’s intention, his mode of procedure in fact distorts the Darwinian theory of evolution and falsifies the standpoint of Adam Smith.  This distortion and falsification then serve Hayek’s goal of underpinning a pre-established policy prescription.  He falsely claims that the Smithian economists can be described as ‘Darwinians before Darwin’, and that Darwin made his name simply by applying in the biological field the ideas that the Smithians had already established in social science.  He systematically downgrades Darwin’s contribution - apparently in order to render respectable a theory of social evolution which leads to laissez-faire conclusions.  A theme of the chapter will be the care with which we have to read Hayek.  Frequently we will find him saying one thing and doing another.  Statements about his standpoint cannot necessarily be taken at face value.  Two examples we will meet concern his supposedly individualist methodological stance, and contradictory statements as to the nature of the Darwinian theory of evolution. 

 

As with the chapter on Smith, an initial caveat is in order.  This chapter is in no way to be construed as an attempt to give an all-sided consideration of Hayek’s contribution.  On the contrary, the focus is on the specific concern of the research of which the chapter, and indeed the thesis, forms part: the question, that is, of how economic theorists have linked micro and macro levels, how these levels are coordinated or articulated.  Given, as I argued in the previous chapter, that in Adam Smith individual behaviours are pre-coordinated by the invisible hand of a wise and benevolent Providence, and further that the more secular twentieth century could not be expected to accept such an explanation, what alternative mechanism to the hand of God can be invoked by today’s advocates of the invisible hand?  With respect to Hayek, therefore, I am here concerned only with this one question: How viable is Hayek’s evolutionary articulating mechanism as an alternative to Smith’s invisible hand of God?  The thesis proposed here is that, Hayek’s theory is as Panglossian as Smith’s – indeed, the two are in many ways very similar[2] – and that his obsession with countering ‘socialism’ and planning leads him, in effect if not intent, to major factual and theoretical distortions.

 

5.2       Hayek and Smith

 

As we saw in the previous chapter, twentieth century Smithians have had trouble with Adam Smith’s reference to ‘an invisible hand’, at least in part because anyone who actually read Smith’s work (and not just WN in isolation) could see that what Smith was referring to was not an ‘analogy’, a ‘metaphor’, but quite literally the hand of God: an unpalatable notion in a relatively secular age.  Some instances of this anxiety about the phrase ‘the invisible hand’ on the part of modern claimants of the Smithian heritage were given in the last chapter. 

 

Hayek was one of those who made it clear that he regarded the phrase as unfortunate.  Smith, admittedly, had used the expression ‘the invisible hand’, but, according to Hayek, he had nevertheless also given an explanation of the phenomenon: ‘Adam Smith and the other great Scottish individualists of the eighteenth century – even though they spoke of the “invisible hand” – provided ... an explanation [of how the interaction of the efforts of individuals can create something greater than they know]’ (CRS: 392-393).  Unfortunately, the explanation that Hayek refers us to is for something different: he has illicitly changed the subject. 

 

The invisible hand - God’s Hand - was the mechanism in Smith which ensured the perfect reconciliation of unconstrained individual motives and behaviour both with each other and with the social interest of maximising human welfare.  Two strands can be discerned in this thought: spontaneous order and optimality.  The spontaneous order strand says that individual self-seeking behaviour, unconstrained by central authority, may result, not in chaos, but in orderly collective behaviour.  The optimality (efficiency, desirability) strand says that this order will be, in some sense, the best that we can get.  Clearly, these are very different propositions.  The spontaneity proposition is, I think, undeniable, while the far stronger optimality proposition is just false.  If Smith had confined himself to the former, that would have been unexceptionable - and there would have been no call for divine intervention, nothing for an invisible hand to do.  The consequences of individual action would just be the consequences: orderly but often sub-optimal collective behaviour.  No explanation of the transmutation of base passions into golden outcomes would be necessary as no such transmutation would be assumed to take place. 

 

Now the optimality proposition clearly encompasses the spontaneity proposition, and hence, when Smith attempts to sustain the former, he necessarily defends the latter.  The bulk of WN is concerned with this defence of the idea of a spontaneous order.  Optimality and the invisible hand are there but they tend to be implicit.  It is therefore unsurprising that economists, reading Smith through nineteenth and especially twentieth century spectacles, have misunderstood ‘the invisible hand’ as a figure of speech representing the spontaneous emergence of some order, rather than, what it is, an assertion of the optimality of that emergent order.  Hayek, however, has pretensions to be - more than merely a technical economist - an intellectual and a scholar.  He has written widely on the Smith-Hume-Ferguson-Burke tradition – the ‘antirationalist tradition’ (COL: 61) – from which he claims intellectual descent.  It is illegitimate for him to slur over the difference between spontaneity and optimality.  The question is, how Smith explains his ‘invisible hand’, and the answer simply: God.  Hayek, however, takes the question and immediately reduces it to the lesser, more innocuous question of the explanation of spontaneous order ‘how the interaction of the efforts of individuals can create something greater than they know’.  This might be relatively harmless, if Hayek then were satisfied with having supported the spontaneity proposition, but this is not what he does.  Throughout his writings, Hayek adopts the same procedure: firstly, focus attention on the spontaneous order, and then slide over to an assumption of its optimality. 

 

The ‘spontaneous order’ in Hayek thus has a dual function.  On the one hand, it is what it says it is, an account of the spontaneous emergence of orderly social behaviour in the absence of prior design and central direction of individual activity.  On the other, it has also to smuggle in the idea of optimality, to act as a secular replacement for Smith’s invisible hand of God.  It is clear that God has to be replaced in the story: the question is, with what?  Hayek’s answer is that the role of God in sustaining the optimality of the spontaneous order is to be played by evolution. 

 

“If, in the form in which Adam Smith put it, the phrase that man in society ‘constantly promotes ends which are no part of his intention’[3] has become the constant source of irritation of the scientistically minded, it describes nevertheless the central problem of the social sciences.  As it was put a hundred years after Smith by Carl Menger, who did more than any other writer to carry beyond Smith the elucidation of the meaning of this phrase, the question ‘how it is possible that institutions which serve the common welfare and are most important for its advancement can arise without a common will aiming at their creation’ is still ‘the significant, perhaps the most significant, problem of the social sciences.’[4]” (CRS: 146-147)

 

In this passage Hayek sets up the problem he is going to use a theory of evolution to solve.  That problem is how individuals pursuing their own goals fulfil social objectives about which the individuals neither know nor care.  This is the problem of the emergence of a spontaneous order.  But Hayek immediately identifies this with the problem of the emergence of institutions which ‘serve the common welfare’.  This is the optimality assumption.  This says that individuals fulfil social goals, and those goals are just the ones which serve the collective interests of the individuals in the society, the ‘common welfare’.  It is assumed by Hayek (and Menger) that this is so, the big question being not whether but how this comes about.  The answer will be ‘by means of evolution’. 

 

According to Haworth, Hayek’s main thesis, ‘the thesis of ‘spontaneous order’ ... is the most subtle, interesting and credible version of the invisible hand argument there is’  (Haworth, 1994: 114).  Hodgson, on the other hand, says that Hayek’s ‘conception of socioeconomic and cultural evolution is the centrepiece of his mature theory’ (Hodgson, 1993: 153).  These accounts seem to point in different directions, the one highlighting the ‘invisible hand’ aspect of Hayek’s thesis of spontaneous order, the other focusing attention on the evolutionary aspect.  In reality both are right, since the whole point of Hayek’s evolutionary theory of spontaneous order is to provide an invisible hand explanation of that order.  As we saw in the previous chapter, the deification of nature by the eighteenth century philosophers, including Smith, led - indeed, was intended to lead - to the sanctification of the particular model of human behaviour that they wished to hold up as natural.  In just the same way, the notion of evolution deployed by Hayek is intended, not to provide a scientific understanding of the social order, warts and all, which has emerged from a blind evolutionary process[5], but to present that order as something with which it is beyond our competence to interfere.  Flew gets the ideological, almost theological role of evolution exactly right in his discussion of Social Darwinism:

 

“many people are inclined to believe, that whatever is in any sense natural must be as such commendable, and that Nature is a deep repository of wisdom, [so] for many the process of evolution by natural selection becomes a secular surrogate for Divine Providence; and ... for some the possibility, or even the duty, of relying on this benign and mighty force presents itself as a decisive reason why positive social policies must be superfluous, and may be wrong - indeed almost blasphemous!” (Flew, 1967: 15)

 

‘Evolution’, in this context, is just the latest stage in the evolution of natural law. 

 

5.3       Holism and reductionism in Hayek

 

5.3.1    Shenfield on collectivism and holism in Hayek

 

It is a commonplace that the methodological standpoint of the Austrian school, including and, perhaps, especially Hayek, what they insist upon with a fundamentalist zeal which distinguishes them from their more pragmatic neoclassical cousins, is the reductionist principle of methodological individualism.  See, for example Garrison and Kirzner (1989: 121-122), and Hodgson (1993: 153-157).  With regard to Friedrich Hayek, this commonplace is false: ‘it may be that ‘Hayek is by no means the champion of methodological individualism that he claims to be,’ as Stephan Böhm (1989[6], p. 221) alleges.  He is more a systems thinker: one moreover with strong traces of functionalism’ (Hodgson, 1993: 157).

 

Hayek’s standpoint is a combination of methodological holism and policy individualism.  This is not to say that Hayek is entirely consistent or that it is impossible, with care, to pick out a methodological individualism in what he says.  On the contrary, perhaps even more than Smith, whose legacy he claims, Hayek seems to have taken literally the enormously arrogant dictum of Emerson, that ‘a foolish consistency is the hobgoblin of little minds’[7].  As we shall see, where the internal tensions of his standpoint, the stresses of combining holism and individualism in this way, prove too severe, consistency is the first casualty.

 

The profound intellectual disarray of the Austrian school on the question of holism and reductionism is shown by a remarkable passage in Shenfield (1977).  The context for this needs to be made explicit.  Machlup (1977a) is a book of Essays on Hayek, presented at a conference of the Mont Pelerin Society in 1975, devoted to the achievements of Friedrich Hayek.  The Mont Pelerin Society was set up by Hayek and presided over by him for 12 years, after which he became its honorary president.  Perhaps needless to say, the only hint of debate the book contains is on the level of ‘Where do Hayek’s greatest achievements lie?’ (Machlup, 1977b: 50).  Shenfield’s essay is billed as an ‘appraisal of Hayek’s innovative work on the methodology of the social sciences’. (Machlup, 1977a: front flap).  We may take it, therefore, that Shenfield’s pronouncements here have something of the nature of a quasi-official Austrian statement of Hayekian methodology[8].

 

The topic of Shenfield’s essay is Hayek’s critique of ‘scientism’[9], the allegedly inappropriate attempt to apply natural scientific methods in the social sciences.   He argues that scientism depends on an unholy trinity of objectivism, collectivism and historicism.  It is with the second of these that we are concerned.  Collectivism, he says, is the same thing as holism: ‘Collectivism (perhaps better called holism ... ) ... treats as wholes conventional constructs like “the economy” or groups like nations or classes, as if they were each invested with a single mind and acted accordingly’ (Shenfield, 1977: 68).

 

This confused formulation says at least three things.  Firstly it correctly recognises that holism, as its name suggests, attempts to grasp entities as a whole, rather than as a collection of parts, as a unity rather than a plurality.  Secondly, however, focusing on particular social entities such as the economy, it suggests that the referent is not in fact an entity but a ‘conventional construct’, and the implication is clearly that holism is a misleading way to see things.  Lastly, Shenfield suggests that holism ascribes rational behaviour (a ‘single mind’ which ‘acts accordingly’) to aggregate level social entities, ‘[p]artly,’ he writes, ‘collectivism is the result of the use of language for a system of relationships similar to that applied to living things’ (ibid) - the implication being that such attribution is fallacious.  This point is neither trivial nor superficial.  It is interesting that already an inconsistency has crept into Shenfield’s account: what only a few lines previously had been dismissed as a ‘conventional construct’ is now admitted to be ‘a system of relationships’.  And Hayekians are certainly ready to use language ‘similar to that applied to living things’ where it suits their purpose to do so:

 

“Our social institutions, customs and rules have ... grown in an evolutionary way, persisting where they prove useful and fading out where they are not.  The result is that society - like the physical structure of animals - has evolved to a point of much greater complexity than the human mind can understand, let alone attempt to redesign.”  (Butler, 1983: 7 - in ‘Foreword’ to KES)

 

There is a clear theoretical distinction between holistic accounts which view aggregate level entities as being, in some sense, ‘organic’, and those which regard them as organisms.  The latter implicitly ascribes aggregate entities a greater degree of autonomy.  This is both a bigger and a more specific claim.  Both views, however, tend to be labelled as ‘organicist’.  Keynes, for example, clearly adopted an organicist standpoint, in which organic links between individuals lead to macroscopic effects of individual actions (Carabelli, 1988).  Marx would undoubtedly have agreed, but went much further than Keynes, arguing that macro level entities, such as capital and the state, had the autonomy and self-interest of organisms: ‘It is a great step forward [for Hegel] to have seen that the political state is an organism and that, therefore, its various powers are no longer to be seen as [merely] organic’ (Marx 1843/1975: 66).  Hayek is clearly in the Marxist, rather than the Keynesian camp on this particular issue: ‘the state … ought to be only a small part of the much richer organism which we call “society”’ (IEO: 22). 

 

Shenfield’s treatment of organicism here neglects this distinction and consequently is too extreme: not all versions need see all social level entities as organisms, though, to be sure, some certainly do see some such entities in this light.  Adam Smith, for example, believed the world was an organism[10] with every part organically linked to every other and subordinated to the task of maximising human happiness.  The world was ruled by a single mind, that of God, whose will was executed by the invisible hand.  While we can share Shenfield’s scepticism with regard to this kind of organicist fairy story, that does not mean to say that we should discard holism or organicism sans phrase.  On the contrary, while each holism must be judged on its merits, according to its ability to identify the principle connections between the elements of the entity in question, reductionism can be rejected a limine since it itself rejects a limine the relevance of those connections. 

 

Having said that collectivism was partly caused by organicism, Shenfield now goes on to examine the roots of collectivism in holism: 'Partly collectivism arises from the essential belief of philosophical holism, namely that wholes are more than the sum of their parts, and that the parts are less real than the wholes, being largely abstract analytical distinctions’ (Shenfield, 1977: 69).  While not being quite how an advocate of the holist standpoint might put it, this is not an unrecognisable description of holism.  It would be more correct to say that, in the holist view, wholes are different from rather than more than the sum of their parts.  It is not merely a quantitative relation.  ‘More than’ is correct if used in a qualitative sense, such as in ‘a home is more than a house’.  And from a holistic point of view ‘my leg’ could, at a pinch, be construed as, in a sense, ‘less real’ than I am (if one really wants to start measuring things along a dimension of ‘reality’), in that it does not and cannot exist without me, as a functioning leg, but I could exist without it, though less ably than with it.  But this is not the main thrust of holism, which is merely to argue for seeing entities as wholes, as systems of relations, rather than as congeries of isolated parts.  Hayek himself is clear on this:

 

“That a particular order of events or objects is something different from all the individual events taken separately is the significant fact behind the [phrase of] ... ‘the whole being greater than the mere sum of its parts’ ... [I]t is only when we understand how the elements are related to each other that the talk about the whole being more than the parts becomes more than an empty phrase.”  (TSO: 47)  “The overall order of actions in a group is ... more than the totality of regularities observable in the actions of the individuals and cannot be wholly reduced to them ... a whole is more than the mere sum of its parts but presupposes also that these elements are related to each other in a particular manner.”  (SIP: 70)

 

These are fine and unambiguous statements on Hayek’s part of a holism entirely consistent with the definition of the term used in this thesis.  So Hayek says that the whole is greater than the sum of the parts: to understand the entity in questions we have to understand the system of relations between its parts.  And Shenfield says that believing the whole is more than the sum of the parts is holism.  So presumably we can agree that Hayek’s methodological approach is a holistic one.  But no: according to Shenfield, holism is just what Hayek is combating.  Or is it?  Having identified holism as the philosophical basis of collectivism, itself one of the three legs supporting scientism, the target of Hayek’s methodological critique, Shenfield immediately proceeds to admit that the holistic view is correct:

 

“Of course it is not to be denied that the whole of a society is more than what the sum of its individuals would be if they had no contact with each other. Such a sum would not be a society at all.  A society is not a collection of hermits.  It is formed because individuals set up relations with each other.  It is then not more than the total of its interconnected individuals, their systems of connection being a vital element in it.”  (Shenfield, 1977: 69)

 

So society is after all different from, ‘more than’, the sum of all its members taken in isolation.  But that is exactly what holism says: the whole cannot be understood except on the basis of the ‘systems of connection’ of its parts.  Shenfield simply concedes the case.  It is interesting, incidentally, to contrast Shenfield’s view that ‘society is not a collection of hermits’ with Milton Friedman’s previously mentioned view of economics as based on the study of ‘a number of independent households - a collection of Robinson Crusoes’ (cited in Haworth, 1994: 8).  On this particular point, Friedman adopts a reductionist, and individualist, stance, while Shenfield, and, indeed, Hayek, adopt a holistic standpoint.

 

One of the distinguishing features of the Austrian tradition separating it from the neoclassical orthodoxy is supposed to be its greater emphasis on methodology, its more advanced epistemological self-consciousness, its greater sensitivity to the need to establish the philosophical preconditions for the practice of economics.  What can we say, therefore when Shenfield, having conceded the case for holism, goes on in the very next sentence to conclude his critique of collectivism with

 

“Thus to treat the whole as a reality and the individuals as an unreality, or as a lesser reality, is a fundamental misconception.  As Popper says, ‘... the holistic way of thinking (whether about ‘society’ or about ‘nature’) ... is characteristic of a pre-scientific age’[11]” (Shenfield, 1977: 69)

 

Although introduced by ‘thus’, neither of these statements flows from anything that has preceded them.  No case at all has been presented for regarding the holist standpoint as ‘a fundamental misconception’, and no reason given for regarding it as ‘pre-scientific’.  On the contrary, as noted above, where he actually addresses the issues, he concedes the case.  The reference to the lamentable discussion of holism in Popper (1957: 76 ff) does nothing to help.

 

In an epilogue to his discussion of collectivism, a paragraph on collectivism and measurement, Shenfield manages to combine holism and opposition to it in a single sentence:

 

“collectivism leads to an exaggerated belief in the importance of measurement as a mark of scientific status.  But by treating the objects of its study as wholes, it is led to subject to measurement almost anything except their essence, namely the systems of connection between individuals which become visible only when the concept of wholes is abandoned.” (Shenfield, 1977: 69)

 

Shenfield says here, firstly, that the ‘essence’ of the object of study is ‘the systems of connection between individuals’, and then that these systems ‘only become visible when the concept of wholes is abandoned’.  He neglects to explain what might be the difference between ‘wholes’ and ‘systems of connection’.  The holistic view, the systems view of the world, says that we should examine a ‘system of connection between individuals’ as a whole, not as a congeries of parts, each considered in isolation, apart from its relationship with the whole.  How such a system can only become visible when we cease to see it as a whole is just incomprehensible.  This confusion is adopted almost word for word from Popper (1957: 76).

 

When Shenfield criticises ‘collectivists’ for measuring ‘anything except their essence’ (ie, the essence of the objects of study), the implication is clearly that that essence is the one thing that they should be measuring.  This begs the question of how one is supposed to measure an essence.  It also inverts Hayek’s reason for scepticism about measurement in social science, which was basically a holistic one.  According to Hayek,

 

“The events which we must take into account in any attempt to predict the outcome of particular social processes are never so numerous as to enable us to substitute ascertained probabilities for information about the individual events .... in the biological and in the social sciences frequently we cannot rely on probabilities, or the law of large numbers, because unlike the positions which exist in the physical sciences, where statistical evidence of probabilities can be substituted for information on particular facts, we have to deal with ... organized complexity, where we cannot expect to find permanent constant relations between aggregates or averages.”  (KES: 25)

 

Here Hayek is making an essentially holistic point: the law of large numbers depends on the independence of the events in question; that is, that the mass of events is a congeries.  In social matters, however, we have ‘organized complexity’ where the micro-level events we are concerned with are connected to each other in an organic way: they are not independent, and hence statistical inference is invalid. 

 

To say that Hayek’s opposition to measurement in social science is based in a holistic outlook, is not, however, to say that it is right.  On the contrary, what this view ignores is that a principal feature of ‘organized complexity’ is, precisely, that it is organised, that is, that it displays a constancy or consistency over time in some of its key internal variables, in spite of changes in environmental variables.  This is summed up both in the concept of homeostasis and in Hayek’s own concept of an order. 

 

This, again, is something which Hayek is well aware of.  In a subsection of The Sensory Order concerned with the evolution of the sensory order, Hayek briefly considers the (reductionist) argument that ‘any attempt to explain the highly complex kind of purposive action made possible by a developed central nervous system may be premature so long as we do not possess a fully adequate biological theory of the comparatively simpler kind of purposive functioning.’ (TSO: 82)  His response to this view is to refer in this connexion to ‘W.B. Cannon’s concept of homeostasis and ... the most promising work of L. von Bertalanffy.  His theory of ‘open systems’ in a steady state (Fliessgleichgewicht[12]) in which ‘equifinality’ prevails because the equilibrium that will be reached will in some measure be independent of the initial conditions, seems to provide the most helpful contribution to this problem’ (TSO: 83).

 

This is essentially both a systems theoretical account of order emerging at the macro level of purposive behaviour and an assertion of our ability to understand it even in the absence of a ‘fully adequate’ theory of the substrate biological level.  The idea of a dynamic steady state immediately suggests that certain variables will be in stable long-run mutual relationship, which in turn suggests the suitability of appropriate mathematical and statistical techniques.  The body of techniques including cointegration, unit roots and error correction mechanisms springs to mind.

 

The only conclusion that can be drawn from Shenfield’s account is thus that he, and Hayek with him, is extremely hostile to holistic approaches to economics, while semi-covertly recognising that such approaches are methodologically sound.  Their opposition is due to the policy consequences which such approaches may entail – individual utility maximising behaviour is interdependent, and hence may not aggregate to collective welfare maximising outcomes.  The tensions implicit in this inconsistent standpoint soon begin to emerge when Shenfield attempts to apply this approach to the question of the validity of macroeconomics.  We should bear in mind that Friedman wrote the Foreword to the book (Shenfield, 1977: xxi-xxiv), and also chaired the session preceding Shenfield’s, so Shenfield needs to be careful to avoid treading on toes.  The question, then, is ‘a problem which Hayek’s Scientism did not deal with, namely the question of the legitimacy or virtue of macroeconomics.  Is not the whole of macroeconomics infected with the collectivism that Hayek condemns?’ (Shenfield, 1977: 69)

 

Now objectively the answer to this question is ‘yes’, and Hayek himself is absolutely clear on this:

 

“I still believe that this [sc microeconomics] is the only approach which is entitled to regard itself as scientific .... [M]icroeconomic theory [is] the only legitimate economic theory.”  (KES: 21-22) “[M]y disagreement with that book [sc Keynes’s General Theory] did not refer so much to any detail of the analysis as the general approach followed in the whole work.  The real issue was the validity of ... macro-analysis”.  (TBT: 100)

 

Shenfield, however, is more cautious.  He examines two aggregate level entities, national income and the general price level, for evidence of holism.  While the concept of national income is - rather grudgingly - acquitted, the general price level, Shenfield finds, is ‘a holistic fiction because it sets up an imaginary whole which is different from the individual transactions that are supposed to form it’ (Shenfield, 1977: 70[13]).  This immediately creates a major difficulty as conservative neoclassical economists, in particular the monetarist school of thought around Milton Friedman, have depended upon the quantity theory of money, which itself depends on a notion of the general price level.  ‘[T]he concept of the general price level, and the quantity theory of money which goes with it [are] essentially holistic’ (Shenfield, 1977: 70-71).  How, then, to avoid division in the conservative ranks?  How to avoid castigating Friedman as a rank collectivist - as Hayek’s prejudices and his supposed theoretical position on the nature of macroeconomics would, indeed, imply?  This is Shenfield’s attempted way out:

 

“one has to admit a qualification to Hayek’s condemnation of collectivist notions .... there may be a few collectivist ... concepts which, when used by those who know the pitfalls of collectivism, may be enlightening.  Macroeconomics can have value, but only in the hands of those who are first and foremost microeconomists.”  (Shenfield, 1977: 71)

 

Shenfield seems not to notice what he has said here.  He has made the value and significance of concepts such as the general price level and the quantity of money depend, not on their content and inner logic, but on the personal characteristics of the theorist deploying them.  If we were to take this approach seriously, all debate about ideas must cease and be replaced by discussion of personalities.  It would be interesting to know what Hayek and Friedman made of this attempted reconciliation of their theoretical standpoints.

 

It is also interesting to note that, whereas earlier, on methodological terrain, we could characterise Hayek as adopting a holist and Friedman a reductionist stance, they have now - at the level of theory - swapped places.  Friedman’s stance is holist, dealing in entities such as the price level which only emerge at the macro level - something which Hayek’s anti-holist prejudice (though not his real methodology) makes impermissible.  This switch demonstrates how profoundly unconcerned these writers are with maintaining methodological and theoretical consistency.  Both want to retain policy individualism in a holist world: where they differ is on where to make concessions with the world they actually inhabit.  Friedman’s strategy is to rely on a non-Keynesian macroeconomics to underpin a laissez-faire policy prescription, while to the same end Hayek would prefer to proscribe macroeconomic thought altogether.

 

5.3.2    Hayek and holism

 

Early in the final version of his magnum opus, Toynbee (1972), sets out definitions of his main terms.  Perhaps the most important is his definition of ‘society’:

 

“Society is the total network of relations between human beings.  The components of society are thus not human beings but relations between them.  In a social structure ‘individuals are merely the foci in the network of relationships’.  The famous frontispiece of Hobbes’s Leviathan, displaying society as a gigantic human figure composed of a multitude of life-sized human figures, is an anthropomorphic misrepresentation of reality; and so is the practice of speaking of human beings as ‘members’ of society or one or other of its component institutions (e.g. a club, a church, a class, a family, a ‘corporation’).  A visible and palpable collection of people is not a society; it is a crowd.  A crowd, unlike a society, can be assembled, dispersed, photographed, or massacred.” (Toynbee, 1972: 43)[14]

 

This is a vivid presentation of a holist view of society.  But what is interesting here for our present purposes is that the writer he cites, explaining that ‘individuals are merely the foci in the network of relationships’ of which society is composed, is none other than Friedrich Hayek (CRS: 59). 

 

Further evidence of Hayek’s fundamentally holistic methodology, in the context this time of the theory, not of society, but of mind, can be found in his work on theoretical psychology, The Sensory Order.  It is extremely significant that TSO was read in draft, and commented on, by Hayek’s friend, von Bertalanffy, and that there are several favourable references in the text to Ashby, Bertalanffy and Wiener, the pioneers of cybernetics and systems thinking, and to Cannon, a pre-cursor of cybernetics and inventor in 1932 of the term ‘homeostasis’.  Systems thinking is, as the name implies, a holistic standpoint emphasising the systematic interconnection of the substrate elements without considering the properties of those elements in isolation (Pask: 1961: 13).  All of this underpins Hodgson’s (1993: 157) remark cited earlier that methodologically Hayek is more a systems theorist than an individualist[15]. 

 

At the end of TSO, in the chapter on ‘Philosophical Consequences’, section on ‘Dualism and Materialism’, Hayek says the following:

 

While our theory leads us to deny any ultimate dualism of the forces governing the realms of mind and that of the physical world respectively, it forces us at the same time to recognize that for practical purposes we shall always have to adopt a dualistic view .... [A]ny explanation of mental phenomena which we can hope ever to attain cannot be sufficient to ‘unify’ all our knowledge, in the sense that we should become able to substitute statements about particular physical events (or classes of physical events) for statements about mental events .... [W]e shall never be able to bridge the gap between physical and mental phenomena; and for practical purposes ... we shall permanently have to be content with a dualistic view of the world.”  (TSO: 179)

 

We should bear in mind that at the beginning of the book, in defining his terms, he refers to these ‘realms’ or ‘orders’, the objective or physical and the subjective or sensory orders respectively, as the ‘microcosm’ and the ‘macrocosm’ (ibid: 4[16]).  Taking this into account, the passage just cited is a lucid and succinct account of the holist standpoint applied to psychology.  Hayek’s vision is one in which macro level phenomena, the ‘macrocosm’, are in principle, if only we knew all the facts, reducible to the micro level substrate, or ‘microcosm’; practical obstacles to knowing the detail requisite for this reduction, however, compel us to understand the macro level in its own terms.  There is no hint of idealism or mysticism here: ‘The order which we call mind is thus the order prevailing in a particular part of the physical universe - that part of it which is ourselves.’  And: ‘this order is formed by its physical elements’ (ibid: 178).  There is no ‘ultimate dualism’ but in practice we are forced to recognise a dichotomy between lower and higher levels, between ‘microcosm’ and ‘macrocosm’.  We can never hope fully to reduce mental phenomena to their micro level substrate in ‘particular physical events’. 

 

This section has established an important point, namely a clear recognition on Hayek’s part, of the holistic nature of the world in which we live.  This recognition is particularly important as it throws into sharp relief his assertion of individualist and reductionist methodological conceptions when policy issues loom.  It also exposes a key aspect of his overall procedure: that, where necessary to defend his laissez-faire policy prescription, he is prepared to say one thing while doing another.  Hayek’s political philosophy is one of individualism, and to underpin that he realises he needs to assert an individualist methodology.  However, such a methodology faces insurmountable incongruities with the way the world is: at some stage the fundamentally holistic nature of the world has to be taken on board if our interaction with it is to have any efficacy whatever.  Hence the fundamental ambiguity in Hayek’s methodology is the consequence of his partisan policy standpoint.  In the next section we will see how this basic contradiction in Hayek’s approach manifests itself in connection with his theory of evolution.  We will find that something very similar occurs here, too: Hayek says one thing and does another - he is well aware of the implications of the Darwinian theory, but falsifies it when it clashes with his desired policy outcome.

 

5.4       Hayek and evolution

 

5.4.1    Darwinian evolution

 

Hayek’s theory of evolution can only be understood on the basis of its rôle in his overall intellectual project, and, hence, an understanding of the nature of that project itself.  Hayek’s theoretical objective throughout is to convince us of the validity of a particular policy prescription, namely laissez-faire[17].  Now to say this is not necessarily to condemn Hayek, although we shall see later that he can indeed be seriously criticised on this score.  It is certainly no dishonour, however, to adopt a polemical stance or to allow that stance to inform and inspire one’s theoretical researches.  Many major figures in economics, from Smith and Marx to Keynes and Friedman have a had a particular policy axe to grind, and have attempted to establish an economic theory to provide underpinning for a pre-existing social philosophy.  It is their engagement with policy implications, rather than any aloof, purely theoretical standpoint, which has given what they had to say its coherence and bite.  The problems that arise when Hayek attempts to do this, however, will become apparent as we examine his theory. 

 

The first problem concerns the issue of consistency in Hayek’s writings.  Hayek simply cannot be relied upon to give us an accurate description of his own mode of procedure.  We have already seen an example of this in connection with methodological issues: Hayek repeatedly asserts his adherence to one approach, methodological individualism, while in fact adopting a contrary one, methodological holism.  When unconstrained by potential adverse policy implications - in theoretical psychology, for example - Hayek adopts a thorough-going holist account, and traces of this view can be seen elsewhere.  When he is discussing society, however, the shutters come down and methodological individualism is proclaimed.  That what is key for Hayek is the goal of privileging the level of the individual, and not the methodological approach to be adopted, is shown by his adoption of holism in psychology, and his claim to adopt individualism in economics.  The former implies a systems view of the individual personality, while the latter again, although now arbitrarily, privileges the level of the individual agent.  Focus on the abstraction of the individual is the goal, and the selection of methodology is made to suit.

 

We may see another example of Hayek saying one thing and doing another in connection with the theory of evolution.  He correctly sets out the principle elements of the Darwinian theory of evolution, but the theory he actually uses is different.  We can see this by comparing what he says in COL, SIP, and NSP.  In COL, Hayek sets out his evolutionary theory and links it to his major themes.  Hume, Smith and Ferguson, he says, were able ‘to comprehend how institutions and morals, language and law, have evolved by a process of cumulative growth’ (COL: 57).  The key word here is ‘evolved’.  Hayek wishes to attract to the tradition from which he claims descent the prestige associated with the Darwinian theory of evolution (Hodgson, 1993: 152).  He immediately links the question of evolution to that of policy: ‘Those British philosophers have given us an interpretation of the growth of civilization that is still the indispensable foundation of the argument for liberty.  They find the origin of institutions, not in contrivance or design, but in the survival of the successful.’ (COL: 56-57). 

 

So the ‘survival of the successful’ – Hayek’s, but by no means Darwin’s, theory of evolution – is an ‘indispensable foundation’ for the case for laissez-faire, the ‘argument for liberty’.  I have argued, above, that, in order to reconcile us to the way things are, to the governmental and property systems which actually exist, Smith argued that all was for the best in this world as the invisible hand of God guided agents to those actions which achieved the socially most desirable outcomes.  I said also that in the more secular twentieth century this goal of reconciliation could only be achieved if a plausible and secular replacement could be found for the invisible hand.  Hayek’s aim is to replace the supernatural invisible hand with a natural one, a version of evolutionary theory which can combine the minimal policy prescription of laissez-faire, ‘liberty’, with the intellectual respectability of a Darwin. 

 

At the same time he re-writes history in an attempt to show, contrary to what we saw in the previous chapter, that Smith did not make God the linchpin of his system: on the contrary, we are informed, Smith et al had already discovered evolution, and, indeed, had done most of the work for which Darwin later took the credit:

 

“Since the emphasis we shall have to place on the role that selection plays in this process of social evolution today is likely to create the impression that we are borrowing the idea from biology, it is worth stressing that it was, in fact, the other way round: there can be little doubt that it was from the theories of social evolution that Darwin and his contemporaries derived the suggestion for their theories.”  (COL: 59)

 

This is indeed a staggering claim.  Although, like much of what Hayek has to say, it is wrapped up in vague phrases – here about ‘deriving the suggestion’ for a theory – this is clearly a claim that the credit for the Darwinian theory should properly go to the Scottish eighteenth century philosophers, principally Smith and Hume.  As Hodgson says, ‘Hayek’s attempt to belittle the importance of the Darwinian revolution by claiming multiple precedence is ... without foundation .... It betrays both a misreading of the sources and some misunderstanding on Hayek’s part’ (Hodgson, 1993: 160).

 

Contrary to what Hayek says, there is no truth whatever in the claim that anything even remotely approaching an anticipation of Darwin can be found in the works of Adam Smith.  Many of the things whose origin Smith attributes to God, such as ‘sympathy’ as a fundamental feature of our social psychology, make a great deal of sense in an evolutionary, rather than a theological, perspective.  But that doesn’t mean that he himself had such a perspective, indeed he most certainly did not[18]. As far as Hume is concerned, however, it is the case that there is some evidence to support Hayek’s claim.  We will be better placed to evaluate that evidence after establishing Hayek’s evolutionary theory and its relation to Darwin’s. 

 

In COL Hayek implies that the essence of Darwinism is ‘the idea that similarity of structure might be accounted for by a common origin’, and then, to bolster his assertion of a pre-Darwinian evolutionary tradition, immediately adds that this was ‘a commonplace in the study of social phenomena long before it was applied to biology’ (COL: 59).  In SIP, however, he says

 

“Before we examine its character [sc the character of the Darwinian theory of evolution by natural selection] we must clear out of the way a widely held misconception as to its content.  It is often represented as if it consisted of an assertion about the succession of particular species of organisms which gradually changed into each other.  This however, is not the theory of evolution but an application of the theory” (SIP: 31).

 

He adds in a footnote: ‘that particular species had common ancestors, or that similarity of structure always means a common ancestry ... is emphatically not the main content of the present theory of evolution.’ (SIP: 31, n21).  And this view, indeed, reflects Darwin’s own: the hypothesis

 

‘that species had not been independently created, but had descended … from other species … even if well founded, would be unsatisfactory, until it could be shown how the innumerable species … have been modified … It is, therefore, of the highest importance to gain a clear insight into the means of modification and coadaptation’ (Darwin, 1859/1928: 18-19). 

 

It was thus, not merely the assertion of the hypothesis of descent, but also the explanation of modification, that was the aim of The Origin of Species (Dennett, 1995: 39).  So the theory of evolution espoused in COL is now, in SIP, ‘emphatically not’ what evolution is about.  In his polemic against this ‘widely held misconception’, he gives no hint as to who might be guilty of holding it, and none at all that he himself had recently held this view.  If the COL conception of evolution is incorrect, what is the correct conception?

 

“The basic conception of the theory [of evolution by natural selection] ... is that a mechanism of reduplication with transmittable variations and competitive selection of those which prove to have a better chance of survival will in the course of time produce a great variety of structures adapted to continuous adjustment to the environment and to each other.” (SIP: 32)

 

This formulation does indeed express the essence of Darwin’s theory.  It combines the two principal points, ‘descent with variation’ and ‘natural selection’.  As far as the result of evolution is concerned, we have organisms which are well-adapted to their environment, which includes each other (‘continuous adjustment’ is the form of that adaptation in some species). 

 

The reader might be forgiven for thinking that, at least it is the later formulation which is correct: Hayek has changed his view for the better, even if he isn’t explicit about having done so[19].  But this is not so.  In 1978 Hayek (NSP: 249-266) reprinted without comment his 1966 British Academy Lecture on a Mastermind, ‘Dr Bernard Mandeville’, in which he says ‘What I do mean to claim for Mandeville is that [his] speculations … mark the definite breakthrough in modern thought of the twin ideas of evolution and of the spontaneous order.’ (Mandeville: 250).  Moreover

 

“Mandeville … made Hume possible … This development [of Mandeville’s ideas] includes … Adam Smith and Adam Ferguson … [T]he tradition which Mandeville started includes also Edmund Burke, and … all those ‘historical schools’ which … made the idea of evolution a commonplace in the social sciences of the nineteenth century long before Darwin.  And it was in this atmosphere of evolutionary thought in the study of society, where ‘Darwinians before Darwin’ had long thought in terms of the prevailing of more effective habits and practices, that Charles Darwin at last applied the idea systematically to biological organisms … Darwin is the culmination of a development which Mandeville more than any other single man had started … Darwin … finished what Mandeville had begun.”  (NSP: 264-265).

 

So, again, Hayek is claiming that the Scottish Enlightenment philosophers, this time building on what he regards as Mandeville’s contribution, were ‘Darwinians before Darwin’, and had discovered the theory of evolution in the particular context of society.  Then, ‘at last’, Darwin came along and applied a commonplace idea of social science to the biological context, and the rest was history[20].  Hayek’s account is a caricature.  Hayek’s paper, and, indeed – and perhaps more importantly – Mandeville’s works, contain not one point of evidence to back up his description of Mandeville as a ‘Darwinian before Darwin’.  It is true that Darwin gained some inspiration from political economy, in particular, from Malthus:  ‘The Struggle for Existence … is the doctrine of Malthus’ applied to the biological domain (Darwin, 1928: 19).  But, firstly, there is no question of Malthus having articulated this idea with the other necessary components – replication, descent and modification – to achieve a theory of evolution.  And secondly, Hayek gives no credit to Malthus for his contribution to Darwinism.  As is well known, Malthus strongly rejected the Panglossian optimism of the Smithian tradition which Hayek cherishes: ‘Hayek’s view of evolution is orientated more to harmony and equilibrium – as in the cases of Adam Smith and Herbert Spencer – than to the relentless discord to be found in the works of Malthus and Darwin’ (Hodgson, 1993: 277-278, n4)[21].

 

So Hayek says different, and, indeed, contradictory things.  When in 1960 he reduces Darwinian evolutionary theory to a hypothesis of common ancestry – what he ‘emphatically’ rejects in 1967 – it is so that he can link Darwin with the Scottish philosophers, particularly Smith and Hume, and bolster a particular notion of evolution in which ‘institutions … evolved by a process of cumulative growth’ based on ‘the survival of the successful’ (COL: 57) and in which ‘such conceptions as “natural selection,” “struggle for existence,” and “survival of the fittest,” … are not appropriate’ (COL: 59).  To have introduced an objective discussion of Darwin’s theory at this point would have showed the gulf which existed between it and Hayek’s own ‘process of cumulative growth’.

 

In the passages cited from SIP, he is less constrained.  He is citing evolution as an instance of ‘pattern prediction’, as an application of the ‘theory of complex phenomena’ (SIP: 31-35).  His point is to argue that, contrary to physical theories, evolutionary theory cannot be used to make specific predictions: because of the limits on our ability to acquire the necessary information, it is not possible to predict the direction evolution will take or to verify such predictions.  All we can do is to talk about certain patterns of outcomes which can or cannot be produced and the conditions which would affect them.  His interest in this is to say that the study of social structures is of the same kind: a case of pattern, not specific, prediction.  Evolution is, again, being used here ultimately to underscore a theoretical point required to generate his desired policy conclusions: the limitations on our knowledge of society preclude central planning[22].  Nevertheless, the link is here far less direct; hence in this context he has no reason to distort the theory and we get a relatively objective account.

 

When we come to ‘Dr Bernard Mandeville’, the case changes again.  Instead of discussing evolutionary theory in general terms as an example of the study of complex phenomena, he is deploying it to underpin a particular policy agenda.  He draws out a tradition going from Mandeville through Hume, Smith, Ferguson, and Burke, as well as Savigny and Herder (NSP: 265), to himself.  These thinkers share two things: a notion of a ‘spontaneous order’, a social order that arises through people’s efforts but independently of their intentions, and a belief in the optimality – in some sense (the individuals Hayek mentions vary) – of that spontaneous order[23].  The identification of the two is hinted at in Hayek’s definition of evolution here as ‘the prevailing of more effective habits and practices’ (NSP: 256).  Hayek’s concern is to present the spontaneous emergence of a social order as tantamount to an evolutionary process.  The corollary would be that the spontaneous order philosophers are pioneer evolutionary theorists, and Darwin is seen as getting all the credit simply by applying the idea to biological phenomena.  One result is to confer the scientific authority of Darwinism on the spontaneous order tradition, and another is to present a fallible social process as something natural and hence right.  The idea of optimality is smuggled in under cover of spontaneity. 

 

In sum, then, when Hayek is discussing the theory of evolution in an objective way, he is able to give a reasonable account of the process; when he is actually using the theory to buttress his overall system we get something very different.  The theory is treated with Procrustean instrumentality.  This points to a great cynicism on Hayek’s part: he surely knows what he is talking about, but it seems that he is willing to distort theory, just as he is willing to distort facts, in order to fit with his desired conclusions.

 

We have seen how Hayek is guilty of a major distortion of Smith, how he recruits Mandeville to his spontaneous order tradition by suppressing contrary evidence, and how he is willing to degrade and distort Darwin’s theory when his purposes require it.  We now need to examine the case for his claim that Hume anticipated Darwin.  In the ‘Legal and Political Philosophy of David Hume’, Hayek writes

 

“I [speak] of Hume’s doctrine as a theory of the growth of an order which provided the basis of his argument for freedom.  But this theory did more.  Though his primary aim was to account for the evolution of social institutions, he seems to have been clearly aware that the same argument could also be used to explain the evolution of biological organisms.  In his posthumously published Dialogues on Natural Religion he more than hints at such an application.  He points out there that ‘matter may be susceptible to many and great revolutions, through the endless periods of eternal duration.  The incessant changes to which every part of it is subject, seem to indicate some such general transformation.’  The apparent design of the ‘parts in the animals or vegetables and their curious adjustment to each other’ does not seem to him to require a designer, because he ‘would fain know how an animal could subsist unless its parts were so adjusted?  Do we not find that it perishes wherever this adjustment ceases, and that its matter corrupting tries some new form?’  And ‘no form can subsist unless it possess those powers and organs necessary for its subsistence: some new order of œconomy must be tried, and so on, without intermission; till at last some order which can support and maintain itself, is fallen upon.’  Man, he insists, cannot ‘pretend to an exemption from the lot of all living animals … [the] perpetual war … kindled among all living creatures’ affects also his evolution.  It was still another hundred years before Darwin finally described this ‘struggle for existence’.  But the transmission of ideas from Hume to Darwin is continuous and can be traced in detail.”  (SIP: 119)

 

There are three references to evolution in the passage but all are in Hayek’s words, not Hume’s – and even if Hume had used the term evolution, it would not have meant what we mean by ‘evolution’, for the simple reason that the concept did not exist in the public domain prior to 1859.  Let us explore this issue further.  The object of this passage is to convince the reader that Hume had a full-blown theory of evolution which he applied to institutions and which he toyed with applying to biological phenomena.  Yet the article on David Hume in which it appears, contains no evidence or argument that Hume did in fact have an evolutionary theory of society.  What we see instead is a demonstration that Hume regarded the emergence of the regular and lawful institutional structure of society as being largely the product of a spontaneous process.  The impression that Hayek wishes to create is that the two are the same thing.  Now there are certainly links between the theory of evolution and the emergence of a spontaneous human order; evolution is clearly both orderly and rule-governed on the one hand, and  spontaneous, in that it cannot be the result of anyone’s intention, on the other.  But, equally certainly, there are very significant differences between the two; the social structure, for example, arises, and must arise, on the basis of the deliberate actions of human beings (even if not as a result of their intentions), but this is clearly not necessarily the case for evolution.  A simple identity between the theory of spontaneous orders and that of evolution cannot be assumed: on the contrary, the links between the two, and what divides them, have to be argued for. 

 

So much for Hume’s theory of evolution in society.  Let us now examine Hayek’s presentation of the evidence in Hume’s Dialogues for a theory of evolution in nature.  To help us we may call as expert witness the American philosopher Daniel Dennett, who has dealt with precisely this point in his book Darwin’s Dangerous Idea.  Part 4 of Chapter 1 is entitled ‘Hume’s Close Encounter’ (Dennett, 1995: 28-34).   After noting, what is surely correct, that Hume himself appears in the Dialogues in the person of Philo, Dennett says that Philo ‘dreams up some speculations that come tantalisingly close to scooping Darwin by nearly a century.’ (Dennett, 1995: 32).  And it is true: if we read the Dialogues, or just the passages cited in Dennett, we can see that Philo did come close to the discovery of evolution by natural selection. 

 

The extracts Dennett cites show (a) a prescient depiction of the origin of life (an ‘economy or order’) by random transpositions of matter; (b) a statement that such ordered matter will sustain itself and produce the ‘appearance of art and contrivance’ which we actually observe in living things; (c) the claim that defects in form will lead to removal of the form.  The latter statement is clearly an idea of natural selection.  What this account lacks, what distinguishes it from Darwinism, is the idea of reproduction as combining overall stability of form with some errors: imperfect replication, allowing selection to have something to work on.  Hume doesn’t mention reproduction - which must be a severe defect in any putative theory of evolution. 

 

Moreover, Philo is ambiguous about the key issue of imperfect replication.  Firstly he contrasts the stability of the orders or economies, with the random transpositions of disordered matter.  Secondly he implies that there must be changes in natural forms in that defects in them are removed.  But if the orders are stable, where do the defects come from?  Again, because he says nothing about reproduction, descent with modification, we are left with that version of selection in which an original endowment of variety is gradually whittled away by selection leaving only the forms we see today.  A form of selection in which a given pool of objects is sifted, the imperfect forms removed and only the adapted ones remain.  In this account nothing has happened to the adapted forms, only to the unadapted ones: the adapted forms were there from the start[24], selection only discovers them.  As Dennett says, ‘cute ideas about evolution had been floating around for millennia’ (Dennett, 1995: 33), and, indeed, this particular version can be seen in Lucretius in the first century BC (Lucretius, 55 BC: Book 5, lines 837-877; 1969: 191; 1951: 196-198), and in Empedocles more than four hundred years before that (Barrow and Tipler, 1988: 34). 

 

In arriving at a verdict on Philo, we need to take three things into consideration.  Firstly, Philo’s remarks constitute only a speculation, involving a brief passage, not a worked out theory.  Secondly, Hume himself ‘couldn’t quite take Philo’s daring foray seriously’  (Dennett, 1995: 33).  Hume’s (and Philo’s) own verdict was that ‘a total suspense of judgment is here our only reasonable resource’ (cited, ibid).  And, finally and most seriously, without a source of variety for natural selection to work on, in the form of copying with errors, a fully functioning theory of evolution is not possible.  Hume has thus not ‘scooped Darwin’.  It is not therefore the case that any of Mandeville, Hume or Smith anticipated Darwin. 

 

To summarise the results of the discussion so far: Hayek is able to set out the theory of evolution concisely, but when he comes to use it, the theory of evolution he employs is something very different.  Hayek claims that the ‘Mandeville-Hume-Smith-Ferguson tradition’ (NSP: 265, n58) developed the theory of evolution which Darwin then later applied to the biological sphere.  This claim is false.  In both cases his objective is to identify the emergence of a spontaneous social order with an evolutionary process, in order to present that order as something natural, something which we cannot and should not adapt to our own needs. The arguments in each case have been shown to be illegitimate.  Ultimately the rôle of evolution in Hayek is just that of the invisible hand in Smith: an inscrutable agency which arranges that the unintended outcomes of our actions will be benign.  Again, we have an interface between a holistic world and a reductionist policy prescription: our activities as human beings are organically linked to each other but can be treated as if they were independent: if the actions of each individual are directed towards the good of that individual, then the actions of all individuals must tend to the good of all.  All the hard work of reconciling disparate interests and behaviours is accomplished behind the scenes by the process of evolution.

 

5.4.2    Hayekian evolution

 

We have seen that the theory of evolution which Hayek deploys is not Darwin’s.  Now we need to investigate the merits of Hayek’s theory in its own right.  What does Hayek mean when he says that institutions ‘evolved by a process of cumulative growth’, when he locates ‘the origin of institutions … in the survival of the successful’ (COL: 56-57), and when he defines evolution as ‘the prevailing of more effective habits and practices’ (NSP: 256) or as ‘the idea that similarity of structure might be accounted for by a common origin’ (COL: 59)?  This subsection will investigate these questions further. 

 

In order to do so we first need to introduce the distinction between ontogeny and phylogeny – terms used by Hayek himself (TSO: 42, for example), but without any apparent consciousness of the significance of the distinction for his theory.  Ontogeny is the development of the individual of a species, while phylogeny is the evolution of the species.  Now the term evolution can be used in both senses: both ‘[t]he process of developing [of animal and vegetable organisms] from a rudimentary to a complete state’ and ‘the origination of species conceived as a process of development from earlier forms’ are included under the catchword evolution in the Shorter Oxford English Dictionary (Onions, 1973: 693)[25].  But there is a key difference between these ideas: ontogeny, the development of the individual from embryo to maturity, has a goal, whereas phylogeny has none.  Ontogeny is teleological: the phases which the immature organism normally passes through are means to the end of creating a reproductively mature adult.  Once that goal, adulthood, is achieved, development ceases.  Deviation from the normal ontogeny is in general pathological.  Phylogeny is very different: there is no goal in the development, and can be none, since no agency exists to implement the interest of the species.  Each individual attempts to survive and to pass on its DNA to successive generations, the best it can, given the character of its environment, including the other individuals of its species.  The history of the species is just a list of the ways in which this happens to have been done in the species’ past.  Since the underlying nature of the world is permanent change, the process of adaptation to the environment can never be complete.  Ontogeny terminates, but the only possible terminus to phylogeny is extinction. 

 

It must, then, be clear that the Darwinian theory of evolution is a theory of phylogeny, not ontogeny.  Hodgson (1993: 161) makes the case, however, that Hayek’s evolutionary theory is ontogenetic and not phylogenetic:

 

“When Hayek (1967, p.72 [SIP: 72]) writes that ‘the whole of economic theory ... may be interpreted as nothing else but an endeavour to reconstruct from regularities of the individual actions the character of the resulting order’ he is letting the cat out of the bag.  Biological ontogeny is precisely the endeavour to explain the development of organisms from the regularities of their genetic endowment, in contrast to phylogeny which considers the sifting and changing of the gene pool through natural selection or drift.  Hayek’s statement clearly suggests ontogeny rather than phylogeny.” (Hodgson, 1993: 161)

 

Now this argument could easily be extremely unfair to Hayek.  Ontogeny and phylogeny are not alternative theories in biology, but complementary.  It is true that species evolve, and it is also true that individuals develop to adulthood.  Hodgson has clearly identified an ontogenetic strand in Hayek’s exposition, but that does not prove that Hayek uses this ontogeny in place of phylogeny.  Hayek’s statement, cited by Hodgson, that the whole of economics is ontogeny is evidence for Hodgson’s view, but it is well known that Hayek, like Popper, exhibited great anxiety and dogmatism about the boundaries between one science and another and between science and other related activities.  It would be quite plausible for Hayek to relegate phylogeny to some other cognate discipline.  We will see shortly that this is not the case.

 

The implication of Hodgson’s interpretation is that Hayek’s account is not genuinely evolutionary, since evolution concerns phylogeny not ontogeny. This is very important for Hayek, because the ‘evolution’ of an individual organism leads to a predetermined outcome: there is a logical goal, and once you’ve got there, there is nowhere else to go - the ‘evolutionary’ process terminates, there is no more evolution.  We reach the end of history.  The ontogenetic version of evolution is fully compatible with the Whig interpretation of history, in which the essence and goal of history is the development of liberal institutions (Marwick, 1970: 45).  The apologetic character of Hayek’s enterprise, in Hodgson’s interpretation, is very clear.

 

Hodgson also links Hayek’s ontogenetic version of evolution with his persistent tendency to slight Darwin’s achievement, discussed in the previous subsection:

 

“Thus, in implicitly comparing his theory to the kind of economic ontogeny found in the writings of Walras or Smith, Hayek makes the addition of the idea of ‘natural selection’ a mere appendage.  Darwin is then reduced in stature because he is not significant for the Hayekian theory.  Without further clarification, the latter can easily be reduced to the post-Humean ontogeny of the emergence of the coherent social order... [O]ntogeny was well established before Darwin.  It is thus no accident that Hayek simultaneously upgrades ontogenesis and downgrades Darwin’s contribution.” (Hodgson, 1993: 161)

 

Here we have further evidence that Hayek attempts to annex the prestige of Darwinian evolution whilst simultaneously distorting the Darwinian theory.  Hayek's theory is ontogenetic; ontogenetic theories of development in nature and society were extant long before Darwin, and, moreover, are not theories of evolution at all, but a theory of the maturation of an organism.  Clearly, twentieth century capitalism has emerged from some kind of developmental process.  The question is, whether that process was ontogenetic or phylogenetic.  Hayek’s case is that the relevant concept of development is that of ontogeny: we have reached the terminus of history, and the system we have now must be considered optimal.  If, on the contrary, phylogeny is the appropriate concept then no such assumption of optimality can be justified: on the contrary the desirability or otherwise of the institutional framework has to be determined by reference to the facts rather than to theological, or evolutionary, invisible hand apologetics.

 

Even Norman Barry, a writer with great sympathy for Hayek’s project, regards Hayek’s invocation of evolution as a failure:

 

“Hayek has suggested ... that the process of evolution (not quite the same as ‘Social Darwinism’) will ‘select out’ those aggregate structures that are more successful in meeting man’s needs.  Most writers have found this implausible and indeed the historical evidence hardly points to an ultimate triumph of the market order ... the evidence for Hayek’s solution is rather meagre and hardly sufficient to establish it as even the beginning of a genuine theory.” (Barry, 1988: 46-47)

 

5.4.3    The assumed optimality of evolved institutions

 

There is a key passage in COL in which Hayek links the Scottish Enlightenment thinkers, social evolution, and the question of optimality:

 

“While the rationalist tradition assumes that man was originally endowed with both the intellectual and the moral attributes that enabled him to fashion civilization deliberately, the evolutionists made it clear that civilization was the accumulated hard-earned result of trial and error; that it was the sum of experience, in part handed from generation to generation as explicit knowledge, but to a larger extent embodied in tools and institutions which had proved themselves superior - institutions whose significance we might discover by analysis but which will also serve men’s ends without men’s understanding them.  The Scottish theorists were very much aware how delicate this artificial structure of civilisation was which rested on man’s more primitive and ferocious instincts[26] being tamed and checked by institutions that he neither had designed nor could control.  They were very far from holding such naïve views ... as the “natural goodness of man,” the existence of a “natural harmony of interests,” or the beneficent effects of “natural liberty” (even though they did sometimes use the last phrase).  They knew that it required the artifices of institutions and traditions to reconcile the conflicts of interest.  Their problem was how “that universal mover in human nature, self love, may receive such direction in this case (as in all others) as to promote the public interest by those efforts it shall make towards pursuing its own.”[27]  It was not “natural liberty” in any literal sense, but the institutions evolved to secure “life, liberty, and property,” which made  ... individual efforts beneficial .... [I]t was not some sort of magic but the evolution of “well-constructed institutions,” where the “rules and principles of contending interests and compromised advantages”[28] would be reconciled, that had successfully channeled individual efforts to socially beneficial aims.” (COL: 59-60)

 

There are many points to comment on in this passage.  Firstly, as we saw in the previous chapter, Adam Smith, for one, certainly did hold the ‘naïve view’ of a ‘natural harmony of interests’ and the ‘beneficent effects of natural liberty’.  On the ‘goodness of man’ his view was a little more complex: it was true, in his view, that man was imperfect - but even the imperfections were god-given and contributed to the overall plan.  The implication of Smith’s account is therefore that the imperfections were only construed as such by men because of their finite minds: the infinite mind of God, seeing all the ‘connexions and dependencies’ of things, would realise the contribution of man’s apparent imperfections to the perfection of the whole.  In this sense, then, Smith certainly did believe in the natural goodness of man, despite all appearances contradicting that belief.  Again, Hayek distorts what the Scottish Enlightenment thinkers actually said in order to present them as the initiators of an evolutionary trend in social thought. 

 

But the main point of the passage lies in Hayek’s acknowledgement of the need to reconcile conflicting interests.  The central question of economics and of social science in general does indeed concern how individual self-seeking behaviour is to be led into socially desirable channels.  Hayek’s account here is extraordinarily abstract.  We are assured that institutions evolved to secure life, liberty, and property, and that they have the effect of directing self-interest into the service of the community.  But we are given absolutely no details - no examples, no analysis of the evolution of particular institutions or types of institution.  Hayek ought to show, as an example, how, and in what circumstances, some of the institutions we have inherited from the past reconcile self-interest with the interests of others.  But there is no word here on how institutions accomplish this task. 

 

There are two sides to Hayek’s account.  Firstly, he contrasts the theory of the spontaneous emergence of a social order with the extreme rationalist account[29] in which every instance of institutional progress occurs as a direct result of the conscious intentions of some social reformer.  In this Hayek is correct.  It was in the interest of the absolutist regimes and their mercantilist literary representatives to argue that the only alternative to a consciously constructed and imposed centralised order was a chaotic anarchy.  The Smithians performed a signal service by arguing that social orders could also arise spontaneously on the basis of self-seeking behaviour. 

 

Secondly, however, we have the hypothesis of optimality.  The institutions which issue from an extensive process of evolution are said to reconcile individual interests and channel individual efforts into socially beneficial directions.  Clearly, they must do this to some extent, or we would not be able to observe spontaneous orders, but the key question is, how well they do this.  On this, Hayek is content to remain silent and to allow the presumption of optimality to remain unexamined.  In his theory, the institutions which are handed down by our forbears show their superiority in their very survival: they survived because they ‘proved themselves superior’.  In two other places in the passage he argues that individual interests are rendered socially beneficial by the evolution of institutions.  But this begs the question: institutions, like genes, survive the selection process and lever themselves into the future by ‘proving themselves superior’ - at surviving, not necessarily at serving our interests.  An institution may well survive because, although harmful to the majority, it serves the interest of a minority who happen to be powerful enough to override the majority’s wishes - the Mafia, for example, or Thuggee.

 

The clear implication of Hayek’s account is that anything which is old is superior.  If it is old it has survived the selection process of imitation and learning, by means of which institutions, ideas and skills are transmitted to new generations, on the basis of their success in serving the interests of previous generations. The hidden implication is that when one of two institutional forms is selected, then it can be regarded as unambiguously superior to the alternative form.  In some sense it reconciles the interests of the individual agents more efficiently.  There is no hint that one group of agents may have an interest in one institutional setup, while another group’s interests are better served by an alternative.  Once this is allowed, institutional change involves victory and defeat for different groups.  In that case it becomes impossible to describe such change, without qualification, as improvement.  Hayek’s account, therefore, contains the hidden implication, that there are no fundamentally conflicting interests: everyone has, let us say, ‘congruent’ interests: and it is unproblematic to compare two institutions and select the ‘superior’ one.  Amartya Sen, discussing this point in Hayek, makes the point that the Smithian argument which Hayek relies on

 

“rests precisely on the ability of the market to achieve the results intended by individuals ... and then some more.  I want bread and will happily give some money for it, and the baker wants money and will give me a loaf of bread in exchange.  When we carry out the exchange, we do achieve what we set out to achieve, and in the process we have helped each other ... the market works on the basis of congruence of interests of different participants.  That is the essence of the Smithian perspective: different people have a common interest in exchange and the market gives them the opportunity to pursue their common interests ... In most economic problems the interests of the different people involved are partly congruent, partly conflicting.  The market mechanism on its own confines its attention only to issues of congruence, leaving the interest conflicts unaddressed.” (Sen, 1983: 4-6)

 

As we saw in the previous chapter, market activity in Smith does not reconcile individual agent interests - because these interests have been pre-reconciled by the invisible hand of God: exchange realises that pre-existing reconciliation.  Now, we can see that Hayek adopts a comparable stand.  Agent interests are assumed not to be mutually contradictory: individual agents hold common but merely spontaneously uncoordinated interests.  Explaining the evolution of new modes of conduct Hayek says that the ‘new manners of conduct ... were adopted because somebody who acted on them profited from it and his group gained from it’ (KES: 32).  In other words, there was a pre-existing harmony of interest between the individual and the group: the individual benefits himself – and simultaneously the group - by his actions.  This is the basic assumption on which Hayek’s whole philosophy is raised.  Agent interests, in Sen’s terminology, are ‘congruent’.  Inherited institutions then realise the agents’ congruent interests by bringing about a coordination of their activities.  This allows the optimality of the institutional framework resulting from the evolutionary process to be assumed.  

 

Since I have placed considerable emphasis on the optimality assumption in Hayek, it is important to consider the occasions on which it is explicitly raised in his writings.  I will refer to two such passages, one in IEO and one in COL.

 

“If each man is to use his peculiar knowledge and skill with the aim of furthering the aims for which he cares, and if, in so doing, he is to make as large a contribution as possible to needs which are beyond his ken, it is clearly necessary ... that the relative importance to him of the different results he can achieve must correspond to the relative importance to others of the more remote and to him unknown effects of his action.”  (IEO: 17)  “[A]ny workable individualist order must be so framed … that the relative remunerations the individual can expect from the different uses of his abilities and resources correspond to the relative utility of the result of his efforts to others … An effectively competitive market satisfies [this] condition” (IEO: 21).

 

This is just an obscure way of saying that the ordinal ranking of the possible outcomes of his action (‘the relative importance of the different results he can achieve’[30]) must be the same for him and for other people affected by his actions; ie, if he faces a choice between spending and saving, and he decides to save, society in general must not prefer that he spends.  In other words, there must be a harmony of interests.  If this condition were always satisfied, then self-serving behaviour would always lead to socially optimal outcomes.  So we urgently need to know when we can expect this harmony to hold.  Remarkably, Hayek simply asserts that it holds in an ‘effectively’ competitive market: in such a market the individual making a decision has the same ranking of outcomes of his behaviour as everyone else does.  Hayek, in other words, blandly asserts that there is no such thing as an externality.  This is just to assume the whole problem away.  It also eliminates any qualitative diversity between individuals: each individual has the same ranking of outcomes as everyone else. 

 

It is true that Hayek allows himself an escape route: to speak of ‘effectively competitive’ markets could imply that any market in which the condition fails is defined as ‘ineffectively competitive’, thus allowing the statement to stand as a tautology.  If the claim is empirical, he should justify it empirically – which, of course, he cannot do.  If it is a definition, he should tell us under what conditions competition will be ‘effective’.

 

In COL, Hayek allows that the points he has previously made

 

“do not prove that all the sets of moral beliefs which have grown up in a society will be beneficial .... [A] group or nation [may] destroy itself by the moral beliefs to which it adheres.  Only the eventual results can show whether the ideals which guide a group are beneficial or destructive .... It may well be that a nation may destroy itself by following the teaching of what it regards as its best men .... There would be little danger of this in a society whose members were still free to choose their way of practical life, because in such a society such tendencies would be self-corrective: only groups guided by “impractical” ideals would decline, and others, less moral by current standards, would take their place.  But this will happen only in a free society in which such ideals are not enforced on all.” (COL: 67)

 

So, although he admits that suboptimal systems may evolve, firstly, this can only be judged retrospectively, by ‘eventual results’: it is thus impermissible for governments to rationalistically step in beforehand to avert the catastrophe.  Secondly he is able to assert that there would be ‘little danger’ of suboptimal results in a ‘free society’ – by appeal to an argument … which itself assumes optimality: ‘groups guided by “impractical” ideas would decline, and others … would take their place’.  The assumption is that what is good for individuals is good for their group and what is good for the group is good for the nation.  But of course the behaviour which is Nash for agents within a society – whether they be individuals or groups – cannot be assumed to be optimal for the society as a whole.  Individuals and groups do not achieve pre-eminence in a nation by following rules which it would be in the interest of the nation for everyone to follow, but by following rules which are well adapted for gaining power and influence within a nation’s establishment. 

 

To conclude, therefore, Hayek does clearly subscribe to the optimality assumption.  A market system in a ‘free society’ based on private property (IEO: 20) will generate social outcomes which are the best we can get.  His theory of social evolution is intended to provide underpinning for this assumption. 

 

In view of the link drawn in the previous chapter between the assumption of optimality and the natural law tradition in Smith, it is interesting to note here the very favourable view that Hayek takes of that tradition.  In Mandeville, pp 131 ff, he details how the idea of spontaneous order was maintained by theorists of ‘the law of nature’ – ie, natural law – from Greek times up to the present.  He postulates a connection between freedom, natural law, and a belief in the agency of a benign deity: ‘There appears to have existed in all free countries a belief that a special providence watched over their affairs which turned their unsystematic efforts to their benefit’  (Mandeville: 130)[31].  ‘Belief in special providence’, that is, the belief that a kindly God would tie up all the loose ends and heal all ills, is the central tenet of Smith’s Panglossian Weltanschauung.  Hayek summarises the history of the spontaneous order tradition as follows:

 

“This tradition was handed on, chiefly through the theories of the law of nature; and it is startling how far the older theorists of the law of nature … penetrated into the secrets of the spontaneous development of social orders .... [I]t [sc this tradition] led to a systematic questioning of how things would have ordered themselves if they had not otherwise been arranged by the deliberate efforts of government; they [sc the older theorists of natural law] thus produced what I should call the first modern theories of society”  (Mandeville: 131).

 

Thus Hayek claims intellectual descent from the ancient[32] and medieval tradition of natural law.  In particular he says of the tradition from which he claims intellectual descent that ‘Savigny and his older historical school, largely based on the conception of a grown order elaborated by the Scottish philosophers of the eighteenth century … continued or resumed the aim of the older natural law theorists’ (SIP: 103-104). 

 

5.4.4    Group selection

 

The idea that institutions, constructed on the basis of individual micro behaviour, are selected on the basis of their success at the macro level, leads immediately to the idea of group selection, so reviled by contemporary biology.  This subsection explores the theme of group selection in Hayek’s theory of social evolution. 

 

Hayek sets the scene in ‘Notes on the Evolution of Systems of Rules of Conduct’ (SIP: Ch 4: 66-81).  Firstly, he explains that rules of individual behaviour constitute the basic units of evolution in society: it is rules which play in social science the role played by genes in biology.  ‘The term ‘rule’ is used for a statement by which a regularity of the conduct of individuals can be described, irrespective of whether such a rule is ‘known’ to the individuals in any other sense than that they normally act in accordance with it.’ (SIP: 67)  Hayek’s rules can be transmitted genetically or culturally, and they may be embodied in humans, non-human animals, or even self-replicating von Neumann machines (SIP: 66).  In so far as they are genetically transmitted, they are identical to the genes for the behaviour they specify; in so far as they are culturally transmitted, they are synonymous with Dawkins’s memes, ‘the new replicator ... a unit of cultural transmission, or a unit of imitation’ (Dawkins, 1989a: 192).  Hayek distinguishes ‘between the systems of rules of conduct which govern the behaviour of the individual members of a group ... and ... the order or pattern of actions which results from this for the group as a whole.’  This distinction is well-taken.  The system of rules of conduct are the social equivalent of the genotype, let’s call it the memotype, while the order of actions corresponds to the phenotype.  The system or order of rules is the set of instructions; the system or order of actions is the outcome.  They describe the micro behaviour of the individuals composing the society and the macro social outcome, respectively. 

 

Contrary to any reductionist view, which would imply a simple, mechanical, and aggregative relationship between memotype and phenotype, between system of rules and order of actions, Hayek stresses the contingent nature of the macro level system arising on the basis of any particular micro level behaviour.  ‘The interplay of the rules of conduct of the individuals with the actions of other individuals and the external circumstances in producing an overall order may be a highly complex affair’ (SIP: 71).  He cites the entropy principle embodied in the second law of thermodynamics as an instance of regular micro level behaviour leading to perfect disorder at the macro level (SIP: 67), and a society in which fixed rôles were filled by individuals selected by lot, as an instance of irregular behaviour at the micro level supporting a perfectly orderly macro outcome (SIP: 69).  Moreover,

 

“Not every system of rules of individual conduct will produce an overall order of the actions of a group of individuals ... and it is at least conceivable that the same overall order of actions may be produced by different sets of rules of individual conduct ... The same set of rules of individual conduct may in some circumstances bring about a certain order of actions, but not do so in different external circumstances.”  (SIP: 67-68) 

 

These perfectly correct - indeed, valuable - points, however, are leading up to an incorrect theory.  An order is ‘a steady structure (showing ‘homeostatic’ control)’ - in other words, an organism.  And what could be more holist than the assertion that ‘systems of rules of conduct will develop as wholes ... the selection process of evolution will operate on the order as a whole’ (SIP: 71)?  Having set out a holistic view of the relationship between the micro and macro levels, in which the link between the two is complex, indirect and mediated, rather than simple, direct and immediate, as it would appear in a reductionist view, he proceeds to break the link between the two altogether.  Macro level objects, ‘orders’, now become independent entities in their own right, owing nothing to their material bases in individual behaviour.  It is in this sense that Hayek departs from what Bunge would call ‘systemism’, and slips into a holism which ignores the substrate-dependence of macro-level phenomena: he forgets that there are ‘no relations without relata’.  Having severed the link between levels, Hayek strays into mysticism: evolution in this view can operate on the order as a whole even in the absence of any mechanism tying the interest of the individual to that of the whole.  By eliminating the tie between macro and micro, Hayek obscures the necessity of such a mechanism.  His thesis is that social evolution is evolution which occurs at the level of society, at the level of the group: the cultural

 

“transmission of rules of conduct takes place from individual to individual, while what may be called the natural selection of rules will operate on the basis of the greater or lesser efficiency of the resulting order of the group.” (SIP: 67)  “The evolutionary selection of different rules of individual conduct operates through the viability of the order it will produce” (SIP: 68).  ‘T[h]e origin of institutions [is to be found] ... in the survival of the successful.’ (COL: 56-57).  Evolution is ‘the prevailing of more effective habits and practices’ (NSP: 256).

 

Cultural rules are, indeed, transmitted from individual to individual in the sense that only individuals can execute cultural instructions (whether on their own account as principals, or as agents for others such as firms and organisations), although the transmission is mainly mediated by cultural artefacts - telephone messages, letters, newspapers, magazines, journals, books, films, TV and radio programmes, e-mail and websites[33].  However, efficiency and viability, successful and more effective are left undefined.  Do we mean efficiency for the order or for the individuals working within its framework?  It is clear that Hayek means ‘efficiency for the group of individuals’.  Logically, however, it can only mean ‘efficiency for, and viability of, the order’. 

 

We have a system of instructions.  Executing those instructions has consequences.  Some consequences are more favourable than others to the continuation and expansion of the system of instructions.  Those systems of instructions which we actually find are likely to be those whose execution leads to their own successful replication.  What does lead to successful replication depends on the environment.  The environment of the system of rules includes its own substrate.  Just as a person can only do what their limbs are able and willing to do - most people cannot hold their hand in a flame or look at the sun, and no one can fly by flapping their arms - a society can only do what its constituent individuals are willing and able to do.  The difference is that in the person, the individual components all have the same set of instructions, the same genotype; and their interest is to lever a copy of that genotype into the future.  The only way they can do it is by aiding the production and care of offspring.  This can only be done by each part playing its rôle in the activity of the whole person.  Every part has an interest in cooperating with every other part to fulfil the aims of the whole person.  In society it is otherwise.  Everyone has their own interest to follow, largely based on tastes and preferences selected for because of their likelihood of leading to successful genetic propagation.  So the parts of an organism play the rôle they are required to play if they get the right information and resources - they already have the necessary incentive for playing their part in the overall scheme.  The parts of a society play the required rôle - the rôle required for the successful adaptation of the social system - if they get the required information, resources, and incentives.  So the system will have a selective advantage if it contains instructions which allocate to individuals (including here every kind of economic agent - individual households, firms etc) the appropriate incentives, information and resources. 

 

Consider the following thought experiment to show that we cannot assume that the ‘efficiency’ which is selected for in the evolution of institutions is necessarily the efficient satisfaction of human interests:  A well-adapted social system, one which has survived the selective process, must include a system of incentives for individuals to follow.  In following these incentives, the individual is necessarily doing something which is both in his own interest, or he wouldn’t do it, and in that of the system, or it wouldn’t have given him the incentive to do it (we assumed at the start that it was well adapted).  So, on the assumption that a set of such incentives can in fact exist, there is at least that much mutuality between the individual and the collective.  Nevertheless, while it may be in the individual’s interest to behave in this way - call it action A - given what everyone else is doing (ie, action A is Nash), it may well be that the collection of all individuals could all do better if they were somehow all coordinated to behave otherwise - say to carry out action B.  In other words, the individual agents find themselves in a multi-player prisoners’ dilemma.  In this case, we have two systems of rules competing for the allegiance of the population.  One system directs them to carry out action A, acting as an isolated human atom, the other requires action B, where the population acts as a collective agent and each individual achieves a better satisfaction of his interests. While none of this may in fact be the case, it is clear that there is no reason in principle for us to assume that the characteristics which are spontaneously selected for in social systems will be more desirable to the members of those social systems than the characteristics with which they might wish consciously to endow them. 

 

Yet this is Hayek’s key assumption throughout - that the selection process sifting institutions is one which endows those systems of rules which are better able to satisfy human interests with a higher probability of survival and propagation.  The thought experiment shows that this assumption is unwarranted.  On the contrary, selection of institutional forms of society may well throw up systems of rules of conduct in which the behaviour of each is Nash, but the outcome for all is suboptimal.  And, of course, it is precisely the contention of many that that is precisely the situation we face.  Hence Hayek’s argument begs the most important question.  To take a single example, it is perfectly clear that the order we have involuntarily constructed is not beneficent towards animals, or we might all be vegans; on what grounds are we to believe that it is beneficent towards humans? 

 

Necessarily, Hayek is extremely vague[34].  He cannot specify the mechanism by which mutation and selection is to take place.  It may be that there is a set of rules such that if a given society were to implement it, it would have a competitive advantage over other groups.  But it may also be the case that the individuals of the society cannot reach that set of rules from their present set by each individual following his own spontaneous interest.  It may need coordination at the macro level to achieve it.  Selection will never be able to work on this set of rules as there is no spontaneous mechanism which will allow the society to adopt it, without it being imposed on the whole society by central command. 

 

To illustrate his thesis that macro level orders are systems of behaviour that have been selected for because they are optimal for the micro level agents, Hayek turns to zoological examples:

 

“The most easily observed instances in which the rules of individual conduct produce an overall order are those where this order consists in a spatial pattern such as will occur in the marching, defence, or hunting of a group of animals or men.  The arrow formation of migrating wild geese, the defensive ring of the buffaloes, or the manner in which lionesses drive the prey towards the male for the kill, are simple instances in which presumably it is not an awareness of the overall pattern by the individual but some rules of how to respond to the immediate environment which co-ordinate the actions of the several individuals.” (SIP: 69)

 

This is a heterogeneous list of examples.  It would be out of place here to launch into a critique of Hayek’s views on the behaviour of lionesses.  Suffice it to say that even if his description of their hunting methods were true, it is most unlikely that their tactics could be reduced to a stereotype summed up in a few simple rules, in the same way as geese and buffalo.  But that is not the main point here.  What is interesting is how these examples contradict his thesis.  Firstly, the arrow formation of the geese.  In Hayek’s model, the arrow formation would be an order of actions which would have evolved because it was optimal for the geese.  A better explanation, or candidate explanation, is that perhaps each goose gains by flying in the slipstream of another, and so it follows the rule of doing so, where possible.  If this is true, then the arrow formation is an epiphenomenon of following this rule: it confers no cost or benefit on the flight of geese.  Now we know that this is not true for Homo sapiens: the patterns of our collective behaviour have a major impact on the fate of individuals. 

 

The defensive circle of the buffalo seems to fit Hayek’s pattern a little better (again, assuming that his facts are correct): it is quite likely that each animal follows a simple rule in certain circumstances of danger - the result is a defensive circle which no individual animal intended but which serves all their interests optimally - and presumably this behaviour evolved because groups of buffalo which reacted thus were at a selective advantage.  The point is that although Hayek’s thesis is plausible in individual cases, it can not be assumed to hold in general.  On the contrary, in situations where it may well hold, such as the buffalo circle, there has to be a mechanism by which it is in the interest of individuals to behave in the way required for the macro level outcome.  In the case of the buffaloes this incentive may lie in the consanguinity of the group: each buffalo is a vehicle for much the same assemblage of genes, and so (the gene complex embodied in) each gains if it aids the survival of its fellows.  The externality is internalised.  Or perhaps it just makes an immediate gain in security for little extra cost by joining a defensive circle.  Such links from self-seeking micro behaviour to desirable social outcomes cannot be assumed in groups of humans, but have to be demonstrated on each occasion where it is thought to hold. 

 

Hayek thus believes that people do what they do, not because it is in their interest to do so, but because it is functional for the society for them to do so[35].  A conception which clearly denies the necessity of incentives to underpin any posited pattern of individual behaviours.  Speaking of the rules of conduct in primitive human societies, he says that

 

“the ‘functions’ which these rules serve we shall be able to discover only after we have reconstructed the overall order which is produced by actions in accordance with them ... all the individuals of the species which exist will behave in that manner because groups of individuals which have thus behaved have displaced those which did not do so.”  (SIP: 70)

 

When we act, what we do is describable, if sufficiently regular, by a rule.  But the question is whether the rule is an epiphenomenon, like the arrow formation of the flying geese, a pattern which emerges from generalising a large number of instances of the particular action, or whether the individual actions are executed because of the rule.  In the second case, the actions of individuals are functional for the purposes served by the rule.  The use of the term ‘functions’ in the passage cited - albeit in scare-quotes - only illustrates Hayek’s functionalism. 

 

“Vanberg (1986[36], p.83) is right to suggest that Hayek’s argument has a functionalist quality; it assumes that the contribution of a rule to the maintenance of a system is sufficient to explain the existence of that rule.  Absent in Hayek’s argument is the specification of a process by which a rule that is advantageous to the system is sustained in operation within that system.” (Hodgson, 1993: 168)

 

It is a basic assumption in Hayek that individual actions serve a ‘function’ for the collective, that is, that in carrying through one’s own interest, one is simultaneously (and more importantly) carrying through the interest of society; that actions performed by individuals are automatically functional for society.  This is to assume all our problems away. 

 

Hayek was talking about ‘primitive human societies’ but by the end of the paragraph from SIP just cited, this has become ‘all the individuals of the [human] species which exist’.  This implies that all the individuals that exist face identical circumstances, and therefore that the same set of rules is appropriate to all.  All the individuals now alive behave in the same way: there was variety in behaviour in the past, but not now, as less well adapted behaviours have been eliminated.  In the past some individuals behaved this way, now all do.  The implication is that evolution is convergence to a destination state, rather than permanent flux.  This brings together two threads: firstly, the Lucretian vision of evolution which Hume attributes to Philo in the Dialogues, the vision in which selection eliminates less well adapted forms, allowing the pre-existing fitter forms to displace them.  Secondly, Hayek’s ontogenetic version of evolution which sees evolution as the approach to a destination state.  On the big issues, the emergence of the market and common law, evolution, and hence history, comes to an end with capitalism.  Hayek is revealed as just as much a ‘historicist’ as thinkers such as Hegel, upon whom he has poured so much abuse (‘Comte and Hegel’, CRS: 365-400).

 

In a footnote to the passage just cited, Hayek refers the reader to the ‘[a]mple further illustrations of the kind of orders briefly sketched in this section ... in V.C. Wynne-Edwards, Animal Dispersion in Relation to Social Behaviour, Edinburgh, 1962’ (SIP: 70 n 7).  Hayek’s point of view is exactly the group selectionist argument criticised by Richard Dawkins:

 

“A group, such as a species or a population within a species, whose individual members are prepared to sacrifice themselves for the welfare of the group, may be less likely to go extinct than a rival group whose individual members place their own selfish interests first.  Therefore the world becomes populated mainly by groups consisting of self-sacrificing individuals.  This is the theory of ‘group selection’ [expressed] in a famous book by V.C. Wynne-Edwards [Animal Dispersion in Relation to Social Behaviour]... [But if] there is just one selfish rebel, prepared to exploit the altruism of the rest, then he, by definition, is more likely than they are to survive and have children.  Each of these children will tend to inherit his selfish traits.  After several generations of natural selection, the ‘altruistic group’ will be over-run by selfish individuals, and will be indistinguishable from the selfish group.” (Dawkins, 1989a: 7-8)[37]

 

To illustrate the point we may cast our minds back to the case of the elephant seals, discussed in Chapter 2 of this thesis.  We saw that the elephant seal species and populations within it are less efficient in exploiting their habitat than they could be, were their genes not caught up in a multi-player iterated prisoners’ dilemma.  Species do go extinct and many mammal species are endangered: it is not beyond the bounds of plausibility that one day the elephant seals will teeter over the edge of extinction when they would not have done, had that prisoners’ dilemma not existed.  A cooperative solution to the dilemma cannot emerge and replicate, and displace the Pareto-inefficient defection solution, because no mechanism, no incentive structure exists to make cooperative behaviour Nash. 

 

Evolution may very well take place at the group or species level; but for that to happen, there has to be a mechanism within the group which gives individuals adequate incentive to behave in the manner required for the group to prosper.  Hayek attempts to suggest such an incentive:

 

“The properties of the individuals which are significant for the existence and preservation of the group, and through this also for the existence and preservation of the individuals themselves, have been shaped by the selection of those from the individuals living in groups which at each stage of the evolution of the group tended to act according to such rules as made the group more efficient.” (SIP: 72)

 

This contains two formulations; let us examine the first - ‘the properties of the individuals which are significant for the existence and preservation of the group [are] through this also [significant] for the existence and preservation of the individuals themselves’.  This formulation is incorrect: the properties of a particular individual, although they may well be significant for the group - when taken together with all the other similar individuals - can only be significant to that individual as a result of its significance for society to a vanishingly small degree, if the group itself is of any significant size.  And, moreover, selection cannot distinguish between the effects on an individual’s survival chances due to its own contribution to society and those due to someone else’s. 

 

Now we may turn to the second formulation - ‘the properties of the individuals which are significant for the existence and preservation of the group ... have been shaped by the selection ... from the individuals living in groups which at each stage of the evolution of the group tended to act according to such rules as made the group more efficient’.  This says that individuals’ behaviour, that is, the rules that they follow, even if not the individuals themselves, is descended from the behaviour of individuals in groups which have been successful.  Again, behaviour can be successful in two different ways: it can fulfil the objectives of those carrying out the activity, or it can be successful in terms of propagating itself, of getting itself copied by other individuals and groups.  We have to ask, what is the selection mechanism here?  Some groups contain individuals which ‘act according to such rules as made the group more efficient’, others don’t, and it is the former which constitute the template for future expansion.  This is the group selection argument, and it is vulnerable to the Dawkins critique mentioned above: this other-regarding behaviour may be optimal for the group, but without individual incentives it is not Nash-ESS for individuals.  Hence Hayek’s attempt to provide an incentive structure to underpin the group selectionist argument assumes exactly what was to be demonstrated. 

 

Now if groups were run by a central authority, then that authority might be able to set up an incentive structure to preserve the optimal behaviour pattern; the central authority changes the payoffs to individual actions to make the socially optimal outcome consistent with individual self-seeking behaviour.  Such a group is also in a position to observe and copy collectively desirable behaviour patterns from other groups, which individual agents certainly are not able to do.  As we have seen the group selectionist argument simply cannot work for spontaneous human societies. 

 

Hayek recasts his evolutionary argument in teleological terms.  There is, he says,

 

“a sort of inversion of the relation between cause and effect in the sense that the structures possessing a kind of order will exist because the elements do what is necessary to secure the persistence of that order.  The ‘final cause’ or ‘purpose’, i.e., the adaptation of the parts to the requirements of the whole, becomes a necessary part of the explanation of why structures of the kind exist: we are bound to explain the fact that the elements behave in a certain way by the circumstance than this sort of conduct is more likely to preserve the whole - on the preservation of which depends the preservation of the individuals, which would therefore not exist if they did not behave in this manner.  A ‘teleological’ explanation is thus entirely in order so long as it does not imply design by a maker but merely the recognition that the kind of structure would not have perpetuated itself if it did not act in a manner likely to produce certain effects, and that it has evolved through those prevailing at each stage who did.

 

“The reason why we are reluctant to describe such actions as purposive is that the order which will form as the result of these actions is of course in no sense ‘part of the purpose’ or of the motive of the acting individuals.  The immediate cause, the impulse which drives them to act, will be something affecting them only; and it is merely because in doing so they are restrained by rules that an overall order results, while this consequence of observing these rules is wholly beyond their knowledge or intentions.  In Adam Smith’s classical phrase, man ‘is led to promote an end which is no part of his intentions’ just as the animal defending its territory has no idea that it thereby contributes to regulate the numbers of its species” (SIP: 77).

 

This is a revealing passage.  Firstly, Hayek had already said that different macro orders are compatible with the same rules of micro behaviour, and different rules compatible with the same order.  Now he says that the preservation of the individuals depends on the preservation of the order such that they would not exist without it.  Well, no doubt their existence depends on there being some order, but it by no means follows that their survival depends on the maintenance of the particular order obtaining at the present moment.  This is the optimality assumption.  Indeed, it is an extreme version of the optimality assumption, in which the present order is not just the best we can get, but the only one in which we could survive.  This is repeated elsewhere:

 

“If there exist recurrent and persistent structures of a certain type (i.e., showing a certain order), this is due to the elements responding to external influences which they are likely to encounter in a manner which brings about the preservation or restoration of this order; and on this, in turn, may be dependent the chances of the individuals to preserve themselves.” (SIP: 71)

 

Hayek says here that an order exists because individuals behave in a way which preserves it.  Perfectly true.  But then he goes on to imply that their survival depends on the preservation of the order.  This prompts the comments that (a) an order which allows a number of individuals to survive is not definitionally the best they can get: the social outcome could be suboptimal even if the behaviour of each individual in such an order is Nash, and (b) even if their survival depended on the individuals maintaining the order, the individuals concerned would still not do so unless it were individually rational to do so. 

 

Secondly, we can see here how thin Hayek’s individualism is: the ‘final cause’ or purpose of a society is ‘the adaptation of the parts to the requirements of the whole’ - the adaptation of individuals to the requirements of society.  We explain the way people behave ‘by the circumstance that this sort of conduct is more likely to preserve the whole’.  But this completely neglects any reason why self-seeking individuals should do any such thing: ‘that the order which will form as the result of these actions is of course in no sense ‘part of the purpose’ or of the motive of the acting individuals’.  The implication is that they don’t know what they are doing, they are ignorant or irrational: the ‘consequence of observing these rules is wholly beyond their knowledge or intentions’.  It is interesting that, quite illegitimately, Hayek now draws a distinction between the actions individuals would take to satisfy their own drives in the absence of rules, and the rules themselves, which take on the status of a restraint.  This breaks with his own procedure, which regards all the actions of the individuals, in so far as they are regular, as the execution of rules.  In the version which sees rules as restraints, they can only be imposed by an external authority or force. 

 

Thirdly, Hayek claims that teleological explanation is in order, as long as it does not imply a deity.  However, so long as the explanation includes no motivation for individuals to behave in this socially desirable way, then it must depend on supernatural intervention.  Hayek replicates Smith’s schema with all individual behaviour revolving round and organised in accordance with the general interest of society.  But it is Hamlet without the prince: the supernal agency arranging all this is missing.  Hayek’s group selectionism cannot stand in for this agency, indeed, without that agency it makes no sense: for group selection assumes individual and general interests already to be reconciled.  Contrary to Hayek’s declaration, teleological explanation is only valid if it is, at least in principle, possible to specify a mechanism by which actions at the level at which the teleology is thought to hold can be reconciled with the interests of substrate levels. 

 

Lastly, it is very fitting that Hayek should cite Smith, at he does at the end, and explicitly link him to a group selectionist standpoint: a footnote at the end of the last sentence of the passage cited refers us again to Wynne-Edwards (1962).  The mythical animal fulfilling its own interests at the same time as it fulfils those of a higher entity of which it is the unwitting subordinate part[38] is just that - mythical.  This is a version of Hegel’s cunning of history.[39]  Here, it is not even the interest of the population or the species which is the unintended beneficiary, but the whole ecosystem. Smith’s ‘famous phrase’ was actually ‘every individual ... is ... led by an invisible hand to promote an end which was no part of his intention.’  Hayek censors out the ‘invisible hand’ as it exposes what he is doing, namely assuming a mystical force which will reconcile our conflicting plans spontaneously to produce a beneficent order at the macro level.

 

This subsection has shown that Hayek’s account of evolution is essentially the group selectionist argument which has been rightly subjected to considerable criticism in the biological domain.  We have also seen that this is closely associated with the Smithian Panglossianism of which Hayek is a principal twentieth century representative.  Hayek’s twists and turns, his falsifications and distortions, his vagueness and obscurity, can be accounted for by his dedication to a particular political programme and his apparent willingness cynically to prefer the support of that programme to all scholarly values of truth and consistency. 

 

5.4.5    Have Sober and Wilson rescued group selection?

 

It is now necessary to turn to an important issue which has been raised in connection with the points made above (Vromen, personal communication), namely whether Sober and Wilson (1998) have rescued the notion of group selection deployed by Hayek.  Clearly, if they have, then much of the argument of the present chapter collapses.  Now, Sober and Wilson certainly perform a signal service by clarifying the conditions under which what we might legitimately call ‘group selection’ could be sustained, and ruling out crude, reductionist readings of Darwinian writers such as Dawkins.  Whether they have anything sensible to say about those Darwinian writers themselves, is another question which it would be inappropriate to explore here.  Suffice it to say that Sober and Wilson significantly muddy the water by their systematic usage, from the front cover of their book to its last page, of the terms ‘unselfish’ and ‘altruistic behaviour’ when they mean cooperative behaviour.  If by altruism we mean, as we clearly should mean, other-regarding behaviour engaged in to one’s own cost, then altruism is not selected for, full stop.  Sober and Wilson’s book is not, what its title implies, about the evolution of unselfish behaviour: it is about the evolution of cooperation, that is, the circumstances in which cooperation is the outcome of individual self-seeking behaviour.  It is individually advantageous to engage in cooperation when the benefits accruing to oneself as a result of the cooperative behaviour exceed its costs.  This can happen, for example, when membership of the group of cooperators is a function of one’s own propensity to cooperate.  In economic terms, cooperation can arise spontaneously when the externality generated by cooperation is internalised. 

 

Once this is understood, a sensible investigation of ‘group selection’ can begin.  Group selection can take place when there is variation between groups, with some exhibiting more, and some less, cooperative behaviour on the part of individual group members, where such cooperative individual behaviour is underpinned by some mechanism ensuring that cooperation is in the interest of selfish individuals.  Then more cooperative groups will tend to displace less cooperative ones: cooperative behaviour is selected for.  There is nothing in this which contradicts Darwinianism of the Dawkins variety.  Indeed, selfish organism theory is a variety of group selection where the group is the community of genes embodied in the organism, as Dawkins makes clear – and as Sober and Wilson concede he makes clear: ‘group selection is a question about vehicles’ (1998: 92) – though, somehow, Dawkins’s, view here is transmuted into a ‘concession’ to group selectionism.  The opposition of Darwinians to ‘group selection’ is not to the idea that such mechanisms, reconciling individual and group interests may exist, but to the Panglossian notion propagated by Wynne-Edwards and his followers, such as Hayek, that group selection can exist in the absence of such mechanisms. 

 

The critical link between individual and group interest is what I will call connation.  It is worth quoting Dawkins, from The Extended Phenotype, at length on the issue: 

 

   “each gene is fighting only its alleles at the same locus, and it will unite with genes at other loci only in so far as doing so assists it in its selfish war against its own alleles.  A fluke gene may ‘unite’ with other fluke genes in this way but, equally, if it was convenient to do so, it might unite with particular snail genes.  And if it remains true that snail genes are in practice selected to work together with each other and against an opposing gang of fluke genes, the reason is only that snail genes tend to gain from the same events in the world as do other snail genes.  Fluke genes tend to gain from other events.  And the real reason why snail genes stand to gain from the same events as each other, while fluke genes stand to gain from a different set of events, is simply this: all snail genes share the same route into the next generation – snail gametes.  All fluke genes, on the other hand, must use a different route, fluke cercariae, to get into the next generation.  It is this fact alone which ‘unites’ snail genes against fluke genes and vice versa.  If it were the case that the parasite genes passed out of the host’s body inside the host’s gametes, things might be very different.  The interests of host genes and parasite genes … would then be very much closer than in the case of fluke and snail.” (Dawkins, 1989b: 221-222, my emphasis)

 

This ‘sharing the same route’ – what I call connation – is absolutely critical.  The difference between parasitism and symbiosis, between a liver fluke and a mitochondrion, rests on shared destiny.  The mitochondrion can only place copies of itself in the next generation by aiding its host, the animal cell; the liver fluke is not so restricted and exploits its host, damaging its host’s interests to its own advantage.  So we need to think about the routes to the future available to social structures, the phenotypic expression of meme complexes.  Clearly, those routes are utterly different from the route by which humans reproduce and so those meme complexes cannot be relied upon spontaneously to share interests with humans.  The meme complexes embodied in the social institutions which emerge spontaneously can be expected sometimes to be symbiotic with, and sometimes parasitic on, their human hosts.  Some interesting examples are given in Blackmore (1999). 

 

If the social institutions which emerge spontaneously from the evolutionary process can be parasitic, then the presumption in favour of a laissez-faire policy framework is undermined.  Spontaneously emerging forms may need to be modified or replaced by institutions adapted to human interests.  In this context, we can return to the question this section seeks to answer: is Hayek a Panglossian evolutionary theorist?  Hayek invokes ‘group selection’ – but is it a form of ‘group selection’ consistent with Darwinian, Dawkinsian thought, or does it rather, as Hayek himself clearly believes, stand in the Wynne-Edwards tradition?  Given Hayek’s belief, his assumption without explanation or justification, that institutions are selected ‘on the basis of their human survival-value’, rather than on the basis of their meme-complex survival value, the conclusion has to be that nothing in Sober and Wilson gives cause to modify our verdict, that Hayek’s evolutionary theory is, indeed, Panglossian.  The last word here goes to Sober and Wilson: against ‘group-level functionalism’ they warn that

 

“One can never simply assume that higher-level units such as cultures, societies or biological ecosystems must be well-functioning organic wholes.  Higher-level functionalism always requires special conditions and is vulnerable to subversion from within.” (Sober and Wilson 1998: 11)

 

5.5       Hayek’s anti-individualism

 

A theme of the previous chapter, on Adam Smith, was that although his policy prescription was one of individualism, this was linked to a methodological holism and combined with some distinctly anti-individualist social attitudes.  This section will present the case for a very similar verdict on Hayek.  Hayek’s basically holistic methodology has already been discussed.  Here I want to draw attention to some strongly anti-individualist sentiments in Hayek’s position.

 

We saw in the previous section how Hayek made the ‘final cause’ or purpose of human activity ‘the adaptation of the parts to the requirements of the whole’ - the adaptation, that is, of individuals to the requirements of society.  Hayek repeats this elsewhere:

 

‘Frequently the behaviour of the individual is determined by his success in maintaining himself as part of a certain system within which it is … the whole system to which he has adapted that determines his behaviour.  For this reason, value … can only be understood as the determinant of what people must do to maintain the overall structure.” (KES: 36) 

 

So the individual has to adapt to the system, and it is the system that determines the behaviour of the individual.  What we think of as value is just a signal to us to act in accordance with the needs of the system.  As statements of fact,  these assertions, like Smith’s on government as a means of defence of the rich against the poor, sound very radical and subversive.  As normative statements, as statements of what should be the case, they take on a more sinister coloration.  It is only Hayek’s Panglossian and harmonic world view, in which individual interests are illegitimately identified with those of the system, which allows him to say this.  If the system is optimal for the individuals composing the society, then it is acceptable to require the individual to adapt to it.  If the system is necessarily optimal, then there are no social problems.  Apparent problems are problems for social scientists only – a challenge for them to explain away.  To assure individuals suffering the consequences of macro level social problems that such problems do not exist, is to treat those individuals with contempt. 

 

We also saw that in the non-harmonic world in which we actually live, the group selectionist argument that individuals behave in the social interest rather than in their own interest implies that such individuals are unaware of the consequences of their actions: they don’t know what they are doing – they are ignorant or irrational[40] (or both).  If individuals were rational and adequately informed, they would follow their own interests and the group interest would remain unimplemented.  ‘[T]he order which will form as the result of [individual] actions is of course in no sense ‘part of the purpose’ or of the motive of the acting individuals’, Hayek asserts in the passage cited in the previous section, the ‘consequence of observing these rules is wholly beyond their knowledge or intentions’ (SIP: 77).  Institutions arise, he says, ‘from the separate actions of many men who did not know what they were doing’ (COL: 58-59, emphasis added). 

 

The irrationality thesis is stated even more bluntly in KES:

 

“to preserve rules of conduct whose functions they [the groups which obeyed these rules] did not understand, they drew upon the aid of supernatural sanctions ... we owe it to mystical beliefs, that we preserved a tradition which was beneficial to us.  Thus we owe  our civilisation to beliefs which are not true” (KES: 48).  “The antirationalistic approach … regards man not as a highly rational and intelligent but as an irrational and fallible being” (IEO: 8)

 

This is a very close parallel to the argument in Smith, that individuals are deceived by nature for the good of society.  Smith says that the individual is deceived into thinking, for example, that wealth will make him happy, and as a result slaves to accumulate wealth, without gaining the expected increase in happiness.  This aided society by keeping the wheels of industry turning.  Just so, individuals in the Hayekian story are misled by bizarre superstitious notions which upset their lives and cause them untold suffering, so that civilisation may prosper. 

 

When we are looking at the status of individuals in a proposed or actual social system, a key diagnostic turns on the question, what constitutes the ends and what the means of the system.  Hayek is clear on this: ‘Like all other values, our morals are … part of the ends which the instrument of our intellect has been developed to serve … the system of values into which we are born supplies the ends which our reason must serve’ (COL: 63).  Again, this is an extremely illiberal and anti-individualist standpoint. Contrary to what Hayek says, the ends we serve arise within us as our natural desires, they are not something we meet externally as something to which we must subordinate ourselves. The system of values within which we work tells us the constraints our actions must satisfy; it tells us one way of coordinating our efforts to fulfil our individual goals so that we all may fulfil them more effectively.  It is merely a means to the end of human happiness. 

 

To argue that the culturally determined system of what at some point in time is taken as right and wrong, ‘the system of values into which we are born’, is an end, rather than a means to our ends, does two things.  Firstly, and this is Hayek’s goal here, it makes the system of values existing here and now absolute instead of relative.  Its survival, the prevention of its succession by another, alternative system becomes a good in its own right, an end which we should pursue regardless of its utility for us.  Secondly, instead of seeking to pursue our own goals, instead of seeking to maximise our own welfare, we are enjoined to pursue, and to subordinate our own interests to, the interest of some non-human entity.  This is precisely the establishment of  ‘Society’ ‘as an abstraction vis-à-vis the individual’, which Amartya Sen, echoing Karl Marx, warned against (Marx[41] cited in Sen 1970: 1 n 1). 

 

Further evidence on Hayek’s anti-individualist outlook emerges in his criticism of (unnamed) rationalists for their alleged tendency to replace the word ‘moral’ with ‘social’ as in ‘social conscience’ instead of ‘moral conscience’ or just ‘conscience’: 

 

“They are in effect saying that our action should be guided by a full understanding of the functioning of the social process and that it should be our aim, through conscious assessment of the concrete facts of the situation, to produce a foreseeable result which they describe as the “social good” … The curious thing is that this appeal to the “social” really involves a demand that individual intelligence, rather than rules evolved by society, should guide individual  action - that men should dispense with the use of what could truly be called “social” (in the sense of being a product of the impersonal process of society) and should rely on their individual judgment of the particular case.  The preference for “social considerations” over the adherence to moral rules is, therefore, ultimately the result of a contempt for what really is a social phenomenon and of a belief in the superior powers of individual human reason.”  (COL: 65)

 

What is remarkable, in the present context, about this passage, is that it criticises a supposed ‘appeal to the social’, not on the grounds that we should not appeal to the social, but because it is really an appeal to the individual.  He is criticising these ‘rationalists’ for their individualism, for their ‘contempt’ for the social!   Once again, he is expressing a very anti-individualist view.  Individuals are not to be trusted to work things out for themselves, but have to submit to traditional rules whose rationale is unknown.  This is very similar to the anti-Protestant view of the Catholic Church, as can be seen by re-casting the passage in terms of the Catholic critique of Protestantism:

 

Protestantism involved a demand that individual religious conscience, rather than the doctrines of the Church, should guide individual action - that men should dispense with what could truly be called ‘religious’ (in the sense of being a work of God, rather than of humans) and should rely on their individual judgement of the particular case.  The preference for ‘considerations of religious conscience’ over adherence to religious rules, is therefore ultimately the result of a contempt for genuine religion and a belief in the superior powers of individual human reason.

 

Hayek’s argument, as well as being explicitly anti-individualist, is also highly misleading.  Although the thinking involved in review, revision and reform of the rules under which we are to live, must take place in the brains of individual people, they are by no means acting as individuals, as isolated atoms, but rather as members of the community, debating with others in ways supervised by the public and according to rules invigilated by the public, many individuals contributing factual and analytical material to the discussion so that the whole thing is far more complex and profound than any one individual could have managed in isolation.  Reform is a truly social enterprise.  It is the superior powers of social, not individual, human reason which are being relied upon. 

 

Indeed, when we get to the bottom of it, we find that Hayek’s individualism really has nothing at all to do with … individualism:

 

 “[I]ndividualism ... is primarily a theory of society, an attempt to understand the forces which determine the social life of man, and only in the second instance a set of political maxims derived from this view of society.  This fact by itself should be sufficient to refute the silliest of the common misunderstandings: the belief that individualism postulates (or bases its arguments on the assumption of) the existence of isolated or self-contained individuals, instead of starting from men whose whole nature and character is determined by their existence in society.” (IEO: 6)

 

Just about everything Hayek says here is false.  Contrary to what he says, individualism is indeed primarily a political doctrine, and only secondarily a theoretical underpinning for it.  And whatever its status in general, it certainly is primarily political rather than theoretical in Hayek’s own case.   It is also false to claim that individualism does not start from the assumption of  ‘the existence of isolated ... individuals’.  The implication, that the whole nature and character of people is determined by their social being, their being in society, is of the essence of the holist standpoint: it is very far indeed from the individualism of neoclassical economics, which starts from isolated individuals – ‘a collection of Robinson Crusoes’ as Friedman says.  The starting point of ‘men whose whole nature and character is determined by their existence in society’ echoes his statement in CRS quoted by Toynbee, that individuals are but foci in the network of relationships constituting society.

 

Smith and Hayek are essentially conservatives[42], and from this all else flows.  In both cases nostalgia for stability plays a key rôle in their psychologies.  Smith wanted to preserve the fixed orders and ranks of society; Hayek feels the same about traditions:

 

‘There probably never has existed a genuine belief in freedom, and there has certainly been no successful attempt to operate a free society, without a genuine reverence for grown institutions, for customs and habits ... [A] successful free society will always in a large measure be a tradition-bound society’ (COL: 61).  ‘[S]ubmission to undesigned rules and conventions whose significance and importance we largely do not understand ... [and] reverence for the traditional ... is indispensable for the working of a free society’ (COL: 63).

 

Hayek’s vision of the free society is thus one in which individuals, as lost and uncomprehending of the world they inhabit as children, voluntarily submit themselves to the greater wisdom embodied in tradition, or, failing such voluntary submission, one in which submission is brought about by compulsion.  The individualist order requires

 

“that the individual ... must be willing ... to submit to conventions ... which to him will often appear unintelligible and irrational .... The willingness to submit to such rules ... is ... an indispensable condition if it is to be possible to dispense with compulsion.” (IEO: 22)  “[T]he fundamental attitude of true individualism is one of humility toward the processes by which mankind has achieved things which have not been designed or understood by any individual and are indeed greater than individual minds.” (IEO: 32)

 

Hayek’s ‘fundamental attitude’, that is, is a humbling of ourselves before the fetish of the spontaneous.

 

The verdict, then, on the relation of Hayek’s philosophy to individualism, is this.  In the sphere of policy, he is indeed an individualist, regarding individual freedom as a paramount value.  Just as Smith regarded social order as more important than justice, as ‘of more importance than even the relief of the miserable’, so Hayek, too, regards individual freedom as more important than social justice, and frankly says so: ‘We must face the fact that the preservation of individual freedom is incompatible with a full satisfaction of our views of distributive justice’ (IEO: 22).  On the other hand, there is nothing specifically individualist about the methodology which Hayek employs to investigate the world.  On the contrary, and again like Smith, and despite equivocation and inconsistency, he does recognise the fundamental necessity of a holistic scientific methodology to understand the world.  Finally we have seen that the two writers, Smith and Hayek, also share a set of authoritarian conservative[43] social attitudes which are extremely thin on respect for the rationality, the autonomy, and the fate of individuals. 

 

5.6       Conclusion

 

Just as Smith faced, and refused to face up to, the problem of how, given that human nature is natural, anything that humans do - especially state activity - could be unnatural, so Hayek faces a problem of how any human behaviour, including state intervention, can fail to be the result of an evolutionary process.  And this is fatal for his policy prescription, just as it was for Smith.  Smith’s Panglossianism depended on the view that everything natural was God-given and hence good, while everything artificial was human-made and hence fallible.  Hence his opposition to the visible hand of state intervention and his belief in the optimality of the outcomes supplied us by the invisible hand of a benign deity.  But if all human strengths and weaknesses alike are themselves natural and God-given, then state intervention, too, must play its necessary part in the scheme of things.  Hayek’s Panglossianism depends on the view that spontaneous evolution of institutions automatically generates optimal outcomes while rationalistic intervention is both unnecessary and perverse in its effects.  But the institutions by means of which the society as a whole acts to coordinate agent actions, and to improve on the inefficiencies of spontaneous outcomes, are themselves the outcome of a spontaneous process of evolution – and thus, in a consistent Hayekian view, optimal.  To intervene on principle to prevent them from doing their job, without regard to the actual content of what they were doing, would be a clear instance of the rationalism which he has spent his life combating. 

 

Appendix: Bibliographical note

 

Hayek’s books exist in several editions and papers are reprinted in various collections.  Navigating his works can be confusing.  This appendix will set out a bibliography of Hayek’s works and explain which versions have been consulted for this chapter.  This is not a comprehensive bibliography of Hayek’s work, which would be a much more ambitious task, but an indication of what has been consulted for this chapter, an explanation of the abbreviations used in the text, and an explanation of which version page numbers of works by Hayek cited here refer to.  For fuller bibliographical information, refer to:

 

a          Machlup (1977: 51-59).  Although only going up to 1977, this gives details of 173 publications by Hayek; 

b          a comprehensive bibliography of Hayek’s writings in J Gray (1985, 2e: 1986) Hayek on Liberty Oxford: Blackwell;

c          a more brief but up to date listing contained in the bibliography to Hodgson (1993: 325-326).

 

Only items referenced in the text are included.  Each of the following items is preceded by the abbreviation used for it in the text, where relevant. Only the books are included in the bibliography at the end of the thesis. 

 

Books by Hayek

 

RTS 1944 The Road to Serfdom London: George Routledge & Sons

 

IEO 1948 Individualism and Economic Order Chicago: University of Chicago Press; (reprinted, 1949, London: Routledge).  References are to the 1949 reprint.

 

TSO 1952 The Sensory Order. An Inquiry into the Foundations of Theoretical Psychology London: Routledge & Kegan Paul.  Originally drafted in approx 1920.

 

CRS 1e: 1952 The Counter-Revolution of Science. Studies on the Abuse of Reason Glencoe, Illinois (second edition, 1979, Indianapolis: LibertyPress).  Reprinted articles.  References are to the second edition of 1979, which contains additional prefatory material.

 

COL 1960 The Constitution of Liberty London: Routledge & Kegan Paul

 

SIP 1967a Studies in Philosophy, Politics and Economics London: Routledge & Kegan Paul.  Reprinted articles.

 

NSP 1978a New Studies in Philosophy, Politics, Economics and the History of Ideas London: Routledge & Kegan Paul.  Reprinted articles.

 

TBT 2e: 1978b (ed SR Shenoy) A Tiger by the Tail London: Institute for Economic Affairs.  An edited collection of extracts from other works. 

 

LLL (1982) Law, Legislation and Liberty. A new statement of the liberal principles of justice and political economy London: Routledge.  ‘Hayek’s major statement of political philosophy ... Hayek’s comprehensive study on the basic principles of the political order of a free society’, according to the publishers comments.  One-volume version with corrections and revised preface of: Law Legislation and Liberty (1973-1979) in three volumes:

Vol 1 (1973) Rules and Order

Vol 2 (1976) The Mirage of Social Justice

Vol 3 (1979) The Political Order of a Free People 

 

KES 1983 Knowledge, Evolution and Society London: Adam Smith Institute.  Four lectures given in the United States in the late 1970s, plus prefatory essays by Eamonn Butler and Arthur Shenfield.

 

Journal articles and lectures

 

1935 ‘The Nature and History of the Problem’ in FA Hayek (ed) (1935) Collectivist Economic Planning London: George Routledge & Sons.  Reprinted as Ch VII, ‘Socialist Calculation I: The Nature and History of the Problem’, of IEO: 119-147.  References are to the 1949 reprint of IEO.

 

1941 ‘The Counter-Revolution of Science’ Economica.  Reprinted as Part II of CRS: 183-363.  References are to the 1979 edition of CRS.

 

1942-44 ‘Scientism and the Study of Society’ Economica.  Reprinted as Part I of CRS: 17-182.  References are to the 1979 edition of CRS.

 

1945 ‘Individualism: True and False’ Finlay Lecture, University College, Dublin; first published, 1946, Dublin: Hodges, Fidges & Co, and Oxford: Blackwell; reprinted as Ch 1 of IEO: 1-32.  References are to the 1949 reprint of IEO.

 

1951 ‘Comte and Hegel’ Measure June.  Reprinted as Part III of CRS: 365-400.  References are to the 1979 edition of CRS.

 

Mandeville 1967b ‘Dr Bernard Mandeville’ Proceedings of the British Academy Volume LII: 125-141  (British Academy ‘Lecture on a Master Mind’ read 23 March 1966) London: Oxford University Press.  Reprinted as Ch 15 of NSP: 249-266.  References are to the Proceedings version..

 

1978a ‘Coping with Ignorance’ Imprimis Vol 7 No 7 (Hillsdale College, Michigan).  Reprinted in KES: 17-27.  References are to the KES version.

 

1978b ‘Science and Socialism’ American Enterprise Institute for Public Policy Research.  Reprinted in KES: 28-37.  References are to the KES version.

 

1978c ‘The Reactionary Nature of the Socialist Conception’ Hoover Institution, Stanford University. Reprinted in KES: 38-44.  References are to the KES version.

 

1983 ‘Our Moral Heritage’ Heritage Foundation. Reprinted in KES: 45-57.  References are to the KES version.

 

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Send me an email: a.denis at city.ac.uk.

Back to my research page.  

Revised: Saturday, 13 September 2003

 


[1] An earlier version of this paper appeared as Denis (1999b),  and at point of writing material derived from it is under consideration at Constitutional Political Economy as Denis (2001b). 

[2] Hutchison says that after the mid-30s, Hayek adopted ‘a comprehensively “Smithian” approach’ (Hutchison, 1981: 228 n 17).

[3] Hayek gives no reference here, and the phrase as it stands does not appear in Smith.  A similar passage is in WN IV.ii.9: the capitalist (not ‘man in society’), Smith says, ‘is in … many … cases, led by an invisible hand to promote an end which was no part of his intention’.

[4] The reference is to Menger (1883, LSE reprint 1933) Untersuchungen über die Methoden der Sozialwissenschaft p 163; trans Hayek.

[5] As Dawkins points out, evolution is a product of a universe in which ‘there is, at bottom, no design, no purpose, no evil and no good, nothing but blind, pitiless indifference’ (Dawkins, 1995: 155).  To explore the consequences for our institutions of such a blind, pitilessly indifferent process in a social context would be a worthy enterprise indeed; needless to say, in my reading, this is not Hayek’s goal.

[6] Either the date or page number of this citation in Hodgson is incorrect.

[7] A saying which is reminiscent of an American millionaire’s remark, when accused of tax evasion, that ‘taxes are for the little people’.

[8] Shenfield also read the final text of Vol III of LLL and ‘corrected there a variety of substantial as well as stylistic points’ - showing, again, the close links between Hayek and Shenfield (LLL: xxi).

[9] What Popper calls ‘dogmatic methodological naturalism’ (Popper, 1957: 60).

[10] That his imagery was mechanical rather than organic is a reflection of the idiom of the time, particularly the influence of the Newtonian scientific revolution, and has no bearing on the content of his theory in this respect.  For centuries people have employed the trope of referring to animals as machines without there being any suggestion that they misunderstood the nature of an organism.  Two examples spanning the last half-millennium are Leonardo da Vinci: ‘A bird is an instrument working according to a mathematical law’ (McCurdy: 1938); and Richard Dawkins’s famous portrayal of individual organisms as ‘gigantic lumbering robots’ (Dawkins, 1989: 19).

[11] The reference is to Karl Popper (1944) ‘The Poverty of Historicism’, Economica XI (new series), August, 126.

[12] ie, flow equilibrium.

[13] Keynes goes further and finds major difficulties with both concepts, such that he decides not to use them in the General Theory (GT: 37-40).

[14] For a similar criticism of the frontispiece to Leviathan, see Haworth (1994: 13).

[15] See also LLL: xviii-xix.

[16] Later in the book, Hayek forgets that he has defined the microcosm and the macrocosm in this way, and refers to them the other way round - the macrocosm as the physical order and the microcosm as the sensory order (TSO: 108, 127).  The logic for this seems to be that the physical world, the macrocosm in this alternative definition, incorporates everything, including the microcosms of the sensory orders of organisms within it.  This is just one of a host of errors and inconsistencies which will irritate and frustrate the reader of this book.  A substantial proportion of the index entries are incorrect and the German orthography is haphazard.  Elsewhere (CRS: 72), in an extended analogy between the physical and social domains, Hayek uses the terms microcosm and macrocosm to refer to the atomic substrate and aggregate outcome levels respectively. 

[17] Hayek himself denies that he supports laissez-faire, and denies that Hume, Smith or Burke supported it (COL: 60).  This is partly because the expression is French and hence ‘rationalistic’ - ‘as the very words show’, but mainly because in his habitual absolutism he interprets laissez-faire as the negation of all state activity - an ‘antistate ... or anarchistic’ argument (ibid).  Hayek is also habitually inconsistent; elsewhere he makes laissez-faire mean, not an injunction to leave individuals alone, but to leave the existing laws alone (IEO: 135).  On this interpretation, a removal of absolutist and mercantilist laws restricting trade would be a denial rather than an implementation of laissez-faire.  Laissez-faire is understood in the same way in RTS (RTS: 13, 27).  This, I contend, is an absurd misuse of words.  On the meaning of the word which everyone else uses, Hayek is clearly a proponent of laissez-faire.

[18] It is often asserted that Smith had an evolutionary approach.  Heilbroner detects a ‘theme of historic evolution’ in WN (Heilbroner, 1986: 149), and speaks of ‘the historical evolution of astronomy’ in Astronomy (Heilbroner, 1986: 16).  But the kind of ‘evolution’ being referred to here is nothing more than a chronological sequence of forms, merely a ‘stadial treatment of history’ (Heilbroner, 1986: 150).  There is no sense of diversification of social forms coupled with selection of the fittest ones which would make this an evolutionary process in the modern, Darwinian sense.

[19] As John Toye remarks of Keynes in another context, ‘Changing one’s mind is not itself ground for criticism … The ground for criticism must be … the failure to acknowledge publicly and to explain honestly the reasons for his change of mind.’ (Toye, 1997: 19)

[20] These ideas have been taken up and repeated: ‘The idea that there can be order and regularity without design, and that social change can be explained without recourse to deliberate human actions, was discovered by the thinkers of the 18th-century Scottish Enlightenment, notably Adam Ferguson, David Hume and Adam Smith, long before Darwin in a not dissimilar way explained the biological world without the intervention of a Creator’ (Barry, 1988: 44).

[21] See also the discussion of Malthus’s decision to drop the theodicy from his (1798) Essay on the Principle of Population in the second (1802) and subsequent editions in Poovey (1998: Ch 6). 

[22] The argument is illegitimate since, as The Sensory Order makes clear, the same limits to self-knowledge apply to individuals as to society – but this doesn’t lead Hayek to deny that individuals can plan their activities.

[23] That what Mandeville says in many places is open to this interpretation is very true.  But it is also true, what Hayek never so much as hints at, that in many places he says exactly the opposite: ‘private vices by the dexterous management of a skillful politician might be turned into public benefits’ (cited in Landreth and Colander, 1994: 45).  ‘Mandeville argued … that social good could result from selfish acts if these actions were properly channelled by the government.  As a mercantilist, Mandeville had no concept of a natural harmony, which is an essential ingredient in Adam Smith’s advocacy of laissez-faire’ (Landreth and Colander, 1994: 45).  No final resolution of the question as to whether Mandeville was a mercantilist or a liberal seems likely: the fact is that he inconsistently adopted both points of view in different places. 

[24] Philo’s proposal seems to contradict this, with new, more perfect forms arising in place of old, more imperfect ones.  But in Philo’s account the origin of the new forms is obscure - if anything, it appears to be by the continual emergence of new life forms from inanimate matter rather than by adaptation of existing forms.  In this sense it is true that adapted forms do not acquire their adaptation from the evolutionary process but acquire it at their origin as life forms. 

[25] The two definitions are dated to 1670 and 1832 respectively.  The second definition still is not the same thing as Darwinism - as, indeed, it could not be, prior to 1859 - lacking as it does the key notion of natural selection as the cause of the modification of species.

[26] These ‘primitive and ferocious instincts’, Hayek later explains, are altruism and solidarity: ‘It is these two instincts ... which remained the great obstacle to the development of the modern economy .... I could write the whole of economic history in terms of the subduing of these good natural instincts by culturally developed rules of conduct’ (KES: 31).

[27] The reference is to Josiah Tucker (1755) The Elements of Commerce in RL Schuyler (ed) (1931) Josiah Tucker: A Selection New York: Columbia University Press, p 92.

[28] The reference is to Edmund Burke Thoughts and Details on Scarcity in Works Vol VII: 398.

[29] This is not the place to discuss whether his treatment of the continental rationalist trend is any nearer the mark than his treatment of the Smithian trend.

[30] Hayek, as so often, is obscure: by ‘relative importance’ he may well mean something more than an ordinal ranking.  Whether it does or not, it certainly means at least that, and hence the argument in the text follows. 

[31] The preceding sentence reads ‘It is remarkable how close … some of the ancient thinkers came to an understanding of the evolutionary processes that produced social institutions.’  So according to Hayek, holding a belief in the ministrations of a special providence illustrates an understanding of social evolutionary processes.  Hayek draws an explicit link between ‘evolutionary processes’ and ‘special providence’ – yet more evidence of the quasi-theological rôle that ‘evolution’ plays in his overall thesis. 

[32] Two examples he gives are Aristophanes and Cato (Mandeville: 130-131).

[33] ie, Popper’s ‘World 3’: see Magee (1973: 59-61).

[34] ‘Hayek repeatedly associates evolution with the existence of some kind of selection mechanism, although its specification, along with that of the unit(s) of selection and the criteria of fitness, are somewhat vague’ (Hodgson, 1993: 163).  Indeed, much of what Hodgson has to say about Hayek is on a note of frustration: Hayek is so obscure, allusive, vague, contradictory and downright wrong that often little can be made of what he says.  Hodgson refers to Hayek’s ‘errors and travesties’, his ‘recurring historical error’ (Hodgson, 1993: 159), to ‘not unique cases of a casual attitude to sources and scholarship in Hayek’s work’ (160); ‘Hayek is unclear as to the criteria on which evolutionary selection takes place’ (164), ‘Hayek’s own standpoint [on the unit of selection is] … vague and rarely elaborated’ (164) ; ‘The mechanisms of rule replication are not clarified or explained.  The mere suggestion of imitation is not enough’, ‘it is not entirely clear’, ‘Hayek writes vaguely’, ‘Here there is another gap in his theory and it is necessary to interpolate and to conjecture so as to attempt to understand his theoretical system as a whole’ (165); ‘Despite having written on cultural evolution for over 20 years … Hayek’s evolutionary theory remains incomplete’ (166).  I can only sympathise.

[35] As we shall see, this involves an impressive negation of the autonomy and rationality, indeed, of the value, of individuals.

[36] The page number is inconsistent with any of the works of Vanberg cited in Hodgson’s bibliography.

[37] It is relevant to the title of this chapter to note that John Maynard Smith, adopting the same standpoint as Dawkins, chose to denounce the Hayekian, Wynne-Edwards group-selection argument as ‘the old Panglossian fallacy that natural selection favours adaptations that are good for the species as a whole, rather than acting at the level of the individual’ (cited in Dennett, 1995: 239).

[38] Lest the reader think that Hayek’s claim about animals regulating their numbers is a slip, I should point out that he repeats this claim – this time about humans – in KES: the growth of world population, he says, ‘is a process which is self-regulating’ (KES: 52).

[39] ‘[S]tates, nations, and individuals arise animated by their particular determinate principle … While their consciousness is limited to these and they are absorbed in their mundane interests, they are all the time the unconscious tools and organs of the world mind at work within them’ (Hegel, 1952: §344).  ‘[I]ndividuals … are the living instruments of what is in substance the deed of the world mind … though it is concealed from them and is not their aim and object’ (Hegel, 1952: §348).

[40] Along with anti-individualism, anti-rationalism is a major theme in Hayek: he endorses ‘the true, antirationalistic … individualism’ (IEO: 11).  ‘Hayek … retained a belief in the inescapably limited nature of human knowledge of society, which would seem to owe much to Kant … and hence the inappropriateness of trying to reconstruct society as if such knowledge existed’ (Tomlinson, 1990: 10).  I argued in the previous chapter that in many ways Kant could be seen as complementing Smith and Hume, particularly in terms of the desire, shared by all three, to limit the legitimate scope of reason.  However, I cannot explore this theme further here.

[41] The reference is to Karl Marx (1844/1959) Economic and Philosophical Manuscripts of 1844 p104; reprinted in Marx (1975: 350).

[42] As O’Hear says, ‘Hayek’s epistemology thus leads to a defence of moral and institutional conservatism’ (O’Hear, 1995: 336) – but only because that is where it is intended to lead.  ‘Hayek is a conservative most obviously in his veneration of tradition, and in his belief that most of the forms of social organisation that exist in capitalist economies are the product of a long process of evolution.  Thus private property is not something to be defended purely on intellectual or rational grounds, but also as the successful product of a process of evolutionary ‘sifting’ of institutions over the centuries.  Hayek also tends to conservatism in social affairs, notable in his attitude to religion and the family ...’ (Tomlinson, 1990: viii-ix).

[43] Hayek’s authoritarian conservatism is shown, for example, in his disdain for democracy: ‘We have no intention ... of making a fetish of democracy.  It may well be true that our generation talks and thinks too much of democracy and too little of the values which it serves … Nor must we forget that there has often been much more cultural and spiritual freedom under an autocratic rule than under some democracies … democratic government might be as oppressive as the worst dictatorship’ (RTS: 52).