Economics

Love Hayek, Love Darwin

It’s time to update the libertarian hero

Share with your friends










Submit
More share buttons
Share on Pinterest

By David Sloan Wilson

In my last essay on Hayek I distinguished between the flesh and blood man and the ideological monster that was created in the 1940s and continues to lumber around uttering his two-word sentences. “Government bad! Market good!” That didn’t sit well with some Hayek enthusiasts (you’d think they would applaud my effort), but fortunately we can begin to understand the man and his ideas by letting him speak for himself. Here is a transcript from a television interview that is available on You Tube. I have colorized the passage for reasons that will become clear below.

Hayek: Our basic problem is that we have three levels of moral beliefs. We have in the first instance our intuitive moral feelings, which are adapted to the small person to-person-society, where we act toward people that we know and are served by people that we know. Then we have a society run by moral traditions, which unlike what modern rationalists believe are not intellectual discoveries of men who designed them, but they are an example of a process that I now prefer to describe by the biological term of group selection. Those groups that quite accidentally developed favorable habits, such as a tradition of private property and the family, succeed but they never understood this. So we owe our present extended order of human cooperation very largely to a moral tradition, which the intellectual does not approve of because it had never been intellectually designed. And it has to compete with a third level of moral beliefs; the morals that intellectuals design in the hope that they can better satisfy man’s instincts than the traditional rules do. And we live in a world where the three moral traditions are in constant conflict: The innate ones, the traditional ones, and the intellectually designed ones…You can explain the whole of social conflicts of the last 200 years by the conflict of the three moral traditions.

Interviewer: I’d like to approach the question of the future society from a different standpoint. One of the principle criticisms that one gets of a liberal individualist society is that it’s selfish; that it’s not an altruistic society. Whereas socialism, whatever flaws it has in terms of inefficiency, is a society where we all look after the weakest, the sick, and so on. What role do you see for altruism in a liberal individualist society?

Hayek: The altruism is an instinct we’ve inherited from small society where we know for whom we work, who we serve. When we pass from this—as I like to call it—concrete society where we are guided by what we see, to the abstract society which far transcends our range of vision, it becomes necessary that we are guided not by the knowledge of the effect of what we do but with some abstract symbols. The only symbol that takes us to where we can make the best contribution is profit. And in fact by pursuing profit we are as altruistic as we can possibly be. Because we extend our concern to people who are beyond our range of personal conception. This is a condition which makes it possible even to produce what I call an extended order; an order which is not determined by our aim, by our knowing what are the most urgent needs, but by an impersonal mechanism that by a system of communication puts a label on certain things which is wholely impersonal. Now this is exactly where the conflict between the traditional moral—which is not altruistic, which emphasizes private property, and the instinctive moral which is altruistic, come in constant conflict. The very transition from a concrete society where each serves the needs of others who he knows, to an extended abstract society where people serve the needs of others whom they do not know, whose existence they are not aware of, must only be made possible by the abandonment of altruism and solidarity as the main guiding factors, which I admit are still the factors dominating our instincts, and what restrains our instincts is the tradition of private property and the family, the two traditional rules of morals, which are in conflict with instinct.

The green text states Hayek’s premises and the red text states the conclusions that Hayek draws from his premises. To begin with his premises, they are a bold departure from the premises of orthodox economics, with Homo economicus, markets in equilibrium, and all that. Hayek places economics on an evolutionary foundation, including our genetically evolved adaptations to life in small-scale society, cultural evolution based on unplanned variation and selection, and intentional thought processes that result in planned variation and selection. This was amazingly ahead of his time, especially given group selection’s controversial status within evolutionary biology. It is not an exaggeration to say that as far as his premises are concerned, Hayek is one of the fathers of Evonomics. So is Thorstein Veblen, who titled an 1898 article “Why is Economics Not an Evolutionary Science?”

The conclusions that Hayek draws from his premises are another matter. In my humble opinion, they require updating. But there’s no point discussing the conclusions that follow from a set of premises unless the premises are first accepted. Discussions centered on Hayek are therefore discussions centered on economics from an evolutionary perspective.

Get Evonomics in your inbox

This will come as a surprise to a lot of Hayek enthusiasts, who manage to endorse his view of economics, deny evolution, and maintain a pious stance toward religion all at the same time. This absurd combination of beliefs is what passes for economic discourse in the popular sphere—and economic experts who know better somehow allow it to happen.

I look forward to discussing the conclusions that follow from Hayek’s premises with people who have a serious commitment to science and scholarship. In the meantime, the next time you meet a free market fundamentalist, remind him or her that loving Hayek requires loving Darwin.


Donating = Changing Economics. And Changing the World.

Evonomics is free, it’s a labor of love, and it's an expense. We spend hundreds of hours and lots of dollars each month creating, curating, and promoting content that drives the next evolution of economics. If you're like us — if you think there’s a key leverage point here for making the world a better place — please consider donating. We’ll use your donation to deliver even more game-changing content, and to spread the word about that content to influential thinkers far and wide.

MONTHLY DONATION
 $3 / month
 $7 / month
 $10 / month
 $25 / month

ONE-TIME DONATION
You can also become a one-time patron with a single donation in any amount.

If you liked this article, you'll also like these other Evonomics articles...




BE INVOLVED

We welcome you to take part in the next evolution of economics. Sign up now to be kept in the loop!

  • Scott

    Libertarians are not Republicans and libertarianism is not a type of Conservatism. Most libertarians are athiests and admonish social Conservatism in general. Not to say there aren’t some with conservative sentiments but the perceived aliance with the right is an accident of history. The irrational fear of the spread of Communism post WWII led to the alliance. The right uses the rhetoric to this day but they still appeal to tradition and are not free market, they support crony capitalism via tax cuts.

    As you noticed from Hayek, libertarianism is a competing progressive ideology that focuses on peeling back the bad parts of society instead of adding new institutions to fix the bad parts. This differs from the sociallly Liberal mixed markerters that are now known as progressive or Democrats. It’s really just a difference of opinion of what is considered progressive.

    Some conservatives may admire Hayek but he certainly was not one of them.

    • efalken

      Agree. Hayek –> Republican –> evangelical Christian –> evolution denier is a weak chain, up there with Hitler –> vegetarian –> liberal –> Democrat.

      Plus, on a purelyy logical note, one can deny evolution in the sense of ‘all organisms today evolved from a single common ancestor’, but still believe in the relevance of natural selection and mutation to give us evolutionarilyy stable strategies/phenotypes etc. To take an extreme example, if God created Adam and Eve, the evolutionary advantage of the ethics for nuclear families and property rights would still have relevance in explaining their popularity and intuition.

  • Roger Koppl

    I’m sorry, David, but Hayek was simply not making the if-then claim you spuriously impute to him. Hayek was saying that you cannot replace the profit motive with altruism. The premises for that view are *not* given in the interview, but elsewhere, namely the socialist calculation debate of the 1930s.

  • Steven van Ostaayen

    To start with the evolution-religion debate:
    What I’ve never understood is why religion and evolution have to be exclusive.
    A simple tweak in perception could spur society on an equal 21st century footing;
    if you believe in creationism, why does one assume God’s work to be static? Instead one could think of Creation as a form of art that is perpetually ‘in the making’.
    In my view, ‘Perpetual Creationism’ could rhyme with evolutionary thinking, without scorning The Creator.

    About the degrees of morality:
    I never dove into Hayek’s thinking on morality, but if your article summarises correctly, I find his logics a bit sloppy/fuzzy.
    I decoded his words as follows;
    1st tier morality: Your innate sense of morality given at birth (nature).
    2nd tier morality: Your taught sense of morality as conditioned by society (culture).
    3rd tier morality: An idealistically proposed/architected sense of morality (filosophy/religion)

    We can never be sure of the distinction between 1st and 2nd tier morality, since our culture is programmed from the moment of birth. I can assume that a predisposition to family affairs or the protection of loved ones is innate, but it could just as wel be learned morality.

    I believe -without any doubt- that altruism is an innate evolutionary tactic. Countless of examples in biology can be found in which symbiosis allows for species to loose otherwise advantageous traits in order to specialise towards dependence. This loss of self-reliance must -in evolutionary sense- be profitable. But whenever egoistic profitability is possible (as energy/resources are abundant) natural selection prefers self-reliance AND competitive advantage, often at the cost of others (egoism means ‘without regard to others’). The evolutionary tree of a shark, doesn’t leave much room for altruism. Yet this path has proven profitable for the species.

    Whenever resources are scarce, altruistic evolution might be the only not to get extinct. So profit motives are a product of resources (energy) – and not by definition altruistic.

    I believe this analogy holds for the human profit motive.

  • I’m surprised to hear the allegation that Hayek enthusiasts are religious evolution-deniers. Maybe I was just fortunate to be introduced to Hayek by my undergraduate professor, Walter B. Weimer, who cited Hayek’s The Sensory Order in his 1973 American Psychologist article on the evolutionary basis of cognition (Psycholinguistics and Plato’s Paradoxes of the Meno, http://www.trincoll.edu/depts/ecopsyc/courses/weimer.pdf). I got to meet Hayek when Weimer invited him to a conference on cognition and the symbolic processes at Penn State. So I’ve always considered Hayek to be an evolutionary thinker. Hayek’s three tiers of morality make sense to me, although as others have mentioned, the second tier can not really be distinct from the first, because cultural traditions are influenced by one’s innate moral sentiments. For goodness sake, family traditions wouldn’t occur if not for kin selection. I even wonder if the third tier can be wholly independent of the first. Rational intellect needs some kind of motive for goal-directed action, and where would that motive be found, if not in evolved emotions? Yet I doubt that the motive for profit comes from moral concern for the welfare of others. It would seem to me to be motivated by pure self-interest, and if (as Hayek claims) others benefit from someone’s profit motive, I think this is just fortuitous. And I’m not sure that it is always true.

    • Which is exactly what Adam Smith was pointing out when he said,”It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Smith was the first thinker to seriously grapple with self-organizing processes. He didn’t know he was doing that. He didn’t have the vocabulary of Hayek or later chaos and complexity theorists, but that’s exactly what he was doing. Economics is almost wholly composed of self-organizing processes. It’s only when you get down to the individual inventor, business executive, worker, where you find human intentionality.

  • Hi David,

    I align with a lot of what you wrote, and of Hayek’s premises, but Hayek is missing many of the key elements of the conceptual puzzle (or at least does not make them explicit in this piece).

    Looked at from an information perspective, evolution encodes strategies at different levels, genetic, cultural, individual, and each is averaged over different time scales, and must be applicable, at least to some degree, to all the significant events encountered over those time scales.

    Once one understands the work of Axelrod, and the recursively applicable nature of the need of raw cooperative strategies to coopt stabilising strategies to prevent cheats from taking over, then all of history can be viewed through this lens, and seen as a strategic arms race between ever more abstract levels of strategies that can be broadly classified as cooperative or cheating (with the cheating strategies having a predatory aspect).

    So in this aspect, I suspect we strongly align.
    Evolution happening at the three separate levels.

    But, and it is a big but, we may diverge significantly on the nature of that environment.
    It is entirely possible that for most of human history, small groups lived in times of relative abundance, essentially without competition, and only periodically did competition become a major element.
    How could that be?
    Nature has many was of dealing death and destruction – extreme weather, volcanism, earthquake, pandemic, comet and meteor strike. Anything less than enough to cause complete extinction doesn’t appear clearly in the fossil record. Thus populations could be reduced to 10% or less with relative frequency – every century or two, and there would then follow a century or two of relative abundance as the population rebuilt to the previous carrying capacity.
    Between them all, it seems entirely possible that life for humans fell into a sort of stochastic sweet spot, that meant that for much of the time, there was no need of competition, and thus extended “space” for cooperative systems to evolve their requisite attendant strategies.

    So that is one way in which Hayek’s view of evolution seems a little less than adequate.

    At another level, in terms of the strategic arms race between strategy sets, it seems that there is considerable advantage for the dominant social “class” to maintain the lower “classes” in a more raw cooperative state, and thus keep them vulnerable to the dominant group’s “cheating strategies”. There is room for infinite regress in such an arms race, and there do in fact seem to be many levels of such at play in the world today.

    So those are my two main criticisms of the view of evolution as a mechanism expressed.

    Going to the specifics of the there levels of systems.

    It seems that at the genetic level, one can see information about the nature of strategies required to survive the variety of conditions actually present (at the frequencies encountered) encoded into all aspects of evolved systems. And the strategies present are for the most part those most closely available in the space of all possible strategies. Wolfram’s work indicates that there may in fact be an infinite class of classes of strategies that work as stabilising strategies, and most of them lie far away in the depths of strategic complexity – and we now have automated systems exploring such strategic depths.
    So our bodies come with likes and dislikes that have worked in practice over evolutionary time.
    As one example, a liking for sweet things sent us to fruits, which over most of our evolutionary history were valuable sources of a wide collection of nutrients. Now that we have sugar water in supermarkets, that particular heuristic doesn’t work so well.
    Same goes for many other heuristics that served our ancestors well in very different environments, most have now been exploited and subserved to the service of profit, and at cost to the health and welfare of us as individuals.

    This brings me to the major fault in Hayek’s thesis, that profit is an effective symbol for telling us where we can make the best contribution.
    In environments where almost everything is genuinely scarce, then a strong case can be made that profit does encode a strong signal of benefit.
    In environments that contain universal abundance, then the profit signal fails.
    The more items exist in the class of universal abundance, the less utility is encoded in the profit signal and the more frequent become suboptimal outcomes.
    When one considers oxygen in the air, a strong case can be made that it is the single most valuable commodity to any human being, yet it has zero value in a market. That is because markets can only ascribe value to things that are scarce, and have exchange value. Markets cannot deliver a non-zero value to universal abundance of anything.
    So people have come up with ideas like “intrinsic value” in an attempt to counter the destruction of abundance. The notion of intrinsic value is flawed, in a complementary way to that which the notion of market value is flawed.

    So this leaves us with two very distinct classes of problem.

    One class of problem is how do we develop signals that actually give a strong measure of real value? This leads in to a whole class of enquiry into the degrees to which each of us as individuals allow the genetic and cultural values of our past dominate our present determination of “value”, and the degree to which we consciously override those, and the risk/benefit profiles associated with different strategies and contexts.

    The other class of problem is around how do we develop signals that allow us to give non-zero values to universal abundance? I live in a freehold house, with solar power, largely automated gardens, and I am vegan. As an economic agent I have very little value. As a human being I have spent over 40 years deeply in the enquiry into the nature of the strategic mechanisms present in our environment, and the nature of changes required to deliver and environment that empowers potentially very long lived individuals to live a very long time with as much freedom as possible. Once one removes age related loss of function and risk of disease, there are many other classes of risk present (to both life and liberty) that require effective mitigation strategies.

    The pursuit of profit was a reasonable signal generator in times of genuine scarcity.
    We now live in an age of automation that could provide universal abundance of a large and exponentially growing set of goods and services; but the pursuit of profit actively works against the emergence of any universal abundance (as we can see with the expansion of “intellectual property” laws – which are nothing more or less than a prohibition on the free sharing of information in the name of profit).

    Today our ability to process information is doubling in under a year.
    All systems that rely on information should be halving in price on that sort of timescale.
    They are not.
    People should be experiencing a doubling of perceived wealth and security on that sort of timescale.
    They are not.
    The system is being manipulated, at recursively expanding levels, to deliver profit, over delivering life and liberty to every sapient entity.

    I make the assertion that any individual who values their own life and liberty, can most powerfully (on the long term, in an environment with strong signal transmission and signal fidelity – ie people will not forget that you cheated them, and will pass such information to their friends, and they to theirs, etc) ensure such life and liberty by taking all reasonable steps to ensure the life and liberty of everyone else.
    In an age of automation, each time we get an effective strategy fully automated, it can be shared with everyone within a few minutes, and can be selectively applied to contexts as they see fit.

    With relatively little effort, we could develop and deploy such systems world wide.

    Distributed cooperation, at a global scale.
    Distributed production and distribution, at a global scale.
    Distributed security, information, automation.
    Valuing individual life and individual liberty, at a global scale.

    And individual freedom is not freedom from the consequence of choice.
    Freedom demands a responsibility for the consequences of choices – it is about as far as one can get from the notion of whim or fancy.

    And empowering individual choice necessitates an acceptance of the exponentially expanding diversity that must logically result.
    Provided that diversity values the life and liberty of others, then it must be given liberty to go where it will.

    Sure, as human beings we all exist in a cultural context, a context of communication, and we cannot be bound by any constraints from the past, and nor do we entirely ignore the past. The past is often, and not always, a good predictor of the future.

  • johnschappert

    “In the meantime, the next time you meet a free market fundamentalist, remind him or her that loving Hayek requires loving Darwin.”

    David are you being deliberately ridiculous? If you really understood evolution, you would understand how important diversity and optionality is, and you would embrace free markets as a result.

    • Carbonman1950

      Only if you are convinced that free markets actually exist.
      I do not. I have concluded that the free market exists only as an academic or philosophical construct. Years of observation convince me that the number of transactions that take place between genuine equals as defined in free market theory is so minute that those transactions are market aberrations that contribute nothing to the function of markets in the real world.

      • How many genuine equals are there in the world? Twins? Triplets?

        • Carbonman1950

          My point exactly.
          Although in all honesty I did say “as defined in free market theory”.
          Thus the reason free-markets can’t exist and never have, except theoretically.

      • johnschappert

        There is no such thing as “genuine equals”, and no definition of “free markets” that suggests such a notion. People are everywhere unequal in their capacities, in their luck, in their knowledge and in the resources at their disposal. The fact that markets involve interactions between such unequals does not invalidate the benefits of markets in aggregating, calculating and dispersing information.

        • Carbonman1950

          I have just finished rereading “The Wealth of Nations” (all that stuff about currency conversions between nations and eras was SOOOO boring) and while I cannot at the moment find and quote any of the many times Smith asserts – in order for a market to operate freely, transactions and negotiations must be non-coercive and between parties of roughly equal knowledge.
          Contrary-wise when the power between or information known to the parties is mis-matched the market is distorted.

          Mr. Smith also says that workers must be paid a wage sufficient to support a family of 6 (husband, wife, and four children) with “not merely the necessaries, but also the comforts” of life.

          And that employers and businesses have moral responsibilities that supersede the purely financial.

          The Wealth of Nations is chock full of thoughts that do not support the currently fashionable interpretation of self-styled free-marketeers.

  • A Complicated World

    Let’s not forget the history about the influences on Darwin himself that got him to start thinking in an evolutionary way…he was influenced by earlier political economists, linguists, and philosophers. Evolutionary thinking started not in biology but in what we’d now call the social sciences (and the humanities).

  • Carbonman1950

    It seems to me that Hayak’s statement that “it becomes necessary that we are guided not by the knowledge of the effect of what we do but with some abstract symbols.” is not exclusively a premise. It is also an assertion. In my opinion, an unsupported and highly suspect assertion.

    I assume when Hayak says “not by the knowledge of the effect” he means to say – not knowledge gained through direct personal observation. If that is what he meant, does it follow that the absence of direct personal observation, necessitates the replacement of the altruism (proven, he admits, to be societally advantageous) and inferential knowledge arising from direct observation with “some [unspecified] abstract symbols” (that he will in his conclusions say are “profit” and imply are only “profit”).

    I admit to being out of my depth here, being neither a philosopher nor an economist, but this seems to me worth consideration.

  • Swami Cat

    David,

    You appear to be assuming that Hayek is a conservative (odd assumption for someone who wrote an article titled “Why I am not a conservative.”)

    You appear to be assuming that people who believe in the role of markets, libertarians, anarchists, conservatives, religious fundamentalists, and neo-classical economists are all the same thing, and that evolutionary theory is something which threatens any or all of these groups. You are in effect straw-manning each subgroup around the most absurd caricature possible and then conflating them all into a super absurd mega strawman.

    You appear to assume that Hayek or those influenced by his thinking believes that government is bad and markets are good. Hayek was in no way even remotely an anarchist. The key takeaway from his writing is not that government is bad, but that markets solve certain problems related to the provision of scarce goods and services better than central planning. As he alludes in the quote, profits act both as an incentive and a signal, which rewards cooperation. This is an extremely difficult concept for some people to grasp. It channels back to the concept of an “invisible hand” which still seems to elude you. Let me be as simple as possible:

    When property, rule of law and contract institutions are working in a particular way (which Hayek stressed tended to evolve rather than be centrally planned, but which could be government run) pursuit of profit could lead to a constructive competition to serve the needs of one’s fellow man. The best profit opportunity acts as a signal and incentive that (for example) consumers would really value an Italian restaurant on this corner as indicated by their willingness to spend money buying food from you. They get delicious food, the entrepreneur gets a profit, the waiters get a wage. Trillions of such actions accumulate into the largest decentralized cooperative entity in the universe.

    If I could offer a suggestion, it is that you argue with real people rather than your artificial composite caricatures. In other words, you are taking five or six groups which in no way agree with each other and then criticizing all of them based upon the lowest common denominator of not just their own argument but that of the other groups which they disagree with.

    I assume you are conflating them based upon political alliances, but this is a separate issue.

    • George P Williams

      I truly could not have stated it better!

    • Jonathan D

      This rather harsh statement seems to confirm the validity of DS Wilson’s post. As I see it, the main point is that Hayek’s sensible notions of the forms of order leads him, and the commentator above, to accept profit signals as the symbolic representation, the guide, to the preferred moral order. Markets are not adequate selection mechanisms in the real world, though that doesn’t mean we can or should cavalierly overrule or dismiss them of course. They encode and reflect institutional practices of all kinds. Hayek’s reasoning goes too far in taking market signals as natural. That is the nub of the problem and it obscures the kinds of ethical dilemmas that arise in market societies.

  • I am an evolutionary Hayekian. I take his discussion of the effect the massive growth of his Extended Order (ever since the Agricultural Revolution some 10,000 years ago) has had on our preconception of morals and ethics very seriously. We cannot know almost everyone with whom we deal with indirectly. We cannot even imagine the Extended Order in which we participate. To borrow from von Mises, it’s a system composed of human action, not human design. The implications for the Religious Right are obvious. No possibility of a Christian-guided or controlled society or an Islamic-guided or controlled society are possible or even conceivable. The EXACT SAME point must be made about the dreams of the Secular Left. Hayek has proved them impossible. No soviet, no workers council, no economic czar or planning board can even make a dent in the immensities of economic activities going on every second. The inbox overflows. The Red Queen’s Race is lost. To be brief, it’s what the kids say today: TMI. Too Much Information. Anyone who is serious about economics must take Hayek’s descriptions of the Extended Order seriously.

  • Pingback: Evonomics – Love Hayek, love Darwin | Ted Howard NZ's Blog()