The Libertarian Economist Friedrich Hayek Gets a Makeover

Rethinking the concept of laissez-faire and complexity

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By David Sloan Wilson

My Evonomics article titled The Road to Ideology: How Friedrich Hayek Became a Monster resulted in a barrage of criticism from those who hold Hayek near and dear. In my own mind, these critics missed my main point. They should be joining me to defeat the ideologues who use Hayek for their simplistic “Market good! State bad!” worldview. Hayek’s ideas were far more complex and sophisticated. Moreover, they also need updating. If you think Hayek can’t do wrong, this post isn’t for you.

Thankfully, amidst the clamor came an invitation from Peter Boettke, Director of the famed F.A. Hayek Center for Advanced Study in Philosophy, Politics, and Economics at George Mason University’s Mercatus Center, to give a seminar. If I was going to be tried and found guilty of profaning Hayek, at least it would be by a distinguished jury.

My seminar was delivered on February 11 2016 and guess what? Here I am, alive to tell about it. As one person tweeted after the event, “We agree: the problems w/ modern econ require outsider thinking.” To be precise, they require the latest ideas from evolutionary and complexity science. That’s one of the main objectives of Evonomics.

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I am pleased to provide a recording of the seminar with the slides to readers of Evonomics.

It runs 52 minutes -a bit long for the twitter generation – but that’s what it takes to swim in the deep end of the new economic thinking pool. Here’s a short summary:

1. Hayek was a true pioneer by basing economic theory on genetic and cultural evolution rather than enlightenment ideas about reason and the “physics of social behavior” that underpins orthodox economic models.

2. His position was heterodox in every way—for evolutionary biologists of the period in addition to economists.

3. Unsurprisingly, his ideas need to be updated based on advances in the study of genetic and cultural evolution in relation to human affairs.

4. Evolutionists revere Darwin but they have also gone way beyond him and don’t consult his writing in their current research. The same goes for Hayek. The answers are to be found in contemporary research, not Hayek’s writings.

5. Currently, there is very little overlap between the sphere of economic thought centered on Hayek and the modern study of cultural multilevel selection. Something must be done to remedy this situation.

6. A brief tutorial on multilevel selection and its implications for human genetic and cultural evolution.

7. Updating Hayek on the nature of small-scale human society.

8. How cultural group selection led to the relatively democratic mega-societies of today.

9. The central importance of Elinor Ostrom’s work—something that is shared between economists influenced by Hayek and modern cultural evolutionists.

10. How Ostrom’s “core design principles” approach relates to multilevel selection theory.

11. Small-scale policy applications of Ostrom’s core design principles approach.

12. On the scale-independence of the core design principles.

13. On scaling up the core design principles as the primary challenge of large-scale governance.

14. Rethinking the concept of laissez-faire in terms of proximate and ultimate causation.

15. On the role of intentional planning efforts compared to blind cultural group selection and the need for “activist laissez-faire”.

16. On Norway as a nation that succeeds by implementing the core design principles at a national scale.

17. On how even Norway can turn selfish at the planetary scale, illustrating the iron law of multilevel selection: Adaptation at any level requires a process of selection at that level and tends to be undermined by selection at lower levels.

It was a pleasure to address such a distinguished and well-informed audience and to get such an open-minded reception. I hope that the dialogue continues. The best way to honor Hayek is to make sure that his vision of placing economic theory on an evolutionary foundation remains updated.

2016 February 22

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  • Aldous Mina

    faceconomics, made Mr.Hayek’s theories obsolete. Not discuraging the merits of his arguements in his time, but simply stating the fact in our time.

  • Andre Levy

    Hayek spent the whole second half of his career from Road to Serfdom onwards demonstrating the fundamental difference between (classical) liberalism and libertarianism for #this?? 0.o

    I’m sure Prof Boettke read Hayek, but did you? Ever?

    • Hannes Radke

      There seems to be a tendency for people to elevate ideas and great personalities above reality and place them on a pedestal. Isolating them and themselves from critical discussion. This is the difference between ideas and ideology. I think a call for critical rereading and updating of valuable, yet outdated ideas is the right thing to do.

  • Peter Smaill

    Hayek, who I met, would wholly agree that his writings provide a frame of reference and not a prescription for all time coming. In the Internet age his thesis on the distributed nature of knowledge becomes more, not less, relevant compared to the fantasies of command- and- control which are the usual tools of hyper interventionist thinking. A fair critique, asking the productive questions on spontaneous collaboration …….

  • destinal

    Some today seem to treat the entire Austrian school of economics as if it only contained Hayek. I’d love to see some modern analysis of the work of other Austrian economists such as Mises and Böhm Bawerk.

  • Pedro Romero

    totally in agreement with you

  • Brian Gladish
  • bampbs

    It is amazing how Hayek’s support for comprehensive, government funded social insurance, including health care, is conveniently ignored. It’s in The Road to Serfdom, Chapter IX. Here’s a quote:

    “Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance— where, in short, we deal with genuinely insurable risks—the case for the state’s helping to organize a comprehensive system of social insurance is very strong.”

    Hayek was also early in the work on complexity, and was involved with the Santa Fe Institute. In 1964, he wrote a paper, The Theory of Complex Phenomena: A Precocious Play on the Epistemology of Complexity – no doubt that he was well past the conventional views of social phenomena.

  • M A J Jeyaseelan

    Outsider thinking has only obfuscated fundamental economics. The core problem in extant economics is the lack of focus on its phenomenological contexts. The most unfortunate part of all outsider thinking in economics so far (including those of mathematicians, statisticians, psychologists and now evolutionary biologists) is the fact that all of them have been attempting to extend or build upon the pre-existing towers of Babel, which are themselves founded upon shaky and sinking foundations. Once we dislodge the faulty and flawed foundations of extant economics, all the edifices created by outside thinking would also crumble and be gone for ever.

    The ‘tragedy of commons’ presents a completely wrong version of the economy, in which overuse of the grazing land is linked to greed of a few individuals – leading to the depletion of the community resources. This is clearly not the phenomenological context of economics. The economic phenomenon includes an auto correction mechanism. If individuals or groups follow the path of greed, the economic system would crash leading to the collapse of the civilisations built upon such greed.

    The real economic challenge is very different from what the ‘tragedy of commons’ assumes it to be. The economic challenge stems from the fact that human population is continuously becoming larger and larger imposing greater and greater demands on the natural endowments, which are finite. Overgrazing and overuse of resources is a necessity that would continue to hold sway until human population itself shrinks. The essence of the economic phenomenon is in the manner in which human population has managed to become larger and larger, while all other animal species seem to be dwindling or have already become extinct.

    Therefore, solutions to economic problems is in – doing more with less. Of course, at the micro level ‘doing more with less’ is a function of technology, innovations, management and maintenance. Economics is all about coordinating all such ‘doing more with less’ initiatives in ways that are sustainable on the one one hand and are able to meet the livelihood and quality of life needs of a growing human population on the other. By 2050, human population would be about 9 to 10 billion. To feed this many people, global food production would need to be raised by about 60 to 70%. So will be the rise in the requirement for housing, healthcare, education and entertainment and more importantly jobs. These are the challenges that economics would need to overcome.

    There is no denying the fact that there would be always the need for aligning individual behaviour to the needs of the overall economy. But such alignments cannot be left to proxy principles such as ‘natural selection’, which in some ways is similar to the all too familiar concept of ‘invisible hand.’ Neither the ‘invisible hand’ nor ‘natural selection’ can be expected to solve real life economic problems. It is time to put an end to ideology based governance and management economies.

    Knowledge based management of economies and governments would be impossible without re-writing the whole of economics based on a proper understanding of the economy. It is also time to stop the preposterous intrusions from neighbouring sciences that are only adding to the already overwhelming confusions and contradictions in extant economics.

    If you would like to read more about my plea for re-writing economics, please do read my article hyper linked below.