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Genre = Economics
Intriguing Connections = Capitalism, Socialism, their Alternatives and Critiques
This book voices the drawing lines between the market order and socialism. For Hayek, the battle of market order and socialism is a matter of survival. Civilization is enabled via conformity to tradition and moral practices, not by design or intention. The promised consequences of those who would design a rationally moral system appeals to myopic understanding. Tradition passed down practices which facilitated its survival, while those who wish to design different practices only benefit initially with grave costs to the society as a whole.
There are groups which coordinate their activities by shared aims and perceptions which rely on instincts that apply only to their group and not others. Cooperation is helpful when there is agreement on ends which are known beforehand. Knowledge within the group can be well applied to known situations, but does not readily apply to unknown situations. More general rules are based on tradition which usually adjust individual decision by prohibition, going against what instinct would dictate. Competition is process of discovery. Competition enables adaption to new or unknown situation by discovering novel responses. Many powerful empires fell behind due to heavy restrictions on development, an inability to generate novel responses due to new circumstance.
Hayek sees that the fatal conceit of socialism is that through reason, skills can be acquired. This is a wrong assumption as reason is created via evolutionary process. Learned rather than constructed. Reason is the result of the process. As Hayek puts it, evolution cannot be rationally predicted or controlled as evolution is a ‘process of continuous adaptation to unforeseeable events’. The socialist authors use declarations which give an impression that only rationally justifiable and provable observations are those that should be acted upon. There are many actions of which the reason for them cannot be known, but without those actions, people could not live without.
Even though everyone has limited knowledge, there are those who can better use knowledge in certain situations. Property rights serve to give those with more knowledge guidance of production. Freedom is enabled by different groups control of various means of production. Making decisions based on private knowledge and experience. Slavery is when everything belongs to the ruler. Order does not arise simply because of design, but by setting the conditions for the situation to self-order.
Knowledge which formers specializations are only beneficial when they confer an advantage which compensates the cost. The specialized knowledge is worth less when more are able to utilize it. Individual differentiation gives an advantage to the group by the variety of skills they possess which enables specialization of labor. There is no scale that can determine which information has more value to achieving different ends.
There seems a small paradox within this book based on tradition and evolution. Tradition seeks to prevent people from having novel ideas while evolution seeks to better adept to situations. Tradition is very static comparted to competition for ideas. They seem contradictory but it can be that tradition situate what changes can be made. Changes will be needed due to circumstance, but tradition helps facilitate how to make those changes. Another problem with this book is that only glimpses of what socialism is are described, not a full description of it. Different types of socialism can have different sets of problems or may have changed some facets of them to remove the disadvantages. Hayek does seem to target the most general and biggest problems.
The book is generally easy to read, but some topics discussed fail to deliver an understanding. The topics are discussed with great importance while their explanation lacks to elucidate the reason why. The main argument of the book is that socialism is actually against the societies they wish to better. By trying to use reason above traditions, the designs conflict with how people behave. Small groups may conform to certain designs, but not large communities. Designing through reason prevents learning to cope with new situations which will eventually destroy the very society.
Pages to read: 157
1st Edition: 1990
Ratings out of 5: