Saturday, December 10, 2005

Andrew Neil on Hayek's Contribution to Solutions to Today's Problems

In one of those remarkable essays that are published from time to time because they shake the thinking of thinking people, Andrew Neil, the Executive Editor of the group of newspapers owned by the Barclay brothers, that includes the Scotsman, the Daily Telegraph and The Business, authors an innocuously titled essay, “What China can teach the West”.

I approached it with the usual semi-interest reserved for familiar themes that appear and re-appear and do not say much that is new. That China is undergoing a major social, economic, and no doubt in due course, a major political transformation is hardly news any more. If you visit China you see it happening before your eyes. Having visited Shanghai and the Pearl River delta in south China if the sheer size of the development does not create a mouth opening awe I suspect nothing will – think modern Hong Kong, only covering hundred of square miles.

However, the article is not really about China alone, nor is it a dreary repeat of all the other wonder-struck travellers’ tales, rolled out to fill space in busy newspapers and tv schedules. In fact, it is only tangentially about China in reality. It is about Britain and Europe, and about fundamental philosophical differences between alternative futures for the next 50 years.

You know this is something different in the first few paragraphs. They catch your mind and make you sit up, eyes wide with attention. I take the liberty of extracting the opening four paragraphs (and risk a copyright suit, perhaps, but in the spirit of Andrew Neil’s theme I am willing to risk the lawyer’s letter).

OF all the great insights that Friedrich August von Hayek bequeathed to us in his work, one in particular shines out today. For its truth has never been more evident, its application never more universal. It is that running through the ideological and political divisions of human history are two distinct and different ways of looking at the world. Between them is a deep and irreconcilable divide. One Hayek called constructivist rationalism. The other he called evolutionary rationalism.
Hayek spent a lifetime arguing that constructivist rationalism is economically and philosophically flawed because it assumes that “all social institutions are, or ought to be, the product of deliberate design”. Hayek later famously called this the Fatal Conceit .
Those who follow this route believe they have it within their power to build, organise and mould society so that it conforms to their concept of what is just and efficient. But it leads, he argued, to economic decline, poverty, social regression and, in extremis, famine, starvation and the collapse of civilisation. Historic examples of this mindset, said Hayek, included Sparta, the French Revolution, communism in general and the Soviet Union in particular, fascism, Nazi Germany – indeed all the tyrannies that blighted the 20th century. As Hayek famously put it, it is the Road to Serfdom.
Hayek favoured “evolutionary rationalism”. It understands that there “exists orderly structures which are the product of the actions of many men [and women] but are not the result of human design”. Hayek believed this the right approach because it is compatible with the teachings of economic science and goes with the grain of human nature; for these reasons, he thought, it leads to prosperity, progress and the flourishing of humanity

You must read it for yourself in full at:

My original interest was occasioned by seeing a reference to Adam Smith, assuming that it would be a remark abut the “Wealth Of Nations” applied in Communist China. Here is the actual reference; note how wrong I was:

Hayek’s work is part of a long and illustrious tradition which includes the great philosophers of the 18th century Scottish Enlightenment – David Hume, Adam Smith and Adam Ferguson. His great achievement was to adapt this tradition to the circumstances of the late 20th century and beyond. An early and influential proponent of the alternative, constructivist view was Rene Descartes, the 17th century French philosopher, who famously claimed to have proved that he existed by virtue of being a sentient being. The problem with the Cartesian view when applied to political organisation and economics, said Hayek, is that it gives the green light to unlimited, hubristic social engineering.”

For those unfamiliar with Hayek’s works this article will introduce you to a modern version of Smithian political economy, or rather, so as not to provoke friends from the numerous Hayek and von Mises’ Blogs on the Internet into frenzies about my misreporting what they are about, an alternative to Smith’s analysis of mid-18th century commercial society (a model well-short of the capitalist based societies that evolved in the 19th-21st centuries).

‘Evolutionary rationalism’ fits in well with Smith’s evolutionary approach to his model of society, as set out in his ‘History of Astronomy’, ‘Origins of Languages’, ‘Theory of Moral Sentiments’ and ‘Wealth of nations’. Hayek and von Mises had an additional two hundred years of change to contemplate and to develop their theories of society. I am approaching half way through von Mises ‘Human Action’ and I read through Hayek’s various volumes some years ago. You can read their current thinkers’ approaches in the Blogs listed in the left-hand column on this page.

To get started read Andrew Neil in The Business now.

His article is the 14th Annual Hayek Lecture delivered to the Institute of Economic Affairs on 28 November


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