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It sounds like Hayek was anticipating the sort of theory that Prof. Ikeda laid out in his "Dynamics of the Mixed Economy." I think the punchline is basically that over time the degree of state intervention can swing to and fro, based on changes in things like ideology, economic environment, and so forth.

Inevitability, no. But one should not underestimate the self-perpetuating and reinforcing feedback associated with collectivist policies. Social Security is a disaster, but what now? Some of the more radical libertarians would cut it off cold, but most of us accept that people who were forced to pay in and now depend on it must be taken care of. Government intervention in money and in the housing market gave us the financial bust and recession, but if the problems are successfully (though falsely) blamed on the market, they become the impetus for yet more intervention. The point is not merely that "if you don't mend your principles you will go to the devil," but that the downhill slide becomes harder to reverse, the farther it goes.

Good post and I think it complements Pete's prior post on Coase. Both Hayek and Coase have been misrepresented in the literature.

I am always amazed how people can misread plain and simple texts. Of course, many rely on second-hand accounts rather than reading original texts.

That quote should settle that debate. There is another problematic quote in the book "Possibly nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on some rough rules of thumb, above all the principle of laissez faire". Chapter 1 p 17 of the Uni of Chicago 22nd impression in 1975).

Can someone explain what principles of laissez faire Hayek found objectionable?


I think what he meant there was that if "laissez-faire" means that we should never consider piecemeal adjustment of the rules so that improved rules could generate better unintended orders, sticking to "laissez-faire" was a mistake. For Hayek, liberals should be willing to make those piecemeal adjustments (e.g. clarifying the status of intellectual property in our own time) in order to remedy avoidable problems.

I wonder what might explain some, if not all, of the reasons why the inevitability interpretation has become so well-accepted. Set aside opportunism and dogmatic adherence to a political belief in interventionism, even if these might be most of the explanation, put together. Is there a reason why the zeitgeist would blind people to the other interpretation of Hayek (the interpretation that seems plain and obvious to you and also to me)?

One possibility that comes to mind is the theory of history that what did in fact happen was the only possible course of events that could possibly have been. My sense is that Hayek, among others, wrote about this mistaken belief.

Samuelson's textbook bears some blame Harry.

Is the welfare state stable, or is it not? Is it more complicated than that? Hayek says no, right?

Thanks David, that must be kind of position that would leave the trade unions and the indusrialists to fight it out without any help from the state to control aggressive violence or protect property rights, or the rights of workers to cross a picket line. That is certainly a disastrous and wooden-headed position but who promoted it? The trade unions?

Harry, the standard critique of historical determinism is/are Popper's arguments in The Poverty of Historicism and The Open Society and its Enemies. Helpfully condensed:)

The case for intervention by piecemeal engineering has been muddled by von Mises' attacks on social egineering without noting that Popper's take on engineering was identical with Mises' own practice. The Poverty remains a little noticed treasure trove of hints including the advice to pursue institutional analysis (near the end) and to take a critical/experimental attitude to public and private policies and actions so we learn something.

If I remember correctly, in the edition of RTS I bought in the mid-90's, Hayek explicitly refutes the oft-repeated "inevitability" claim; repeated the old adage, "nothing is inevitable except thinking makes it so."

This statement of Hayek's is what inspired my work with Glen Whitman in our "The Camel Nose is in the Tent: Rules, Theories and Slippery Slopes" in the UCLA Law Review. It is also the essence of Herbert Spencer's argument in his essay "The Coming Slavery." Here he says the key question for the "practical" man of affairs (the politician) is: What kind of society am I tending to produce? Specific policies imply, in a context of argument, certain principles. The principles go on the have a life of their own.

This is why I think the issue-by-issue approach to policy, even when practiced by free-market economists, is low-brow. The main consequences of a policy are usually not what we think of in terms of efficiency, etc but rather the precedential significance of those policies.

We are all, including Hayek, indebted to David Hume for this insight.

In LLL (1973), Hayek quoted Menger on the pragmatism that leads to socialism. He described liberalism as the system of principles.

I'm not sure how all that squares with the idea of piecemeal adjustments. Particularly so if one takes into account public choice.

The leftist grad students at Harvard in the 1930s and 1940s absolutely hated Hayek - e.g. Samuelson & Solow -- there's got to be a story there.

Sameulson took several opportunities to slander Hayek on false grounds.

Solow is still trashing Hayek -- based his hate for Hayek's Prices and Production as a student forced to read the book 65 years ago, and based on utterly bogus perceptions of the contents of Hayek's TRtoS, although Solow says he's never read any Hayek except P&P.

Hayek says he was despised by exonomists in many departments -- and these were two of them who led the blanket party ....

Jerry what do you see as the alternative to piecemeal adjustments, bearing in mind that it is not a matter of size or scope as much as alertness to undesirable consequences and learning from experience?

Commonsense one might say, but too many people have not learned the real lessons of dirigism.


I just think there is a tension between Hayek of the RTS and later Hayek on principle vs. expediency. Take a look at the US tax code as an outcome to "piecemeal adjustment." Does anyone think that anyhting less than radical reform is the answer?

The later Hayek recommends "radical reform" at some times if "piecemeal adjustment" has taken things off track, or in order to set up better systems which privilege principle over expedience, e.g. radical constitutional reform of the sort undertaken in ancient Athenians or by the Americans, or recommended by Hayek's "invention" of a different system of elections and representation, one based on age cohorts.

Hayek distinquishes between small adjustments of the law to advance their application coherence and coordination, etc. and all sorts of "piecemeal" expediencies of the legislature to buy advantages, pursue particular ends, and to advance particular interests.

Distinctions between different kinds of "adjustment" are important here, adjustments to make the principles more general and coherent vs. adjustment to steamroll over principles to achieve particular plans and temporary ends for particular interests.

I agree with O'Driscoll. There are things that are so crooked that cannot be made straight. Most things that come out of politics are such: legislation, tax codes, addiction to parasitism, macroeconomic disequilibria.

In small doses it looks like that political problems can be counteracted, then a threshold is hit and a positive feedback ensures that things can't go straight unless a miracle occurs. There is no piecemeal solution for Argentina, Greece, and probably Italy: only a moral and intellectual miracle che change things. Anything short of total collapse would leave the underlying problems unscathed.

Let's consider Mancur Olson's theory of the decline of nations. When the political structure becomes corrupt to the core because of interest politics, a decline is almost impossible to avoid in the long-run, except in case of radical political shocks, which I wouldn't want to experience.

There is no happy end when entrepreneurial efforts instead of being directed toward wealth production are deviated toward rent seeking. It is as hard as imagining a functional financial system under interventionist financial policies such as ours.

Thanks Jerry, I think we are on the same track, bearing in mind Greg's distinction between different kinds of adjustments.

A great precedent for the kind of reform that I think we would both like to see was Erhard's "bonfire of regulations" in Germany.

I don't want to adocate bombing Brussells but it is tempting (for the greater good!).


At a more practical level, I interpret this as allowing for the legislative correction of situations where order distorting decisions (and other sources of law) have made jurisprudence. Would you agree with that formulation?

I realize this is stale, but already in the ORIGINAL INTRODUCTION to RTF Hayek writes: "Nor am I arguing that these developments are inevitable. If they were, there would be no point in writing this."

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