Friedrich Hayek on Evolution and Spontaneous Order (1983) [video]

This an interesting interview with Hayek from 1982:

https://www.cato.org/policy-report/february-1982/interview-f...

His quote here makes me think he would have rejoiced at the idea of Bitcoin:

"Well, I have despaired of ever again finding a way of restraining government abuse of any money which it issues. My proposal to denationalize money was always in a sense Utopian because governments will never freely allow competition in this business. I believe there are ways around this, and my present view—which I hope before long to state in detail—is that there is probably a possibility of not issuing currency but starting with credit accounts under some other name—say, call the unit a “stable” and promise to redeem it with enough of whatever current monies are required to buy a certain list of raw materials. So it doesn’t involve issuing any circulating money, but it enables the holder to keep a stable unit in the form of a credit. Once you’ve succeeded in this, the next step would be issuing credit cards on these accounts. And then you have circumvented the whole monopoly of government. Since it is politically impractical to deprive the government of its monopoly, you have to circumvent it."

In the same vein: https://cafehayek.com

> Friedrich Hayek put the Austrian in Austrian Economics

No he didn't. The concept of 'Austrian Economics' was applied to Carl Menger a central part of the marginal revolution of the late 1800s. His books 1871 – 'Principles of Economics' and 'Investigations into the Method of the Social Sciences with Special Reference to Economics'. Are the foundation stone of Austrian economics.

Another good place to start is with his 1945 paper, The Use of Knowledge in Society [1]. It’s readable in a single sitting, and packed with insights that go far beyond economics.

[1] https://en.m.wikipedia.org/wiki/The_Use_of_Knowledge_in_Soci...

https://www.fee.org/articles/the-use-of-knowledge-in-society

Hayek himself recognized that people are forced to submit to the market. He just approved of that kind of submission.

I got bad news for you guys, Hayek was just making excuses for rich people running the world.

> I don't think it's a question of what is "desirable", but rather a question of what is inevitable.

inevitable is a smart way of pushing something you want to happen though. The famous quote from Margaret Thatcher “there is no alternative” is tge best example of that.

Also, as twentieth century shown us, their is nothing really impossible for a sufficiently motivated government, sometimes for the better but often the worse (from “landing on the moon in a decade” to “eradicate the Jews”).

Adding to this, the subthread that followed on from my comment ends up illustrating the point quite well: the harder governments try to override spontaneous order, the further they go down the path to totalitarianism, which I hope people here would agree is not "desirable".

Which is not to say there is no legitimate role for government. Hayek himself identified pandemics and a social safety net as legitimate cases for government intervention.

In Raod to Sefdom Hayek acknowledges that basic welfare, health and retirment polices are consistant with a liberal state.

What it gave a backround to was dismanteling a lot of the idioitc regulatory structures and inflationary spending of the 1970s.

Yeah, Sowell is still writing books like age never impacted him! He's amazing. He's also very careful to stay politically neutral about every issue he touches upon.

His book "Basic Economics" keeps getting updates every 5 years or so, at this stage it's almost an encyclopedia of economic principles.

Libertarianism has left and right variants: the right retains private property, and the associated government functions, while the left is also known as anarcho-communism.

We really need special economic zones for experimenting with alternative economic and social systems. Unfortunately, the tradition has been to have a single system for an entire country, and if not all people want it, too bad.

You may want to look into Kropotkin (Conquest of the bread, Mutual Aid) or maybe Max Stirner (The Ego and Its Own).

Missions would be inefficient if they weren’t centrally planned. Markets would be inefficient if they were centrally planned.

But this is just what Hayek's work is all about: to show _why_ central planning is ineffective. It works with theoretical arguments and there is no need to use real-life examples.

Federalism reflects a principle that works even in a pandemic response, which is that local units of government are better equipped to evaluate the local situation and respond accordingly. The federal government was too big and ponderous to quickly react to the situation in NYC (which after all comprises a mere 2.5% of the US population). Meanwhile, other states locked down too quickly and for hard because that’s what was required in NYC.

Note that when the pandemic hit, the EU room a back seat to the National governments, even though the EU has a CDC itself. And in Japan success was largely due to local effort: https://fee.org/articles/did-japan-beat-covid-19-with-a-dece...

See also: https://www.hoover.org/research/decentralize-covid-19-respon...

His critique goes well beyond just the quantity of data.

This is, perhaps, also the point where I should briefly mention the fact that the sort of knowledge with which I have been concerned is knowledge of the kind which by its nature cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form.

His bigger argument though, is even if it were effective, it is inherently undemocratic.

It will often be necessary that the will of a small minority be imposed upon the people

The issue is that it's impossible for a computer to know what everybody values. When people participate in a market, this allows their values to be expressed: at a particular time, if they spend their money on A over B, then they valued A over B. Talk is cheap (people can say anything they want; it conveys extremely little information if they're not putting their money where their mouth is, so to speak).

If you even the slighest bit of understanding of Indian history and Indian economics calling it 'liberal' is complete nonsense.

After WW2 India adopted a diliberatly socialst agenda, often called Indian Socialism the was all about top down managment of all markets with heavy government guidence and intervention. This concept was popular in pre-WW2 British Socialism and India served as a huge experiment. While some of this has been removed you can still see it all over Indias economic policies today. India is still a far, far away from any sort of free market economy or liberal political order.

> (Also relevant, in the 20s and 30s, USSR came from a shithole agricultural country with no industry, to the second biggest industrial economy of the world).

Its is another bunch of nonsense socialist myth making. The trope of Imperial Russia being a backwards shithole then as soon as Soviets take over its some paradise is nothing but Communist propaganda.

In fact before WW1 Russia was one of the fasted growing nations, that itself was one of the reasons for WW1 as the Germans realized that within a generation Russia would probebly match or be more powerful then them.

If you look at Russia WW1 economy, you will see that in terms of manufacturing it actually performed incredibly well. They had a problem with food distriubtion and political authority, more then with production. The Imperial Russian economy was already one of the biggest industrial countries by a lot of different measures. This is clearly confirmed when you look at the weapons output during WW1.

In the 20s Soviet economy first of all starved millions of people and only by the end of the 20s did they reach pre-war levels of output.

From 1928 they started collectivisation and even more agressive industrialisation, but it should be noted that it required millions of people dead, many more millions put into forced labor and massive starvation of the whole population to export grain and thus import pretty much everything from the West.

To make a point of this, the Soviets literally copied US and German factories and payed tons of money for them and then used lots of forced labor to build them. Putting that as some great success of centralised planning is dubious to me.

And this great plan also didn't lead to much improvment for the actual people, it was primarly about the production of military equipment.

The Uighurs and Ukrainians might disagree that your examples are adequate.

I would say that China prosperity is very related to the Free Economic Zones which allows for non-centrally planned zones within China.

> liberal countries like India

India is probably the most bureaucratic country on earth. It may be a democracy but that does not mean it is economically more liberal than China.

> And China's economic failure compared to liberal countries like India is a great illustration of that. Oh wait…

China's success is actually a very powerful illustration of this, in fact. Through the 1980s-1990s, China went through dramatic economic reform, and the results largely speak for themselves[1].

Before the reforms, the Chinese economy was dominated by state ownership and central planning. From 1950 to 1973, Chinese real GDP per capita grew at a rate of 2.9% per year on average, albeit with major fluctuations stemming from the Great Leap Forward and the Cultural Revolution. This placed it near the middle of the Asian nations during the same period, with neighboring capitalist countries such as Japan, South Korea and rival Chiang Kai-shek's Republic of China outstripping the PRC's rate of growth. Starting in 1970, the economy entered into a period of stagnation, and after the death of Mao Zedong, the Communist Party leadership turned to market-oriented reforms to salvage the failing economy.

The first stage, in the late 1970s and early 1980s, involved the de-collectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start businesses. However, 87% industry remained state-owned. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry, followed by the 1985 lifting of price controls. The private sector grew to the extent that it accounted for as much as 70% of China's gross domestic product by 2005. From 1978 until 2013, unprecedented growth occurred, with the economy increasing by 9.5% a year.

India actually experienced a similar trajectory — from 1947 until the late 80s/early 90s, India's economic system was described as "Nehruvian socialism". It was more derogatorily called a "License Raj"[2]. Under the License Raj, India's annual economic growth rate stagnated around 3.5% from the 1950s to 1980s, while per capita income averaged 1.3%. In the same period, Pakistan grew by 5%, Indonesia by 9%, Thailand by 9%, South Korea by 10% and Taiwan by 12%. Before 2015, India grew at a slower pace than China, which had been liberalizing its economy since 1978. In 2015, India's GDP growth outpaced that of China.

[1] https://en.wikipedia.org/wiki/Chinese_economic_reform

[2] https://en.wikipedia.org/wiki/Licence_Raj

>And China's economic failure compared to liberal countries like India is a great illustration of that.

Better to compare China to Korea, Singapore, Hong Kong and Taiwan, which all started at a similar position (and have similar cultures), but now those others all have way higher GDP per capita than China.

China started thriving in early 80ties precisely because they considerably loosened the central planning. For example, they allowed plant directors to have some input into what a plant is going to produce and into setting prices of their products. Beforehand, it was all decided centrally, with plenty of absurdities unimaginable for Western people. One tiny example is the shortage of bread in Poland in the eighties, which was caused by the centrally set price of bread being lower than the price of the ingredients... So, bakeries did everything to bake as little bread as possible, to minimize their losses - resulting in a nation-wide shortage. There's actually a whole subgenre of comedy in Polish cinema, focusing on realities in living in a centrally planned economy.

Russia's industrial power before WW I was larger than a lot of people remember.

The fore-mentioned EconTalk recently had a discussion of China’s centralized politics but relatively open economy.

Less than 10% of Chinese agriculture employment is in state owned enterprises now, for example.

https://www.econtalk.org/branko-milanovic-on-capitalism-alon...

David Friedman and others have come up with decentral ways to deal with complex externalities like disease transmission risk. You can read "Machinery of Freedom" for a taste of how this works. It would probably involve health insurance standards for the negotiation of transit rights, just like we have car insurance standards for the negotiation of vehicle transit rights.

The most famous example is when Sears was internally organized around free market ideology by an Ayn Rand adherent. It did not go well. Declining profits drove a viscous cycle of back-stabbing and secrecy among competing units inside the company.

My impression is that the people who argue against central planning always rationalize backwards from a pre-established conclusion. The fact is that the experiment has never been allowed to proceed on a national scale without violent undermining from the forces of private capital, both internal and external.

He deals with this kind of question explicitly. Humans have evolved to be able to work efficiently at tribal sizes - this is Dunbar's Number. So yeah, you'll see organization around this size doing very well. But as companies grow beyond that, you'll see them turn into the hulking dinosaurs that can no longer operate agilely.

Hayek talks about the error of trying to use in government that in-built but limited capacity for managing relationships at too great a scale.

Not a critique, just pointing out discussion of his ideas is not possible in the States due to irrational elevation of Hayek by Conservatives.