Friedrich Hayek (1899-1992) published this book in 1988 as his last word in opposition to socialism. I read it to “update” myself on his thinking since The Road to Serfdom (1944) and “The use of knowledge in society” (1945) — an article I regularly recommend to students.
This book is full of insights on how individuals with distributed knowledge coordinate their actions (so this “review” will be long with his words), but Hayek also throws out the baby (the importance of social management of collective goods) with the bathwater (the dangers of centralized, “rational” social control). Given my interest and the global importance of the commons and environment (both social, or non-excludable goods), I think that Hayek — like Milton Friedman — could have delivered a sharper message. But most of this review focuses on what Hayek gets right.
Chapter 1: Between instinct and reason
This book argues that our civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection – the comparative increase of population and wealth – of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be ‘fruitful, and multiply, and replenish the earth, and subdue it’ (Genesis 1:28). This process is perhaps the least appreciated facet of human evolution.
Socialists take a different view of these matters. They not only differ in their conclusions, they see the facts differently. That socialists are wrong about the facts is crucial to my argument, as it will unfold in the pages that follow… If it were for instance true that central direction of the means of production could effect a collective product of at least the same magnitude as that which we now produce, it would indeed prove a grave moral problem how this could be done justly. This, however, is not the position in which we find ourselves.
[snip]
The main point of my argument is, then, that the conflict between, on one hand, advocates of the spontaneous extended human order created by a competitive market, and on the other hand those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources is due to a factual error by the latter about how knowledge of these resources is and can be generated and utilised (pp 6-8).
These opening paragraphs focus on the main issue, which is not morality but prosperity. Socialists who fail to understand this difference often suggest that equal access to the means of production will lead to equal outcomes from the fruits of production (“From each according to his ability, to each according to his needs“) when (a) that doesn’t happen and (b) capitalism’s job is to create wealth while the state’s job is to redistribute it (so-called “mixed economies”).
Why are (would-be) socialists or those sympathetic to socialism so often mislead? Hayek points the finger at our limited capacity to comprehend our complex social systems:
They [human instincts] were adapted to life in the small roving bands or troops in which the human race and its immediate ancestors evolved during the few million years while the biological constitution of homo sapiens was being formed. These genetically inherited instincts served to steer the cooperation of the members of the troop, a cooperation that was, necessarily, a narrowly circumscribed interaction of fellows known to and trusted by one another… The primitive individualism described by Thomas Hobbes is hence a myth. The savage is not solitary, and his instinct is collectivist. There was never a ‘war of all against all’. (pp 11-12)
Hayek calls our collective and innate instincts natural morality, defining “morality” as “those non-instinctive rules that enabled mankind to expand into an extended order” (p. 12). Hayek places morality between natural morality (a non-scaleable concern for one’s tribe) and rationality (a non-scaleable assumption that one can design the mechanism for converting resources into desired outcomes). Hayek’s morality allows us to compete with strangers (as we would not with “family”) in ways that convert our greed into gains (“as if guided by an invisible hand”) that we would never (in a tribe) knowingly share with other strangers:
In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant; and we in turn constantly live on the services of other people of whom we know nothing. All this is possible because we stand in a great framework of institutions and traditions – economic, legal, and moral – into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood (p. 14).
How did these morals develop? As Joseph Heinrich explained in The Secret of Our Success (2015), they emerged as cultural evolution favored tribes willing to exchange with non-blood relatives over tribes held back by kin loyalty (Hayek cites much older sources). As a result, we created context-dependent loyalties:
If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e., of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once. To apply the name ‘society’ to both, or even to either, is hardly of any use, and can be most misleading (p. 18, emphasis in original).
In those two worlds, it is necessary to Think Fast and Slow (2011) in discriminating between instincts (Type 1 thinking) and learnt rules (Type 2 thinking), and competition drove this process: “Competition is a procedure of discovery, a procedure involved in all evolution, that led man unwittingly to respond to novel situations; and through further competition, not through agreement, we gradually increase our efficiency” (p. 19). To Hayek, the most important word in that description is “unwittingly,” which refers both to the unintentional way that humans have improved their condition and the difficulty of wittingly designing improvements (the “fatal conceit”) — a concern at the center of Scott’s brilliant Seeing Like a State (and more recent Two Cheers for Anarchism).
And out of this concern, Hayek harkens to an old-fashioned (think Burke vs Paine) version of conservatism:*
Learning how to behave is more the source than the result of insight, reason, and understanding. Man is not born wise, rational and good, but has to be taught to become so. It is not our intellect that created our morals; rather, human interactions governed by our morals make possible the growth of reason and those capabilities associated with it. Man became intelligent because there was tradition – that which lies between instinct and reason – for him to learn. This tradition, in turn, originated not from a capacity rationally to interpret observed facts but from habits of responding. It told man primarily what he ought or ought not to do under certain conditions rather than what he must expect to happen.
[snip]
It is less accurate to suppose that thinking man creates and controls his cultural evolution than it is to say that culture, and evolution, created his reason. In any case, the idea that at some point conscious design stepped in and displaced evolution substitutes a virtually supernatural postulate for scientific explanation. So far as scientific explanation is concerned, it was not what we know as mind that developed civilisation, let alone directed its evolution, but rather mind and civilisation which developed or evolved concurrently.
[Thus…]
Just as instinct is older than custom and tradition, so then are the latter older than reason: custom and tradition stand between instinct and reason – logically, psychologically, temporally (pp. 21-23).
Hayek then repeats the oft-forgotten fact that Darwin read Smith’s Wealth of Nations before he came up with a theory of evolution. Darwin borrowed from Smith’s ideas of undirected, beneficial social evolution (“as if guided…”) when looking at the much-longer process of natural selection. Sociologists, likewise, claim “group selection” explains why some cultures succeed over others, without guidance, in continuously changing circumstances, i.e., “biological and cultural evolution… rely on the same principle of selection: survival or reproductive advantage… Not only does all evolution rest on competition; continuing competition is necessary even to preserve existing achievements,” regardless of what we consider fair or rational: “I do not claim that the results of group selection of traditions are necessarily ‘good’ – any more than I claim that other things that have long survived in the course of evolution, such as cockroaches, have moral value” (pp. 26-27).
…and that’s the first chapter. If you’ve made it this far, I suggest taking a short break to think over these ideas, since they underpin the rest of the book.
2: The origins of liberty
Liberty was not given as much as taken by the Mediterranean merchants who would leave oppressive for welcoming ports, taking their custom with them. In this early (pre-Roman) period, private property was synonymous with individual freedom. Slaves lived the difference. Traders knew the difference. Tribes did not know the difference, so their members were caught in a collective, protective — and stifling — safety net. Some Greek philosophers (Aristotle, Plato) disliked private property, and their influence might explain how the Greeks lost out to pro-property, pro-market Rome.
There is a tension between ruler’s desire to tax and control and their subjects’ desire to protect their money and autonomy. Individual and state prosperity suffered when the state was too strong. Paradoxically, strength came from weakness:
The revival of European civilisation during the later Middle Ages… owes its origins and raison d’être to political anarchy. It was not under the more powerful governments, but in the towns of the Italian Renaissance, of South Germany and of the Low Countries, and finally in lightly-governed England, i.e., under the rule of the bourgeoisie rather than of warriors, that modern industrialism grew. Protection of several property, not the direction of its use by government, laid the foundations for the growth of the dense network of exchange of services that shaped the extended order (p 33).
From these experiences, philosophers such as Locke argued that private property, justice and freedom went hand-in-hand, since the right to property could be interpreted to include oneself as well as one’s land, possessions and ideas (The Declaration of Independence very nearly said “life, liberty and property”). More recent examinations of “property rights” have veered into novel but important areas, e.g., Coase’s “Nature of the Firm” (where does control start and stop) and “Problem of Social Costs” (the right to pollute — or not be polluted).
Hayek thinks the application of property rights to ideas, patents, and copyright slows their exchange and thus learning and innovation.
3. The evolution of the market
“Modern archaeology confirms confirms that trade is older than agriculture or any other sort of regular production” (p39) — read my review of Jacobs (1969) for more support of Hayek’s rejection of the conventional wisdom of agriculture preceding trade or towns. From trade came norms of hospitality (and protection) for strangers, an appreciation of different ideas, and specializations in sourcing raw materials and crafted goods. Crossroads grew into towns and towns into cities. Cooperation was expected. Surpluses allowed more people to live better lives.
Rebels added bridging social capital to the bonding social capital of their home communities:
In any case, some individuals did tear away, or were released, from the hold and obligations of the small community, and began not only to settle other communities, but also to lay the foundations for a network of connections with members of still other communities – a network that ultimately, in countless relays and ramifications, has covered the whole earth (p. 42).
Historians and archaeologists can be biased by evidence, crediting rulers and bureaucrats (who left behind buildings, laws and records) instead of individuals for successes. Their informal, bottom up actions left few traces but delivered more prosperity. Rulers, sadly, preferred their control over people’s prosperity:
What led the greatly advanced civilisation of China to fall behind Europe was its governments’ clamping down so tightly as to leave no room for new developments, while… Europe probably owes its extraordinary expansion in the Middle Ages to its political anarchy (p. 45).
…and China has not changed: President Xi’s need for control is more important than freedom (and prosperity) in Hong Kong — something I worried about on my first (and last) visit to HK in 2018.
Aristotle admired oiknomia (home economics) but not markets. He preferred autarky (self-sufficiency), so he was not an economist. His (surviving) writings omit discussion or understanding of evolution or self-organizing phenomena. His insistence that nature and human activities must be organized (via taxonomy) before they could be accepted or understood left him and his followers blind to most evolutionary successes.
Aristotle (and many religions) opposed interest, free prices, and profits. Rulers who embraced the insights of Hume and Smith (“one can serve another without kind intentions”) gave space for undirected but mutually beneficial trade. The move from feudalism and tribalism towards bourgeois dignity and a “propensity to truck barter and exchange” created wealth that was distributed through a self-organized system that no individual could understand, explain or control.
4. The revolt of instinct and reason
Enlightenment thinkers such as Decartes raised the profile of reason at the expense of tradition, sometimes pursuing “scientism” to the point of discarding “irrational” but functional institutions in favour of rational but dysfunctional replacements. Rousseau opposed rationalism with admiration for the “noble savage” but his admiration of “animal instinct” and “the will of the people” discarded thousands of years of tradition that had delivered — without design — the civilisation that supported Rousseau and others.
It’s hard to be an individualistic noble savage if you don’t have freedom for yourself or your property, but that “bug” was a “feature” to those — like Rousseau — who favoured collectivism over property. Academics and intellectuals (e.g., Marx) mythologize the past as they espoused flawed ideologies on putting humanity on the socially engineered path to a workers paradise.
One’s initial surprise at finding that intelligent people tend to be socialists diminishes when one realises that, of course, intelligent people will tend to overvalue intelligence, and to suppose that we must owe all the advantages and opportunities that our civilisation offers to deliberate design rather than to following traditional rules, and likewise to suppose that we can, by exercising our reason, eliminate any remaining undesired features by still more intelligent reflection, and still more appropriate design and ‘rational coordination’ of our undertakings. This leads one to be favourably disposed to the central economic planning and control that lie at the heart of socialism. Of course intellectuals will demand explanations for everything they are expected to do, and will be reluctant to accept practices just because they happen to govern the communities into which they happen to have been born (pp. 53-54).
Hayek’s complaint here echoes that of Vincent and Elinor Ostrom, both of whom spent their careers understanding and explaining how informal institutions emerged, evolved and prevented “common pool situations” from turning into “common pool dilemmas” (or tragedies).
Hayek lists four ideas (rationalism, empiricism, positivism and utilitarianism) that “scientific” people implicitly accept before delving into the presuppositions that support those ideas, i.e.,
- The idea that it is unreasonable to follow what one cannot justify scientifically or prove observationally (Monod, Born).
- The idea that it is unreasonable to follow what one does not understand (Popper).
- The related idea that it is unreasonable to follow a particular course unless its purpose is fully specified in advance (Einstein, Russell, Keynes).
- The idea, also closely related, that it is unreasonable to do anything unless its effects are not only fully known in advance but also fully observable and seen to be beneficial (the utilitarians).
“To what purpose tradition, suffering or obedience?” Hayek answers:
…intellectuals from Rousseau to such recent figures in French and German thought as Foucault and Habermas regard alienation as rampant in any system in which an order is ‘imposed’ on individuals without their conscious consent…
On a less sophisticated level than the argument against ‘alienation’ are the demands for ‘liberation’ from the burdens of civilisation – including the burdens of disciplined work, responsibility, risk-taking, saving, honesty, the honouring of promises, as well as the difficulties of curbing by general rules one’s natural reactions of hostility to strangers and solidarity with those who are like oneself – an ever more severe threat to political liberty.
Everywhere, in the name of liberation, people disavow practices that enabled mankind to reach its present size and degree of cooperation because they do not rationally see, according to their lights, how certain limitations on individual freedom through legal and moral rules make possible a greater – and freer! – order than can be attained through centralised control (pp. 64-65).
5. The fatal conceit
Traditions, institutions and beliefs… may be seen, as is especially fashionable today, as sources of alienation and oppression, and of ‘social injustice’. After such objections, the conclusion is reached that there is an urgent need to construct a new, rationally revised and justified morality which does meet these requirements (p. 67).
What’s the danger of pursuing rationality?
If we stopped doing everything for which we do not know the reason, or for which we cannot provide a justification in the sense demanded, we would probably very soon be dead (p. 68).
Economists’ models of “rational” behaviour, expectations and so on, contribute to problems because they are used to argue for bad policies, such as those that contributed to the 2007+ financial crisis (read more and more).
Hayek explains how the “extended order” in which we live and which contributes so much to our prosperity is “transcendent”, i.e., beyond our understanding and thus immune to rationalist design and control. Those who ignore such orders are counterproductive (“decimal time” in revolutionary France) or dangerous (the Khmer Rouge killed ~2 million citizens in their quest to reset society to Year 0).
Turning to the opposite side of “it must fit in my brain box”, Hayek warns against an obsession with “moral” rules. Many people do good things for reasons outsiders cannot understand: “As if guided by an invisible hand” applies in markets as well as social situations. A requirement to “justify your actions” is not just a waste of time but a version of petty fascism. Who cares why consenting adults — whether they know each other or not — do what they do. (I give “reddit gold” anonymously to strangers whose ideas and words I like; they don’t need to know why.)
Civilisation is not only a product of evolution – it is a process; by establishing a framework of general rules and individual freedom it allows itself to continue to evolve. This evolution cannot be guided by and often will not produce what men demand. Men may find some previously unfulfilled wishes satisfied, but only at the price of disappointing many others. Though by moral conduct an individual may increase his opportunities, the resulting evolution will not gratify all his moral desires. Evolution cannot be just (p. 74).
…and that means that the impacts of actions and choices, structures and relations should not — and cannot — be judged ex-ante or even ex-post, as impacts are partially felt and unevenly distributed days, years and centuries later. Hayek’s statement of this perspective is famous for those of us who play the Econtalk drinking game:
If we had deliberately built, or were consciously shaping, the structure of human action, we would merely have to ask individuals why they had interacted with any particular structure. Whereas, in fact, specialised students, even after generations of effort, find it exceedingly difficult to explain such matters, and cannot agree on what are the causes or what will be the effects of particular events. The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design (p. 76).
I often think of this curious task when teaching, as one of my main jobs is convincing students that “it’s not as easy as you think.” That said, way back in 1995, I remember sitting in Sienna as a 25-year old with ambitious plans for government reform. (My plans, sadly, are lost. Government will have to struggle without me.)
Hayek then explains how decentralised information recommends decentralised decisions in markets and politics (what the Ostrom’s called “polycentricity” [pdf]). Hayek reinforces these points by citing long human childhoods (necessary for understanding social norms), different sets of moral rules (allowing experimentation and adaptation), and diversification (individuals coming together to exchange based on their several talents, ideas and assets).
In calling for such humility, Hayek attracts opposition, i.e., “the individual can no longer know whose needs his efforts do or ought to serve… Directing his productive efforts altruistically thus becomes literally impossible for him… for intellectuals generally, the feeling of being mere tools of concealed, even if impersonal, market forces appears almost as a personal humiliation” (pp. 81-82). These words remind me of Peter Singer’s (utilitarian) quest to shame people for prioritising care for neighbours over the distant, anonymous poor. I think Singer is misguided. Hayek would probably call him dangerous.
Turning against Hayek, I think he misses an important role for the bureaucrats he despises: “Attempts to intervene in spontaneous order rarely result in anything closely corresponding to men’s wishes, since these orders are determined by more particular facts than any such intervening agency can know” (p. 84). I am not sure where he would stand on correcting market failures (such as pollution) via regulations and/or taxes, but I think those interventions are necessary and useful.
Hayek ends with an appeal to respect institutions that distribute power to those possessing the local and tacit knowledge needed to make good decisions.
6. The mysterious world of trade and money
A “primitive minds” distrusts a win-win transaction (e.g., I sell you a hamburger) because it is accustomed to simple win-lose interactions among peers (more meat for you means less meat for others) rather than mutually beneficial, impersonal exchanges based on comparative advantage. When I teach economics, I must always explain the differences among cost, price and value — concepts that many assume are interchangeable.
Trade – regarded as real work or not – brought not only individual but also collective wealth through effort of brain rather than of muscles. That a mere change of hands should lead to a gain in value to all participants, that it need not mean gain to one at the expense of the others (or what has come to be called exploitation), was and is nonetheless intuitively difficult to grasp (p. 93).
Many people still prefer “honest” physical labor over the “alchemy” of ideas, innovations and value gradients. Marx’s obsession with the labor theory of value blinded him to the means in which capital multiplied the value of labor as well as the gains from trade arising from differences in talent, resources and taste. These fears only multiply when the marketplace under consideration expands beyond a few vendors or small-scale manufacturers to larger markets and longer supply chains that no individual (due to the knowledge problem) can ever hope to understand. For some people, it is fine to believe in an almighty, all-seeing god (who plays no role in our daily lives) but totally wrong to believe in the “magic of markets” delivering goods made by some strangers for the benefit of other strangers. Markets are autonomous, complex and robust — like ecosystems. People accustomed to simplifying ecosystems into gardens and food courts will also try to simplify markets into good, bad, ethical, and so on. Anyone who has studied (or operated) supply chains will know that such descriptors (let alone KPIs) are nearly impossible to measure or apply to supply chains.
That said, Hayek claims (correctly) that prices help us navigate this complexity as buyers of goods or sellers of inputs. Prices can be wrong if they ignore the costs of “negative externalities” (such as pollution) or reflect a monopolist’s market power, but even flawed prices are better than no prices. We have not found any mechanism better suited to coordinating self-interested strangers than the invisible hand.
Money, interest, borrowing and lending are feared for their complexity (see, e.g., debates over fractional vs full-reserve banking), which leads to bad policies, resource waste, and greater income inequality (those who “get it” grow wealthier). Politicians, of course, have sometimes neglected citizens. Inflationary spending harms savers and the poor while saving debtors from accountability and the rich from taxes. In 2020, short term (MZM) money supply jumped by 25% in the US — a rate far greater than historic norms.
7. Our poisoned language
Understanding and cooperation require a common language. In some cases, language for new ideas needs to be invented (e.g., “telephone” to “mobile phone” to “zoom”). In other cases, language based on “erroneous theory” sows confusion and division. I see this problem with “post-modern” thinking faffing, but Hayek worries (justly) about socialists who attribute order to design when “observed order” actually results from an evolutionary process. Likewise, discarding the “state” for “society” is dangerous because it trades accountable known people for an unaccountable nebulous “movement.”
Building on this statement, Hayek then looks into the (mis)use of “liberal,” “capitalism” and “socialism” — terms with a variety of (sometimes) contradictory meanings. “Capitalists” and the “proletariat,” for example, are portrayed as opponents when they actually benefit each other.
One of the oldest terms… societas, from socius [Latin], the personally known fellow or companion… has been used to describe both an actually existing state of affairs and a relation between individuals… To call by the same name such completely different formations as the companionship of individuals in constant personal contact and the structure formed by millions who are connected only by signals resulting from long and infinitely ramified chains of trade is not only factually misleading but also almost always contains a concealed desire to model this extended order on the intimate fellowship for which our emotions long (p. 112-3)
Thus, we are confused when people use “social” to refer to small groups joined by personal relations as well as larger groups joined by impersonal norms.
Hayek lists over 160 nouns that are qualified by “social” (e.g., “social animal” or “social justice”), to show how those claiming (social) legitimacy try to avoid accurate terms that deliver less authority: “The traditional term for what is now called the ‘social state’ was ‘benevolent despotism’, and the very real problem of achieving such despotism democratically, i.e., while preserving individual freedom, is simply wished away by the concoction ‘social democracy’” (p. 117).
Hayek warns that social justice warriors’ support for redistributive interventions undermines the market forces that bring wealth and “society.” Although I agree with his point, note that some “social” measures (regulating bad behaviour, taxing wealth, subsidizing public goods, and reducing inequality) can be designed and implemented in ways that allow for individual decisions, market-efficiency and overall prosperity.
8. The extended order and population growth
It is, then, not simply more men, but more different men, which brings an increase in productivity. Men have become powerful because they have become so different: new possibilities of specialisation – depending not so much on any increase in individual intelligence but on growing differentiation of individuals – provide the basis for a more successful use of the earth’s resources This in turn requires an extension of the network of indirect reciprocal services which the signalling mechanism of the market secures. As the market reveals ever new opportunities of specialisation, the two-factor model, with its Malthusian conclusions, becomes increasingly inapplicable. (pp. 122-123).
Although Hayek is right about the development and deepening of markets, he overlooks population- and growth-related issues as they affect the commons, which (by definition, due to missing property rights) are not amenable to market incentives or solutions. Hayek indirectly invokes such a caveat:
As long as an increase in population has been made possible by the growing productivity of the populations in the regions concerned, or by more effective utilisation of their resources, and not by deliberate artificial support of this growth from outside [=negative externalities], there is little cause for concern (p 124).
…but then fails to admit its relevance:
There is no danger whatever that, in any foreseeable future with which we can be concerned, the population of the world as a whole will outgrow its raw material resources, and every reason to assume that inherent forces will stop such a process long before that could happen (p. 125).
This bold statement is just wrong, and the fact that Hayek cites Julian Simon (see this post and this review) confirms his myopia with respect to non-excludable goods.
Hayek argues that population growth should be allowed to run its course and that humans will “find a way” to live sustainably, innovate solutions and thrive. Such hopes are misplaced as long as politicians and communities fail to manage their collective goods and markets continue to “grow artificially” using outside (non-priced) resources, as we can see with climate chaos, crashing biodiversity and increasing water scarcity.
9. Religion and the guardians of tradition
Hayek and I agree that “If God did not exist then it would be necessary to invent Him.” But the existence of so many religions — in contradiction to Voltaire’s gist — provides evidence of their social value. How do religions help? They use stories, beliefs and superstition to direct individuals towards choices that benefit the group.
In any case, the religious view that morals were determined by processes incomprehensible to us may at any rate be truer (even if not exactly in the way intended) than the rationalist delusion that man, by exercising his intelligence, invented morals that gave him the power to achieve more than he could ever foresee. If we bear these things in mind, we can better understand and appreciate those clerics who are said to have become somewhat sceptical of the validity of some of their teachings and who yet continued to teach them because they feared that a loss of faith would lead to a decline of morals. No doubt they were right; and even an agnostic ought to concede that we owe our morals, and the tradition that has provided not only our civilisation but our very lives, to the acceptance of such scientifically unacceptable factual claims. (p. 137).
Collective well-being also helps religions survive. Judaism may have strange rules (no cheeseburgers, closed for Shabbat, etc.), but you can’t deny its long-running (3,500+ years) benefits to the Jewish community. Other religions (e.g., Communism) are doomed (recall this book is from 1988) because they denounce property and family, thereby undermining their current effectiveness and future prospects.
Hayek reminds readers that we have come this far without knowing why we believe, act or hesitate in certain situations. Taking success as the ultimate measure, he recommends we put our faith into the evolved institutions that have brought collective prosperity rather than the “rational” schemes offered by scientists, visionaries and quacks.
This “review” is now over 5,300 words, so congratulations for reading so far! I hope this review helps you understand (or decide to read) this excellent book. I think Hayek is 90 percent right and 10 percent wrong (mostly regarding collective goods) in his argument and analysis of how private decisions can combine to create positive collective outcomes. I give this book FIVE STARS.
* I definitely recommend you read “Why I am not a conservative,” an excerpt from Hayek’s 1960 Constitution of Liberty. In that short accessible essay, you will see how Hayek worried about radicals from the Right as much as the Left.
Here are all my reviews.
I heard about this book (subtitle “how the hidden rules of ownership change our lives”) via this Econtalk podcast and “acquired” a copy.
