Yesterday was F.A. Hayek’s 112th birthday, and as Hayek’s work inspired the name of this blog, and continues to inspire my work every day, I encourage you all to celebrate this anniversary by reading (or re-reading, I hope!) his seminal Use of Knowledge in Society (1945):
The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.
Knowledge problem, indeed.
As it happens, I was writing at the same time as Mike was posting his remarks about Fukuyama’s NYT review of the new edition of Hayek’s Constitution of Liberty … I’ve been quite struck by the juxtaposition this past week of two quite dramatic partially-misguided and incorrect readings of Hayek. Fukuyama’s was one, and the analyses by Easterly, Boudreaux, and Boettke cover much of my reaction to his misreading.
The other dramatic partial misreading came last week from George Soros, at a panel discussion at the Cato Institute (with fellow panelists Bruce Caldwell, Richard Epstein, and new edition CoL editor Ron Hamowy) discussing Hayek’s Constitution of Liberty in celebration of the release of the new edition. David Boaz provides some summary remarks about the panel, and Soros’ reading of Hayek, in this post from Cato @ Liberty. I watched the panel live online, and was struck by Soros’ claim that Hayek would have supported the efficient markets hypothesis and was a “Chicago school” economist — my reading of Hayek says that nothing is farther from the truth! Boaz’s post recounts Caldwell’s response to Soros:
First of all, Hayek and the Austrians in my estimation reject the usefulness of an efficient market hypothesis and a theory of rational expectations for capturing the workings of a market process. So if the acceptance of those two theories is the defining characteristic of being a market fundamentalist, then he’s not the sort of market fundamentalist that you’re describing. I think a pithy way of putting this is that there’s definitely a difference methodologically and in other realms between Chicago and Vienna.
I actually think that public intellectual exchanges such as those following Fukuyama’s review and Soros’ panel comments are highly salutary, and not just because they create opportunities for Hayek scholars to correct misperceptions about his ideas that others hold. The more we share ideas around the multidimensional political and philosophical spectrum, the more we understand where we have common cause and where we don’t.
David Boaz has a post reviewing the Hayek-related discourse over the past week at the Encyclopedia Britannica blog, and I recommend it, in addition to the other links in this post and Mike’s earlier one.