FA Hayek’s final work, The Fatal Conceit (1988), is in essence a lengthy argument against what its author calls ‘constructivist rationalism’. By that term he means the assumption that cultural evolution occurs not by a process of natural selection as in biological evolution, but instead as the result of deliberate design guided by human reason (p. 22). In the constructivist framework, societal, economic, and political institutions are assumed to have developed as the result of a guiding mind or minds. Such a view, Hayek argues, smacks of a fatal conceit.
Throughout the above mentioned work, Hayek demonstrates that in many areas, the constructivist assumptions are not warranted, and that the existence of various social institutions can be understood as resulting from the interplay of acting individuals without a single guiding force – that is, as a result of human action, but not of human design. He refers to such emergence as spontaneous, and this process can be particularly understood in regard to the development of languages and economies. In his discussion of the fatal conceit, Hayek recognises that a great deal of the constructivist-rationalist view on political economy owes much to the work of ancient philosophers Plato (424/423 – 348/347 BCE) and Aristotle (384 – 322 BCE):
“The unsatisfactory character of our contemporary vocabulary of political terms results from its descent largely from Plato and Aristotle who, lacking the conception of evolution, considered the order of human affairs as an arrangement of a fixed and unchanging number of men fully known to the governing authority – or, like most religions down to socialism, as the designed product of some superior mind.” (p. 109)
In this he recognises a particular strand of Platonic-Aristotelian rationalism, which was not necessarily universal in Greek thought (p. 46). It was this strand, however, that was to become the most influential one in Western philosophy from the time of the Scholastic movement in the Middle Ages. Expanding on Hayek’s work, it must be realised that this constructivist-rationalist view extends to the very root of Western philosophy in the works of Plato, and goes far deeper than questions of political economy.
I think that it’s quite obvious that libertarianism is much more of a worldview now than anything else. Long gone are the days when libertarianism and its good friend the Austrian School were known as simple and respective political and economic philosophies. As of today, Austro-libertarianism digs so incredibly deep in various matters of sociology and the everyday life of its proponents that early thinkers like Menger and Bohm-Bawerk would be astounded if exposed to the product of its evolution.
Not too many people however hold something like the Austrian School, an economic social science, to be related to a prominent branch of human art such as film. Indeed, the Austrian School may actually represent the driving force behind movies. I am under the impression that both praxeology and Austrian spontaneous order theory are what can be used to pull a viewer into the picture, not through the economic actions of the characters of course, but by applying these theories to the characteristics of the characters themselves.
The topic of today’s post is chapter 3: The Notion of Utility. Some people think that the stance on utility can quickly separate Austrians from adherents of other schools. And no, this is not as simple as just asking whether utility is cardinal or ordinal.
Test yourself on these questions, too. Continue reading →
The Effect of Price Controls On The Supply of Goods.
To analyze this further, we must look at the role of prices in the market. Why do things cost the amount that they do, and who dictates these prices?
All things held equal, we see that supply and demand dictate prices. Since goods are scarce, there must be a tradeoff to obtain them; if all goods were scarce, and free, then goods will not exist anymore since they all will be consumed without restriction.
Well here’s an unlikely post, let alone a series of posts. What could interest me enough about these two shows that would bring me to deface our beautiful website with talk of television? The answer is that they are very high quality television shows, and they provide legitimate insights into human behavior. These aren’t midday soap operas, they are impressive works of fiction. What brings me to write about them, however are the characters within the two series. Not only do both series have tremendous character development, but they have a fantastic character growth (even if this growth is negative). Most importantly, both shows allow us an insight into theoretical extreme conditions which people must overcome, and they contrast each other beautifully in this respect.
The Walking Dead provides a vivid scenario in which individuals must overcome the destruction of the entire societal order which is then replaced by a constant threat of violence, death, and scarcity. Meanwhile Breaking Bad offers us an example of a man who has destroyed his own life through his own actions. He began with the best of intentions: to help his family, but has increasingly been corrupted by the lure of power and wealth to the point that he has come close to destroying everything that he once was and that he originally worked to preserve.
The two scenarios are antithetical to one another. While the latter takes place entirely within the framework of society, was chosen on some level, and could have been escaped at several points within the story, the former show envisions a scenario which was in no way chosen, destroys the societal order, and presents characters with a terrifying reality that they can never escape.
I believe that both offer us insights into human behavior under certain dire, and fascinating, situations, and therefore they are worthy of a deeper examination.
I honestly don’t know very much about Paul Krugman. He’s a statist, he’s a liberal, and he’s an economist. These factors don’t make for a very winning combination among the libertarian circles which I frequent. Exactly for this reason I actually don’t know whether or not I’m predisposed to be unsympathetic towards Professor Krugman, because while I’ve been exposed to a good deal of anti-Krugman sentiment, I feel that I mustn’t disregard such a prominent economist without a fair trial. This is really my first actual experience with Krugman’s work, other than bits and pieces of his economic writings, none of which I found too offensive. Recently, however, I read a short piece by Krugman which I did find quite offensive. It’s an opinion article Krugman wrote for the New York Times. The name of this article was The Twinkie Manifesto.