I agree with Hayek

[Random]

No, come back!

In this article on the computer company Valve I found this summary of some of Hayek's philosophy. Sounds sensible to me:

"Hayek’s argument was predicated upon the premise that knowledge is always ‘local’ and all attempts to aggregate it are bound to fail. The world, in his eyes, is too complex for its essence to be distilled in some central node; e.g. the state. If we hardly understand our own preferences and capabilities, how on earth can we hope to aggregate the knowledge of what people want and what societies can produce within some central agency; however well meaning that agency might be? All attempts to centralise this infinite, and unknowable, quantity of knowledge will, inevitably, end up in serfdom."

This is basically why I think a state cannot be democratic - and also why the market cannot be fair either, since it is always dominated by those with most resources. If we replace Hayek's focus on prices with negotiation, discussion and collective bargaining, is there anything intrinsically wrong with it?

"The miracle of the market, according to Hayek, was that it managed to signal to each what activity is best for herself and for society as a whole without first aggregating all the disparate and local pieces of knowledge that lived in the minds and subconscious of each consumer, each designer, each producer. How does this signalling happen? Hayek’s answer (borrowed from Smith) was devastatingly simple: through the movement of prices. E.g. whenever the price of balloons goes up, this signals to balloon makers that ‘society’ wants more balloons. Thus they produce more, without any agency or ministry telling them to do so; without any need to concentrate in some building or server all information about people’s balloon preferences, or about the technology of producing balloons. As for Hayek’s intense dislike of the state, trades unions, municipalities, indeed any collective agency, the reason is that he believed that (a) such bodies interfere with the price signals (e.g. through ‘distorting’ taxes) that are society’s only chance to coordinate its activities well and efficiently; and (b) aggregating profoundly local knowledge was the first step toward collectivising decision making for the benefit of the decision makers and at great cost to everyone else. "

http://blogs.valvesoftware.com/econ...nt-structure-fit-into-todays-corporate-world/

I appreciate that this man may have misinterpreted Hayek. I've not read him in the original.

edit: thanks mod!

 

[camouflage]

I agree actually, it's a point i wanted to make on another thread where someone criticised 'economists' as thinking human action can be summized in formula, and that this was required by capitalism. I wanted to point out that not all economists are capitalist, and that Hayek beleived quite the opposite, but was too embarresed to say so. I think Hayek deserves a read... Since reading some Adam Smith i've come to realize that people can misrepresent the ideas of thinkers for their own reasons. But this means holding my nose and giving The road to serfdom a read. :/

Anyway i find his hatred of collective action pathalogical, and i think collective agency is a thing worth getting right.

 

[TruXta]

Who are you and what's happened to the real Random?

 

[Orang Utan]

Cracking norks too

 

[Random]

I've already mentioned, I think, that Marxist massimo d'angelis (for it was he) says that he's a leftist who thinks people can learn a lot from Hayek. Maybe this is some of what he means?

 

[TruXta]

There are some definite affinities with autonomism/non-capitalist anarchism, but Hayek is and was a free market champion.

 

[littlebabyjesus]

Problem is that his logic is also predicated on infinite resources. This, for instance:

Hayek’s argument was predicated upon the premise that knowledge is always ‘local’ and all attempts to aggregate it are bound to fail. The world, in his eyes, is too complex for its essence to be distilled in some central node; e.g. the state. If we hardly understand our own preferences and capabilities, how on earth can we hope to aggregate the knowledge of what people want and what societies can produce within some central agency; however well meaning that agency might be? All attempts to centralise this infinite, and unknowable, quantity of knowledge will, inevitably, end up in serfdom

But if limited resources are owned privately, the alternative - the market - inevitably ends up in serfdom. He focuses on demand without analysing the power structures of the supply side.

I would turn this on its head - 'All attempts to privatise limited resources will, inevitably, end up in serfdom.'

 

[butchersapron]

The market signals to each? Whose in control here? That reads to me like a negative criticisms of the state and its problems that then magically are positively dealt with by the market. In that sense it's a political argument rather than the logical one it pretends/aims to be in that there are other ways to aggregate needs/wants etc than the market as evidenced by the way that whenever historically the market gains the upper hand (and leads to its own fuck-ups) there is an anti-market reaction (sometimes from above, sometimes from below) - Polanyi etc.

What affinities with automnomism do you see truxta? (and, i suppose, what do you mean by autonomism here?)

edit: that said, this is just from that posted above, not the full article posted on another thread.

 

[Firky]

Back in the day I joined the chatroom with the name 'Hayek' and was promptly kicked out. Some names have a pile of connotations with them.

(trying to work my way through that link you posted regarding Valve, but keep getting distracted)

 

[TruXta]

The market signals to each? Whose in control here? That reads to me like a negative criticisms of the state that then magically are positively dealt with by the market. In that sense it's a political argument rather than the logical one it pretends/aims to be in that there are other ways to aggregate needs/wants etc than the market as evidenced by the way that whenever historically the market gains the upper hand (and leads to its own fuck-ups) there is an anti-market reaction (sometimes from above, sometimes from below) - Polanyi etc.

What affinities with automnomism do you see truxta? (and, i suppose, what do you mean by autonomism here?)

Just the very basic one of seeing difficulties with central planning/aggregation of knowledge as a prerequisite for efficient distribution of resources. So it's almost more an epistemological affinity than a political affinity. Admittedly this is very vague, and I could be well off.

 

[littlebabyjesus]

He is also assuming rational actors here, no? Health care is a good example of where lack of central planning leads to inefficient services - people generally leave it too late to spend money on their health, and then throw whatever they have at themselves when they are really sick.

 

[TruXta]

He is also assuming rational actors here, no? Health care is a good example of where lack of central planning leads to inefficient services - people generally leave it too late to spend money on their health, and then throw whatever they have at themselves when they are really sick.

Who, Hayek? I guess so.

 

[Jeff Robinson]

"The miracle of the market, according to Hayek, was that it managed to signal to each what activity is best for herself and for society as a whole without first aggregating all the disparate and local pieces of knowledge that lived in the minds and subconscious of each consumer, each designer, each producer. How does this signalling happen? Hayek’s answer (borrowed from Smith) was devastatingly simple: through the movement of prices. E.g. whenever the price of balloons goes up, this signals to balloon makers that ‘society’ wants more balloons. Thus they produce more, without any agency or ministry telling them to do so; without any need to concentrate in some building or server all information about people’s balloon preferences, or about the technology of producing balloons. As for Hayek’s intense dislike of the state, trades unions, municipalities, indeed any collective agency, the reason is that he believed that (a) such bodies interfere with the price signals (e.g. through ‘distorting’ taxes) that are society’s only chance to coordinate its activities well and efficiently; and (b) aggregating profoundly local knowledge was the first step toward collectivising decision making for the benefit of the decision makers and at great cost to everyone else. "

http://blogs.valvesoftware.com/econ...nt-structure-fit-into-todays-corporate-world/

I appreciate that this man may have misinterpreted Hayek. I've not read him in the original.

edit: thanks mod!

To say that Hayek disliked the State is a little misleading. Hayek consistantly defended the need for a State and not just a 'night watchman' one but a proactive one committed the construction and maintaince of a market society (i.e. continually providing the legal and institutional framework for the market but not interfering in market outcomes). The States he despised were those that he regarded as interfering in the 'spontaneous order' of the free market - social democratic and socialist states in particular. Because markets assumed such primacy in Hayek's conception of liberty he generally prefered dictatorial regimes that supported 'free markets' to democratic states that sought to regulate and intervene in them. Hence he once described Chile under Pinochet as a 'liberal dictatorship' that was prefererable to the 'authoritarian democracy' of Allende. He's a strange bed fellow for an anarchist to say the least!

 

[Falcon]

Without a boss overlooking one’s work, what stops a Valve employee from dosing off? … a very careful screening process the purpose of which is to ensure that Valve admits to its ranks self-motivated people who prefer to do something exciting than to be idle.

Hayek says that societies self organise on the basis of citizens with the means to do so signalling their preferences through price. In other words, the preferences of those lacking the means to signal their preference through price - the poor - are ignored. Charming.

Valve says that the only way to prevent people dosing off under self organised arrangements is to only hire the sort of people that won't doze off.

Since actual societies are comprised of (1) poor people and (2) people who are likely to doze off if unsupervised, I'm struggling to understand the real world application of this speculation.

States exist to protect poor people from the rich, and the active from the idle.

 

[ItWillNeverWork]

Weirdly though, both Hayek and Friedman supported the idea of a basic minimum income, and Hayek was only opposed to the minimum wage if different minimums were set in different industries. If a minimum wage applied to all industries equally, then he considered it "permissible". He also was not opposed to maximum working-hour laws. Or at least according to the following interview extract

Mr. Krueger: “What about limitation of working hours—a maximum-hours act? Is that compatible with your notions of proper planning?”

Mr. Hayek: “Yes, if it is not carried too far.59 It is one of these regulations which creates equal conditions throughout the system.60 But, of course, if it does beyond the point where it accords with the general situation of the country, it may indeed interfere very much. . . .”

Mr. Merriam: “Would any limitation on the hours of labor be objectionable in your judgment?”

Mr. Hayek: “Not ‘any,’ but they can be. There you have one of the instances where my objection is not one of principle but one of degree. It is one of the things which cannot be made to fit the question of the cost involved in that particular measure.”

Mr. Krueger: “Is a minimum wage law permissible?”

Mr. Hayek: “A general, flat minimum wage law for all industry is permissible, but I do not think that it is a particularly wise method of achieving the end. I know much better methods of providing a minimum for everybody.61 But once you turn from laying down a general minimum for all industry to decreeing particular and different minima for different industries, then, of course, you make the price mechanism inoperative, because it is no long the price mechanism which will guide people between industries and trades.”

I know, he's a riddle wrapped in a mystery inside a South American dictatorship.

 

[audiotech]

The price of balloons going up could indicate a shortage, but there could be other variables at work here. Anyway, this is the usual, reductionist babble, typical of classical economic theory. The price mechanism changes behaviour! Well, shiver me timbers. I note the tories are pursuing this relentlessly against the poor right now, with their assault on benefits, pushing people into a jobs market that's hardly buoyant presently. Is this the "democracy" Hayek pontificates upon? What does Hayek mean by "democracy" anyway? The reality is that today it is the state which drives a capitalist economy, it being the largest purchaser of balloons and many other things. Government thinking that its spending drives out private spending on balloons and things is not having the desired affect and never will because the "free market" notions of Hayek et al are utopian fantasies, that turn into nightmares.

 

[camouflage]

 

[Harry Webb]

The price of balloons will rise if commercial banks secure credit against them, regardless of whether demand is driven by anything other than the end consumer's belief that their balloons with rise in nominal value - as a direct result of banking policy.

 

[ViolentPanda]

Thank you for that thrilling interjection, Sir Cliff.

 

[Harry Webb]

Thank you for that thrilling interjection, Sir Cliff.

up yours

 

[ViolentPanda]

up yours

No, Sir Cliff, up yours, perhaps accompanied by a bottle of your wine!

 

[Harry Webb]

No, Sir Cliff, up yours, perhaps accompanied by a bottle of your wine!

You'll go to hell....

 

[Harry Webb]

....if you touch my bum.

 

[Idaho]

Like many of the major figures of politics and economics, right and left; they are usually much more interesting, reasonable and credible than the fanboys that follow.

 

[ViolentPanda]

I'm going to Hell anyway. Jehovah has no time for my sort.

 

[audiotech]

Interesting metaphor. If you had a toothache and went to Keynes, or Hayek, who were dentists, to try and sort out the troublesome tooth. Keynes would say what can I do to help, whilst Hayek would say it's your own fault, so you'll have to bear the pain, whilst the tooth rots and eventually fall out.