Making Sense of Hayek on Spontaneous Order

Timothy Sandefur criticizes Hayek for not making clear the distinction between a spontaneous and a constructed order. Furthermore, because all spontaneous orders also contain constructed elements, so that the difference between the two orders is not a difference in principle, but depends on one’s point of view, any criticism of a constructed order must be hopelessly ambiguous. Finally, given Hayek’s reliance in later writings on evolutionary theory, unless he were to commit the naturalistic fallacy (that is, to make the claim that, whatever evolves, is good), he has no grounds for criticizing constructed orders.

Sandefur could have made an even stronger case against Hayek. In his early writings Hayek talked about planning the general systems of rules under which individuals operate, which certainly mixes together the two concepts. Furthermore, in the third volume of the offending Law, Legislation and Liberty, the book in which Hayek criticizes constructed orders, Hayek offers a model constitution which is itself as bald an example of rationalist constructivism as ever existed.

How do we respond to this? One way is to agree with Sandefur that Hayek was on these matters simply hopelessly muddled. Another is to try to make sense of what he was saying, and for that, we need recourse to history.

In the 1930s and 1940s Hayek was attempting to revive liberalism in the face of calls for extensive central planning of the economy. The word “planning” was then very popular: the public saw it as the answer to all social problems. He talked about planning a system of general rules to show that the concept of “planning” need not exclusively mean central planning. But Hayek also disavowed laissez faire in these earlier writings. He thought that the government needed to provide a stable framework within which individuals acted. This is how he put it in “Freedom and the Economic System.”

We can ‘plan’ a system of general rules, equally applicable to all people and intended to be permanent (even if subject to revision with the growth of knowledge), which provides an institutional framework within which the decisions as to what to do and how to earn a living are left to the individuals. In other words, we can plan a system in which individual initiative is given the widest possible scope and the best opportunity to bring about effective coordination of individual effort. Or we can ‘plan’ in the sense that the concrete action of the different individuals, the part each person is to play in the social process of production — what he is to do and how he is to do it — is decided by the planning agency… The planning of the planners of our time… involves the idea that some body of people, in the last instance some individual mind, decides for the people what they have to do at each moment.

The last sentence holds the key to Hayek’s critique of central planning: that no central body could ever have the knowledge necessary to plan something as complex as an economy. In contrast, as Hayek demonstrated in his classic piece “The Use of Knowledge in Society,” a well-functioning free market economy allows the local knowledge of millions of individuals to be made available to the rest, allowing them to make better decisions.

Hayek maintained throughout his life that a market system, to work effectively, needed to be embedded in a host of other social institutions. In his later writings, however, the “twin ideas of spontaneous order and evolution” carried increasing emphasis. Rather than us planning or constructing those other institutions, some of them, he claimed, emerged on their own. The common law and a system of morals that promoted trade (he frequently invoked Hume’s three fundamental laws of nature: “the stability of possession, of its transference by consent, and of the performance of promises”) were chief among them.

In this later work Hayek was no longer criticizing central planning. Rather, he was worried that the liberal constitutionalism that he had described and advocated in The Constitution of Liberty was being undermined by all sorts of interventionist proposals, often promoted by coalitions of special interests, and usually cloaked in calls for “social justice.” It is probably worth recalling that in the United States in the decade that Law, Legislation and Liberty was published, Nixon imposed wage-price controls, the Department of Energy and the Environmental Protection Agency were created, and there were widespread calls for incomes policies.

But he was also trying to answer another question: how is it that the complex adaptive order that constitutes a market system ever emerged at all? After all, markets go against our instincts (that is, our hunter-gatherer heritage) and offend our reason (we think we can, through conscious intervention, improve on their flaws). Yet still they emerged. How? Hayek’s answer was that those groups that adopted certain practices and moral stances that promoted the spread of trade, and later the division of labor and specialization, and the invention of new products and processes, were more successful than those that did not.

Having made morals a product of evolution, however, Hayek apparently undermined any foundation from which to make normative judgments about orders of any kind. How does one deal with this?

I think that there are two possible solutions. One is to say that Hayek’s criticisms of constructed orders and his evolutionary account of the development of ethics were on two different levels. Hayek himself was a type of rule utilitarian, and his criticisms of constructed orders had to do with the bad consequences he thought they entailed. On the other hand, his evolutionary writings were a positive account of the origins, persistence, and functions of a system of ethics and of certain specific ethical norms. This also may hold the key for explaining his model constitution proposal. Here we must distinguish between rule proposal or design, and rule selection. Anyone, including Hayek, is free to propose new designs for rules. Rule selection, though, takes place through an evolutionary process: new rules and practices are tried out, and they succeed or fail. (It must be admitted, though, that the model constitution goes considerably beyond the sort of “piece-meal” proposals for change that Hayek typically viewed as acceptable. Another solution for this particular problem is to take him at his word, that it is only a model, a kind of thought experiment.)

Another way to make sense of Hayek is simply to assert that he was making no normative claims at all, that he was doing positive science. This would probably be Hayek’s preferred route, given that the Austrians always claimed to be following Weber’s strictures regarding Wertfreiheit. Thus when he criticized central planning, Hayek was actually claiming that, given the goals of socialists, central planning was not the appropriate means by which to reach them. Likewise, in criticizing the imposition of extensive planning on the already existing complex order that comprises “the great society,” he might as easily be read as saying that if you take this approach, you should realize that you will be condemning millions of people to relative deprivation, and in some instances to starvation and even death. That is a positive statement, not a normative one. If one wants evidence that bears on the truth or falsity of the claim, one might examine the history of North versus South Korea, or East versus West Germany, or take a trip to Robert Mugabe’s Zimbabwe, once the breadbasket of Africa, but now simply just another basket case.

In his discussions of spontaneous orders, sometimes Hayek was simply trying to make the point that they exist; that is, he was trying to counter the claim that any beneficent social order needed to be constructed. This view was widespread when he first was writing; the mania for planning was then ubiquitous, so it was a point worth making. In later writings, Hayek sometimes did say, let’s trust to evolved orders rather than constructed ones, but then allowed that sometimes we needed to make piece-meal changes, and he gave no criteria for deciding. On this point Sandefur is right to criticize him.

But it is a long way from there to Sandefur’s claim that, because there is no difference in principle between a constructed order and a spontaneous order, we are helpless to distinguish between them. On this, I would simply invoke Potter Stewart on hard-core pornography: I know it when I see it. When Paris gets fed though no one plans it, even though it involves millions of people acting on their own individual plans, I see such an order. When the firing of millions of neurons creates the consciousness required to plow through Hayek’s dense prose, I see one. When I read Bill Easterley’s (but not Jeffrey Sach’s) recommendations about how to deal with global problems, I see suggestions that depend on orders forming, on providing frameworks in which people are allowed to use their own local knowledge to improve things. Some things are just not that hard to see.

Also from This Issue

Lead Essay

  • Four Problems with Spontaneous Order by Timothy Sandefur

    In his lead essay, lawyer and legal theorist Timothy Sandefur proposes that Friedrich Hayek’s understanding of law and justice is flawed: Spontaneous order may be a descriptively accurate concept, but it has little or no effective normative content. Depending on how one chooses to focus, those who wish to reform a spontaneous order are either constructive rationalists – thus, outside the order, and presumptively bad – or they are manifestations of the spontaneous order itself, which changes over time. He suggests that the Hayekian approach to legal reform is simply “be careful,” and that this is not terribly helpful advice.

Response Essays

  • Four Solutions to Sandefur’s Problems by John Hasnas

    In his response essay, John Hasnas offers solutions to Sandefur’s problems. He suggests that genuine spontaneous orders can be recognized as having no final decision makers, and hence as recognizing a multitude of individual choices. Constructed orders have a final decision maker, and do not respect individual choice. The normative benefits of a spontaneous order are therefore clear: It offers a greater scope for peaceful cooperation, while tending to reduce coercion incrementally. Still, Hasnas admits, spontaneous orders will always be “riddled with injustice,” in part owing to our own limited knowledge and virtue. He suggests that one key missing insight helps rescue much of Hayekian legal thought: the notion that laws, too, respond to market forces.

  • Liberty between the Lines in a Modernist Age by Daniel B. Klein

    Daniel Klein argues that much of the fuzziness in Hayek’s writing was strategic – designed to bring lapsed liberals back into the fold, or to appeal to people who would never accept an unvarnished liberalism. Still, Klein finds great value in Hayek’s work. He argues that, while out of fashion at the time, Hayek’s own willingness to be indeterminate, and to embrace indeterminateness, was both consistent with the Smithian understanding of the social order – and predictive of some of the best work being done today in economics and in other social sciences.

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