Individualism and Economic Order [Paperback]

F. A. Hayek (Author)

Book Description

Publication Date: June 1, 1996 | ISBN-10: 0226320936 | ISBN-13: 978-0226320939

In this collection of writings, Nobel laureate Friedrich A. Hayek discusses topics from moral philosophy and the methods of the social sciences to economic theory as different aspects of the same central issue: free markets versus socialist planned economies. First published in the 1930s and 40s, these essays continue to illuminate the problems faced by developing and formerly socialist countries.

F. A. Hayek, recipient of the Medal of Freedom in 1991 and winner of the Nobel Memorial Prize in Economics in 1974, taught at the University of Chicago, the University of London, and the University of Freiburg. Among his other works published by the University of Chicago Press is The Road to Serfdom, now available in a special fiftieth anniversary edition.

Editorial Reviews

About the Author

F. A. Hayek (1899–1992), recipient of the Presidential Medal of Freedom in 1991 and co-winner of the Nobel Memorial Prize in Economics in 1974, was a pioneer in monetary theory and a leading proponent of classical liberalism in the twentieth century. He taught at the University of London, the University of Chicago, and the University of Freiburg.

 

 

Product Details

• Paperback: 280 pages
• Publisher: University Of Chicago Press (June 1, 1996)
• Language: English
• ISBN-10: 0226320936
• ISBN-13: 978-0226320939
• Product Dimensions: 5.5 x 0.6 x 8.5 inches
• Shipping Weight: 4.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.4 out of 5 stars  See all reviews (5 customer reviews)
• Amazon Best Sellers Rank: #62,353 in Books (See Top 100 in Books)

More About the Author

Friedrich August Hayek (1899-1992), recipient of the Medal of Freedom in 1991 and co-winner of the Nobel Memorial Prize in Economics in 1974, was a pioneer in monetary theory and the principal proponent of libertarianism in the twentieth century. He taught at the University of London, the University of Chicago, and the University of Freiburg. His influence on the economic policies in capitalist countries has been profound, especially during the Reagan administration in the U.S. and the Thatcher government in the U.K.

Amazon Author Rankbeta 

(What's this?)

#55 in Books > Business & Investing

#55 in Kindle eBooks > Business & Investing

#55 in Books > Business & Investing

#55 in Kindle eBooks > Business & Investing

Most Helpful Customer Reviews

65 of 66 people found the following review helpful

5.0 out of 5 stars Different Essays, Similar Themes October 22, 2003

By D. W. MacKenzie

Format:Paperback

Individualism and Economic Order contains several classic essays. Chapter two (Economics and Knowledge) examines decentralized economic planning by individuals. Plan coordination among individuals requires each to form plans that contain relevant data from the plans of others. We each acquire this data through competition in markets. Every time someone adjusts their plans, others must also change their plans. So, initial plan coordination requires each to fully anticipate the actions of others. Since this is impossible, order will emerge as a result of successive trials by individuals in markets. The price system enables individuals to adjust their plans with each other through time. This is the foundation of Hayek's theories of spontaneous order and social evolution. Hayek was far ahead of his peers in examining expectations formation.

Chapter four (The Use of Knowledge in Society) is another classic. Hayek contends that the economic problem is really one how to make use of fragmented and widely dispersed data. As he indicated in chapter two, full knowledge of economic conditions reduces the economic problem to one of pure logic. Markets increase our ability to take advantage of division of labor and capital formation by extending the span of our utilization of resources beyond the span of any individual mind. The price system in markets does this by acting as a communications network. We can then each dispense with the need for conscious control over resources and rely on our own intimate knowledge of local economic conditions, and price information regarding general economic conditions. This proves that decentralized competitive systems will vastly outperform centrally planned systems.

Chapter five looks at the process of competition. Data regarding the least cost methods of satisfying consumer demand comes through the process of competition. The notion of competition as an end state, where we have attained perfect resource allocation, overlooks the importance of the actual processes by which market participants actually compete. Competition is a process of forming opinions and spreading information. It informs us regarding which alternatives are best and cheapest. Those who judge actual market outcomes with theoretical models that assume perfect information are putting the cart before the horse. Competition is the only means by which we can each acquire data on general economic conditions. Governmental bureaucrats do not simply know what the final outcomes of competition are supposed to be. This data is particular to the process of competition itself. We should therefore be wary of those who complain that markets do not deliver perfect competition based on perfect information. Markets are our best source on the data in question, albeit an imperfect one.

In chapter seven Hayek lays out the arguments that some make in favor of Socialism. Some claim that greater equality in incomes is worth the loss of efficiency that is inherent to Socialism. Others want to maintain some degree of free choice- consumer and occupational choice. Yet others want to restrict even these areas of personal choice. Socialists face a problem in trying to show how socialist planners could plan production in terms of satisfying consumer desires, without market prices. The labor theory of value did not explain actual behavior, but was instead an "a search after some illusory substance of value. Since we lack objective measures of the importance of the needs of different individuals, central planners face "a task which far exceeds the powers of individual men". In chapter eight Hayek points to specific informational problems that Socialist planners face. Of course, he deals with information in earlier chapters. But this chapter leads into the next. Chapter nine deals with proposals to simulate market competition under socialism. Hayek mentions that even if central planners have full knowledge of economic conditions, the calculations concerning the allocation of all resources is too difficult to perform. After dealing with the absurd notion of full information, Hayek turns to three issues. First, Socialists once aimed at overcoming the results of markets. Now they accept the results of market competition as a standard to aim at. Second, an omniscient and omnipresent dictator would also require omnipotence to plan an economy using their omniscience. Even if they had omniscience, the central planners would still have to work through an imperfect bureaucracy. So the notion of omnipotence is absurd. We must look at the actual bureaucratic problems that planners will face. Third, Perhaps, in a world of unchanging data Socialist planners could arrive at efficient prices for the means of production through trial and error. But, with changing data, the plans of the authority will never match the decisions of the 'man on the spot'. Hayek discusses incentive problems and knowledge problems at length, and also mentions the potential for abuse by concentrating power into the hands a few. This is the subject of his book "The Road to Serfdom".

The other chapters are not what I would call classics, but are generally of a high quality. Chapter eleven deals with an aspect of trade cycle theory. Chapter six (Free Enterprise and Competitive Order) deals with the limits of market and government and the influence of ideas. This is not Hayek's best effort in explaining these matters. Chapter one (Individualism, True and False) is much better. It discusses the drive to control individual action based on alleged notions of reason. True individualism requires humility towards the processes by which societal order emerges, not as a result of deliberate planning by any particular individual, but as an unintended consequence of self-serving individual interaction.

These are ideas that far too few appreciate. This book is key to understanding the way Hayek thought about social problems in general. The chapters might seem disjointed in the table of contents, but they have much in common. Anyone serious about understanding how society works should read this book, especially if they tend to disagree with the author's pro free market stance. Hayek is one of the worthiest opponents that Socialists face, and this book is one of his best.

60 of 67 people found the following review helpful

4.0 out of 5 stars Interesting analysis of Individual behavior on the economy September 24, 1999

By [e-mail]

Format:Paperback

F.A. Hayek, well-deserved recipient of the Nobel Prize in Economics, 1976, wrote several other deep books on political economy. This book is about how individuals are better decision-makers when it comes to their own lives, and that a "Committee" of "Planners" cannot possibly do a better job (How can you tell that someone else is happy? What they need? What they want?). It is no accident that countries with relative freedom on economics are more productive and wealthier overall (US/Hong Kong) than countries with little or no economic freedom (India/sub-Sahara Africa) and lots of gov't planning. It can't be mere exploitation or culture, as India has the largest middle-class and a great population of educated people. India has more college-degree persons than the US, yet is significantly poorer. Hayek investigates this. A good book, especially for leftists and right-wing oligarchs. I used to be a commie too, but open your mind and put the rhetoric on hold, just for a moment.

22 of 26 people found the following review helpful

4.0 out of 5 stars One essay towers above the rest ... December 22, 2001

By A Customer

Format:Paperback

own this book, please, if only for the essay "the use of knowledge in society". in a few short pages, hayek explores how to think about how people use and spread knowledge, and how that affects everyday economic behavior.