Sunday, July 3, 2011

Hayek on "Self-Interest"

From "Individualism: True and False" in Individualism and the Economic Order:
To the accepted Christian tradition that man must be free to follow his conscience in moral matters if his actions are to be of any merit, the economists added the further argument that he should be free to make full use of his knowledge and skill, that he must be allowed to be guided by his concern for the particular things of which he knows and for which he cares, if he is to make as great a contribution to the common purposes of society as he is capable of making. Their main problem was how these limited concerns, which did in fact determine people's actions, could be made effective inducements to cause them voluntarily to contribute as much as possible to needs which lay outside the range of their vision. What the economists understood for the first time was that the market as it had grown up was an effective way of making man take part in a process more complex and extended than he could comprehend and that it was through the market that he was made to contribute "to ends which were no part of his purpose."


Another misleading phrase, used to stress an important point, is the famous presumption that each man knows his interests best. In this form the contention is neither plausible nor necessary for the individualist's conclusions. The true basis of his argument is that nobody can know who knows best and that the only way by which we can find out is through a social process in which everybody is allowed to try and see what he can do. The fundamental assumption, here as elsewhere, is the unlimited variety of human gifts and skills and the consequent ignorance of any single individual of most of what is known to all the other members of society taken together. Or, to put this fundamental contention differently, human Reason, with a capital R, does not exist in the singular, as given or available to any particular person, as the rationalist approach seems to assume, but must be conceived as an interpersonal process in which anyone's contribution is tested and corrected by others.
So much, then, for this false accusation that the classical liberal philosophy relies on faith in individual autonomous reason. Much more insulting is that absolutely baseless notion that free market advocates must necessarily advocate an ethic of personal gain.

I can't recommend this essay enough to people wanting to understand some of the fundamental principles of what Hayek calls "true" individualism. I say this particularly to Christians who, I have noticed, are often swept to and fro by the winds of philosophical fads, and often take very reactionary stands on important political ideas. If we care about human flourishing, we need to subscribe to principles which are much more carefully tested than shallow sentiments like, "Oh, I believe in individual freedom," on the one hand or, "I think we owe something to our community," on the other. Shallow as such sentiments might be, they far too often get tossed around as the defining difference between political ideas.

This seems like as good a post as any to write on the eve of Independence Day.

Happy 4th of July.

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