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."

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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.

Creation, Competition, and Capitalism

Recently I've been poking around the "Emergent Village," an online haven for this so-called "Emergent" church. Frankly, I still can't tell you what that is, exactly. All I know is I like a lot of things they're saying, and I'm a little disturbed by how quick some evangelicals are to throw around words like "heretical" when it comes to their teaching.

I found a series of podcasts by Brian McLaren on Creation: God's Project of Reconciliation. I've never read anything by McLaren, but listening to him is quite a treat. The slow, thorough way in which he deals with scripture is enlightening. I also enjoy his voice--it's rather soothing. :)

One part of his third podcast I thought was interesting was when he was comparing the Hebrew creation account to other creation stories from the ancient Near East. Whereas other cultures viewed creation as emerging from chaos through violence, the Hebrews viewed creation as being essentially a harmonious thing, spoken into existence by the sheer will of a loving God.

Also whereas in some Egyptian creation stories things are already set in place before humans show up--crops already planted, irrigation channels already dug--in the Hebrew creation story, humans are given a part in creation--to work the land.

So McLaren points out that the biblical creation story says that humans were made for harmony as opposed to violence, and we were made not to support the status quo, but to participate in God's creative act.

He says that there are systems of economics and politics today that view competition and violence as driving creative forces, suggesting that these work counter to the biblical conception of God's creativity.

I think it's pretty clear he has in mind a conservative capitalist economic system. Conservative economists unashamedly call capitalism "creative destruction," which does give you an image of violence as the means by which progress happens.

Capitalism is not supposed to be based on literal violence (though there have been some instances of that). However, the "violence" of free market competition can still seem out of joint with the harmony that Genesis says we were made for.

It does make you wonder: why have Christians in America (Protestants especially) been so wedded to free market economics when a biblical worldview doesn't seem to lend that much support to it? Perhaps it's only when you compare the Genesis account to other creation stories that this really becomes clear. It's too bad Christians haven't often kept up the practice of comparing our own scriptures to those of other cultures. We would learn more about our own.

But today is Independence Day, and having recently listened to the Declaration of Independence being read, I think it would be tragic not to give at least a little defense of free markets. When you read what Jefferson wrote about King George's tyrannical acts, you sort of realize that free markets were part of what the revolutionaries fought for.

Of course, that all may have been a result of their Enlightenment thinking, rather than orthodox Christianity, but certainly they were great men, and the beliefs of great men deserve to be considered carefully.

One need not think of competition as the driving force of capitalism. I think the fundamental point that capitalism makes is that each human being has sufficient dignity to govern his own property. The idea that owning property is a dignified thing makes capitalism fundamentally different from other political and economic systems.

I think this plays nicely into McLaren's second point about the Genesis account--human beings were not meant to support the status quo, but to have an active role in creation. By conceiving of human beings as creatures who may own property, capitalism defines a natural way in which humans can assume that role.

The incredible thing about capitalism is that dividing up the world into private property is not a zero sum game. That sounds counter-intuitive, since there's only so much matter to go around.

But that's where human creativity comes in. Although we cannot create matter, we can essentially create new things out of nothing, simply by rearranging matter into a more useful, beautiful, or otherwise pleasing form.

By developing new technology, art, literature, and entertainment, it is possible to increase the overall amount of property in a society. That's because people measure property in terms of what the things they have mean to them, rather than how much matter is actually present. This is why I paid a lot more for the computer sitting on my desk than I did for the desk itself.

I, too, worry about a culture that thrives on a competitive, Darwinist approach to economics. But I also worry about some reactions to the free market that seem to deprive human of that basic dignity which the Bible says they have: the ability to rule over part of God's creation and to take part in His creativity.

Human beings are not meant to step on each other in order to climb up the corporate ladder. But neither are they meant to see themselves as dependent on the government. We should work hard in our society to make people know how each and every person--as opposed to only a few heroes--can be part of God's creative work, changing the status quo for the better.

Happy Independence Day.