Economics, Book/Article Reviews

Schmidtz on Hayek at the Stanford Encyclopedia of Philosophy

The Stanford Encyclopedia of Philosophy has a new essay up on Friedrich Hayek. This is good news.

Here’s some even better news: it is written by David Schmidtz. For those of you who don’t know, Dave is the founder and director of the Freedom Center at the University of Arizona, the author of some of the most readable and thought-provoking philosophy of the past several decades (see his Elements of Justice and the collection of essays in Person, Polis, Planet for a taste), and, most importantly, a former guest-blogger here at BHL.

Go read the whole thing yourself. It’s not your standard point-by-point comprehensive encyclopedia entry. But it’s a fascinating read that explores a number of Hayek’s ideas in ways that will often be surprising and stimulating even to those fairly familiar with Hayek’s work.

For instance, in discussing Hayek’s ideas on knowledge and the price system, Schmidtz goes beyond the familiar point that it would be impossible for a central planner to collect all of the information necessary to make efficient decisions.

A central planner could have the world’s most powerful computer, beyond anything imagined when Hayek published “Use of Knowledge” in 1945. No computer, however, could solve the problem that Hayek was trying to articulate. The problem is not lack of processing power so much as a lack of access to the information in the first place. That much seems clear enough, but the problem has a deeper level. The problem is not merely lack of access to information; rather the information does not exist. There is no truth about what prices should be, accessible or otherwise, except to the extent that prices are in fact evolving, continuously reflecting an ongoing equilibration of supply and demand.

Schmidtz also examines Hayek’s critique of social justice, a subject near and dear to us at this blog and one which I wrote about in this post, and which John Tomasi writes about extensively in chapter 5 of his Free Market Fairness. Here’s Schmidtz’s bottom line:

Hayek’s critique of social justice is more specifically a critique of centrally planned distribution according to merit. He thinks a merit czar would be intolerable. However, the nightmarish aspect of this vision has everything to do with the idea of central planning and nothing to do with the idea of merit. Anyone who takes merit seriously agrees with Hayek that it is imperative to decentralize evaluation. If Hayek is right that there is no place for a merit czar in a good society, then one could argue that, contra Hayek, the implication is not that merit does not matter but precisely that merit does matter (Hayek 1976, 64). We cannot tolerate a merit czar because a merit czar would reward obsequiousness, not merit.

Like Tomasi (and like Hayek himself), Schmidtz sees the distance between Rawls and Hayek as smaller than many have assumed.

Note the similarity between Hayek’s view and the view expressed by John Rawls in “Two Concepts of Rules” (1955). Hayek and Rawls both understood what is involved in a practice having utility. To use Rawls’s example, the practice of baseball is defined by procedural rules rather than by end-state principles of distributive justice. One has to be dogmatic (Hayek would say) about how many strikes a batter should get, in order to have a practice at all.

Imagine changing the concept of the game so that the umpire’s job is to make sure the good guys win. What would that do to the players? What would become of their striving? The result of the change would not be baseball. If we end up with a game where the umpire is making sure the favored side wins, then the players are sitting on the sidelines watching, hoping to be favored. Hayek’s insight (and Rawls’s insight at that stage of his career) is that genuine fairness is not about making sure prizes are equally distributed. It is not even about making sure outcomes are not unduly influenced by morally arbitrary factors such as how well the players played or how hard they worked to develop their talent. True fairness is about being impartial, nonpartisan—proverbially, “letting the players play.”
There’s more to recommend in Schmidtz’s essay. But like I said, go read the whole thing yourself. The Stanford Encyclopedia is one of the most prestigious and authoritative reference cites in philosophy – it’s what I send my students to when I want them to learn the broad contours of a topic, and it’s what I turn to myself to learn about new subjects on a regular basis. That they now include any essay on Hayek, let alone one as good as this, is something to be pretty happy about.


H/T Jim Nichols

  • Sean II

    One thing in that article sounds very un-Hayekian to me. To say the problem with a “merit czar “is that he would “reward obsequiousness instead of merit” just seems like it would be a distant third-tier objection coming from an Austrian…because it leaves open the idea that “merit” exists somewhere (other than in the mind of the czar).

    The problem with a merit czar is that if you believe in the subjective theory of value, there is no merit for anyone to recognize.

    It wouldn’t matter if the merit czar was a perfectly programmed cyborg, trained to ignore obsequiousness (except, of course, when serving as a celebrity judge for the annual “Bootlickers Ball” in Vegas, where obsequiousness and merit just happen to be the exact same thing).

    Or to put it another way, I would expect an Austrian to lead with this: “there can’t be a merit czar because everyone is his own merit czar.”

  • Fallon

    If the problem with socialism is centralized knowledge and a central planner’s inability to take into context the advantages that individuals posess in local situations, why is it that prices, essential pieces of coordinating knowledge in Hayek’s view, are made even more useful the more public and centralized they become? Then, if it’s prices that are key for solving coordination, and decentralization of knowledge is a secondary and not a given issue, does it not follow that the ability to form prices trumps all other concerns in the first place? And what makes price phenomena possible: private property. This was Mises’s original take. Maybe Hayek did not improve on Mises at all.

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