Thursday, July 17, 2008

Quote of the day (#2)

"[W]hile is it easy to protect a particular person or group against the loss which might be caused by an unforeseen change, by preventing people from taking notice of the change after it has occurred, this merely shifts onto other shoulders but does not prevent it. If, e.g., capital invested in very expensive plant is protected against obsolescence by new inventions by prohibiting the introduction of such new inventions, this increases the security of the owners of the existing plant but deprives the public of the benefit of the new inventions. Or, in other words, it does not really reduce uncertainty for society as a whole if we make the behavior of the people more predictable by preventing them from adapting themselves to an unforeseen change in their knowledge of the world. The only genuine reduction of uncertainty consists in increasing its knowledge, but never in preventing people from making use of new knowledge."

This quote can be found in the 21st footnote of Friedrich von Hayek's essay titled "Individualism: True and False". The essay is taken from a lecture given by Hayek in 1945, and a copy of it can be found in his book, published in 1948, Individualism and Economic Order.

"Individualism: True and False" is a fabulous essay, one that is filled with many interesting thoughts pertaining to the debate over Socialism and Capitalism, as well as a brief, yet thoroughly fascinating, explaination of the subtle differences between the ideas on individualism orginating from the French physiocrats and British classical liberals. But the most important idea that Hayek discusses is that on the distiction between institutions and human societal organizations based upon Reason, with a capital R, and those that have orginated without any specific design by the human mind. Hayak argues that much of what contributes to the cohesiveness of modern society is essentially unknowable to any one person--the extent of these processes cannot be grasped by any one mind, making it impossible for society to be successfully managed by rules and regulations conceived by the human mind (Reason) and then implemented in a top-down fashion. Hayek concludes that the only basis for a truly free and prosperous system of social organization consists in the adherence to a set of principles that serve to solidify and codify commonly agreed to norms that facilitate peaceable social cooperation. Hayek's views are humbling; it takes a lot of courage to admit that there may be limits to the extent that the human mind can fully grasp the extensiveness and magnificence of modern civilization.

The goal is to develop principles that treat people equally before the law and in the protection of their personal property rights, not in any programs or policies that have the objective to make all people equal absolutely. It seems that modern civilization and our method of social cooperation depends upon it, as Hayek warned "while it may not be difficult to destroy the spontaneous formations which are the indispensible bases of a free civilization, it may be beyond our power deliberately to reconstruct such a civilization once these foundations are destroyed." Yikes!

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