The section following Hayek’s
saying that the morality of markets (or the extended order) is between instinct and reason is titled in
part “the impossibility of observing the effects of our morality.” Therein it
says:
- unintended consequences are
paramount in the marketplace, and
- the distribution of resources
is guided by an impersonal process that individuals acting for their own ends
do not and cannot know what will be the net result of their interactions
- constructivist rationalism
requires that the purposes and effects of a proposed action must be known in
advance and be fully observable.
As I said in my previous post,
it seems that Hayek created another, different false dichotomy – that reason
has no role in the morality of markets. The first two points exaggerate
ignorance and nearly obliterate actors using reason in markets. “Paramount”
means more important than all other things. I don’t buy the notion that
unintended consequences are more important
than intended consequences.
Why is knowing the distribution
of resources important? Individuals acting for their own ends do know something about the results of their
interactions – such as on a production team or obtaining a job – despite their
not knowing every consequence.
Economic theory usually assumes
that humans make rational choices, .i.e. they use reason. Putting the morals of
the market between instinct and
reason is problematic in two ways. It equates reason with constructivist
rationalism. It goes against a basic assumption of economic theory.
With regard to morals more
specifically, is following the golden rule – negative or positive version – irrational
or arational? Moreover, how is it possible
to observe none of the effects?
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