Of Rationalism

Hayek's critique of the assumption of perfect information in models of economic equilibrium and his focus on the ''unintended and uncomprehended'' character of knowledge drew him inexorably toward a much larger target, the role of reason in modern culture. In attacking rationalism he was aware that he would be misunderstood, particularly as he at first labeled his approach anti-rationalist. He later discarded this in favor of Popper's term ''critical rationalism.''

This was less confusing, since Hayek always thought of himself as a rationalist, a believer in the value of human reason, the importance of science, and of universal truths. He was never an irrationalist or a nihilist. He believed very deeply in the values of western civilization, and many of the values of the Enlightenment were his values. But he argued that there was not one but two kinds of rationalism in the western tradition, and that the form of rationalism which became dominant after the French Revolution was misguided and dangerous, and had eclipsed true rationalism. If unchallenged it would prevent any proper analysis of the nature of western civilization, its economy and society, and how it might be preserved and strengthened (Hayek 1948a).

Critical rationalism was a tradition that had been lost or submerged, according to Hayek, and for it to be recovered it was necessary to confront what he called variously scientism and constructivism - the belief that in the modern era human beings were able to throw off the chains of tradition, superstition, convention, and precedent and design institutions, choose morals, invent values, and plan societies as though they were starting from a blank sheet (Hayek 1978, p. 5). Rationalism in the form of modern science had come to be associated with the growth of human knowledge and the possibility of subjecting both the physical world and the social world to human purposes and preferences. It was the latter that Hayek thought pernicious. For this kind of constructivist rationalism, nothing from the past should be preserved just because it was from the past. Everything that had been inherited should be interrogated by reason, and if found inadequate or inappropriate should be abolished.

Hayek did not in principle disagree with this. There were many things that liberals achieved in the nineteenth century of which he approved. He did not favour absolutism in any form, or the monopoly of power by church or state, or slavery. He believed strongly in personal freedom, and in reforms which extended it wherever possible. But like many liberals he became concerned about the threat which was posed to liberty by certain aspects of democracy and the spread of collectivist ideas. The powers of reason were not used just against the anciens regimes of Europe, but increasingly against the liberal market order as well, and the ideal of a classless planned society run in the interests of all its members took hold. The ferocity of Hayek's assault upon scientism stemmed from his conviction that it mattered hugely which kind of rationalism, and therefore which concept of knowledge, was dominant in western civilization, because he believed only his kind of rationalism was compatible with the further progress of this civilization. If constructivist rationalism was allowed to reign unchecked then western civilization would be launched on a road to serfdom which would end with the extinction of human freedom. For Hayek, rationalism and freedom were very closely connected, but it was a particular kind of rationalism that was required. Intellectual error was for Hayek as much as for Keynes the source of grave social consequences, so in seeking to remedy that intellectual error Hayek saw himself as performing an essential task in the battle for freedom.

Hayek did not invent an alternative rationalism. Instead he drew on an older tradition, the tradition of Mandeville, Smith, Ferguson, and Hume, as well as on Kant and Humboldt. For Mandeville and the Scottish philosophers a major focus of social inquiry was the unintended consequences of social action, the creation of orders which were the result of human action but not human design (Hayek 1948a, p. 7). The great importance of Smith according to Hayek was that he was the first to see that ''we had stumbled upon methods of ordering human economic co-operation that exceed the limits of our knowledge and perception'' (Hayek 1988, p. 14). The most important problem requiring explanation was how the activities of so many independent agents in modern societies were coordinated so that these societies exhibited high degrees of stability and order. Human agents with their limited knowledge could act in ways that could produce a result which none of them individually had aimed at or could imagine or needed to understand. Rules had over time been selected which led individuals to behave in ways that made social life possible (Hayek 1982a, p. 44). It was a rational process because all agents were acting to obtain the best possible result from their own standpoint, but the order that resulted was not designed or planned or intended by anyone (Bianchi 1994). The modern social order for Hayek was distinctive not just for its complexity, but because the way it had been constituted through the activities of so many minds over so many generations made it in important respects unknowable. The knowledge that was most important for the survival of this civilization was the tacit knowledge encoded in the traditions, conventions, and rules which had been inherited, and were the fruit of human action over millennia, rather than human design in one generation. He was fond of quoting A. N. Whitehead: ''Civilization advances by extending the number of important operations which we can perform without thinking about them'' (Hayek 1960, p. 22).

Hayek's reformulation of the nature of knowledge in human societies using the insights of economic theory gave him a new way to understand and formulate the insights of classical liberalism. If knowledge was dispersed and fragmented in the Great Society, the society of strangers, it followed that this was a necessary condition for the creation of order in such a society. The market order was imperfect but ''the only way so many activities depending on dispersed knowledge can be integrated into a single order'' (Hayek 1982a, p. 42). Social scientists and economists should concern themselves with understanding how this order had evolved, what its institutional underpinnings were, and how it might be sustained. Society had to be understood as an organism rather than as a machine. Abstract rules of conduct such as several property, honesty, contract, exchange, trade, competition, and privacy (Hayek 1982a, p. 13) had furnished a new morality which helped human beings to choose among or avoid their instinctual drives. They were the product of a long history of experiments, of trial and error, which embodied a wisdom which could not be arrived at in any other way. Adam Smith's metaphor of the invisible hand, or as Hayek rephrased it less poetically, ''the unsurveyable pattern'' (Hayek 1988, p. 14), expressed this characteristic of modern societies. The alternative to the invisible hand was the visible hand of human reason, taking control of human societies and remodeling them according to rational blueprints, which, however, lacked the all-important sanction of evolutionary experience, and therefore risked claiming a knowledge which human beings could not possess.

Hayek is sometimes thought to be so pessimistic about the possibilities of human knowledge that he discounts the importance of human reason. But that is a misreading. With Hume he stresses the limited capacity of human reason, but with Kant he acknowledges that recognition of the limits of knowledge also creates the possibility of knowledge. Hayek nowhere suggests that knowledge is impossible, that human reason is unimportant, or that human beings should not seek to act rationally. What he opposes is a conception of human reason which attributes to it powers which it cannot possess. The belief that it can leads to many mistakes, because it means that instead of society, rationality, and action being understood from below, as a spontaneous and unplanned process that can produce order, they are understood from above. The observer and the scientist claim a higher rationality, superior to the rationality of the individual member of society.

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