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Friedrich Hayek and the Collective Brain

128 points by miraj 10y ago

djschnei 10y ago
"Hayek is my homeboy" ... that must be a bumper sticker...
vyodaiken 10y ago
I can't think of Hayek without being reminded of his claim that personal freedom in Pinochet's torture state was greater than that under the previous government where people were not getting their eyeballs pulled out and genitals shocked for disagreeing with the State.
- danharaj 10y ago
  Hayek is an interesting figure. He was a total knob, especially to Marxists and other such lefty economic thinkers. But he did so much interesting work that he's worth reading even for people who think he's a reactionary. It's unlike the case with a lot of other liberal/reactionary knobs who are easily ignored if you reject classical/neoclassical economics any anything right of that.
- nickik 10y ago
  I really Hayek fan and I agree that he was wrong here. Allende was not as socialistic and not as much in control as Hayek thought. Since WW2 Hayek had a huge fear of democratic socialism turning into what we would now call stalisim. This fear never really came to pass because there is to much vested interest in the markets, thus the change happens slowly. Most democratic countries realize that they have gone to far, and then go back.
dmix 10y ago
> Hayek’s point in his famous essay of 1945, “The Uses of Knowledge in Society”, is that central planning cannot work because it is trying to substitute an individual all-knowing intelligence for a distributed and fragmented system of localised but connected knowledge, much of which is tacit. Yet centralized control is the hammer that everyone turns to whenever there is a problem. Instead of figuring out the root-cause and actually solving problems the default instinct of all modern state-heavy economies is always to add more layers on control. And I don't mean the 'state' but people... I see it all the time on HN and Reddit too. A perfect example of this recently is all of the calls for price controls in pharma - prices are a great example of distributed knowledge systems. Despite the fact research points to gov-backed monopolies being the primary cause for drug price fluctuations [1], sometimes increasing prices 2000% at a time. In any other market if a company increased prices even 25-50% they would put themselves out of business because a competitor would step in to offer a better price. This was demonstrated recently with the Epipen controversy [2]. They would never have been able to jack their prices so high if they had any competitors, and there are companies dying to compete with them, but they have been stuck in the FDA 'backlog' for years. Plenty of other research shows that price controls results in shortages. Just like the massive food shortages that have been happening since Venezuela enacted price controls on food. Yet the argument is being characterized as the evil selfish individualism which permeates American 'capitalism' making these pharma CEOs jack prices up. Of course not all regulation is bad. There are many externalities that can't be controlled in the market (pollution is the perfect example). But this immediate instinct to always turn to more centralized control with blind trust, while villianizing markets, is an unhealthy obsession IMO. People act like capitalism is the shining star of American culture but as far as I can see it is continually villianized in movies and pop culture to the detriment of society. While government is held to such low standards that we only expect mediocrity from them. For example, in response to pharma prices, how about cleaning up the existing regulatory system so the FDA doesn't have companies in the backlogs for years? Or investing more capital so they have enough people to handle the load? Or are we just so used to inefficient government that we just expect them to not do their jobs well? But no, clearly the solution is to give them even more work to set prices for thousands of drugs. I'm all for Hayek being taught in schools, maybe people would hold both markets to higher esteem and governments to higher standards. So we get better policy and new policy only when centralized control actually makes the most sense. /rant [1] http://khn.org/news/government-protected-monopolies-drive-drug-prices-higher-study-says/ http://khn.org/news/government-protected-monopolies-drive-dr... [2] http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-drugs-vs-chairs/ http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-dr...
- justin66 10y ago
  Is that just a long-winded way of stating that government can be a useful tool to interfere with price discovery, which we should only do when we are certain it's called for?
  - dmix 10y ago
    I'm pretty sure there is never a good use-case for centralized price controls. As I mentioned, the biggest problem is that it causes shortages. There are tons of historical examples of this happening in other markets (for example: rent control resulted in a shortage of affordable housing in NYC and Toronto, only making the problem worse not better, as landlords had no incentive to invest in new properties). Having shortages of medication is a serious risk. The need for price controls is usually caused by other problems... lack of competition/monopolies, a weak economy, lack of a proper social safety net for poor people to afford basic necessities, etc. But my comment was hardly just about price controls. It is a critique of the default instinct people have to look to centralized control (typically regulations) to solve problems in a marketplace.
    - justin66 10y ago
      > I'm pretty sure there is never a good use-case for centralized price controls. Wow. The most obvious counterexamples involve resource allocation during wartime.
      - dmix 10y ago
        Do you mean a 'total war' situation? I highly, highly doubt there will ever be a total war again. Economic sanctions would destroy a country before that ever happens. And if it gets that serious we have thousands of ICBM to handle the job. Millions of westerns won't be dying any time soon. But regardless that is an extreme rare example. Not what I'm talking about at all...
      - nickik 10y ago
        It can be argued that avoiding price controls in wartime would vastly improve the performance. The problem is usually that to be able to avoid it and still fight a total war, you would have to massively up the tax rate and that is usually not possible. You are correct, it is a usecase for them.
ranko 10y ago
Interesting aside - the Matt Ridley who wrote was chairman of the Northern Rock bank in the UK when it became the first British bank to suffer a run for 150 years. Perhaps when it was nationalised in 2008 he said something like "it takes a government to rescue a failed bank".
- justin66 10y ago
  Pretty sure you've got him mixed up with someone else, I went to a review of his book and saw this: "Matt Ridley is a zoologist by training and a disciple of Richard Dawkins."
  - CalChris 10y ago
    Not mixed up with someone else. https://en.wikipedia.org/wiki/Matt_Ridley https://en.wikipedia.org/wiki/Matt_Ridley He was made a board member because his father had been a board member. And then he was promoted to chairman of the board. His academic training was in zoology but he wrote for the Economist.
    - pjc50 10y ago
      > He was made a board member because his father had been a board member How amazing that the free market in employees would produce such a coincidental result! That the most economically efficient person would be a relative of another board member!
      - RobertoG 10y ago
        Yeah, similarly amazing, in my opinion, is that we are informed that: " [..] authoritarian, top-down rule is not the source of order or progress, but a hindrance. [..]" by the 5th Viscount Ridley.
      - nickik 10y ago
        That the bank failed seems to be a indication that it was not economically efficient and the market correctly removed it. That seems to be the exact thing that we want. For some (easy to understand) reason government have taking into their heads to 'save' these institutions, but you can hardly blame that on the market as a organisational principle.
RobertoG 10y ago
"[..] Exchange, as practised by people for about the last 100,000 years [..]" We know that exchange is just one more activity that humans do, but, historically, in the thousand of years context, it was not fundamental. We could argue that in the palaeolithic the social organization had little to do with markets. We could argue that in the neolithic, the social organization was, in most cases, hierarchical and top-down. So, the implicit assumption of markets as the 'natural state' of human organization has not real basis. Even money is an invention of the state. The idea that markets are powerful tools don't need to be defended. It's the idea that markets know what is better for us what many reject. It's like saying that we should just start the lawnmower and leave it to decide what to cut. Then, when we don't like the garden, we have to accept it's for the best, because if a better garden was possible is what we would have.
- ue_ 10y ago
  Markets in the capitalist sense, with people having to sell labour-time for wage in order to survive to a market of bourgeoisie is also a recent invention, a little over 200 years old. There's no reason to think it's the 'natural state' of humanity as some people have said. Edit: Clarified what is being sold.
  - drdeca 10y ago
    Can you use words more associated with some other ideological group to describe what you mean by, e.g. "bourgeoisie"? When trying to convince people who are of a differing ideology of something, I think it is often useful to use the terminology they are familiar with, and to use their shiboleths. Speaking to people in the language of their group probably often makes them more willing to take your ideas seriously. Like, you use the term "labor-time", which probably makes perfect sense to the people who already agree with the ideology you are promoting, but for people who don't already agree (who are the people you are presumably talking to), they likely don't already have "labor-time" as a clearly understood concept that they recognize as important. If you want them to recognize the idea of "labor-time", you might have to convince them that it is an important concept.
joshuaheard 10y ago
When the author talks about the Collective Brain, or the Cloud, it is really referring to the Market, or the Marketplace of Ideas. Conservatives like the market over government for the very reasons outlined in this article. I'm glad these fundamental ideas are getting updated with today's nomenclature.
RodericDay 10y ago
The way I see it, democracy and markets are opposed to each other. Democracy: One person one vote. Markets: Each person has tiny micro-votes, and they can get more votes by supporting initiatives that pan out. One individual with millions of micro-votes can easily out-vote a million individuals with less votes. It's interesting to see just how "cargo cult"-like the practice of voting has become in many places.
- nickik 10y ago
  You are not seeing the full picture. > One individual with millions of micro-votes can easily out-vote a million individuals with less votes No. In a market there exist property rights that are designed to not work like that. If I own a simple pen, somebody with a billion 'votes' can come along and if I refuse to sell my pen that just that. In a pure democracy, this is simple not the case. The rule of the majority is a real thing, if I have a pen and there are a majority of votes for me to be forced to give away that pen, I can do nothing. This is of course in theory, in practice their is no pure form of either. However it es a extremely important thing to point out. It is the exact reason why you can run a economy with markets but not with democracy.
  - RodericDay 10y ago
    "A simple pen" is a nice example, but the real interesting question is what to do about common goods like natural resources and land. The more we shift to an economy where people "own" things via debt and rent, it really becomes a matter of best bids. -- edit: It's also interesting to keep in mind that the original distribution of land wasn't equal. So much of libertarianism is predicated on ideals like "homesteading", but in practice most parcels of land were unequally distributed from the very beginning. This was never corrected, and continues to reverberate.
    - nickik 10y ago
      > "A simple pen" is a nice example, but the real interesting question is what to do about common goods like natural resources and land. A pen is made out of natural resources. > The more we shift to an economy where people "own" things via debt and rent, it really becomes a matter of best bids. No, a rent is just a transfer of right of use but not right of ownership. Once you have stable property rights you can actually make renting practical, and that opens many more options. It does not fundamentally change the system. > edit: It's also interesting to keep in mind that the original distribution of land wasn't equal. So much of libertarianism is predicated on ideals like "homesteading", but in practice most parcels of land were unequally distributed from the very beginning. This was never corrected, and continues to reverberate. Nobody ever said that life was fair, certainty not the classical liberals. No system can go back in time and fix all the morally wrong thing to establish a perfect system and then role history forward. This is not Kafka DB. The argument is that the best societies establish a property rights system and based on that develop further. That's the best we can do. If there are identifiable rights violation that we can 'fix' then this should of course be done. The issue of course explode in complexity with time.
aerodeck 10y ago
Funny to see this on HN. I am currently reading a book that details the recent history of economic theory and how it has been in bed with neoliberalism. It has much to say about Hayek and the Mont Pelerin Society, a think-tank that he founded to develop his ideas. What surprises me about Hayek was that he had a radical conception of decentralization, managing to talk about human society as though on-par with an ant-colony. IMO, this sort of anti-humanism is a necessary ingredient for overcoming anthropocentrism in our current thinking and pivoting towards ecological thinking, rather than purely rational thinking. However, I think Hayek makes some tremendous mistakes in his thinking. Firstly, by reducing the Collective Brain to merely the market/price-discovery, he ignores the possibility that price-controls and/or social-demonization could themselves be components of that brain (perhaps fulfilling the function of an OS's kernel). Hayek talks much about there being no one person who can understand everything, but fails to critique himself. Secondly, he fails to see how the setup of a market has an influence on the kind of information that gets processed. In order for some thing to be exchanged on the market, it needs to be commodified in some way. This transformation of /thing/ into /commodity/ is where the social slight-of-hand happens, necessarily discounting some aspect of it's worth. An example is having two identical mugs, but one of those mugs being /mine/ and therefore special to me. That specialness doesn't exist if the mugs are a commodity, and perhaps that specialness fulfills an informational/computational function. In the end, the price is a result of a collective brain, but the market itself is a human construct. Facebook, Wikipedia, Reddit and 4Chan all structure their 'markets' differently, with incredibly different results. Hayek had some good ideas, but he was too much of an apologist for the existing economic order for those ideas to really be useful. As technologists resurrect his ideas to apologize for the existing technological order, the same will likely be the case.
- nickik 10y ago
  > Firstly, by reducing the Collective Brain to merely the market/price-discovery He does not. > he ignores the possibility that price-controls and/or social-demonization could themselves be components of that brain Again. He does not. He actually talks about this question in actual interviews that you can listen to. > Hayek talks much about there being no one person who can understand everything, but fails to critique himself. Again, there are literal interviews where he talks about this exact question. And making a argument myself, his point is that you can not understand everything and that's why you can not centrally control it, not that he actually knows how everything works. Plus, he has spent a lot of time on actually trying to figure out how this processes happens, and again, there are audio recordings of him talking about it. > In order for some thing to be exchanged on the market, it needs to be commodified in some way. False. Prices work for uniques as well. > This transformation of /thing/ into /commodity/ is where the social slight-of-hand happens, necessarily discounting some aspect of it's worth. An example is having two identical mugs, but one of those mugs being /mine/ and therefore special to me. That specialness doesn't exist if the mugs are a commodity, and perhaps that specialness fulfills an informational/computational function. That is exactly what the price mechanism is for. If the mug has special value to you then you can not sell it or sell it at a higher price. You are signaling to the 'collective brain' that this is a special mug. That's the exact point. > In the end, the price is a result of a collective brain, but the market itself is a human construct. Nobody argued against that.
iamcasen 10y ago
It is a fascinating thought that human intelligence is collective, and that a vast network of specialists is more efficient than a small network of self sufficient producers. I think there is a lot more to study there. That being said, I could have done without the left leaning politics === extreme, oppressive, authoritarian government bologna.
mcnaughtonrules 10y ago
Wild to see Hayek on hacker news
brbrodude 10y ago
Libertarians take vague/basic stuff, rephrase them and act as if they just uncovered Gods truth itself. Yes, commerce/market has good stuff, but capitalism isn't the sole owner of commerce and markets, not the inventor, nor anything of it. The Ottomans(islamic golden age etc) had them, but they also redistributed resources to the needy and condemned usury, and so, most past societies also had markets and commerce, and also, no one has ever rallied against "freedom", those 'argument' mean little. The text reads like it could have been written by any teenager who uncritically took all propaganda from facebook and is enamored with an ideology. Plus, he makes it sound like these sort of liberalism and theory is just injustly shunned for no reason(or maybe no other than "all academics are secretly communists"?) The point where left vs right were == USA pre-90s model vs soviet model should be considered anachronic by now, as most leftists, and even china, are not for central planning as a rule, and neither is USA capitalism as defensible now. This is a perfect example of false dichotomy(probably one of the most abused nowadays, because its necessary to do so to sustain a certain narrative). Libertarians(which are called liberals everywhere else on the world, with libertarian meaning non-authoritarian leftist) defend private property and so they are completely for states, police and prisons by consequence. And if you take the theories as nature's truth and apply it leaving out politics you end up with dictatorships like Pinochet's Chile, where only the kernell of state violence remains because it is necessary to keep a system which is not able to satisfy humans needs of survivorship and self-determination(aka freedom). I do plan to take a closer look at Hayek as this one seems like one who was actually interested in science, philosophy, and truth and seems to be an honest free thinker and not as much an ideologue, Nassim Taleb praises him, it seems the reason he's not taken so seriously in Academy is actually because his ideas refused to 'solidify' and provide hard models which would be seem as "more sciency"(I could be wrong, but seems it's one of the points Nassim makes, that a Science with uncertainty at it's core is better than one that tries to cargo-cult its way through).... But damn the undead arguments and mythologizing of 'market is god and good and pure freedom for all all in itself' must die already, lets live in the real world, shall we? Edit: some spelling
chrismealy 10y ago
Having read a ton of Hayek I thought I'd share what the real Hayek is like, not the libertarian poster child. Actually existing Hayek would probably disappoint most libertarians. He’s against corporate personhood, skeptical about patents and copyright, and for urban planning, unemployment benefits, public health, socialized medicine, and inheritance taxes. It seems like what gets him really riled up is setting prices for cucumbers or state-owned hat factories. His contribution to social science is his focus on distributed information in economic production. Think about how decision-making is distributed in capitalist economies: bankers, investors, asset managers, producers, distributors, retailers, brokers, executives, corporate planning departments, middle managers, marketing departments, advertising, etc. Just imagine trying to replicate all that effort with a few office buildings' worth of planners in Moscow (Compare that to just Wall Street!). You can't run an economy without enough planners. Hayek never tells jokes. I think if he had any sense of humor at all it might have occurred to him that designing the perfect society without planners (or much democracy) was certainly a kind of planning. He's like the whiteboard in "Office Space" that says "Planning to Plan" except it says "Planning to not Plan" and it's three books and 700 pages long ("Law, Legislation and Liberty").
- TheOtherHobbes 10y ago
  Indeed. I'm not really sure I see the difference between capitalist planning and communist planning. Don't corporations have growth targets and multi-year plans? Don't they (mostly) have a top-down management structure, where freedom of action and collective intelligence are constrained the further you get from the Central Committee (also known as the C-suite)? Don't corporations regularly do incredibly stupid, naive, uninformed, and self-destructive things that would be impossible if the kind of distributed intelligence claimed in this article was a reality? Are corporations any better at constraining the effects of toxic self-promoting and self-aggrandising individuals who talk a good game but are either incompetent or actively destructive? And so on. It doesn't really matter that Hayek is misunderstood and (mis)used for free market propaganda in the same way that Adam Smith is. What matters is that the existence of true freedom of thought and action is debatable in any culture which considers that kind of propaganda a necessity at all.
aidenn0 10y ago
> If Hayek is mentioned at all in academia, it is usually as an alias for Voldemort. I thought that economists in academia were largely Austrian, which would certainly not position Hayek as Voldemort.
hyporthogon 10y ago
(1) 'Exchange between strangers is a unique feature of us modern hominids' isn't really falsifiable without begging the question or establishing a hard boundary between kin and non-kin, which afaik is currently a function of the problem under consideration (i.e.'kin' might mean something different to geneticist vs. anthropologist vs. linguist vs. classical economist and even something different for a different problem in each of those disciplines). But 'this is what makes us human' is far from essential to Hayek..and probably basically inimical to Hayek, as some other commenters have pointed out. (2) The 'reduction of collective intelligence to the price mechanism' objection (which is often a specific case of generic objections to dimensional reduction, including e.g. perceptron thresholds) is addressed throughout Minsky's Society of Mind[0], esp. the 'frames' concept. (3) The article doesn't mention the benefits of localized knowledge (as opposed to the 'practical reality' of localized knowledge, which may be lamentable and/or fixable), which iirc Hayek does get into (or maybe some other Hayekians? more modern systems-oriented folks? can't think of a source at the moment). If some knowledge (for example, within a community of practice) weren't pretty strongly localized, then every knowable would be in one truly global variable space, and abstraction would be incredibly computation-intensive, and knowledge growth would be horribly O(n!), and all of thought would work like JavaScript (ZING). This is a stronger kind of localization than technical specialization (which just maps onto SOLID class design rather than variable space).[1] [0] Beautiful html edition: http://aurellem.org/society-of-mind/ http://aurellem.org/society-of-mind/ [1] Broad philosophical musing on this sort of thing: https://mitpress.mit.edu/books/bubbles https://mitpress.mit.edu/books/bubbles
saintPirelli 10y ago
There is one guy in a t-shirt in this classroom. Savage!

128 points by miraj 10y ago

"Hayek is my homeboy" ... that must be a bumper sticker...

I can't think of Hayek without being reminded of his claim that personal freedom in Pinochet's torture state was greater than that under the previous government where people were not getting their eyeballs pulled out and genitals shocked for disagreeing with the State.

danharaj 10y ago
Hayek is an interesting figure. He was a total knob, especially to Marxists and other such lefty economic thinkers. But he did so much interesting work that he's worth reading even for people who think he's a reactionary. It's unlike the case with a lot of other liberal/reactionary knobs who are easily ignored if you reject classical/neoclassical economics any anything right of that.
nickik 10y ago
I really Hayek fan and I agree that he was wrong here. Allende was not as socialistic and not as much in control as Hayek thought. Since WW2 Hayek had a huge fear of democratic socialism turning into what we would now call stalisim. This fear never really came to pass because there is to much vested interest in the markets, thus the change happens slowly. Most democratic countries realize that they have gone to far, and then go back.

dmix 10y ago

> Hayek’s point in his famous essay of 1945, “The Uses of Knowledge in Society”, is that central planning cannot work because it is trying to substitute an individual all-knowing intelligence for a distributed and fragmented system of localised but connected knowledge, much of which is tacit. Yet centralized control is the hammer that everyone turns to whenever there is a problem. Instead of figuring out the root-cause and actually solving problems the default instinct of all modern state-heavy economies is always to add more layers on control. And I don't mean the 'state' but people... I see it all the time on HN and Reddit too. A perfect example of this recently is all of the calls for price controls in pharma - prices are a great example of distributed knowledge systems. Despite the fact research points to gov-backed monopolies being the primary cause for drug price fluctuations [1], sometimes increasing prices 2000% at a time. In any other market if a company increased prices even 25-50% they would put themselves out of business because a competitor would step in to offer a better price. This was demonstrated recently with the Epipen controversy [2]. They would never have been able to jack their prices so high if they had any competitors, and there are companies dying to compete with them, but they have been stuck in the FDA 'backlog' for years. Plenty of other research shows that price controls results in shortages. Just like the massive food shortages that have been happening since Venezuela enacted price controls on food. Yet the argument is being characterized as the evil selfish individualism which permeates American 'capitalism' making these pharma CEOs jack prices up. Of course not all regulation is bad. There are many externalities that can't be controlled in the market (pollution is the perfect example). But this immediate instinct to always turn to more centralized control with blind trust, while villianizing markets, is an unhealthy obsession IMO. People act like capitalism is the shining star of American culture but as far as I can see it is continually villianized in movies and pop culture to the detriment of society. While government is held to such low standards that we only expect mediocrity from them. For example, in response to pharma prices, how about cleaning up the existing regulatory system so the FDA doesn't have companies in the backlogs for years? Or investing more capital so they have enough people to handle the load? Or are we just so used to inefficient government that we just expect them to not do their jobs well? But no, clearly the solution is to give them even more work to set prices for thousands of drugs. I'm all for Hayek being taught in schools, maybe people would hold both markets to higher esteem and governments to higher standards. So we get better policy and new policy only when centralized control actually makes the most sense. /rant [1] http://khn.org/news/government-protected-monopolies-drive-drug-prices-higher-study-says/ http://khn.org/news/government-protected-monopolies-drive-dr... [2] http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-drugs-vs-chairs/ http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-dr...

justin66 10y ago
Is that just a long-winded way of stating that government can be a useful tool to interfere with price discovery, which we should only do when we are certain it's called for?
- dmix 10y ago
  I'm pretty sure there is never a good use-case for centralized price controls. As I mentioned, the biggest problem is that it causes shortages. There are tons of historical examples of this happening in other markets (for example: rent control resulted in a shortage of affordable housing in NYC and Toronto, only making the problem worse not better, as landlords had no incentive to invest in new properties). Having shortages of medication is a serious risk. The need for price controls is usually caused by other problems... lack of competition/monopolies, a weak economy, lack of a proper social safety net for poor people to afford basic necessities, etc. But my comment was hardly just about price controls. It is a critique of the default instinct people have to look to centralized control (typically regulations) to solve problems in a marketplace.
  - justin66 10y ago
    > I'm pretty sure there is never a good use-case for centralized price controls. Wow. The most obvious counterexamples involve resource allocation during wartime.
    - dmix 10y ago
      Do you mean a 'total war' situation? I highly, highly doubt there will ever be a total war again. Economic sanctions would destroy a country before that ever happens. And if it gets that serious we have thousands of ICBM to handle the job. Millions of westerns won't be dying any time soon. But regardless that is an extreme rare example. Not what I'm talking about at all...
    - nickik 10y ago
      It can be argued that avoiding price controls in wartime would vastly improve the performance. The problem is usually that to be able to avoid it and still fight a total war, you would have to massively up the tax rate and that is usually not possible. You are correct, it is a usecase for them.

ranko 10y ago

Interesting aside - the Matt Ridley who wrote was chairman of the Northern Rock bank in the UK when it became the first British bank to suffer a run for 150 years. Perhaps when it was nationalised in 2008 he said something like "it takes a government to rescue a failed bank".

justin66 10y ago
Pretty sure you've got him mixed up with someone else, I went to a review of his book and saw this: "Matt Ridley is a zoologist by training and a disciple of Richard Dawkins."
- CalChris 10y ago
  Not mixed up with someone else. https://en.wikipedia.org/wiki/Matt_Ridley https://en.wikipedia.org/wiki/Matt_Ridley He was made a board member because his father had been a board member. And then he was promoted to chairman of the board. His academic training was in zoology but he wrote for the Economist.
  - pjc50 10y ago
    > He was made a board member because his father had been a board member How amazing that the free market in employees would produce such a coincidental result! That the most economically efficient person would be a relative of another board member!
    - RobertoG 10y ago
      Yeah, similarly amazing, in my opinion, is that we are informed that: " [..] authoritarian, top-down rule is not the source of order or progress, but a hindrance. [..]" by the 5th Viscount Ridley.
    - nickik 10y ago
      That the bank failed seems to be a indication that it was not economically efficient and the market correctly removed it. That seems to be the exact thing that we want. For some (easy to understand) reason government have taking into their heads to 'save' these institutions, but you can hardly blame that on the market as a organisational principle.

RobertoG 10y ago

"[..] Exchange, as practised by people for about the last 100,000 years [..]" We know that exchange is just one more activity that humans do, but, historically, in the thousand of years context, it was not fundamental. We could argue that in the palaeolithic the social organization had little to do with markets. We could argue that in the neolithic, the social organization was, in most cases, hierarchical and top-down. So, the implicit assumption of markets as the 'natural state' of human organization has not real basis. Even money is an invention of the state. The idea that markets are powerful tools don't need to be defended. It's the idea that markets know what is better for us what many reject. It's like saying that we should just start the lawnmower and leave it to decide what to cut. Then, when we don't like the garden, we have to accept it's for the best, because if a better garden was possible is what we would have.

ue_ 10y ago
Markets in the capitalist sense, with people having to sell labour-time for wage in order to survive to a market of bourgeoisie is also a recent invention, a little over 200 years old. There's no reason to think it's the 'natural state' of humanity as some people have said. Edit: Clarified what is being sold.
- drdeca 10y ago
  Can you use words more associated with some other ideological group to describe what you mean by, e.g. "bourgeoisie"? When trying to convince people who are of a differing ideology of something, I think it is often useful to use the terminology they are familiar with, and to use their shiboleths. Speaking to people in the language of their group probably often makes them more willing to take your ideas seriously. Like, you use the term "labor-time", which probably makes perfect sense to the people who already agree with the ideology you are promoting, but for people who don't already agree (who are the people you are presumably talking to), they likely don't already have "labor-time" as a clearly understood concept that they recognize as important. If you want them to recognize the idea of "labor-time", you might have to convince them that it is an important concept.

joshuaheard 10y ago

When the author talks about the Collective Brain, or the Cloud, it is really referring to the Market, or the Marketplace of Ideas. Conservatives like the market over government for the very reasons outlined in this article. I'm glad these fundamental ideas are getting updated with today's nomenclature.

RodericDay 10y ago

The way I see it, democracy and markets are opposed to each other. Democracy: One person one vote. Markets: Each person has tiny micro-votes, and they can get more votes by supporting initiatives that pan out. One individual with millions of micro-votes can easily out-vote a million individuals with less votes. It's interesting to see just how "cargo cult"-like the practice of voting has become in many places.

nickik 10y ago
You are not seeing the full picture. > One individual with millions of micro-votes can easily out-vote a million individuals with less votes No. In a market there exist property rights that are designed to not work like that. If I own a simple pen, somebody with a billion 'votes' can come along and if I refuse to sell my pen that just that. In a pure democracy, this is simple not the case. The rule of the majority is a real thing, if I have a pen and there are a majority of votes for me to be forced to give away that pen, I can do nothing. This is of course in theory, in practice their is no pure form of either. However it es a extremely important thing to point out. It is the exact reason why you can run a economy with markets but not with democracy.
- RodericDay 10y ago
  "A simple pen" is a nice example, but the real interesting question is what to do about common goods like natural resources and land. The more we shift to an economy where people "own" things via debt and rent, it really becomes a matter of best bids. -- edit: It's also interesting to keep in mind that the original distribution of land wasn't equal. So much of libertarianism is predicated on ideals like "homesteading", but in practice most parcels of land were unequally distributed from the very beginning. This was never corrected, and continues to reverberate.
  - nickik 10y ago
    > "A simple pen" is a nice example, but the real interesting question is what to do about common goods like natural resources and land. A pen is made out of natural resources. > The more we shift to an economy where people "own" things via debt and rent, it really becomes a matter of best bids. No, a rent is just a transfer of right of use but not right of ownership. Once you have stable property rights you can actually make renting practical, and that opens many more options. It does not fundamentally change the system. > edit: It's also interesting to keep in mind that the original distribution of land wasn't equal. So much of libertarianism is predicated on ideals like "homesteading", but in practice most parcels of land were unequally distributed from the very beginning. This was never corrected, and continues to reverberate. Nobody ever said that life was fair, certainty not the classical liberals. No system can go back in time and fix all the morally wrong thing to establish a perfect system and then role history forward. This is not Kafka DB. The argument is that the best societies establish a property rights system and based on that develop further. That's the best we can do. If there are identifiable rights violation that we can 'fix' then this should of course be done. The issue of course explode in complexity with time.

aerodeck 10y ago

Funny to see this on HN. I am currently reading a book that details the recent history of economic theory and how it has been in bed with neoliberalism. It has much to say about Hayek and the Mont Pelerin Society, a think-tank that he founded to develop his ideas. What surprises me about Hayek was that he had a radical conception of decentralization, managing to talk about human society as though on-par with an ant-colony. IMO, this sort of anti-humanism is a necessary ingredient for overcoming anthropocentrism in our current thinking and pivoting towards ecological thinking, rather than purely rational thinking. However, I think Hayek makes some tremendous mistakes in his thinking. Firstly, by reducing the Collective Brain to merely the market/price-discovery, he ignores the possibility that price-controls and/or social-demonization could themselves be components of that brain (perhaps fulfilling the function of an OS's kernel). Hayek talks much about there being no one person who can understand everything, but fails to critique himself. Secondly, he fails to see how the setup of a market has an influence on the kind of information that gets processed. In order for some thing to be exchanged on the market, it needs to be commodified in some way. This transformation of /thing/ into /commodity/ is where the social slight-of-hand happens, necessarily discounting some aspect of it's worth. An example is having two identical mugs, but one of those mugs being /mine/ and therefore special to me. That specialness doesn't exist if the mugs are a commodity, and perhaps that specialness fulfills an informational/computational function. In the end, the price is a result of a collective brain, but the market itself is a human construct. Facebook, Wikipedia, Reddit and 4Chan all structure their 'markets' differently, with incredibly different results. Hayek had some good ideas, but he was too much of an apologist for the existing economic order for those ideas to really be useful. As technologists resurrect his ideas to apologize for the existing technological order, the same will likely be the case.

nickik 10y ago
> Firstly, by reducing the Collective Brain to merely the market/price-discovery He does not. > he ignores the possibility that price-controls and/or social-demonization could themselves be components of that brain Again. He does not. He actually talks about this question in actual interviews that you can listen to. > Hayek talks much about there being no one person who can understand everything, but fails to critique himself. Again, there are literal interviews where he talks about this exact question. And making a argument myself, his point is that you can not understand everything and that's why you can not centrally control it, not that he actually knows how everything works. Plus, he has spent a lot of time on actually trying to figure out how this processes happens, and again, there are audio recordings of him talking about it. > In order for some thing to be exchanged on the market, it needs to be commodified in some way. False. Prices work for uniques as well. > This transformation of /thing/ into /commodity/ is where the social slight-of-hand happens, necessarily discounting some aspect of it's worth. An example is having two identical mugs, but one of those mugs being /mine/ and therefore special to me. That specialness doesn't exist if the mugs are a commodity, and perhaps that specialness fulfills an informational/computational function. That is exactly what the price mechanism is for. If the mug has special value to you then you can not sell it or sell it at a higher price. You are signaling to the 'collective brain' that this is a special mug. That's the exact point. > In the end, the price is a result of a collective brain, but the market itself is a human construct. Nobody argued against that.

iamcasen 10y ago

It is a fascinating thought that human intelligence is collective, and that a vast network of specialists is more efficient than a small network of self sufficient producers. I think there is a lot more to study there. That being said, I could have done without the left leaning politics === extreme, oppressive, authoritarian government bologna.

mcnaughtonrules 10y ago

Wild to see Hayek on hacker news

brbrodude 10y ago

Libertarians take vague/basic stuff, rephrase them and act as if they just uncovered Gods truth itself. Yes, commerce/market has good stuff, but capitalism isn't the sole owner of commerce and markets, not the inventor, nor anything of it. The Ottomans(islamic golden age etc) had them, but they also redistributed resources to the needy and condemned usury, and so, most past societies also had markets and commerce, and also, no one has ever rallied against "freedom", those 'argument' mean little. The text reads like it could have been written by any teenager who uncritically took all propaganda from facebook and is enamored with an ideology. Plus, he makes it sound like these sort of liberalism and theory is just injustly shunned for no reason(or maybe no other than "all academics are secretly communists"?) The point where left vs right were == USA pre-90s model vs soviet model should be considered anachronic by now, as most leftists, and even china, are not for central planning as a rule, and neither is USA capitalism as defensible now. This is a perfect example of false dichotomy(probably one of the most abused nowadays, because its necessary to do so to sustain a certain narrative). Libertarians(which are called liberals everywhere else on the world, with libertarian meaning non-authoritarian leftist) defend private property and so they are completely for states, police and prisons by consequence. And if you take the theories as nature's truth and apply it leaving out politics you end up with dictatorships like Pinochet's Chile, where only the kernell of state violence remains because it is necessary to keep a system which is not able to satisfy humans needs of survivorship and self-determination(aka freedom). I do plan to take a closer look at Hayek as this one seems like one who was actually interested in science, philosophy, and truth and seems to be an honest free thinker and not as much an ideologue, Nassim Taleb praises him, it seems the reason he's not taken so seriously in Academy is actually because his ideas refused to 'solidify' and provide hard models which would be seem as "more sciency"(I could be wrong, but seems it's one of the points Nassim makes, that a Science with uncertainty at it's core is better than one that tries to cargo-cult its way through).... But damn the undead arguments and mythologizing of 'market is god and good and pure freedom for all all in itself' must die already, lets live in the real world, shall we? Edit: some spelling

chrismealy 10y ago

Having read a ton of Hayek I thought I'd share what the real Hayek is like, not the libertarian poster child. Actually existing Hayek would probably disappoint most libertarians. He’s against corporate personhood, skeptical about patents and copyright, and for urban planning, unemployment benefits, public health, socialized medicine, and inheritance taxes. It seems like what gets him really riled up is setting prices for cucumbers or state-owned hat factories. His contribution to social science is his focus on distributed information in economic production. Think about how decision-making is distributed in capitalist economies: bankers, investors, asset managers, producers, distributors, retailers, brokers, executives, corporate planning departments, middle managers, marketing departments, advertising, etc. Just imagine trying to replicate all that effort with a few office buildings' worth of planners in Moscow (Compare that to just Wall Street!). You can't run an economy without enough planners. Hayek never tells jokes. I think if he had any sense of humor at all it might have occurred to him that designing the perfect society without planners (or much democracy) was certainly a kind of planning. He's like the whiteboard in "Office Space" that says "Planning to Plan" except it says "Planning to not Plan" and it's three books and 700 pages long ("Law, Legislation and Liberty").

TheOtherHobbes 10y ago
Indeed. I'm not really sure I see the difference between capitalist planning and communist planning. Don't corporations have growth targets and multi-year plans? Don't they (mostly) have a top-down management structure, where freedom of action and collective intelligence are constrained the further you get from the Central Committee (also known as the C-suite)? Don't corporations regularly do incredibly stupid, naive, uninformed, and self-destructive things that would be impossible if the kind of distributed intelligence claimed in this article was a reality? Are corporations any better at constraining the effects of toxic self-promoting and self-aggrandising individuals who talk a good game but are either incompetent or actively destructive? And so on. It doesn't really matter that Hayek is misunderstood and (mis)used for free market propaganda in the same way that Adam Smith is. What matters is that the existence of true freedom of thought and action is debatable in any culture which considers that kind of propaganda a necessity at all.

aidenn0 10y ago

> If Hayek is mentioned at all in academia, it is usually as an alias for Voldemort. I thought that economists in academia were largely Austrian, which would certainly not position Hayek as Voldemort.

hyporthogon 10y ago

(1) 'Exchange between strangers is a unique feature of us modern hominids' isn't really falsifiable without begging the question or establishing a hard boundary between kin and non-kin, which afaik is currently a function of the problem under consideration (i.e.'kin' might mean something different to geneticist vs. anthropologist vs. linguist vs. classical economist and even something different for a different problem in each of those disciplines). But 'this is what makes us human' is far from essential to Hayek..and probably basically inimical to Hayek, as some other commenters have pointed out. (2) The 'reduction of collective intelligence to the price mechanism' objection (which is often a specific case of generic objections to dimensional reduction, including e.g. perceptron thresholds) is addressed throughout Minsky's Society of Mind[0], esp. the 'frames' concept. (3) The article doesn't mention the benefits of localized knowledge (as opposed to the 'practical reality' of localized knowledge, which may be lamentable and/or fixable), which iirc Hayek does get into (or maybe some other Hayekians? more modern systems-oriented folks? can't think of a source at the moment). If some knowledge (for example, within a community of practice) weren't pretty strongly localized, then every knowable would be in one truly global variable space, and abstraction would be incredibly computation-intensive, and knowledge growth would be horribly O(n!), and all of thought would work like JavaScript (ZING). This is a stronger kind of localization than technical specialization (which just maps onto SOLID class design rather than variable space).[1] [0] Beautiful html edition: http://aurellem.org/society-of-mind/ http://aurellem.org/society-of-mind/ [1] Broad philosophical musing on this sort of thing: https://mitpress.mit.edu/books/bubbles https://mitpress.mit.edu/books/bubbles

saintPirelli 10y ago

There is one guy in a t-shirt in this classroom. Savage!