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FWIW what I understand Hayek as discussing is something different, which is that centrally imposed definitions of "good" have very little to do with local decis

FWIW what I understand Hayek as discussing is something different, which is that centrally imposed definitions of "good" have very little to do with local decisions that people make. Hayek is arguing, as I read him, against the idea that "social good" as we culturally construct it through centralized structures (church and state) is the goal of the economy. There is a way out of this, and that is a 19th century Catholic idea (I am not even a Christian but Catholicism is interesting to me to the extent the Catholic Church is a torchbearer for pagan Greek and Roman phylosophy) called "subsidiarity." The idea of subsidiarity is that it is theft for a group to accomplish what an individual could accomplish by him or herself, and for the same reason it is theft for a larger, more centralized group to do what a smaller group could do. The goal of larger groups should be to support, not supplant, smaller organizations. This idea of subsidiarity thus seeks to reformulate society and the economy on Aristotelian grounds, with the family household in the center (rather than the multinational corporation of liberal capitalism, or the state). From this view, virtue and economic value are the same to the extent that people seek to live just lives, and to the extent that central authorities only seek to accomplish on their own what are fundamentally impossible for the smaller entities. I think this is one reason why libertarians have associated the Catholic idea of subsidiarity with the private sector which only makes sense in terms of Hayek (I don't think that equivalence quite works but one can easily see the similarity).

jacques_chester 13y ago
I don't know if Hayek would be on board with it. The main problem is that it introduces a new criterion for arranging production which doesn't emerge from the existing order. Hayek isn't trying to build the Ideal World. He's taking the world he saw and said "here's how it works", and then, "here's why it wouldn't work if we decided to design a system instead of having it emerge". So for example, if subsidiarity is imposed, how does that play out? You already create a requirement to deduce what the smallest group capable of producing a thing is. But we already have something like that in the market. It's lumpy and fuzzy, but it does eventually kill off the too large and the too small (modulo endless tinkering by legislators). Coase explained that firms emerge because of transaction costs. Sometimes it's easier and cheaper to do a thing in existing groups. Sometimes it's not. The tension between these allows firms to emerge from the social order. I'd add that the rise of IT has enabled coordination on a vastly greater scale, which has helped to create the modern corporation.
- einhverfr 13y ago
  The point of subsidiarity though is that it puts central authorities in the position of midwifery for having such a world emerge rather than in the position of architecting, designing, and building it.

jacques_chester 13y ago

I don't know if Hayek would be on board with it. The main problem is that it introduces a new criterion for arranging production which doesn't emerge from the existing order. Hayek isn't trying to build the Ideal World. He's taking the world he saw and said "here's how it works", and then, "here's why it wouldn't work if we decided to design a system instead of having it emerge". So for example, if subsidiarity is imposed, how does that play out? You already create a requirement to deduce what the smallest group capable of producing a thing is. But we already have something like that in the market. It's lumpy and fuzzy, but it does eventually kill off the too large and the too small (modulo endless tinkering by legislators). Coase explained that firms emerge because of transaction costs. Sometimes it's easier and cheaper to do a thing in existing groups. Sometimes it's not. The tension between these allows firms to emerge from the social order. I'd add that the rise of IT has enabled coordination on a vastly greater scale, which has helped to create the modern corporation.

einhverfr 13y ago
The point of subsidiarity though is that it puts central authorities in the position of midwifery for having such a world emerge rather than in the position of architecting, designing, and building it.