The Fatal Conceit: The Errors of Socialism

by F. A. Hayek, W. W. Bartley III (Editor)

Overview

A critique of socialism by the Nobel Prize–winning economist: “The energy and precision with which Mr. Hayek sweeps away his opposition is impressive.” —The Wall Street Journal

In this work, F.A. Hayek—a pioneer in monetary theory and proponent of libertarian philosophy—gives the main arguments for the free-market case and presents his manifesto on the “errors of socialism.” Hayek argues that socialism has, from its origins, been mistaken on factual, and even on logical, grounds and that its repeated failures in the many different practical applications of socialist ideas that the twentieth century witnessed were the direct outcome of these errors. He labels as the “fatal conceit” the idea that “man is able to shape the world around him according to his wishes.”

“The achievement of The Fatal Conceit is that it freshly shows why socialism must be refuted rather than merely dismissed—then refutes it again.” —Fortune

Product Details

ISBN-13:	9780226321158
Publisher:	University of Chicago Press
Publication date:	12/22/2022
Series:	The Collected Works of F. A. Hayek , #1
Sold by:	Barnes & Noble
Format:	eBook
Pages:	193
Sales rank:	76,169
File size:	674 KB

About the Author

F. A. Hayek (1899-1992), recipient of the Medal of Freedom in 1991 and co-winner of the Nobel Memorial Prize in Economics in 1974, was a pioneer in monetary theory and a leading proponent of classical liberalism  in the twentieth century. He taught at the University of London, the University of Chicago, and the University of Freiburg.

Read an Excerpt

The Fatal Conceit

The Errors of Socialism

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By F. A. Hayek

The University of Chicago Press

Copyright © 1988 F. A. Hayek
All rights reserved.
ISBN: 978-0-226-32115-8

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CHAPTER 1

BETWEEN INSTINCT AND REASON

Consuetudo est quasi altera natura.

Cicero

Les lois de la conscience que nous disons naître de la nature, naissant de la coustume.

M. E. de Montaigne

Zwei Seelen wohnen, ach, in meiner Brust, Die eine will sich von der anderen trennen.

J. W. von Goethe

Biological and Cultural Evolution

To early thinkers the existence of an order of human activities transcending the vision of an ordering mind seemed impossible. Even Aristotle, who comes fairly late, still believed that order among men could extend only so far as the voice of a herald could reach (Ethics, IX, x), and that a state numbering a hundred thousand people was thus impossible. Yet what Aristotle thought impossible had already happened by the time he wrote these words. Despite his achievements as a scientist, Aristotle spoke from his instincts, and not from observation or reflection, when he confined human order to the reach of the herald's cry.

Such beliefs are understandable, for man's instincts, which were fully developed long before Aristotle's time, were not made for the kinds of surroundings, and for the numbers, in which he now lives. They were adapted to life in the small roving bands or troops in which the human race and its immediate ancestors evolved during the few million years while the biological constitution of homo sapiens was being formed. These genetically inherited instincts served to steer the cooperation of the members of the troop, a cooperation that was, necessarily, a narrowly circumscribed interaction of fellows known to and trusted by one another. These primitive people were guided by concrete, commonly perceived aims, and by a similar perception of the dangers and opportunities – chiefly sources of food and shelter – of their environment. They not only could hear their herald; they usually knew him personally.

Although longer experience may have lent some older members of these bands some authority, it was mainly shared aims and perceptions that coordinated the activities of their members. These modes of coordination depended decisively on instincts of solidarity and altruism – instincts applying to the members of one's own group but not to others. The members of these small groups could thus exist only as such: an isolated man would soon have been a dead man. The primitive individualism described by Thomas Hobbes is hence a myth. The savage is not solitary, and his instinct is collectivist. There was never a 'war of all against all'.

Indeed, if our present order did not already exist we too might hardly believe any such thing could ever be possible, and dismiss any report about it as a tale of the miraculous, about what could never come into being. What are chiefly responsible for having generated this extraordinary order, and the existence of mankind in its present size and structure, are the rules of human conduct that gradually evolved (especially those dealing with several property, honesty, contract, exchange, trade, competition, gain, and privacy). These rules are handed on by tradition, teaching and imitation, rather than by instinct, and largely consist of prohibitions ('shalt not's') that designate adjustable domains for individual decisions. Mankind achieved civilisation by developing and learning to follow rules (first in territorial tribes and then over broader reaches) that often forbade him to do what his instincts demanded, and no longer depended on a common perception of events. These rules, in effect constituting a new and different morality, and to which I would indeed prefer to confine the term 'morality', suppress or restrain the 'natural morality', i.e., those instincts that welded together the small group and secured cooperation within it at the cost of hindering or blocking its expansion.

I prefer to confine the term 'morality' to those non-instinctive rules that enabled mankind to expand into an extended order since the concept of morals makes sense only by contrast to impulsive and unreflective conduct on one hand, and to rational concern with specific results on the other. Innate reflexes have no moral quality, and 'sociobiologists' who apply terms like altruism to them (and who should, to be consistent, regard copulation as the most altruistic) are plainly wrong. Only if we mean to say that we ought to follow 'altruistic' emotions does altruism become a moral concept.

Admittedly, this is hardly the only way to use these terms. Bernard Mandeville scandalized his contemporaries by arguing that 'the grand principle that makes us social creatures, the solid basis, the life and support of all trade and employment without exception' is evil(1715/1924), by which he meant, precisely, that the rules of the extended order conflicted with innate instincts that had bound the small group together.

Once we view morals not as innate instincts but as learnt traditions, their relation to what we ordinarily call feelings, emotions or sentiments raises various interesting questions. For instance, although learnt, morals do not necessarily always operate as explicit rules, but may manifest themselves, as do true instincts, as vague disinclinations to, or distastes for, certain kinds of action. Often they tell us how to choose among, or to avoid, inborn instinctual drives.

It may be asked how restraints on instinctual demands serve to coordinate the activities of larger numbers. As an example, continued obedience to the command to treat all men as neighbours would have prevented the growth of an extended order. For those now living within the extended order gain from not treating one another as neighbours, and by applying, in their interactions, rules of the extended order – such as those of several property and contract – instead of the rules of solidarity and altruism. An order in which everyone treated his neighbour as himself would be one where comparatively few could be fruitful and multiply. If we were, say, to respond to all charitable appeals that bombard us through the media, this would exact a heavy cost in distracting us from what we are most competent to do, and likely only make us the tools of particular interest groups or of peculiar views of the relative importance of particular needs. It would not provide a proper cure for misfortunes about which we are understandably concerned. Similarly, instinctual aggressiveness towards outsiders must be curbed if identical abstract rules are to apply to the relations of all men, and thus to reach across boundaries – even the boundaries of states.

Thus, forming superindividual patterns or systems of cooperation required individuals to change their 'natural' or 'instinctual' responses to others, something strongly resisted. That such conflicts with inborn instincts, 'private vices', as Bernard Mandeville described them, might turn out to be 'public benefits', and that men had to restrain some 'good' instincts in order to develop the extended order, are conclusions that became the source of dissension later too. For example, Rousseau took the side of the 'natural' although his contemporary Hume clearly saw that 'so noble an affection [as generosity] instead of fitting men for large societies, is almost as contrary to them, as the most narrow selfishness' (1739/1886:II, 270).

Constraints on the practices of the small group, it must be emphasised and repeated, are hated. For, as we shall see, the individual following them, even though he depend on them for life, does not and usually cannot understand how they function or how they benefit him. He knows so many objects that seem desirable but for which he is not permitted to grasp, and he cannot see how other beneficial features of his environment depend on the discipline to which he is forced to submit – a discipline forbidding him to reach out for these same appealing objects. Disliking these constraints so much, we hardly can be said to have selected them; rather, these constraints selected us: they enabled us to survive.

It is no accident that many abstract rules, such as those treating individual responsibility and several property, are associated with economics. Economics has from its origins been concerned with how an extended order of human interaction comes into existence through a process of variation, winnowing and sifting far surpassing our vision or our capacity to design. Adam Smith was the first to perceive that we have stumbled upon methods of ordering human economic cooperation that exceed the limits of our knowledge and perception. His 'invisible hand' had perhaps better have been described as an invisible or unsurveyable pattern. We are led – for example by the pricing system in market exchange – to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant; and we in turn constantly live on the services of other people of whom we know nothing. All this is possible because we stand in a great framework of institutions and traditions – economic, legal, and moral – into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood in the sense in which we understand how the things that we manufacture function.

Modern economics explains how such an extended order can come into being, and how it itself constitutes an information-gathering process, able to call up, and to put to use, widely dispersed information that no central planning agency, let alone any individual, could know as a whole, possess or control. Man's knowledge, as Smith knew, is dispersed. As he wrote, 'What is the species of domestic industry his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, in his local situation, judges much better than any statesman or lawgiver can do for him' (1776/1976:11, 487). Or as an acute economic thinker of the nineteenth century put it, economic enterprise requires 'minute knowledge of a thousand particulars which will be learnt by nobody but him who has an interest in knowing them' (Bailey, 1840:3). Information-gathering institutions such as the market enable us to use such dispersed and unsurveyable knowledge to form super-individual patterns. After institutions and traditions based on such patterns evolved, it was no longer necessary for people to strive for agreement on a unitary purpose (as in the small band), for widely dispersed knowledge and skills could now readily be brought into play for diverse ends.

This development is readily apparent in biology as well as in economics. Even within biology in the strict sense 'evolutionary change in general tends towards a maximum economy in the use of resources' and 'evolution thus "blindly" follows the route of maximum resources use' (Howard, 1982:83). Further, a modern biologist has rightly observed that 'ethics is the study of the way to allocate resources' (Hardin, 1980:3) – all of which points to the close interconnections among evolution, biology, and ethics.

The concept of order is difficult – like its near equivalents 'system', 'structure' and 'pattern'. We need to distinguish two different but related conceptions of order. As a verb or noun, 'order' may be used to describe either the results of a mental activity of arranging or classifying objects or events in various aspects according to our sense perception, as the scientific re-arrangement of the sensory world tells us to do (Hayek, 1952), or as the particular physical arrangements that objects or events either are supposed to possess or which are attributed to them at a certain time. Regularity, derived from the Latin regula for rule, and order are of course simply the temporal and the spatial aspects of the same sort of relation between elements.

Bearing this distinction in mind, we may say that humans acquired the ability to bring about factually ordered arrangements serving their needs because they learned to order the sensory stimuli from their surroundings according to several different principles, rearrangements superimposed over the order or classification effected by their senses and instincts. Ordering in the sense of classifying objects and events is a way of actively rearranging them to produce desired results.

We learn to classify objects chiefly through language, with which we not merely label known kinds of objects but specify what we are to regard as objects or events of the same or different kinds. We also learn from custom, morality and law about effects expected from different kinds of action. For example, the values or prices formed by interaction in markets prove to be further superimposed means of classifying kinds of actions according to the significance they have for an order of which the individual is merely one element in a whole which he never made.

The extended order did not of course arise all at once; the process lasted longer and produced a greater variety of forms than its eventual development into a world-wide civilisation might suggest (taking perhaps hundreds of thousands of years rather than five or six thousand); and the market order is comparatively late. The various structures, traditions, institutions and other components of this order arose gradually as variations of habitual modes of conduct were selected. Such new rules would spread not because men understood that they were more effective, or could calculate that they would lead to expansion, but simply because they enabled those groups practising them to procreate more successfully and to include outsiders.

This evolution came about, then, through the spreading of new practices by a process of transmission of acquired habits analogous to, but also in important respects different from, biological evolution. I shall consider some of these analogies and differences below, but we might mention here that biological evolution would have been far too slow to alter or replace man's innate responses in the course of the ten or twenty thousand years during which civilisation has developed – not to speak of being too slow to have influenced the far greater numbers whose ancestors joined the process only a few hundred years ago. Yet so far as we know, all currently civilised groups appear to possess a similar capacity for acquiring civilisation by learning certain traditions. Thus it hardly seems possible that civilisation and culture are genetically determined and transmitted. They have to be learnt by all alike through tradition.

The earliest clear statement of such matters known to me was made by A. M. Carr-Saunders who wrote that 'man and groups are naturally selected on account of the customs they practice just as they are selected on account of their mental and physical characters. Those groups practising the most advantageous customs will have an advantage in the constant struggle between adjacent groups over those that practise less advantageous customs' (1922:223, 302). Carr-Saunders, however, stressed the capacity to restrict rather than to increase population. For more recent studies see Alland (1967); Farb (1968:13); Simpson, who described culture, as opposed to biology, as 'the more powerful means of adaptation' (in B. Campbell, 1972); Popper, who argued that 'cultural evolution continues genetic evolution by other means' (Popper and Eccles, 1977:48); and Durham (in Chagnon and Irons, 1979:19), who emphasises the effect of particular customs and attributes in enhancing human reproduction.

This gradual replacement of innate responses by learnt rules increasingly distinguished man from other animals, although the propensity to instinctive mass action remains one of several beastly characteristics that man has retained (Trotter, 1916). Even man's animal ancestors had already acquired certain 'cultural' traditions before they became, anatomically, modern man. Such cultural traditions have also helped to shape some animal societies, as among birds and apes, and probably also among many other mammals (Bonner, 1980). Yet the decisive change from animal to man was due to such culturally-determined restraints on innate responses.

(Continues...)

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Excerpted from The Fatal Conceit by F. A. Hayek. Copyright © 1988 F. A. Hayek. Excerpted by permission of The University of Chicago Press.
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Table of Contents

Editorial Foreword
Preface
Introduction: Was Socialism a Mistake?
1. Between Instinct and Reason
2. The Origins of Liberty, Property and Justice
3. The Evolution of the Market: Trade and Civilisation
4. The Revolt of Instinct and Reason
5. The Fatal Conceit
6. The Mysterious World of Trade and Money
7. Our Poisoned Language
8. The Extended Order and Population Growth
9. Religion and the Guardians of Tradition
Appendices
Editor's Acknowledgements
Bibliography
Name Index
Subject Index