Sunday, 8 May 2011

David Hume and Friedrich Hayek: classical liberal giants

Is the title of a posting by Mario Rizzo at the ThinkMarkets blog. It turns out that May 7th was David Hume’s birthday and May 8th is Friedrich Hayek’s birthday. Hume would be 300 while Hayek is just a youngster at 112.

Rizzo writes,
The Hume-Hayek tradition in political philosophy stresses the importance of general and (relatively) inflexible rules, especially with respect to property and contract rights (“justice”).

Hume’s reasons for rules might be characterized today as “incentive” arguments. Property must be secure to encourage the production of wealth. But property is a “convention” (or an artificial virtue) in the sense that the individual respects the property of others because others respect his property. When that mutuality goes, the system goes. The continual making of exceptions weakens the general rule. It also opens the door to “avidity” and “partiality.” Special interest groups pursue their partial interests and neglect the good of each and all.

Hume’s “justice” is a public good – valuable to all, but subject to the free-riding of exception-making. Each exception in itself does little harm but may have large benefits to some special group. Step by step, a world of deteriorated general justice is created beyond anyone’s intention.
In an important sense then, Hume is a father of rule-consequentialism. The goodness or badness of an action is determined by the consequences of the rule that subsumes the action. Thus, the rule, not the action, is the focus of morality.

Hayek took Hume’s argument and went a step farther. He argued for rules for “epistemic” reasons. We follow rules because we do not know what is best to do in the individual case. Tracing individual consequences is actually more difficult than determining the general effects of general rules.
We do not know in an acceptably objective way what makes particular individuals happy; we do not know what tradeoffs should be made between benefits to certain individuals and those to other individuals. A particular act of justice may be, in fact, contrary to the public or private interest (people may suffer) but the rationale of that decision can only be understood at the level of rules. Furthermore, relatively simple and inflexible rules have an epistemic advantage as rules of the road for people operating in an open-ended and complex world.
So let us celebrate the birthdays of two great men whose thinking is still entirely relevant to us today, in so many ways.

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