Some months ago I posted a critique of Timothy Sandefur’s criticism of Hayek’s concept of spontaneous order. I used articles he had published on line. Since then he generously sent me his article in Independent Review, which was in important ways more insightful than his earlier stuff. (Something I hope is true for us all…) At the time I did not have time to give his piece a careful reading, and promised “more later.”
Yesterday the editor at IR told me they would publish a letter I sent dealing with Sandefur’s piece, and let him offer a response. Give that, I think it would be unethical to publish a detailed critique until it appears in the December issue of Independent Review. That’s a long wait, but it only seems right.
On the other hand, I will give my basic critique in a general way right now.
Sandefur’s error is a common one – I believe he does not adequately distinguish between Hayek’s concept of a spontaneous order and his concept of an instrumental organization. The distinction is fundamental, and Hayek cannot be clearly understood without grasping it.
A instrumental organization can be described teleologically, in terms of pursuing a purpose or hierarchy of purposes. This is true for businesses, unions, bureaucracies, armies, and so on. Because they are teleological, they can be evaluated in terms of their efficiency in using resources to attain their purpose. People in organizations are evaluated by its leaders in terms of their value to the organization in attaining its purpose, and so are necessarily in hierarchical relations both to its purpose, and usually to one another. An efficient organization successfully subordinates secondary purposes to its primary one. More can be said, but I think that gets the point across.
A spontaneous order is not teleological. All people able to act within it share equal status and are in principle equally able to pursue any purposes of their choosing that are in keeping with procedural rules that may reflect values, but do not reflect hierarchies of choice and do not preclude completely contradictory purposes being legitimately pursued within its framework.
Rules within spontaneous orders are entirely procedural. Rules in organizations are a mix of directives and commands, and procedures justified by their utility in achieving what is commanded.
Businesses pursue their purposes within a market, scientific research teams pursue their purposes within science, and political parties pursue their purposes within a democracy. All exemplify this distinction.
A second level of error came from Sandefur insufficiently appreciating Hayek’s emphasis on knowledge and discovery. Information in spontaneous orders is characterized by complexity in the sense that no one knows much that is relevant to achieving his or her ends, and also what is relevant is subject to change and must be discovered. The information problem is radically less in successful organizations.
The classic example is how markets generate price information that is essential for economic organizations in complex environments to be efficient. In its absence economic organizations in complex environments cannot be efficient.
Once this distinction is grasped the problems Sandefur locates with regard to Hayek’s concept of a spontaneous order dissipate. His criticisms of Hayek’s ethical framework are based on other issues that I do not explore, because my ethical approach is neither Hayek’s nor Sandefur’s.