Monday, December 1, 2014

Hayek's Warning: The Social Engineer's Pretense of Knowledge"

Richard Ebeling emails:
Dear Bob, 
I have a new article on the news and commentary website, “EpicTimes,” on, “Hayek’s Warning: The Social Engineer’s Pretense of Knowledge.”

December 11, 2014 marks the 40th anniversary of Friedrich A. Hayek receiving the Nobel Prize in Economics at the formal award ceremony in Stockholm, Sweden, during which Hayek delivered his official Nobel lecture on, “The Pretense of Knowledge.”

Hayek warned of the danger from those in the intellectual and government policy decision-making community who arrogantly believe that they have the ability and wisdom to redesign or regulate the complex market order.

He emphasized the hubris on the part of those who fail to understand and appreciate that in the developed market system there is more knowledge and different types of knowledge that are dispersed and decentralized in the respective minds of all the participants of the society than any government master minds could ever successfully integrate or coordinate better than is done through the competitive market price system.

He particularly singled our the presumption of knowledge by the Keynesian Economists who assumed that the construction and manipulation of a series of quantitative macroeconomic statistical aggregates could serve as the policy means for managing total output and total employment, and the general wage and price levels in the economy.

What is generated by such policies, Hayek argued, are unsustainable “booms,” followed by an inescapable economic downturn, with those falsely drawn into employments during an inflation now having to adjust and rebalance their activities to be consistent with a post-inflationary environment.

More generally, Hayek warned of those social engineers who refuse to accept the humility of how little they know to plan or micro-manage a society, but by pursuing their coercive political plans threaten the long-run survivability of a free society.

This is a message that is as true and relevant today as when Hayek delivered these warnings four decades ago at the Nobel Prize ceremony.

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