"He's a snake in the grass, I tell ya guys; he may look dumb but that's just a disguise; he's a mastermind in the ways of espionage." Charlie Daniels, "Uneasy Rider" Hayek on the grim threat posed by the erosion of "market morals"; Who, exactly, is leading us down the primrose Road to Serfdom? - TT's Lost in Tokyo

Hayek on the grim threat posed by the erosion of "market morals"; Who, exactly, is leading us down the primrose Road to Serfdom?

I recently ran across excerpts to what looks like an interesting essay by F.A. Hayek; I copy them below for the benefit of interested readers.  (I could not find a  complete or.pdf version.) [Update: At my request, Jeffrey Tucker kindly tracked down the rest of this essay and put it up here.]

I ask readers to ponder the relevance of Hayek's remarks in light of the huge expansion of government and of manipulations by the Fed, the growth of large and statist "public" corporations whose executives are free from shareholder control (because limited liability incorporation statutes free shareholders from personal concern about risks of injuring others), and of snowballing moral hazard (particularly obvious in connection with our heavily regulated banking sector).

It seems to me that one can as easily lay blame for our current problem as much at the feet of statist corporations and excesses of government - of the sharp elites who take advantage of both - as one can on "socialists" and "envirofascists" who either want to rein in corporations or are looking for what they see as their "fair share" from a now bankrupt government. http://bit.ly/9oBkC7  http://bit.ly/fDoROa

F. A. Hayek, “The Moral Imperative of the Market” (in Martin J. Anderson (ed.) The Unfinished. Agenda: Essays on the Political Economy of Government, 1986)

Emphasis added: 

Until 130 or 150 years ago, everybody in what is now the industrialised part of the Western world grew up acquainted with the rules and necessities of what are called commercial or mercantile morals, because everyone worked in a small enterprise where he was equally concerned with, and exposed to, the conduct of others. Whether as master or servant or member of the family, everybody accepted the unavoidable necessity of having to adapt himself to changes in demand, supply and prices in the market-place. A change began to happen in the middle of the last century [1800s]. Where previously perhaps only the aristocracy and its servants were strangers to the rules of the market, the growth of large organisations in business, commerce, finance, and ultimately in government, increased the number of people who grew up without being taught the morals of the market which had been developed in the course of the preceding 2,000 years.

--------

For probably the first time since classical antiquity, an ever-increasing part of the population of the modern industrial state grew up without learning in childhood that it was indispensable to respond as both producer and consumer to all the unpleasant things which the changing market required.

This dichotomy explains the increasing opposition to the market system that has expanded far beyond the specifically socialist parties of the last century. In the course of history almost every step in the development of commercial morals had to be contested against the opposition of moral philosophers and religious teachers - a story well enough known in its outlines. We are now in the extraordinary situation that, while we live in a world with a large and growing population which can be kept alive thanks only to the prevalence of the market system, the vast majority of people (I do not exaggerate) no longer believes in the market.

It is a crucial question for the future preservation of civilisation and one which must be faced before the arguments of socialism return us to a primitive morality. We must again suppress those innate feelings which have welled up in us once we ceased to learn the taut discipline of the market, before they destroy our capacity to feed the population through the co-ordinating system of the market. Otherwise, the collapse of capitalism will ensure that a very large part of the world's population will die because we cannot feed it.

We can nonetheless demonstrate that unless people are willing to submit to the discipline constituted by commercial morals, our capacity to support any further growth of population other than in the relatively prosperous West, or even to maintain it at its existing numbers, will be destroyed.

Grim words, that loom large these days.

Published Mon, Mar 28 2011 2:09 AM by TokyoTom

Comments

# Are Hayek's essential "market morals" breaking down? Hmm ... Is peace breaking out, or are things getting ugly?

Wednesday, March 30, 2011 7:07 AM by TT's Lost in Tokyo

I wanted to post a few additional and somewhat scattered thoughts I have had relating to the 1986 essay