All Commentary
Tuesday, November 4, 2014

Hayek’s Rules of Order

His ideas, like the phenomena they describe, are still emerging

The Road to Serfdom had influenced her early on. And when she looked out on a Britain laid waste by 30 years of postwar nationalization and welfare statism, Margaret Thatcher knew that the old Austrian’s work had been nothing if not prescient.

It was in 1974, however, that F.A. Hayek became relevant again for Thatcher. Britain’s economy was in torpor. The people were dependent. Great cities were covered in rust and barnacles left by the ghost of Keynes. And even as Hayek’s ideas smoldered in her subconscious, it wasn’t until Hayek received his Nobel that his ideas were rekindled in Thatcher and her party.

“One of the precursors of Thatcherism was a revival of interest in Britain and worldwide in the work of the Austrian economist and political philosopher, Friedrich Hayek, who won the Nobel Prize for economics in 1974,” Thatcher’s historians write.

Alongside Milton Friedman, who won his Nobel Prize in 1976, Hayek lent great prestige to the cause of economic liberalism, helping to create the sense of a rightward shift in the intellectual climate, valuable in all sorts of ways to [Thatcher] and others arguing the cause, such as Ronald Reagan.

Mere politicians, made crooked and venal by incentives, were being touched by ideas — one of the few antidotes to power.

Britain enjoyed an economic renaissance after she, her party, and her government had been reintroduced to Hayek's writing. But the credit, according to, may belong more to his philosophy than his economics. After all, “While there is no reason to doubt Hayek's emblematic significance to the Thatcherites in their search for new roots, it was as a political and economic philosopher that he mattered, not as an economist,” the site states.

Hayekian thinking is economic thinking, to be sure. It is also philosophy. But we would urge that Hayek’s thought is something else, too. Despite Hayek’s resistance to scientism, Hayekianism is a kind of science. To make the point, I borrow a slice from peer-progressive writer Steven B. Johnson, who in his book Emergence writes,

Indeed, some of the great minds of the last few centuries — Adam Smith, Friedrich Engels, Charles Darwin, Alan Turing — contributed to the unknown science of self-organization, but because the science didn’t exist yet as a recognized field, their work ended up being filed on more familiar shelves.

File him wherever you like. Hayek was a complexity scientist before the discipline had a name. And that might be his greatest gift to humanity. The Wikipedia entry on complex systems even mentions Hayek.

Hayek might have asked, “For what can the teeming molecules that hustled themselves into self-reproducing metabolisms, the cells coordinating their behaviors to form multicelled organisms, the ecosystems, and even economic and political systems have in common?” But he did not. That was theoretical biologist Stuart Kauffman in At Home in the Universe. And maybe Hayek’s answer would have looked something like Kauffman’s: “The wonderful possibility, to be held as a working hypothesis, bold but fragile, is that, on many fronts, life evolves toward a regime that is poised between order and chaos.”

Hayek’s greatest contributions apply in many domains of inquiry. And the conclusions one must draw from these insights are eternal lessons for experts, eggheads, and executives of every kind.

1.     Complex orders are emergent — that is, they can’t be centrally designed or controlled.

2.     Knowledge is primarily local, situational, in context, and in flux.

3.     Prediction in complex systems is difficult, if not impossible.

4.     Complex orders are far more likely to arise from simple rules.

5.     Simple rules are far more likely to arise from human complexity.

6.     The social sciences require humility in the face of complexity.

7.     Governance requires humility in the face of complexity.

Hayek gave us a lot more than seven bullet points. But if, like Thatcher, every person in the world could have studied and embraced even these few distillations of his thinking, fewer sets of wax wings would have been melted away by the fires of ideology. Fewer mass graves would have been dug up in places like Cambodia. And fewer citizens today would divide themselves along party lines over whether people should be centrally controlled through the bank or through the bedroom.

The good news is, Hayek’s ideas haven’t stopped burning since that catalyzing event in 1974. The only question is, who out there is waiting to have their minds set ablaze by his insights?

  • The Freeman is the flagship publication of the Foundation for Economic Education and one of the oldest and most respected journals of liberty in America. For more than 50 years it has uncompromisingly defended the ideals of the free society.