All Commentary
Saturday, April 22, 2006

The Political Sociology of Freedom: Adam Ferguson and F. A. Hayek

Spontaneous Order Is Superior to Government Planning and Control

When I was a young economics major back in the 1970s, one of the standard arguments that many of my professors would hurl at me was: “Your ideal of free-market capitalism may have been all right 200 years ago, when society was a lot simpler, but in a society as complex as ours is today, such a policy of laissez faire just won’t work. The complexity of modern life requires the government to interfere and regulate to see that everything works harmoniously, otherwise there would be chaos.” Any reference I made to Adam Smith’s “invisible hand” in The Wealth of Nations brought forth mockery and snide remarks.

The idea that a complex social order can arise and function without a human creator who designs and guides it often seems counterintuitive to our everyday experience. All that we consume shows signs of human planning and human action. The farmers plant the crops and bring them to harvest. The manufacturers design and oversee the production processes that bring all desired goods and services to market. All works of art and literature are the result of creative minds that put paint on canvas or words on a page.

Surely, it is said, there must an overarching design to fit all those individual plans into a society-wide coordinated pattern, just as the pieces of a jigsaw puzzle fit properly together. In the history of ideas, there have been two groups of thinkers who not only challenged that presumption, but who also showed how social order evolves and coordinates the actions of multitudes of people, without a planner imposing a design on everyone: the Scottish moral philosophers and the Austrian economists.

Ronald Hamowy offers a fairly detailed exposition of many of their ideas in The Political Sociology of Freedom. In this series of essays Hamowy traces the development of a theory of spontaneous social order in the works of Bernard Mandeville, David Hume, Adam Smith, Adam Ferguson, and a number of other writers of the eighteenth century. Their premise was that if man and society are to be properly studied and understood, we must use our reason and the historical record to find out what is the actual nature of man and how society’s institutions actually come into existence.

Their conclusion was that man is a frail and imperfect creature, who applies his reasoning to solve problems, but who is also influenced by his passions. Man’s knowledge is far from perfect about his past and current circumstances, and especially weak about what the future might hold. While capable of cruel and violent acts, man’s nature also contains a spirit of benevolence based on his desire and need for the company of others. He is far from the hyper-rationalistic “economic man” that critics of the market later tried to portray him as.

What their study of history demonstrated was that none of the institutions and social norms of interpersonal conduct and commerce had been introduced by some great and all-knowing philosopher king; nor had their development and change over the centuries been anticipated or even thought about by those whose actions brought them into existence. (As the Austrian economist Ludwig von Mises once expressed it, “History is made by men. . . . But the historical process is not designed by individuals . . . . The Pilgrim Fathers did not plan to found the United States.”)

Instead, the Scottish thinkers argued that language, custom, tradition, law, market rules of conduct and association, and the moral codes of society are the cumulative outcomes of multitudes of people acting and interacting over many generations, resulting in the institutionalized patterns and structures within which men live. Society’s institutions change (usually slowly) over time, as men discover ways to improve their circumstances.

These ideas were captured in what are some of the most famous passages in the works of the Scottish thinkers. For example, Adam Ferguson: “Every step and every movement of the multitude, even in what are termed enlightened ages, are made with equal blindness to the future; and nations stumble upon establishments [institutions], which are indeed the result of human action, but not the execution of any human design.”

Or Adam Smith: In the market economy, the individual “neither intends to promote the public interest, nor knows how much he is promoting it. . . . He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it.”

Hamowy shows that those ideas were a liberating force that freed men from the notion that only the king or a strong political authority could assure order in society. But he also shows that this theory could easily be turned around and used by “conservative” elements who, appealing to custom and tradition, want no significant change to the existing order.

The Austrian economists, beginning with the school’s founder, Carl Menger, have also emphasized the nature and superiority of spontaneous social orders over various systems of government planning and control. That was especially the case with F. A. Hayek, who developed this theme in The Constitution of Liberty and Law, Legislation and Liberty.

Ronald Hamowy studied under Hayek in the 1960s at the University of Chicago. In the essays devoted to Hayek he combines a sincere appreciation and respect for Hayek’s important contributions to the theory of spontaneous order, while challenging some of his master’s thinking, particularly on the meaning of “the rule of law” and the nature of “coercion.” He defends Hayek against the totally misplaced charge of anti-Semitism, made a few years ago by Melvin Rederin the pages of the History of Political Economy. He also discusses the limits of Hayek’s own conception of a political order for a free society.

Hamowy draws a highly complimentary and moving portrait of Hayek, as a scholar, teacher, and mentor. In the 1970s, when I was in my twenties and shortly after he had won the Nobel Prize in economics, I had the good fortune to spend most of two summers in Hayek’s company as a research fellow at the Institute for Humane Studies. He exemplified in all ways the highest learning, kindness, and patience—even when confronted by a brash and know-it-all young man like myself who was determined to “set Hayek right.” He represented the finest ideal of what one thinks a Nobel laureate should be.

  • Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.