Hayek and Connectionism

Hayek proposed that the free price system was an instance of spontaneous order, "which is the result of human action but not of human design." Interestingly, in The Sensory Order, he proposes connectionism as the basis of such behavior. Connectionism is the view that mental and subsequently behavioral phenomena are emergent properties which arise from the interaction of simple units, i.e. neurons. I'll admit I've only just started to research this, but it seems that the inference is that spontaneous order in economics is a reflection of similar spontaneous order within the brain itself.

Does this seem plausible? Can such events taking place on the micro level be reflected at the macro level? Is this theory reductionist? Would that be a bad thing?

Julie Lange

Course Lectures: Mill and Rawls Slides

Below are links to slideshows for the Mill and Rawls lectures from the first part of the course. I hope some of you will find them useful in preparing your papers. As always, email me with any questions.

Teaching_Phil144_Apr3_PolPhil_Intro.pps (Introduction to Political Philosophy)

Teaching_Phil144_Apr3_Mill_Intro.pps (Introduction to Mill)

Teaching_Phil144_Apr8_Mill_PubPriv.pps (Public/Private in Mill)

Teaching_Phil144_History_Privacy_Law.ppt (History of Privacy Law)

Teaching_Phil144_Apr10_Rawls_BasicCo.pps (Rawls Basic Concepts 1)

Teaching_Phil144_Apr15_Rawls_BasicCo.pps (Rawls Basic Concepts 2)

Teaching_Phil144_Apr15_Rawls_TwoPrin.pps (Rawls' Two Principles of Justice)

Teaching_Phil144_Rawls_PubPriv.pps (Public/Private in Rawls)

All files listed above are at 'http://cwkoopman.googlepages.com/'.

In his "The Use of Knowledge in Society" article, Hayek asserts that "economic problems arise always and only in consequence of change. So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision" (H12). In order to address the inevitable changes Hayek argues in favor of his decentralized price system. It does not address the fact that our system is not reducing inequality as it is supposed to and that it might need to be changed. I wonder if a decentralized system impedes the evolution of our overarching economic system into a more equitable one by dividing up too much power between people who are self-interested (within capitalist society). 

Hayek calls for decentralization of economics. Would he want to get rid of the Federal Reserve Bank? It doesn't regulate prices between commodities, but the value of money in general. What about international trade and tariffs, minimum wage, and corporations being required to supply health insurance, retirement plans, and pensions? Would he be against insider trading on the stock market? That is an example where we, as a society, commonly agree that having and using privileged knowledge is unethical. I wonder to what extent he wants to take the price system he's proposing.

Does the price communicate all that Hayek says it does?

Hayek asserts that the "price system"(H.20) clearly communicates everything that the particular purchaser needs to know. That their "limited individual fields of vision sufficiently overlap"(H.21) to create the best of all possible worlds. In the tin example,(H.21) it seems like there is more information that a purchaser could want, beyond that the price had gone up or down. For instance, if an oil company were to raise prices at the same time as a major conflict in the Middle-East begins, people may assume that this is because they are having difficulty procuring oil, thus creating a scarcity. But if the company knows that people will expect this, they could raise the price regardless of difficulties in accumulation. This is a politically charged example, but the point is a simple one. There may be more information necessary than can be summed up in a price index. Hayek claims that "There is no need for the great majority of them(purchasers) even to know where the more urgent need has arisen."(H.21) Should there not be someone watching to legitimize claims of scarcity? All questions of feasibility aside, couldn't we use a system of checks and balances to our economic structure?

Hayek on The Use of Knowledge in Society

How should we ideally construct a good economy? According to F.A. Hayek, "If we possess all the relevant information, if we can start out from a given system of preferences, and if we command complete knowledge of available means, the problem which remains is purely one of logic". Unfortunately, he claims, this is really not possible in reality. Hayek's argument is that centralized knowledge and control of goods and resources based on theoretical models will not be as successful as a decentralized system that operates according to the price mechanism. He gives the example of a shortage of tin due to some unknown cause and shows how there is simply no need for each individual to know all the specifics about the shortage, but merely knowing that tin costs more will prompt changes within each business. The problem with centralized economic planning is that it is impossible to have all the information needed at any one time in order to make informed and wise choices. The market system automatically adjusts itself as individuals make the necessary adjustments in response to changes in supply and demand. As much as I understand it, Hayek's argument seems valid. But I also do not clearly understand what it would mean to have a completely centralized and planned economy as opposed to a market economy. Anyone with a better knowledge of political economy is welcome to enlighten me.