Friday, April 21, 2006

Friedrich Hayek vs. Karl Polanyi

In my Bangkok Post weblog today, I got to revisit through Wikipedia (a good refresher of one's memory) Friedrich Hayek and his argument that free markets are a form of spontaneous order:

"Hayek viewed the price mechanism, not as a conscious invention (that which is intentionally designed by man), but as spontaneous order, or what is referred to as "that which is the result of human action but not of human design". Thus, Hayek put the price mechanism on the same level as, for example, language. Such thinking led him to speculate on how the human brain could accommodate this evolved behavior. In The Sensory Order (1952), he proposed, independently of Donald Hebb, the connectionist hypothesis that forms the basis of the technology of neural networks and of much of modern neurophysiology."

"Hayek attributed the birth of civilization to private property in his book The Fatal Conceit (1988). According to him, price signals are the only possible way to let each economic decision maker communicate tacit knowledge or dispersed knowledge to each other, in order to solve the economic calculation problem."

Karl Polanyi [Wikipedia] and Hayek certainly stand poles apart. Reciprocity and redistribution don't seem to play any role in Hayek.