The Human Chessboard

by Russ Roberts on December 11, 2008

in Complexity & Emergence

Two quotes for would-be car czars and other experts to remember:

From Hayek’s The Fatal Conceit:

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

From Adam Smith’s The Theory of Moral Sentiments:

The man of system, on the contrary, is apt to be very wise in
his own conceit; and is often so enamoured with the supposed
beauty of his own ideal plan of government, that he cannot suffer
the smallest deviation from any part of it. He goes on to
establish it completely and in all its parts, without any regard
either to the great interests, or to the strong prejudices which
may oppose it. He seems to imagine that he can arrange the
different members of a great society with as much ease as the
hand arranges the different pieces upon a chess-board. He does
not consider that the pieces upon the chess-board have no other
principle of motion besides that which the hand impresses upon
them; but that, in the great chess-board of human society, every
single piece has a principle of motion of its own, altogether
different from that which the legislature might chuse to impress
upon it. If those two principles coincide and act in the same
direction, the game of human society will go on easily and
harmoniously, and is very likely to be happy and successful. If
they are opposite or different, the game will go on miserably,
and the society must be at all times in the highest degree of
disorder.

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{ 13 comments }

Matt C. December 11, 2008 at 10:49 am

In today's Examiner I read a quote from Rep Barney Frank regarding the bailout for the vehicles. It reads as follows:

"They will have to be able [to] demonstrate by the 31st of March that they can go forward in an efficient way and producing the kind of cars that we think will sell." [My emphasis added]

It made me think of Hayek's the Use of Knowledge. I mean honestly, if it was just as easy as asking Congress which cars would sell why haven't they done that already? Stupid business men.

Flash Gordon December 11, 2008 at 11:06 am

There haven't been very many public administrators, bureaucrats or politicians who understand [or care] about economic growth and economic freedom. Sir John Cowperthwaite, financial secretary of Hong Kong after WW II, was one who did. He followed a policy of "positive nonintervention" which led to Hong Kong's spectacular economic growth.

Frustrated interventionists who were prevented by him from meddling in Hong Kong's economy cried, "Sir John thinks he knows everything!" His reply was, "They have it backwards. I realize that I don't know everything."

Sam Grove December 11, 2008 at 11:54 am

That rather nails it.

Planners envision some result, which, in all its elegant simplicity, they imagine fairly complete.

The details, they also imagine, will flow from their crude instruments of manipulation as if that is how nature intends it.

When the plan fails, they proceed to blame everyone else and anything other than their own hubris.

I came across this at lrc:

"Thomas Fingar, until this week the deputy director of national intelligence for analysis, declined to directly address the president's swipe. But he said: "I learned something a long time ago in this town. There are only two possibilities: policy success and intelligence failure."

ColoComment December 11, 2008 at 3:01 pm

I don't think I have ever commented here before, but on reading the reference above to Cowperthwaite, I simply have to add another quote of his that I've kept close to hand for years now. He said (and lordy, how very, very timely it now is):

“…in the long run the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government; and certainly the harm is likely to be counteracted faster.”

BTW, RR, I have almost finished The Choice, & to this economic layman it's made more sense of the economics of national & international commerce and trade than anything else I've read.

Randy December 12, 2008 at 1:46 am

Conceit is certainly part of the story. I think these "men of the system" also routinely overestimate the probability of success of an application of force. They reach the point in the system at which the necessity of force becomes obvious, but then they just skip on by it with little thought of the consequences. "We're the government", they say, "We'll make them do it." Much easier said than done.

SaulOhio December 12, 2008 at 9:28 am

Smith had it so right so long ago: "…in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it."

Why do people like Hayek and Ayn Rand have to repeat it again and again, as if it was their own discovery? People have free will, and their own ability to gather information, think, and act upon the knowledge they gain. Politicians who think they can substitute that with their own thinking are just arrogant.

Flash Gordon December 12, 2008 at 2:38 pm

Politicians will always prefer Keynes to Hayek because Keynesian intervention gives them a purpose. Hayek tells them to do less, and sometimes to do nothing. Their egos won't accept that.

vidyohs December 12, 2008 at 6:52 pm

I just spent 7 hours videotaping a bank owner, a Texas bank, and a board member of VISA Intl as well as other VISA entities. I received a free education, some of which I confess I don't quite yet understand but now have direction on, plus the delight in fidning that the man could have been Don Boudreaux, Hayek, or Adam Smith in his firm belief in the free market.

Now I come home and read Russ Roberts post and the comments and I feel uplifted in that I can believe that there are people in this land that still have their heads screwed on straight.

BTW, the man was so far removed from the sterotype of a CEO that is portrayed by the braying jackasses of the left, that frequently stop by here, that he can only be described as typical of most.

vidyohs December 12, 2008 at 6:54 pm

"delight in fidning"

You ain't done nothing until you have "fidn".

Ouch. Find is what I meant, of course.

maximus December 13, 2008 at 5:34 pm

"You ain't done nothing until you have "fidn".

I think papa gave me a good whippin' last time I "fidn'd"… I wish I could remember her name !!! Keep on smiling vid!!!

Current December 14, 2008 at 11:36 am

"Why do people like Hayek and Ayn Rand have to repeat it again and again, as if it was their own discovery? People have free will, and their own ability to gather information, think, and act upon the knowledge they gain. Politicians who think they can substitute that with their own thinking are just arrogant."

Read some of Hayek's papers, especially "The Uses of Knowledge".

It may be said that to some extent what he was saying was not original. In terms of detailed economics this isn't really the case. Adam Smith chose to use the Labour Theory of Value in his writings, that theory is in direct conflict with the passage that Don quotes. Follow thorough the logic of some of Smiths work and you reach the conclusions of Marx.

Hayek's point is that the labour theory of value is false. Also, general equilibrium is false, it never happens in the short or long run. However that does not mean that the market economy is chaos, far from it.

Sammy December 15, 2008 at 2:37 pm

Many people have expressed these ideas. The trick is expressing it so a 6th grader can grasp it. It should be conventional wisdom. The ladies on The View should be making fun of those who don't understand this, rather than making fun of those who do. It baffles me that in 2008 these principles are not well understood.

Sam Grove December 15, 2008 at 2:58 pm

However that does not mean that the market economy is chaos, far from it.

Complexity often appears to be chaotic.
Is there a word for it?
Dynamic complexity.

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