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Quotation of the Day…

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… is from page 404 of the 2014 collection, The Market and Other Orders [2] (Bruce Caldwell, ed.), of some of F.A. Hayek’s essays on spontaneous-ordering forces; specifically, it’s from Hayek’s previously unpublished 1961 lecture at the University of Virginia “Economics and Technology” (which is the third of four lectures that Hayek delivered in UVA’s Newcomb Hall during the Spring 1961 semester; the title of this lecture series by Hayek is “A New Look at Economic Theory”):

[T]he various technological possibilities are not necessarily simultaneous possibilities.  Which of them can be realized at the same time depends on economic circumstances which are thus chiefly a restraint on what technology pictures as  ossible.  This means that, while technology deals with pleasant facts which give people a thrill, economics deals with unpleasant facts which people would prefer not to be true.  Compared with the glamour of technology, economics is still the dismal science which explains why we can’t do what we would like to do.

DBx: Yes.  The economic challenge is not a technological challenge.  Getting the vital details of economic processes ‘right’ is not an engineering problem, for no amount of science can discover how each of the constantly arising unavoidable trade-offs should be made.  Getting that task ‘right’ requires that each individual has as much as possible freedom to strike each of his or her trade-offs as only he or she has the knowledge to know how each such trade-off should be struck.

Economics, therefore, should study how individuals exchange with each other.  Economists should stop treating ‘the economy’ as if it is a real thing onto itself that has an objective ‘solution’ that, at least in principle, can be discovered by genius third-party investigators.

(By the way, I do wish that Hayek had not used the term “dismal science” in this hackneyed way.  See David Levy and Sandra Peart [3].)

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