Monday, November 14, 2011

Time Horizons: Reading Hayek Edition

Buried down a relatively long list of takeways from the Euro Crisis by Tyler Cowen, FLG saw this sentence:
Hayek really was right about French rationalist constructivism (see chapter one).

Now, some of you will remember that FLG blames the entire financial collapse on the French. So, this immediately piqued FLG' interest. FLG had never read Individualism and Economic Order.

FLG's Time Horizons Theory comes into play straight away:
To ADVOCATE any clear-cut principles of social order is today
an almost certain way to incur the stigma of being an unpractical
doctrinaire. It has come to be regarded as'-the sign of the judicious
mind that in social matters one does not adhere to fixed principles but decides each question "on its merits"; that one is generally guided by expediency and is ready to compromise between opposed views.

For clarity's sake, FLG views clear-cut principles as long run and deciding each question as short run, as emphasized by the word "expediency." Moreover, FLG thinks this hints at the corollary to FLG's theory, which states that conservatives are rational while liberals are inherently more empirical. Looking at this case, the liberals point to this case on its merits, .i.e. more of an empirical question, while conservatives apply a rational principle. Perhaps FLG is stretching this a bit far, but he thinks it's all in there.

But Withywindle raised a good point a while back about how FLG's corollary actually is somewhat contrary to the self-perceptions of conservatives and liberals. Conservatives see themselves as those who see how it is (and FLG would add,always will be, to further emphasize his time horizons theory).

Here's what Hayek wrote:
The antirationalistic approach, which regards man not as a highly rational and intelligent but as a very irrational and fallible being, whose individual errors are corrected only in the course of a social process, and which aims at making the best of a very imperfect material, is probably the most characteristic feature of English individualism.

Okay, so FLG needed to find something in Hayek that would square the circle, and he thinks he found it here:
human Reason, with a capital R, does not exist in the singular, as given or available to any particular person, as the rationalist approach seems to assume, but must be conceived as an interpersonal process in which anyone's contribution is tested and corrected by others.

Reason, thus, only reveals itself, such as it is, in a Burkean fashion, over the long-term. This Reason then produces general principles that can be applied in future cases over and above the narrow empirical reality of the case in question.

And so FLG's Time Horizons Theory is still totally boss!

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