F.A. Hayek on Individualism

Understanding the great economist's insights into individualism, true and false

F. A. Hayek's essay "Individualism: True and False" (pdf; chapter one of Individualism and Economic Order) overflows with insights that belong in any brief on behalf of the free society. As the title suggests, Hayek wished to distinguish two markedly different philosophies associated with the label individualism: one that rejected rationalism and one that embraced it

"One might even say," Hayek explained, "that the former is a product of an acute consciousness of the limitations of the individual mind which induces an attitude of humility toward the impersonal and anonymous social processes by which individuals help to create things greater than they know, while the latter is the product of an exaggerated belief in the powers of individual reason and a consequent contempt for anything which has not been consciously designed by it or is not fully intelligible to it."

Thus for Hayek the crucial difference is over whether societies (institutions) are largely spontaneous, emergent, and organic—or designed. His great concern was that rationalistic individualism, in awe of the mind's ability to engineer solutions, too readily leads to the centralization of power and totalitarianism.

Controversial Essay

This essay has not been without controversy even among fans of Hayek. He has been criticized for drawing too sharp a distinction between the liberal rationalists and liberal empiricists and for being arbitrarily pro-British and anti-French in dividing the true from the false individualists. I happily duck those controversies here and focus instead on points that are both less controversial among liberals and, in my view, indispensable to the full case for freedom. (In his book Classical Liberalism and the Austrian School, the great intellectual historian Ralph Raico criticizes [pdf] Hayek's derogation of the French liberals. "Some might uncharitably suspect Hayek of a terminal Anglophilia which tended to blind him to some obvious facts," Raico writes.)

The first point I draw attention to comes in Hayek's discussion of Adam Smith's view of mankind. Smith's "chief concern," Hayek wrote,

was not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst. It would scarcely be too much to claim that the main merit of the individualism which he and his contemporaries advocated is that it is a system under which bad men can do least harm. It is a social system which does not depend for its functioning on our finding good men for running it, or on all men becoming better than they now are, but which makes use of men in all their given variety and complexity, sometimes good and sometimes bad, sometimes intelligent and more often stupid. Their aim was a system under which it should be possible to grant freedom to all, instead of restricting it . . . to "the good and the wise." [Emphasis added.]

Keep this in mind the next time someone proclaims that a muscular state, unconstrained by strict rules, is needed to prevent flawed human beings from harming others. Then ask: What will keep the flawed—and privileged—human beings who have access to the violent power of the state from harming others? Those who are familiar with Hayek's The Road to Serfdom, and especially his chapter "Why the Worst Get on Top," will know what Hayek is getting at.

Self-Love

Hayek also sought to correct a popular misconception about the early liberals' view of human motivation. "There can be no doubt, of course, that in the language of the great writers of the eighteenth century it was man's 'self-love,' or even his 'selfish interests,' which they represented as the 'universal mover,' and that by these terms they were referring primarily to a moral attitude, which they thought to be widely prevalent," Hayek wrote. "These terms, however, did not mean egotism in the narrow sense of concern with only the immediate needs of one's proper person. The 'self,' for which alone people were supposed to care, did as a matter of course include their family and friends; and it would have made no difference to the argument if it had included anything for which people in fact did care."

When critics attack the alleged market ideal of the selfish maximizer, they tackle a straw man.

As important as this point regarding moral attitude is, Hayek finds something more important in true individualism, namely:

the constitutional limitation of man's knowledge and interests, the fact that he cannot know more than a tiny part of the whole of society and that therefore all that can enter into his motives are the immediate effects which his actions will have in the sphere he knows. All the possible differences in men's moral attitudes amount to little, so far as the significance for social organization is concerned, compared with the fact that all man's mind can effectively comprehend are the facts of the narrow circle of which he is the center; that, whether he is completely selfish or the most perfect altruist, the human needs for which he can effectively care are an almost negligible fraction of the needs of all members of society. The real question, therefore, is not whether man is, or ought to be, guided by selfish motives but whether we can allow him to be guided in his actions by those immediate consequences which he can know and care for or whether he ought to be made to do what seems appropriate to somebody else who is supposed to possess a fuller comprehension of the significance of these actions to society as a whole.

Rulers Can't Know

Of course Hayek's true individualists—that is, the early economists—understood that no one possesses that fuller comprehension. Rulers can have no better grasp of the whole than do the ruled. However, rulers lack something that ruled individuals do not: knowledge of the subjects' own particular circumstances, interests, preferences skills, and so on. Hence the liberal injunction that the state should leave peaceful people alone and the conviction that strict observance of that injunction serves the general good.

"What the economists understood for the first time," Hayek wrote, "was that the market as it had grown up was an effective way of making man take part in a process more complex and extended than he could comprehend and that it was through the market that he was made to contribute 'to ends which were no part of his purpose.'"

There's irony in individualism: "What individualism teaches us is that society is greater than the individual only in so far as it is free. In so far as it is controlled or directed, it is limited to the powers of the individual minds which control or direct it."

Sheldon Richman is editor of The Freeman, where this article originally appeared.