F. A. Hayek and the Modern Economy Jepson Studies in Leadership Series Editors: George R. Goethals, Terry L. Price, and J. Thomas Wren Managing Editor: Tammy Tripp Jepson Studies in Leadership is dedicated to the interdisciplinary pur- suit of important questions related to leadership. In its approach, the series reflects the broad-based commitment to the liberal arts of the University of Richmond’s Jepson School of Leadership Studies. The series thus aims to publish the best work on leadership not only from management and organizational studies but also from such fields as economics, English, history, philosophy, political science, psychology, and religion. In addition to monographs and edited collections on lead- ership, included in the series are volumes from the Jepson Colloquium, which bring together influential scholars from multiple disciplines to think collectively about distinctive leadership themes in politics, sci- ence, civil society, and corporate life. The books in the series should be of interest to humanists and social scientists, as well as to organizational theorists and instructors teaching in business, leadership, and profes- sional programs. Books Appearing in This Series: The Values of Presidential Leadership edited by Terry L. Price and J. Thomas Wren Leadership and the Liberal Arts: Achieving the Promise of a Liberal Education edited by J. Thomas Wren, Ronald E. Riggio and Michael A. Genovese Leadership and Discovery edited by George R.Goethals and J. Thomas Wren Lincoln’s Legacy of Leadership edited by George R. Goethals and Gary L. McDowell For the Greater Good of All: Perspectives on Individualism, Society, and Leadership edited by Donelson R. Forsyth and Crystal L. Hoyt Executive Power in Theory and Practice edited by Hugh Liebert, Gary McDowell, and Terry L. Price Leadership and Global Justice edited by Douglas Hicks and Thad Williamson On Eff ective Leadership: Across Domains, Cultures, and Eras G. Donald Chandler III and John W. Chandler F. A. Hayek and the Modern Economy: Economic Organization and Activity edited by Sandra J. Peart and David M. Levy F. A. Hayek and the Modern Economy Economic Organization and Activity Edited by Sandra J. Peart and David M. Levy F. A. HAYEK AND THE MODERN ECONOMY Copyright © Sandra J. Peart and David M. Levy, 2013. Softcover reprint of the hardcover 1st edition 2013 978-1-137-35958-2 All rights reserved. First published in 2013 by PALGRAVE MACMILLAN® in the United States— a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-47162-1 ISBN 978-1-137-35436-5 (eBook) DOI 10.1057/9781137354365 Library of Congress Cataloging-in-Publication Data is available from the Library of Congress. A catalogue record of the book is available from the British Library. Design by Newgen Knowledge Works (P) Ltd., Chennai, India. First edition: December 2013 10 9 8 7 6 5 4 3 2 1 To our friend and mentor James M. Buchanan, 1919–2013, the “Relatively Absolute Absolute” This page intentionally left blank C O N T E N T S List of Figures and Tables ix Preface F. A. Hayek: Social Theorist and Philosopher of Liberty xi Bruce Caldwell Acknowledgments xvii Introduction 1 Sandra J. Peart and David M. Levy Part I Foundations One On Hayek’s Unsentimental Liberalism 11 Peter McNamara Two F. A. Hayek and the “Individualists” 29 Sandra J. Peart and David M. Levy Part II Contributions to Political Economy in Theory and Practice Three The Evolution, Evaluation, and Reform of Social Morality: A Hayekian Analysis 5 9 Gerald Gaus Four Hayek and the Conditions of Freedom 89 Kenneth Minogue Five F. A. Hayek and the Early Foundations of Spontaneous Order 1 01 Emily Skarbek viii Contents Six Hayek and the Nomothetes 1 19 Christopher S. Martin Part III Hayek and Policy Making Seven The Control of Engagement Order: Attlee’s Road to Serfdom? 157 Andrew Farrant and Nicola Tynan Eight Hayekian Perspectives on Canada’s Economic and Social Reforms of the 1990s 181 Jason Clemens and Niels Veldhuis Nine The Conjoint Quest for a Liberal Positive Program: “Old Chicago,” Freiburg, and Hayek 211 Ekkehard A. Kö h ler and Stefan Kolev Ten Hayek and My Life 229 V á clav Klaus Conclusion : The Hayek Difference 235 David M. Levy and Sandra J. Peart Notes on Contributors 239 Index 243 F I G U R E S A N D T A B L E S Figures 2.1 Killing fools, vice or policy 41 3.1 A Hayekian adaptive landscape 65 3.2 A Mount Fuji “progressive” landscape 66 3.3 Dancing landscapes 78 6.1 A state riven by factions 1 44 6.2 Policy outcomes in the Assembly and the People’s Court: Faction X > faction Y 146 7.1 FFF Leaflet 47-Rhys Davies Prayer to Annul 165 7.2 FFF Leaflet 54-Dictators and Register at Labour Exchange 166 7.3 FFF Leaflet 55-Scoffed at Freedom 167 8.1 Federal and provincial deficits as a share of gross domestic product (GDP) (1992–93) 1 85 8.2 Federal and provincial net debt as a share of GDP (1992–93) 186 8.3 Canadian federal program spending (nominal dollars) 188 8.4 Canada–US all government spending as a share of GDP 1 91 8.5 Number of welfare beneficiaries, including dependents (1979–2009) 1 95