Tuesday, October 06, 2009

A Repeating Pattern

Writing of the development of the extended order in his book The Fatal Conceit, celebrated economist Friedrich A. Hayek writes (p. 32):
“It is true that, for a time, the large trading communities that had grown up in the Mediterranean were precariously protected against marauders by the still more martial Romans, who as Cicero tells us, could dominate the region by subduing the most advanced commercial centres of Corinth and Carthage, which had sacrificed military progress to mercandi et navigandi cupiditas (De re publica, 2, 7-10). But during the last years of the Republic and the first centuries of the Empire, governed by a senate whose members were deeply involved in commercial interests, Rome gave the world the prototype of private law based on the most absolute conception of several property. The decline and final collapse of this first extended order came only after central administration in Rome increasingly displaced free endeavour. This sequence has been repeated again and again: civilization might spread, but is not likely to advance much further, under a government that takes over the direction of daily affairs from its citizens. It would seem that no advanced civilisation has yet developed without a government which saw its chief aim in the protection of private property, but that again and again the further evolution and growth to which this gave rise was halted by a ‘strong’ government. Governments strong enough to protect individuals against the violence of their fellows make possible the evolution of an increasingly complex order of spontaneous and voluntary cooperation. Sooner or later, however, they tend to abuse that power and to suppress the freedom they had earlier secured in order to enforce their own presumedly greater wisdom and to allow ‘social institutions to develop in a haphazard manner’ (to take a characteristic expression that is found under the heading ‘social engineering’ in the Fontana/Harper Dictionary of Modern Thought (1977)).”
Hayek goes on to discuss similar experiences in Asia, Meso-America, and Egypt to make his point. He goes on to decry the fact that historians have given far too much credit to the “monuments and documents left by holders of political power, whereas the true builders of the extended order, who as often as not created the wealth that made the monuments possible, left less tangible and ostentatious testimonies to their achievement.”

Does this pattern sound familiar?


Charles D said...

It is not only governments that tend to abuse their power. Private players can do so as well. Our current economic crisis was caused by private banks, insurance companies, mortgage companies, and other corporations who sought to maximize their profits regardless of the impact it might have on the society as a whole. They were permitted to do this because advocates of "smaller government" removed or watered down the regulations that prevented them from doing so.

We have monuments now to the "true builders of the extended order": long unemployment lines, soaring personal bankruptcies and foreclosures, lack of available credit for businesses, and a government and Federal Reserve that have become little more than a giant funnel pouring taxpayer dollars into the pockets of the private players who caused the crisis. At this point, we have ample evidence of what results from following the theories of Hayek and Milton Friedman - collapse.

Scott Hinrichs said...

I must disagree with some points of your assessment, but I agree with other points. The combination of government and big business you have described is Fascism, not a free and extended order. And, yes, I agree that Fascism is alive and well in our nation's economic system today.

The "true builders of the extended order" are the people that are out there working, producing, and taking personal risk on a daily basis. They are not the mega corporations that use the government regulations you appear to relish so much to hurt their competitors. They are not the empire builders. None of the "true builders of the extended order" are "too big to fail," nor do they have gigantic skyscraper monuments.