The Errors of Socialism

F. A. Hayek studied at the University of Vienna, where he became both a Doctor of Law and a Doctor of Political Science. After several years in the Austrian civil service, he was made the first director of the Austrian Institute for Business Cycle Research. In 1931 he was appointed Tooke Professor of Economics and Statistics at the London School of Economics, and in 1950 he went to the University of Chicago as Professor of Social and Moral Sciences.

He returned to Europe in 1962, to the chair of Economics at the University of Freiburg, where he became Professor Emeritus in 1967. The holder of numerous honorary doctorates, and a member of the British Academy, Hayek was awarded the Nobel Memorial Prize in Economics in 1974. He was created Companion of Honour in 1984. He is the author of some fifteen books, including Prices and Production, The Pure Theory of Capital The Road to Serfdom, The Counter-Revolution of Science, The Sensory Order, The Constitution of Liberty, and Law, Legislation and Liberty. He died in 1992. The editor, Professor W. W.

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Bartley, III, was at the Hoover Institution, Stanford University until his death in 1990. PLAN OF THE COLLECTED WORKS Founding Editor: W. W. Bartley, III Editor: Stephen Kresge The Fatal Conceit: The Errors of Socialism The Uses and Abuses of Reason: The CounterRevolution of Science, and Other Essays Volume III The Trend of Economic Thinking: Essays on Political Economists and Economic History Volume IV The Fortunes of Liberalism: Essays on Austrian Economics and the Ideal of Freedom Volume V Nations and Gold Volume VI Money and Nations Volume VII Investigations in Economics Volume VIII Monetary

Theory and Industrial Fluctuations Volume IX Contra Keynes and Cambridge: Essays, Correspondence, and Documents Volume X Socialism and War: Essays, Correspondence, and Documents Volume XI Essays on Liberty Volume XII Essays, Debates, and Reviews Volume XIII The Pure Theory of Capital Volume XIV The Road to Serfdom Volume XV The Constitution of Liberty Volume XVI Philosophy, Politics, and Economics Volume XVII Law, Legislation, and Liberty Volume XVIII The Sensory Order and other Essays in Psychology Volume XIX John Stuart Mill and Harriet Taylor: Their Friendship and Subsequent Marriage The plan is provisional.

Minor alterations may occur in titles of individual books, and several additional volumes may be added. * THE COLLECTED WORKS OF Volume I Volume II * Friedrich August Hayek VOLUME I THE FATAL CONCEIT The Errors of Socialism EDITED BY W. W. BARTLEY, III available in paperback THE COLLECTED WORKS OF F. A. HAYEK Founding Editor: W. W. Bartley III First published in 1988 by Routledge 11 New Fetter Lane, London EC4P 4EE Reprinted 1989 New in paperback 1990 Reprinted 1990, 1992 Set in Baskerville by Columns of Reading and printed in Great Britain by T. J. Press (Padstow) Ltd. Padstow, Cornwall © F. A. Hayek 1988 All rights reserved.

No part of this book may be reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data General Editor: Stephen Kresge Assistant Editor: Gene Opton Published with the support of Hayek, F. A. (Friedrich August), 1899The fatal conceit : the errors of socialism. (The collected works of Freidrich August Hayek). 1. Socialism. Philosophical perspectives I. Title II.

Bartley, William Warren III. Series 335′. 001 ISBN 0-415-00820-4 ISBN 0-415-04187-2 (Pbk) The Hoover Institution on War, Revolution and Peace, Stanford University Anglo American and De Beers Chairman’s Fund, Johannesburg Cato Institute, Washington, D. C. The Centre for Independent Studies, Sydney Chung-Hua Institution for Economic Research, Taipei Earhart Foundation, Ann Arbor Engenharia Comercio e Industria S/A, Rio de Janeiro Escuela Superior de Economia y Administracion de Empresas (ESEADE), Buenos Aires The Institute for Humane Studies, George Mason University Instituto Liberal, Rio de Janeiro Charles G.

Koch Charitable Foundation, Wichita The Vera and Walter Morris Foundation, Little Rock Verband der Osterreichischen Banken and Bankiers, Vienna The Wincott Foundation, London 4234 CONTENTS Editorial Foreword Preface Introduction One Was Socialism a Mistake? Between Instinct and Reason Biological and Cultural Evolution Two Moralities in Cooperation and Conflict Natural Man Unsuited to the Extended Order Mind Is

Not a Guide but a Product of Cultural Evolution, and Is Based More on Imitation than on Insight or Reason The Mechanism of Cultural Evolution Is Not Darwinian X 5 6 II II 17 19 21 23 29 29 31 33 35 37 Two The Origins of Liberty, Property and justice Freedom and the Extended Order The Classical Heritage of European Civilisation ` Where There Is No Property There Is No justice’ The Various Forms and Objects of Property, and the Improvement Thereof Organisations as Elements of Spontaneous Orders

Three The Evolution of the Market: Trade and Civilisation The Expansion of Order into the Unknown The Density of Occupation of the World Made Possible by Trade Trade Older than the State The Philosopher’s Blindness 38 38 41 43 45 Four The Revolt of Instinct and Reason The Challenge to Property Our Intellectuals and Their Tradition of Reasonable Socialism Morals and Reason: Some Examples A Litany of Errors 48 48 52 55 60 vii

CONTENTS Positive and Negative Liberty `Liberation’ and Order Five The Fatal Conceit Traditional Morals Fail to Meet Rational Requirements Justification and Revision of Traditional Morals The Limits of Guidance by Factual Knowledge; The Impossibility of Observing the Effects of Our Morality Unspecified Purposes: In the Extended Order Most Ends of Action Are Not Conscious or Deliberate The Ordering of the Unknown How What Cannot Be Known Cannot Be Planned The Mysterious World of Trade and Money Disdain for the Commercial Marginal Utility versus Macroeconomics The Intellectuals’ Economic Ignorance The Distrust of Money and Finance The Condemnation of Profit and the Contempt for Trade Our Poisoned Language Words as Guides to Action Terminological Ambiguity and Distinctions among Systems of Coordination Our Animistic Vocabulary and the Confused Concept of `Society’ The Weasel Word `Social’ ‘Social Justice’ and `Social Rights’ The Extended Order and Population Growth The Malthusian Scare: The Fear of Overpopulation The Regional Character of the Problem Diversity and Differentiation The Centre and the Periphery Capitalism Gave Life to the Proletariat The Calculus of Costs Is a Calculus of Lives Life Has No Purpose But Itself Religion and the Guardians of Tradition Natural Selection from Among the Guardians of Tradition 62 64 66 66 67 CONTENTS Appendices A. `Natural’ vs. `Artificial’ B. The Complexity of Problems of Human Interaction C.

Time and the Emergence and Replication of Structures D. Alienation, Dropouts, and the Claims of Parasites E. Play, the School of Rules F. Remarks on the Economics and Anthropology of Population G. Superstition and the Preservation of Tradition Editor’s Acknowledgements Bibliography Name Index Subject Index 1 43 1 48 1 51 152 154 1 55 1 57 158 159 1 73 1 76 71 75 83 85 89 89 94 100 101 104 106 106 110 112 114 117 120 120 124 126 127 130 132 133 135 135 Six Seven Eight Nine viii ix EDITORIAL FOREWORD EDITORIAL FOREWORD I The Fatal Conceit, here published in paperback, is a new work by Hayek. It was first published in 1988 as the first volume to appear in The Collected Works of F. A.

Hayek, a new standard edition of his writings. The reader who is struck by the pace and freshness of the argument of this new book, its vigorous application to specific cases, and its occasionally polemical thrust will want to know something of its background. In 1978, at the age of nearly eighty, and after a lifetime of doing battle with socialism in its many manifestations, Hayek wanted to have a showdown. He conceived of a grand formal debate, probably to be held in Paris, in which the leading theorists of socialism would face the leading intellectual advocates of the market order. They would address the question: `Was Socialism a Mistake? ‘.

The advocates of the market order would argue that socialism was – and always had been thoroughly mistaken on scientific and factual, even logical grounds, and that its repeated failures, in the many different practical applications of socialist ideas that this century has witnessed, were, on the whole, the direct outcome of these scientific errors. The idea of a grand formal debate had to be set aside for practical reasons. How, for instance, would the representatives of socialism be chosen? Would socialists themselves not refuse to agree on who might represent them? And even in the unlikely event that they did agree, could they be expected to acknowledge the real outcome of any such debate? Public confessions of error do not come easily.

Yet those of his colleagues who had met with Hayek to discuss the idea were reluctant to abandon it, and encouraged him to set down, in a manifesto, the main arguments in the free-market case. What was intended as a brief manifesto first grew into a large work in three parts; then the whole was compressed into the short book – or longer manifesto – presented here. Some fragments of the larger work have been preserved, and will be published separately in Volume X. Adopting an economic and evolutionary approach throughout, Hayek examines the nature, origin, selection and development of the differing x moralities of socialism and the market order; he recounts the extraordinary powers that `the extended order’ of the market, as he calls it, bestows on mankind, constituting and enabling the development of civilisation.

Hayek also weighs – in a manner occasionally reminiscent of Freud’s Civilisation and Its Discontents, yet reaching very different conclusions – both the benefits and costs of this civilisation, and also the consequences that would ensue from the destruction of the market order. He concludes: `While facts alone can never determine what is right, ill-considered notions of what is reasonable, right and good may change the facts and the circumstances in which we live; they may destroy, perhaps forever, not only developed individuals and buildings and art and cities (which we have long known to be vulnerable to the destructive powers of moralities and ideologies of various sorts), but also traditions, institutions, and interrelations without which such creations could hardly have come into being or ever be recreated. ‘ II The Collected Works of F. A.

Hayek attempts to make virtually the entire Hayek corpus available to the reader for the first time. The chief organisation is thematic, but within this structure a chronological order is followed where possible. The series opens with two closely-related books on the limits of reason and planning in the social sciences – The Fatal Conceit, a new work, and The Uses and Abuses of Reason: The Counter-Revolution of Science, and Other Essays, a work never previously published in Britain. The series continues with two collections of historical and biographical essays ( The Trend of Economic Thinking and The Austrian School and the Fortunes of Liberalism).

The essays in these two volumes have never before been collected; over half of them have previously been available only in German; and approximately one-third of the first of these volumes is drawn from important manuscripts never previously published. The series continues with four volumes encompassing the bulk of Hayek’s contributions to economics: Nations and Gold; Money and Nations; Investigations in Economics; and Monetary Theory and Industrial Fluctuations. These volumes are followed by three volumes of documentation, historical record and debate: The Battle with Keynes and Cambridge; The Battle with Socialism; and the remarkable Correspondence Between Karl Popper and F. A.

Hayek, extending over fifty years, in which these close friends and intellectual collaborators intensely debate the main problems of philosophy and methodology, and many of the principal issues of our time. xi EDITORIAL FOREWORD These documentary volumes are followed by two new collections of essays by Hayek, and by a volume of his interviews and informal conversations about both theoretical issues and practical affairs Conversations with Hayek – a volume intended to make his ideas available to a wider readership. These first fourteen volumes will draw on, and be in large part created from, the resources of the large Hayek Archive at the Hoover Institution on War, Revolution and Peace, Stanford University, as well as its closely-related Machlup Archive and Popper Archive.

Numerous other rich archival resources throughout the world will also be used. The first volume in the series, The Fatal Conceit, which is fresh from Hayek’s hand, is of course unburdened by critical apparatus. The texts of subsequent volumes will be published in corrected, revised and annotated form, with introductions by distinguished scholars intended to place them in their historial and theoretical context. The series will conclude with eight of Hayek’s classic works i ncluding The Road to Serfdom, Individualism and Economic Order, The Constitution of Liberty, and Law, Legislation and Liberty – books that are at the moment still readily available in other editions.

It is assumed that the publication of the entire series will take ten to twelve years. It is the intention of the editors that the series of volumes be complete i n so far as that is reasonable and responsible. Thus essays which exist i n slightly variant forms, or in several different languages, will be published always in English or in English translation, and only in their most complete and finished form unless some variation, or the timing thereof, is of theoretical or historical significance. Some items of ephemeral value, such as short newspaper articles and book notices of a few lines written when Hayek was editing Economica, will be omitted.

And of course the correspondence to be published will be mainly that which bears significantly on Hayek’s literary and theoretical work in economics, psychology, biography and history, political theory, and philosophy. All materials used in the creation of these volumes, as well as those comparatively few items omitted, will be available to scholars in the Hoover Institution Archives. EDITORIAL FOREWORD The presiding genius behind the larger project, without whose advice and support it never could have been organised or launched, is Walter S. Morris, of the Vera and Walter Morris Foundation. Two other institutions whose directors watched carefully over the inception of the project, and whose advice has been ,invaluable, are the Institute for Humane Studies, George Mason University, and the Institute of Economic Affairs, in London.

The editor is particularly indebted to Leonard P. Liggio, Walter Grinder, and John Blundell, of the Institute for Humane Studies; and to Lord Harris of High Cross and John B. Wood, of the Institute of Economic Affairs. Equally important has been the unflagging support and advice of Norman Franklin of Routledge & Kegan Paul, Ltd. , London, who has been Hayek’s publisher for many years. Finally, the project could not have been carried through successfully without the generous financial support of the supporting organisations, whose names are listed prominently at the beginning of this volume, and to which all associated with the volume are deeply grateful.

The support of these sponsors – institutions and foundations from six continents – not only acknowledges the international appreciation of Hayek’s work, but also provides very tangible evidence of the ` extended order of human cooperation’ of which Hayek writes. The Editor also wishes to acknowledge grants in aid of the project from the Werner Erhard Foundation, Sausalito, California, and from the Thyssen Foundation, Cologne, West Germany. W. W. Bartley, III III The preparation of a standard edition of this type is a large and also expensive undertaking. First and foremost among those who are to be thanked for their very great assistance are W.

Glenn Campbell, Director of the Hoover Institution on War, Revolution and Peace, Stanford University, for the generous decision to provide the principal underlying support for this project, and also for the editor’s biography of Hayek. xii xiii F. A. HAYEK THE FATAL CONCEIT The Errors of Socialism Liberty or Freedom is not, as the origin of the name may seem to i mply, an exemption from all restraints, but rather the most effectual applications of every just restraint to all members of a free society whether they be magistrates or subjects. Adam Ferguson The rules of morality are not the conclusions of our reason. David Hume How can it be that institutions that serve the common welfare and are extremely significant for its development come into being without a common will directed towards establishing them? Carl Menger PREFACE For this book I adopted two rules.

There were to be no footnotes and all arguments not essential to its chief conclusions but of interest or even essential to the specialist were either to be put into smaller print to tell the general reader that he might pass over them without missing points on which the conclusions depended, or else were to be assembled in appendices. References to works cited or quoted are therefore usually indicated simply by brief statements in brackets of the name of the author (where not clear from the context) and the date of the work, followed after a colon by page numbers where needed. These refer to the list of authorities quoted at the end of the volume. Where a later edition of a work has been used, this is indicated by the latter of the dates given in the form 1786/1973, where the former date refers to the original edition.

It would be impossible to name the obligations one has incurred in the course of a long life of study even if one were to list all the works from which one has acquired one’s knowledge and opinions, and still more impossible to list in a bibliography all the works one knows one ought to have studied in order to claim competence in a field as wide as that with which the present work deals. Nor can I hope to list all the personal obligations I have incurred during the many years my efforts were directed towards what was fundamentally the same goal. I wish, however, to express my deep gratitude to Miss Charlotte Cubitt, who has served as my assistant throughout the period that this work was in preparation and without whose dedicated help it never could have been completed; and also to Professor W. W.

Bartley, III, of the Hoover Institution, Stanford University, who – when I fell ill for a time, just prior to the completion of the final draft – took this volume in hand and prepared it for the publishers. F. A. Hayek Freiburg im Breisgau April 1988 5 WAS SOCIALISM A MISTAKE? INTRODUCTION WAS SOCIALISM A MISTAKE? The idea of Socialism is at once grandiose and simple…. We may say, in fact, that it is one of the most ambitious creations of the human spirit, . . . so magnificent, so daring, that it has rightly aroused the greatest admiration. If we wish to save the world from barbarism we have to refute Socialism, but we cannot thrust it carelessly aside.

Ludwig von Mises This book argues that our civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection – the comparative increase of population and wealth – of those groups that happened to follow them.

The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be `fruitful, and multiply, and replenish the earth, and subdue it’ ( Genesis 1:28). This process is perhaps the least appreciated facet of human evolution. Socialists take a different view of these matters. They not only differ in their conclusions, they see the facts differently. That socialists are wrong about the facts is crucial to my argument, as it will unfold in the pages that follow. I am prepared to admit that if socialist analyses of the operation of the existing economic order, and of possible alternatives, were factually correct,-. e might be obliged to ensure that the distribution of incomes conform to certain moral principles, and that this distribution might be possible only by giving a central authority the power to direct the use of available resources, and might presuppose the abolition of individual ownership of means of production. If it were for instance true that central direction of the means of production could 6 effect a collective product of at least the same magnitude as that which we now produce, it would indeed prove a grave moral problem how this could be done justly. This, however, is not the position in which we find ourselves. For there is no known way, other than by the distribution of products in a competitive market, to inform individuals in what direction their several efforts must aim so as to contribute as much as possible to the total product.

The main point of my argument is, then, that the conflict between, on one hand, advocates of the spontaneous extended human order created by a competitive market, and on the other hand those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources is due to a factual error by the latter about how knowledge of these resources is and can be generated and utilised. As a question of fact, this conflict must be settled by scientific study. Such study shows that, by following the spontaneously generated moral traditions underlying the competitive market order (traditions which do not satisfy the canons or norms of rationality embraced by most socialists), we generate and garner greater knowledge and wealth than could ever be obtained or utilised in a centrally-directed economy whose adherents claim to proceed strictly in accordance with `reason’.

Thus socialist aims and programmes are factually impossible to achieve or execute; and they also happen, into the bargain as it were, to be logically impossible. This is why, contrary to what is often maintained, these matters are not merely ones of differing interests or value judgements. Indeed, the question of how men came to adopt certain values or norms, and what effect these had on the evolution of their civilisation, is itself above all a factual one, one that lies at the heart of the present book, and whose answer is sketched in its first three chapters. The demands of socialism are not moral conclusions derived from the traditions that formed the extended order that made civilisation possible.

Rather, they endeavour to overthrow these traditions by a rationally designed moral system whose appeal depends on the instinctual appeal of its promised consequences. They assume that, since people had been able to generate some system of rules coordinating their efforts, they must also be able to design an even better and more gratifying system. But if humankind owes its very existence to one particular rule-guided form of conduct of proven effectiveness, it simply does not have the option of choosing another merely for the sake of the apparent pleasantness of its immediately visible effects. The dispute between the market order and socialism is no less than a matter of survival. To follow socialist morality would destroy much of present humankind and impoverish much of the rest. 7

THE FATAL CONCEIT WAS SOCIALISM A MISTAKE? All of this raises an important point about which I wish to be explicit from the outset. Although I attack the presumption of reason on the part of socialists, my argument is in no way directed against reason properly used. By `reason properly used’ I mean reason that recognises its own li mitations and, itself taught by reason, faces the implications of the astonishing fact, revealed by economics and biology, that order generated without design can far outstrip plans men consciously contrive. How, after all, could I be attacking reason in a book arguing that socialism is factually and even logically untenable?

Nor do I dispute that reason may, although with caution and in humility, and in a piecemeal way, be directed to the examination, criticism and rejection of traditional institutions and moral principles. This book, like some of my earlier studies, is directed against the traditional norms of reason that guide socialism: norms that I believe embody a naive and uncritical theory of rationality, an obsolete and unscientific methodology that I have elsewhere called ‘constructivist rationalism’ (1973). Thus I wish neither to deny reason the power to improve norms and institutions nor even to insist that it is incapable of recasting the whole of our moral system in the direction now commonly conceived as `social justice’.

We can do so, however, only by probing every part of a system of morals. If such a morality pretends to be able to do something that it cannot possibly do, e. g. , to fulfill a knowledge-generating and organisational function that is impossible under its own rules and norms, then this impossibility itself provides a decisive rational criticism of that moral system. It is important to confront these consequences, for the notion that, in the last resort, the whole debate is a matter of value judgements and not of facts has prevented professional students of the market order from stressing forcibly enough that socialism cannot possibly do what it promises.

Nor should my argument suggest that I do not share some values widely held by socialists; but I do not believe, as I shall argue later, that the widely held conception of `social justice’ either describes a possible state of affairs or is even meaningful. Neither do I believe, as some proponents of hedonistic ethics recommend, that we can make moral decisions simply by considering the greatest foreseeable gratification. The starting point for my endeavour might well be David Hume’s insight that `the rules of morality … are not conclusions of our reason’ ( Treatise, 1739/1886:11:235). This insight will play a central role in this volume since it frames the basic question it tries to answer – which is how does our morality emerge, and what implications may its mode of coming into being have for our economic and political life?

The contention that we are constrained to preserve capitalism because of its superior capacity to utilise dispersed knowledge raises the 8 question of how we came to acquire such an irreplaceable economic order – especially in view of my claim that powerful instinctual and rationalistic impulses rebel against the morals and institutions that capitalism requires. The answer to this question, sketched in the first three chapters, is built upon the old insight, well known to economics, that our values and institutions are determined not simply by preceding causes but as part of a process of unconscious self-organisation of a structure or pattern. This is true not only of economics, but in a wide area, and is well known today in the biological sciences.

This insight was only the first of a growing family of theories that account for the formation of complex structures in terms of processes transcending our capacity to observe all the several circumstances operating in the determination of their particular manifestations. When I began my work I felt that I was nearly alone in working on the evolutionary formation of such highly complex self-maintaining orders. Meanwhile, researches on this kind of problem – under various names, such as autopoiesis, cybernetics, homeostasis, spontaneous order, self-organisation, synergetics, systems theory, and so on – have become so numerous that I have been able to study closely no more than a few of them.

This book thus becomes a tributary of a growing stream apparently leading to the gradual development of an evolutionary (but certainly not simply Neo-Darwinian) ethics parallel and supplementary to, yet quite distinct from, the already well-advanced development of evolutionary epistemology. Though the book raises in this way some difficult scientific and philosophical questions, its chief task remains to demonstrate that one of the most influential political movements of our time, socialism, is based on demonstrably false premises, and despite being inspired by good intentions and led by some of the most intelligent representatives of our time, endangers the standard of living and the life itself of a large proportion of our existing population.

This is argued in the fourth through sixth chapters, wherein I examine and refute the socialist challenge to the account of the development and maintenance of our civilisation that I offer in the first three chapters. In the seventh chapter, I turn to our language, to show how it has been debased under socialist influence and how careful we must be to keep ourselves from being seduced by it into socialist ways of thinking. In the eighth chapter, I consider an objection that might be raised not only by socialists, but by others as well: namely, that the population explosion undercuts my argument. Finally, in the ninth chapter, I present briefly a few remarks about the role of religion in the development of our moral traditions. 9 THE FATAL CONCEIT ONE

Since evolutionary theory plays so essential a part in this volume, I should note that one of the promising developments of recent years, leading to a better understanding of the growth and function of knowledge (Popper, 1934/1959), and of complex and spontaneous orders (Hayek, 1964, 1973, 1976, 1979) of various kinds, has been the development of an evolutionary epistemology (Campbell, 1977, 1987; Radnitzky & Bartley, 1987), a theory of knowledge that understands reason and its products as evolutionary developments. In this volume I turn to a set of related problems that, although of great importance, remain largely neglected. That is, I suggest that we need not only an evolutionary epistemology but also an evolutionary account of moral traditions, and one of a character rather different than hitherto available. Of course the traditional rules of human intercourse, after language, law, markets and money, were the fields in which evolutionary thinking originated. Ethics is the last fortress in which human pride must now bow in recognition of its origins.

Such an evolutionary theory of morality is indeed emerging, and its essential insight is that our morals are neither instinctual nor a creation of reason, but constitute a separate tradition ‘ between instinct and reason’, as the title of the first chapter indicates – a tradition of staggering importance in enabling us to adapt to problems and circumstances far exceeding our rational capacities. Our moral traditions, like many other aspects of our culture, developed concurrently with our reason, not as its product. Surprising and paradoxical as it may seem to some to say this, these moral traditions outstrip the capacities of reason. BETWEEN INSTINCT AND REASON Consuetudo est quasi altera natura.

Cicero Les lois de la conscience que nous disons naitre de la nature, naissant de la coustume. M. E. de Montaigne Zwei Seelen wohnen, ach, in meiner Brust, Die eine will sich von der anderen trennen. J. W. von Goethe Biological and Cultural Evolution To early thinkers the existence of an order of human activities transcending the vision of an ordering mind seemed impossible. Even Aristotle, who comes fairly late, still believed that order among men could extend only so far as the voice of a herald could reach ( Ethics, IX, x), and that a state numbering a hundred thousand people was thus i mpossible. Yet what Aristotle thought impossible had already happened by the time he wrote these words.

Despite his achievements as a scientist, Aristotle spoke from his instincts, and not from observation or reflection, when he confined human order to the reach of the herald’s cry. Such beliefs are understandable, for man’s instincts, which were fully developed long before Aristotle’s time, were not made for the kinds of surroundings, and for the numbers, in which he now lives. They were adapted to life in the small roving bands or troops in which the human race and its immediate ancestors evolved during the few million years while the biological constitution of homo sapiens was being formed. These genetically inherited instincts served to steer the cooperation of the members of the troop, a cooperation that was, necessarily, a narrowly circumscribed interaction of fellows known to and trusted by one another.

These primitive people were guided by concrete, commonly perceived aims, and by a similar perception of the dangers and opportunities – chiefly sources of food and shelter – of their 11 10 THE FATAL CONCEIT BETWEEN INSTINCT AND REASON environment. They not only could hear their herald; they usually knew him personally. Although longer experience may have lent some older members of these bands some authority, it was mainly shared aims and perceptions that coordinated the activities of their members. These modes of coordination depended decisively on instincts of solidarity and altruism – instincts applying to the members of one’s own group but not to others. The members of these small groups could thus exist only as such: an isolated man would soon have been a dead man.

The primitive individualism described by Thomas Hobbes is hence a myth. The savage is not solitary, and his instinct is collectivist. There was never a ` war of all against all’. Indeed, if our present order did not already exist we too might hardly believe any such thing could ever be possible, and dismiss any report about it as a tale of the miraculous, about what could never come into being. What are chiefly responsible for having generated this extraordinary order, and the existence of mankind in its present size and structure, are the rules of human conduct that gradually evolved (especially those dealing with several property, honesty, contract, exchange, trade, competition, gain, and privacy).

These rules are handed on by tradition, teaching and imitation, rather than by instinct, and largely consist of prohibitions (‘shalt not’s’) that designate adjustable domains for individual decisions. Mankind achieved civilisation by developing and learning to follow rules (first in territorial tribes and then over broader reaches) that often forbade him to do what his instincts demanded, and no longer depended on a common perception of events. These rules, in effect constituting a new and different morality, and to which I would indeed prefer to confine the term ` morality’, suppress or restrain the `natural morality’, i. e. , those i nstincts that welded together the small group and secured cooperation within it at the cost of hindering or blocking its expansion.

I prefer to confine the term `morality’ to those non-instinctive rules that enabled mankind to expand into an extended order since the concept of morals makes sense only by contrast to impulsive and unreflective conduct on one hand, and to rational concern with specific results on the other. Innate reflexes have no moral quality, and ‘sociobiologists’ who apply terms like altruism to them (and who should, to be consistent, regard copulation as the most altruistic) are plainly wrong. Only if we mean to say that we ought to follow `altruistic’ emotions does altruism become a moral concept. Admittedly, this is hardly the only way to use these terms.

Bernard Mandeville scandalized his contemporaries by arguing that `the grand principle that makes us social creatures, the solid basis, the life and support 12 of all trade and employment without exception’ is evil (1715/1924), by which he meant, precisely, that the rules of the extended order conflicted with innate instincts that had bound the small group together. Once we view morals not as innate instincts but as learnt traditions, their relation to what we ordinarily call feelings, emotions or sentiments raises various interesting questions. For instance, although learnt, morals do not necessarily always operate as explicit rules, but may manifest themselves, as do true instincts, as vague disinclinations to, or distastes for, certain kinds of action.

Often they tell us how to choose among, or to avoid, inborn instinctual drives. It may be asked how restraints on instinctual demands serve to coordinate the activities of larger numbers. As an example, continued obedience to the command to treat all men as neighbours would have prevented the growth of an extended order. For those now living within the extended order gain from not treating one another as neighbours, and by applying, in their interactions, rules of the extended order – such as those of several property and contract – instead of the rules of solidarity and altruism. An order in which everyone treated his neighbour as himself would be one where comparatively few could be fruitful and multiply.

If we were, say, to respond to all charitable appeals that bombard us through the media, this would exact a heavy cost in distracting us from what we are most competent to do, and likely only make us the tools of particular interest groups or of peculiar views of the relative importance of particular needs. It would not provide a proper cure for misfortunes about which we are understandably concerned. Similarly, instinctual aggressiveness towards outsiders must be curbed if identical abstract rules are to apply to the relations of all men, and thus to reach across boundaries – even the boundaries of states. Thus, forming superindividual patterns or systems of cooperation required individuals to change their `natural’ or `instinctual’ responses to others, something strongly resisted.

That such conflicts with inborn instincts, `private vices’, as Bernard Mandeville described them, might turn out to be `public benefits’, and that men had to restrain some ` good’ instincts in order to develop the extended order, are conclusions that became the source of dissension later too. For example, Rousseau took the side of the `natural’ although his contemporary Hume clearly saw that `so noble an affection [as generosity] instead of fitting men for large societies, is almost as contrary to them, as the most narrow selfishness’ (1739/1886:11, 270). Constraints on the practices of the small group, it must be emphasised and repeated, are hated. For, as we shall see, the individual 13 THE FATAL CONCEIT BETWEEN INSTINCT AND REASON following them, even though he depend on them for life, does not and usually cannot understand how they function or how they benefit him.

He knows so many objects that seem desirable but for which he is not permitted to grasp, and he cannot see how other beneficial features of his environment depend on the discipline to which he is forced to submit – a discipline forbidding him to reach out for these same appealing objects. Disliking these constraints so much, we hardly can be said to have selected them; rather, these constraints selected us: they enabled us to survive. It is no accident that many abstract rules, such as those treating individual responsibility and several property, are associated with economics. Economics has from its origins been concerned with how an extended order of human interaction comes into existence through a process of variation, winnowing and sifting far surpassing our vision or our capacity to design.

Adam Smith was the first to perceive that we have stumbled upon methods of ordering human economic cooperation that exceed the limits of our knowledge and perception. His `invisible hand’ had perhaps better have been described as an invisible or unsurveyable pattern. We are led – for example by the pricing system in market exchange – to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant; and we in turn constantly live on the services of other people of whom we know nothing.

All this is possible because we stand in a great framework of institutions and traditions – economic, legal, and moral into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood in the sense in which we understand how the things that we manufacture function. Modern economics explains how such an extended order can come into being, and how it itself constitutes an information-gathering process, able to call up, and to put to use, widely dispersed information that no central planning agency, let alone any individual, could know as a whole, possess or control. Man’s knowledge, as Smith knew, is dispersed. As he wrote, `What is the species of domestic industry his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, in his local situation, judges much better than any statesman or lawgiver can do for him’ (1776/1976:11, 487).

Or as an acute economic thinker of the nineteenth century put it, economic enterprise requires `minute knowledge of a 14 thousand particulars which will be learnt by nobody but him who has an interest in knowing them’ (Bailey, 1840:3). Information-gathering institutions such as the market enable us to use such dispersed and unsurveyable knowledge to form super-individual patterns. After institutions and traditions based on such patterns evolved, it was no longer necessary for people to strive for agreement on a unitary purpose (as in the small band), for widely dispersed knowledge and skills could now readily be brought into play for diverse ends.

This development is readily apparent in biology as well as in economics. Even within biology in the strict sense `evolutionary change in general tends towards a maximum economy in the use of resources’ and `evolution thus “blindly” follows the route of maximum resources use’ ( Howard, 1982:83). Further, a modern biologist has rightly observed that `ethics is the study of the way to allocate resources’ ( Hardin, 1980:3) – all of which points to the close interconnections among evolution, biology, and ethics. The concept of order is difficult – like its near equivalents `system’, `structure’ and `pattern’. We need to distinguish two different but related conceptions of order.

As a verb or noun, `order’ may be used to describe either the results of a mental activity of arranging or classifying objects or events in various aspects according to our sense perception, as the scientific re-arrangement of the sensory world tells us to do (Hayek, 1 952), or as the particular physical arrangements that objects or events either are supposed to possess or which are attributed to them at a certain time. Regularity, derived from the Latin regula for rule, and order are of course simply the temporal and the spatial aspects of the same sort of relation between elements. Bearing this distinction in mind, we may say that humans acquired the ability to bring about factually ordered arrangements serving their needs because they learned to order the sensory stimuli from their surroundings according to several different principles, rearrangements superimposed over the order or classification effected by their senses and instincts.

Ordering in the sense of classifying objects and events is a way of actively rearranging them to produce desired results. We learn to classify objects chiefly through language, with which we not merely label known kinds of objects but specify what we are to regard as objects or events of the same or different kinds. We also learn from custom, morality and law about effects expected from different kinds of action. For example, the values or prices formed by interaction in markets prove to be further superimposed means of classifying kinds of actions according to the significance they have for an order of which the individual is merely one element in a whole which he never made. 15 THE FATAL CONCEIT BETWEEN INSTINCT AND REASON

The extended order did not of course arise all at once; the process lasted longer and produced a greater variety of forms than its eventual development into a world-wide civilisation might suggest (taking perhaps hundreds of thousands of years rather than five or six thousand); and the market order is comparatively late. The various structures, traditions, institutions and other components of this order arose gradually as variations of habitual modes of conduct were selected. Such new rules would spread not because men understood that they were more effective, or could calculate that they would lead to expansion, but simply because they enabled those groups practising them to procreate more successfully and to include outsiders. This evolution came about, then, through the spreading of new practices by a process of transmission of acquired habits analogous to, but also in important respects different from, biological evolution.

I shall consider some of these analogies and differences below, but we might mention here that biological evolution would have been far too slow to alter or replace man’s innate responses in the course of the ten or twenty thousand years during which civilisation has developed – not to speak of being too slow to have influenced the far greater numbers whose ancestors joined the process only a few hundred years ago. Yet so far as we know, all currently civilised groups appear to possess a similar capacity for acquiring civilisation by learning certain traditions. Thus it hardly seems possible that civilisation and culture are genetically determined and transmitted. They have to be learnt by all alike through tradition.

The earliest clear statement of such matters known to me was made by A. M. Carr-Saunders who wrote that `man and groups are naturally selected on account of the customs they practice just as they are selected on account of their mental and physical characters. Those groups practising the most advantageous customs will have an advantage in the constant struggle between adjacent groups over those that practise less advantageous customs’ (1922:223, 302). Carr-Saunders, however, stressed the capacity to restrict rather than to increase population. For more recent studies see Alland (1967); Farb (1968:13); Simpson, who described culture, as opposed to biology, as `the more powerful means of adaptation’ (in B.

Campbell, 1 972); Popper, who argued that `cultural evolution continues genetic evolution by other means’ (Popper and Eccles, 1977:48); and Durham (in Chagnon and Irons, 1979:19), who emphasises the effect of particular customs and attributes in enhancing human reproduction. This gradual replacement of innate responses by learnt rules 16 increasingly distinguished man from other animals, although the propensity to instinctive mass action remains one of several beastly haracteristics that man has retained (Trotter, 1916). Even man’s c animal ancestors had already acquired certain `cultural’ traditions before they became, anatomically, modern man. Such cultural traditions have also helped to shape some animal societies, as among birds and apes, and probably also among many other mammals (Bonner, 1980).

Yet the decisive change from animal to man was due to such culturally-determined restraints on innate responses. Whilst learnt rules, which the individual came to obey habitually and almost as unconsciously as inherited instincts, increasingly replaced the latter, we cannot precisely distinguish between these two determinants of conduct because they interact in complicated ways. Practices learnt as infants have become as much part of our personalities as what governed us already when we began to learn. Even some structural changes in the human body have occurred because they helped man to take fuller advantage of opportunities provided by cultural developments.

Neither is it important for our present purposes how much of the abstract structure that we call mind is transmitted genetically and embodied in the physical structure of our central nervous system, or how far it serves only as a receptacle enabling us to absorb cultural tradition. The results of genetic and cultural transmission may both be called traditions. What is important is that the two often conflict in the ways mentioned. Not even the near universality of some cultural attributes proves that they are genetically determined. There may exist just one way to satisfy certain requirements for forming an extended order – just as the development of wings is apparently the only way in which organisms can become able to fly (the wings of insects, birds and bats have quite different genetic origins).

There may also be fundamentally only one way to develop a phonetic language, so that the existence of certain common attributes possessed by all languages also does not by itself show that they must be due to innate qualities. Two Moralities in Cooperation and Conflict Although cultural evolution, and the civilisation that it created, brought differentiation, individualisation, increasing wealth, and great expansion to mankind, its gradual advent has been far from smooth. We have not shed our heritage from the face-to-face troop, nor have these instincts either `adjusted’ fully to our relatively new extended order or been rendered harmless by it.

Yet the lasting benefits of some instincts should not be overlooked, 17 THE FATAL CONCEIT BETWEEN INSTINCT AND REASON including the particular endowment that enabled some other instinctual modes to be at least partly displaced. For example, by the time culture began to displace some innate modes of behaviour, genetic evolution had probably also already endowed human individuals with a great variety of characteristics which were better adjusted to the many different environmental niches into which men had penetrated than those of any non-domesticated animal – and this was probably so even before growing division of labour within groups provided new chances of survival for special types.

Among the most important of these innate characteristics which helped to displace other instincts was a great capacity for learning from one’s fellows, especially by imitation. The prolongation of infancy and adolescence, which contributed to this capacity, was probably the last decisive step determined by biological evolution. Moreover, the structures of the extended order are made up not only of individuals but also of many, often overlapping, sub-orders within which old instinctual responses, such as solidarity and altruism, continue to retain some importance by assisting voluntary collaboration, even though they are incapable, by themselves, of creating a basis for the more extended order.

Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i. e. , of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once. To apply the name `society’ to both, or even to either, is hardly of any use, and can be most misleading (see chapter seven).

Yet despite the advantages attending our limited ability to live simultaneously within two orders of rules, and to distinguish between them, it is anything but easy to do either. Indeed, our instincts often threaten to topple the whole edifice. The topic of this book thus resembles, in a way, that of Civilisation and Its Discontents (1930), except that my conclusions differ greatly from Freud’s. Indeed, the conflict between what men instinctively like and the learnt rules of conduct that enabled them to expand – a conflict fired by the discipline of `repressive or inhibitory moral traditions’, as D. T. Campbell calls it – is perhaps the major theme of the history of civilisation. It seems that Columbus recognised at once that the life of the `savages’ whom he encountered was more gratifying to innate human instincts.

And as I shall argue 18 later, I believe that an atavistic longing after the life of the noble savage is the main source of the collectivist tradition. Natural Man Unsuited to the Extended Order One can hardly expect people either to like an extended order that runs counter to some of their strongest instincts, or readily to understand that it brings them the material comforts they also want. The order is even `unnatural’ in the common meaning of not conforming to man’s biological endowment. Much of the good that man does in the extended order is thus not due to his being naturally good; yet it is foolish to deprecate civilisation as artificial for this reason.

It is artificial only in the sense in which most of our values, our language, our art and our very reason are artificial: they are not genetically embedded in our biological structures. In another sense, however, the extended order is perfectly natural: in the sense that it has itself, like similar biological phenomena, evolved naturally in the course of natural selection (see Appendix A). Nonetheless it is true that the greater part of our daily lives, and the pursuit of most occupations, give little satisfaction to deep-seated `altruistic’ desires to do visible good. Rather, accepted practices often require us to leave undone what our instincts impel us to do.

It is not so much, as is often suggested, emotion and reason that conflict, but innate instincts and learnt rules. Yet, as we shall see, following these learnt rules generally does have the effect of providing a greater benefit to the community at large than most direct `altruistic’ action that a particular individual might take. One revealing mark of how poorly the ordering principle of the market is understood is the common notion that `cooperation is better than competition’. Cooperation, like solidarity, presupposes a large measure of agreement on ends as well as on methods employed in their pursuit. It makes sense in a small group whose members share particular habits, knowledge and beliefs about possibilities.

It makes hardly any sense when the problem is to adapt to unknown circumstances; yet it is this adaptation to the unknown on which the coordination of efforts in the extended order rests. Competition is a procedure of discovery, a procedure involved in all evolution, that led man unwittingly to respond to novel situations; and through further competition, not through agreement, we gradually increase our efficiency. To operate beneficially, competition requires that those involved observe rules rather than resort to physical force. Rules alone can unite an extended order. (Common ends can do so only during a temporary 19 THE FATAL CONCEIT BETWEEN INSTINCT AND REASON emergency that creates a common danger for all.

The `moral equivalent of war’ offered to evoke solidarity is but a relapse into cruder principles of coordination. ) Neither all ends pursued, nor all means used, are known or need to be known to anybody, in order for them to be taken account of within a spontaneous order. Such an order forms of itself. That rules become increasingly better adjusted to generate order happened not because men better understood their function, but because those groups prospered who happened to change them in a way that rendered them increasingly adaptive. This evolution was not linear, but resulted from continued trial and error, constant `experimentation’ in arenas wherein different orders contended.

Of course there was no intention to experiment – yet the changes in rules thrown forth by historical accident, analogous to genetic mutations, had something of the same effect. The evolution of rules was far from unhindered, since the powers enforcing the rules generally resisted rather than assisted changes conflicting with traditional views about what was right or just. In turn, enforcement of newly learnt rules that had fought their way to acceptance sometimes blocked the next step of evolution, or restricted a further extension of the coordination of individual efforts. Coercive authority has rarely initiated such extensions of coordination, though it has from time to time spread a morality that had already gained acceptance within a ruling group.

All this confirms that the feelings that press against the restraints of civilisation are anachronistic, adapted to the size and conditions of groups in the distant past. Moreover, if civilisation has resulted from unwanted gradual changes in morality, then, reluctant as we may be to accept this, no universally valid system of ethics can ever be known to us. It would however be wrong to conclude, strictly from such evolutionary premises, that whatever rules have evolved are always or necessarily conducive to the survival and increase of the populations following them. We need to show, with the help of economic analysis (see chapter five), how rules that emerge spontaneously tend to promote human survival.

Recognising that rules generally tend to be selected, via competition, on the basis of their human survival-value certainly does not protect those rules from critical scrutiny. This is so, if for no other reason, because there has so often been coercive interference in the process of cultural evolution. Yet an understanding of cultural evolution will indeed tend to shift the benefit of the doubt to established rules, and to place the burden of proof on those wishing to reform them. While it cannot prove the 20 superiority of market institutions, a historical and evolutionary survey of the emergence of capitalism (such as that presented in chapters two and three) helps to explain how such productive, albeit unpopular and . nintended, traditions happened to emerge, and how deep is their significance for those immersed in the extended order. First, however, I want to remove from the path just outlined a major stumbling-block, in the form of a widely shared misconception of the nature of our capacity to adopt useful practices. Mind Is Not a Guide but a Product of Cultural Evolution, and Is Based More on Imitation than on Insight or Reason We have mentioned the capacity to learn by imitation as one of the prime benefits conferred during our long instinctual development. Indeed, perhaps the most important capacity with which the human individual is genetically endowed, beyond innate responses, is his ability to acquire skills by largely imitative learning.

In view of this, it is important to avoid, right from the start, a notion that stems from what I call the `fatal conceit’: the idea that the ability to acquire skills stems from reason. For it is the other way around: our reason is as much the result of an evolutionary selection process as is our morality. It stems however from a somewhat separate development, so that one should never suppose that our reason is in the higher critical position and that only those moral rules are valid that reason endorses. I shall examine these matters in subsequent chapters, but a foretaste of my conclusions may be in place here. The title of the present chapter, ` Between Instinct and Reason’, is meant literally.

I want to call attention to what does indeed lie between instinct and reason, and which on that account is often overlooked just because it is assumed that there is nothing between the two. That is, I am chiefly concerned with cultural and moral evolution, evolution of the extended order, which is, on the one hand (as we have just seen), beyond instinct and often opposed to it, and which is, on the other hand (as we shall see later), incapable of being created or designed by reason. My views, some of which have been sketched earlier (1952/79, 1973, 1976, 1979), can be summarised simply. Learning how to behave is more the source than the result of insight, reason, and understanding.

Man is not born wise, rational and good, but has to be taught to become so. It is not our intellect that created our morals; rather, human interactions governed by our morals make possible the growth of reason and those capabilities associated with it. Man became intelligent because there was tradition – that which lies between instinct and reason – for him to learn. This tradition, in turn, originated not from a 21 THE FATAL CONCEIT BETWEEN INSTINCT AND REASON capacity rationally to interpret observed facts but from habits of responding. It told man primarily what he ought or ought not to do under certain conditions rather than what he must expect to happen.

Thus I confess that I always have to smile when books on evolution, even ones written by great scientists, end, as they often do, with exhortations which, while conceding that everything has hitherto developed by a process of spontaneous order, call on human reason now that things have become so complex – to seize the reins and control future development. Such wishful thinking is encouraged by what I have elsewhere called the ‘constructivist rationalism’ (1973) that affects much scientific thinking, and which was made quite explicit in the title of a highly successful book by a well-known socialist anthropologist, Man Makes Himself (V. Gordon Childe, 1936), a title that was adopted by many socialists as a sort of watchword (Heilbroner, 1970:106).

These assumptions include the unscientific, even animistic, notion that at some stage the rational human mind or soul entered the evolving human body and became a new, active guide of further cultural development (rather than, as actually happened, that this body gradually acquired the capacity to absorb exceedingly complex principles that enabled it to move more successfully in its own environment). This notion that cultural evolution entirely postdates biological or genetic evolution passes over the most important part of the evolutionary process, that in which reason itself was formed. The idea that reason, itself created in the course of evolution, should now be in a position to determine its own future evolution (not to mention any number of other things which it is also incapable of doing) is inherently contradictory, and can readily be refuted (see chapters five and six). It is less accurate to suppose that thinking man creates and controls is cultural evolution than it is to say that culture, and evolution, created his reason. In any case, the idea that at some point conscious design stepped in and displaced evolution substitutes a virtually supernatural postulate for scientific explanation. So far as scientific explanation is concerned, it was not what we know as mind that developed civilisation, let alone directed its evolution, but rather mind and civilisation which developed or evolved concurrently. What we call mind is not something that the individual is born with, as he is born with his brain, or something that the brain produces, but something that his genetic equipment (e. g. a brain of a certain size and structure) helps him to acquire, as he grows up, from his family and adult fellows by absorbing the results of a tradition that is not genetically transmitted. Mind in this sense consists less of testable knowledge about the world, less in interpretations of man’s surroundings, more in the capacity to restrain instincts – a capacity which cannot be tested by individual reason since 22 its effects are on the group. Shaped by the environment in which individuals grow up, mind in turn conditions the preservation, development, richness, and variety of traditions on which individuals draw. By being transmitted largely through families, mind preserves a multiplicity of concurrent streams into which each newcomer to the community can delve.

It may well be asked whether an individual who did not have the opportunity to tap such a cultural tradition could be said even to have a mind. Just as instinct is older than custom and tradition, so then are the latter older than reason: custom and tradition stand between instinct and reason – logically, psychologically, temporally. They are due neither to what is sometimes called the unconscious, nor to intuition, nor to rational understanding. Though in a sense based on human experience in that they were shaped in the course of cultural evolution, they were not formed by drawing reasoned conclusions from certain facts or from an awareness that things behaved in a particular way. Though governed in our conduct by what we have learnt, we often do not know why we do what we do.

Learnt moral rules, customs, progressively displaced innate responses, not because men recognised by reason that they were better but because they made possible the growth of an extended order exceeding anyone’s vision, in which more effective collaboration enabled its members, however blindly, to maintain more people and to displace other groups. The Mechanism of Cultural Evolution Is Not Darwinian We are led by our argument to consider more closely the relationship between the theory of evolution and the development of culture. It is an issue that raises a number of interesting questions, to many of which economics provides an access that few other disciplines offer. There has however been great confusion about the matter, some of which should be mentioned if only to warn the reader that we do not intend to repeat it here.

Social Darwinism, in particular, proceeded from the assumption that any investigator into the evolution of human culture has to go to school with Darwin. This is mistaken. I have the greatest admiration for Charles Darwin as the first who succeeded in elaborating a consistent (if still incomplete) theory of evolution in any field. Yet his painstaking efforts to illustrate how the process of evolution operated in living organisms convinced the scientific community of what had long been a commonplace in the humanities – at least since Sir William Jones in 1787 recognised the striking resemblance of Latin and Greek to Sanskrit, and the descent of all ‘ Indo-Germanic’ languages from the latter. This example reminds us 23 THE FATAL CONCEIT BETWEEN INSTINCT AND REASON hat the Darwinian or biological theory of evolution was neither the first nor the only such theory, and actually is wholly distinct, and differs somewhat from, other evolutionary accounts. The idea of biological evolution stems from the study of processes of cultural development which had been recognised earlier: processes that lead to the formulation of institutions like language (as in the work of Jones), law, morals, markets, and money. Thus perhaps the chief error of contemporary `sociobiology’ is to suppose that language, morals, law, and such like, are transmitted by the `genetic’ processes that molecular biology is now illuminating, rather than being the products of selective evolution transmitted by imitative learning. This idea s as wrong – although at the other end of the spectrum – as the notion that man consciously invented or designed institutions like morals, law, language or money, and thus can improve them at will, a notion that is a remnant of the superstition that evolutionary theory in biology had to combat: namely, that wherever we find order there must have been a personal orderer. Here again we find that an accurate account lies between i nstinct and reason. Not only is the idea of evolution older in the humanities and social sciences than in the natural sciences, I would even be prepared to argue that Darwin got the basic ideas of evolution from economics.

As we learn from his notebooks, Darwin was reading Adam Smith just when, in 1838, he was formulating his own theory (see Appendix A below). ‘ In any case, Darwin’s work was preceded by decades, indeed by a century, of research concerning the rise of highly complex spontaneous orders through a process of evolution. Even words like `genetic’ and `genetics’, which have today become technical expressions of biology, were by no means invented by biologists. The first person I know to have spoken of genetic development was the German philosopher and cultural historian Herder. We find the idea again in Wieland, and again in Humboldt. Thus modern biology has borrowed the concept of evolution from studies of culture of older lineage. If this is in a sense See Howard E.

Gruber, Darwin on Man: A Psychological Study of Scientific Creativity, together with Darwin’s Early and Unpublished Notebooks, transcribed and annotated by Paul H. Barrett well known, it is also almost always forgotten. Of course the theory of cultural evolution (sometimes also described as psycho-social, super-organic, or exosomatic evolution) and the theory of biological evolution are, although analogous in some important ways, hardly identical. Indeed, they often start from quite different assumptions. Cultural evolution is, as Julian Huxley justly stated, `a process differing radically from biological evolution, with its own laws and mechanisms and modalities, and not capable of explanation on purely biological grounds’ (Huxley, 1947).

Just to mention several important differences: although biological theory now excludes the inheritance of acquired characteristics, all cultural development rests on such inheritance – characteristics in the form of rules guiding the mutual relations among individuals which are not innate but learnt. To refer to terms now used in biological discussion, cultural evolution simulates Lamarckism (Popper, 1972). Moreover, cultural evolution is brought about through transmission of habits and information not merely from the individual’s physical parents, but from an indefinite number of ` ancestors’. The processes furthering the transmission and spreading of cultural properties by learning also, as already noted, make cultural evolution incomparably faster than biological evolution.

Finally, cultural evolution operates largely through group selection; whether group selection also operates in biological evolution remains an open question – one on which my argument does not depend (Edelman, 1987; Ghiselin, 1969:57-9, 132-3; Hardy, 1965:153ff, 206; Mayr, 1970:114; Medawar, 1983:134-5; Ruse, 1982:190-5, 203-6, 235-6). It is wrong for Bonner (1980:10) to claim that culture is `as biological as any other function of an organism, for instance respiration or locomotion’. To label `biological’ the formation of the tradition of language, morals, law, money, even of the mind, abuses language and misunderstands theory. Our genetic inheritance may determine what we are capable of learning but certainly not what tradition is there to learn. What is there to learn is not even the product of the human brain. What is not transmitted by genes is not a biological phenomenon.

Despite such differences, all evolution, cultural as well as biological, is a process of continuous adaptation to unforeseeable events, to contingent circumstances which could not have been forecast. This is another reason why evolutionary theory can never put us in the position of rationally predicting and controlling future evolution. All it can do is to show how complex structures carry within themselves a means of correction that leads to further evolutionary developments which are, however, in accordance with their very nature, themselves unavoidably unpredictable. 25 ( New York: E. P. Dutton & Co. , Inc. , 1974), pp. 13, 57, 302, 305, 321, 360, 380.

In 1838 Darwin read Smith’s Essays on Philosophical Subjects, to which was prefixed Dugald Stewart’s An Account of the Life and Writings of the Author ( London: Cadell and Davies, 1795, pp. xxvi-xxvii). Of the latter, Darwin noted that he had read it and that it was `worth reading as giving abstract of Smith’s views’. In 1839 Darwin read Smith’s The Theory of Moral Sentiments; or, An Essay Towards an Analysis of the Principles by which Men Naturally judge concerning the Conduct and Character, first of their Neighbours, and afterwards of themselves, to which is added, A Dissertation on the Origin of Languages, 1 0th ed. , 2 vols. (London: Cadell ; Davies, 1804). There does not appear to be any evidence that Darwin read The Wealth of Nations. – Ed. 24 THE FATAL CONCEIT BETWEEN INSTINCT AND REASON

Having mentioned several differences between cultural and biological evolution, I should stress that in one important respect they are at one: neither biological nor cultural evolution knows anything like `laws of evolution’ or `inevitable laws of historical development’ in the sense of laws governing necessary stages or phases through which the products of evolution must pass, and enabling the prediction of future developments. Cultural evolution is determined neither genetically nor otherwise, and its results are diversity, not uniformity. Those philosophers like Marx and Auguste Comte who have contended that our studies can lead to laws of evolution enabling the prediction of inevitable future developments are mistaken.

In the past, evolutionary approaches to ethics have been discredited chiefly because evolution was wrongly connected with such alleged `laws of evolution’, whereas in fact the theory of evolution must emphatically repudiate such laws as i mpossible. As I have argued elsewhere (1952), complex phenomena are confined to what I call pattern prediction or predictions of the principle. One of the main sources of this particular misunderstanding results from confusing two wholly different processes which biologists distinguish as ontogenetic and phylogenetic. Ontogenesis has to do with the predetermined development of individuals, something indeed set by inherent mechanisms built into the genom of the germ cell. By contrast, phylogeny – that with which evolution is concerned – deals with the evolutionary history of the species or type. While biologists have generally een protected against confusing these two by their training, students of affairs unfamiliar with biology often fall victim to their ignorance and are led to ‘historicist’ beliefs that imply that phylogenesis operates in the same way as does ontogenesis. These historicist notions were effectively refuted by Sir Karl Popper (1945, 1957). Biological and cultural evolution share other features too. For example, they both rely on the same principle of selection: survival or reproductive advantage. Variation, adaptation and competition are essentially the same kind of process, however different their particular mechanisms, particularly those pertaining to propagation. Not only does all evolution rest on competition; continuing competition is necessary even to preserve existing achievements.

Although I wish the theory of evolution to be seen in its broad historical setting, the differences between biological and cultural evolution to be understood, and the contribution of the social sciences to our knowledge of evolution to be recognized, I do not wish to dispute that the working out of Darwin’s theory of biological evolution, in all of its ramifications, is one of the great intellectual achievements of modern times – one that gives us a completely new view of our world. Its universality as a means 26 of explanation is also expressed in the new work of some distinguished physical scientists, which shows that the idea of evolution is in no way li mited to organisms, but rather that it begins in a sense already with atoms, which have developed out of more elementary particles, and that we can thus explain molecules, the most primitive complex organisms, and even the complex modern world through various processes of evolution (see Appendix A).

No one who takes an evolutionary approach to the study of culture can, however, fail to be aware of the hostility often shown towards such approaches. Such hostility often stems from reactions to just those `social scientists’ who in the nineteenth century needed Darwin to recognise what they ought to have learnt from their own predecessors, and who did a lasting disservice to the advance of the theory of cultural evolution, which they indeed brought into discredit. Social Darwinism is wrong in many respects, but the intense dislike of it shown today is also partly due to its conflicting with the fatal conceit that man is able to shape the world around him according to his wishes. Although this too has nothing to do with volutionary theory properly understood, constructivist students of human affairs often use the inappropriateness (and such plain mistakes) of Social Darwinism as a pretext for rejecting any evolutionary approach at all. Bertrand Russell provides a good example in his claim that `if evolutionary ethics were sound, we ought to be entirely indifferent to what the course of evolution might be, since whatever it is is thereby proved to be best’ (1910/1966:24). This objection, which A. G. N. Flew (1967:48) regards as `decisive’, rests on a simple misunderstanding. I have no intention to commit what is often called the genetic or naturalistic fallacy.

I do not claim that the results of group selection of traditions are necessarily `good’ – any more than I claim that other things that have long survived in the course of evolution, such as cockroaches, have moral value. I do claim that, whether we like it or not, without the particular traditions I have mentioned, the extended order of civilisation could not continue to exist (whereas, were cockroaches to disappear, the resulting ecological `disaster’ would perhaps not wreak permanent havoc on mankind); and that if we discard these traditions, out of ill-considered notions (which may indeed genuinely commit the naturalistic fallacy) of what it is to be reasonable, we shall doom a large part of mankind to poverty and death.

Only when these facts are fully faced do we have any business – or are we likely to have any competence – to consider what the right and good thing to do may be. While facts alone can never determine what is right, ill-considered notions of what is reasonable, right and good may change the facts and 27 THE FATAL CONCEIT TWO the circumstances in which we live; they may destroy, perhaps forever, not only developed individuals and buildings and art and cities (which we have long known to be vulnerable to the destructive powers of moralities and ideologies of various sorts), but also traditions, institutions, and interrelations without which such creations could hardly have come into being or ever be recreated. THE ORIGINS OF LIBERTY, PROPERTY AND JUSTICE

Nobody is at liberty to attack several property and to say that he values civilisation. The history of the two cannot be disentangled. Henry Sumner Maine Property … is therefore inseparable from human economy in its social form. Carl Menger Men are qualified for civil liberties, in exact proportion to their disposition to put moral chains upon their appetites: in proportion as their love of justice is above their rapacity. Edmund Burke Freedom and the Extended Order If morals and tradition, rather than intelligence and calculating reason, lifted men above the savages, the distinctive foundations of modern civilisation were laid in antiquity in the region surrounding the Mediterranean Sea.

There, possibilities of long-distance trade gave, to those communities whose individuals were allowed to make free use of their individual knowledge, an advantage over those in which common local knowledge or that of a ruler determined the activities of all. So far as we know, the Mediterranean region was the first to see the acceptance of a person’s right to dispose over a recognised private domain, thus allowing individuals to develop a dense network of commercial relations among different communities. Such a network worked independently of the views and desires of local chiefs, for the movements of naval traders could hardly be centrally directed in those days.

If we may accept the account of a highly respected authority (and one certainly not biased in favour of the market order), `the Graeco-Roman world was essentially and precisely one of private ownership, whether of a few acres or of the enormous domains of Roman senators and emperors, a world of private trade and manufacture’ (Finley, 1973:29). Such an order serving a multiplicity of private purposes could in fact 28 29 THE FATAL CONCEIT THE ORIGINS OF LIBERTY, PROPERTY AND JUSTICE have been formed only on the basis of what I prefer to call several which is H. S. Maine’s more precise term for what is usually described as private property. If several property is the heart of the morals of any advanced civilisation, the ancient Greeks seem to have been the first to see that it is also inseparable from individual freedom.

The makers of the constitution of ancient Crete are reported to have ` taken it for granted that liberty is a state’s highest good and for this reason alone make property belong specifically to those who acquire it, whereas in ‘ a condition of slavery everything belongs to the rulers’ (Strabo, 10, 4, 16). An important aspect of this freedom – the freedom on the part of different individuals or sub-groups to pursue distinct aims, guided by their differing knowledge and skills – was made possible not only by the separate control of various means of production, but also by another practice, virtually inseparable from the first: the recognition of approved methods of transferring this control.

The individual’s ability to decide for himself how to use specific things, being guided by his own knowledge and expectations as well as by those of whatever group he might join, depends on general recognition of a respected private domain of which the individual is free to dispose, and an equally recognised way in which the right to particular things can be transferred from one person to another. The prerequisite for the existence of such property, freedom, and order, from the time of the Greeks to the present, is the same: law in the sense of abstract rules enabling any individual to ascertain at any time who is entitled to dispose over any particular thing. With respect to some objects, the notion of individual property must have appeared very early, and the first hand-crafted tools are perhaps an appropriate example.

The attachment of a unique and highly useful tool or weapon to its maker might, however, be so strong that transfer became so psychologically difficult that the instrument must accompany him even into the grave – as in the tholos or beehive tombs of the Mycenaean period. Here the fusion of inventor with `rightful owner’ appears, and with it numerous elaborations of the basic idea, sometimes accompanied also by legend, as in the later story of Arthur and his sword Excalibur – a story in which the transfer of the sword came about not by human law but by a `higher’ law of magic or `the powers’. The extension and refinement of the concept of property were, as such examples suggest, necessarily gradual processes that are hardly completed even today. Such a concept cannot yet have been of much ignificance in the roving bands of hunters and gatherers among whom the discoverer of a source of food or place of shelter was obliged to reveal his find to his fellows. The first individually crafted durable tools property, probably became attached to their makers because they were the only ones who had the skill to use them – and here again the story of Arthur and Excalibur is appropriate, for while Arthur did not make Excalibur, he was the only one able to use it. Separate ownership of perishable goods, on the other hand, may have appeared only later as the solidarity of the group weakened and individuals became responsible for more limited groups such as the family. Probably the need to keep a workable holding intact gradually led from group ownership to individual property in land.

There is however little use in speculating about the particular sequence of these developments, for they probably varied considerably among the peoples who progressed through nomadic herding and those who developed agriculture. The crucial point is that the prior development of several property is indispensable for the development of trading, and thereby for the formation of larger coherent and cooperating structures, and for the appearance of those signals we call prices. Whether individuals, or extended families, or voluntary groupings of individuals were recognised as owning particular objects is less important than that all were permitted to choose which individuals would determine what use was to be made of their property.

There will also have developed, especially with regard to land, such arrangements as `vertical’ division of property rights between superior and inferior owners, or ultimate owners and lessees, such as are used in modern estate developments, of which more use could perhaps be made today than some more primitive conceptions of property allow. Nor should tribes be thought of as the stock from which cultural evolution began; they are, rather, its earliest product. These `earliest’ coherent groups were of common descent and community of practice with other groups and individuals with whom they were not necessarily familiar (as will be discussed in the next chapter).

Hence we can hardly say when tribes first appeared as preservers of shared traditions, and cultural evolution began. Yet somehow, however slowly, however marked by setbacks, orderly cooperation was extended, and common concrete ends were replaced by general, end-independent abstract rules of conduct. The Classical Heritage of European Civilisation It appears also to have been the Greeks, and especially the Stoic philosophers, with their cosmopolitan outlook, who first formulated the moral tradition which the Romans later propagated throughout their Empire. That this tradition arouses great resistance we already know and will witness again repeatedly. In Greece it was of course chiefly the 31 30 THE FATAL CONCEIT

THE ORIGINS OF LIBERTY, PROPERTY AND JUSTICE Spartans, the people who resisted the commercial revolution most strongly, who did not recognise individual property but allowed and even encouraged theft. To our time they have remained the prototype of savages who rejected civilisation (for representative 18th-century views on them compare Dr. Samuel Johnson in Boswell’s Life or Friedrich Schiller’s essay Uber die Gesetzgebung des Lykurgos and Solon). Yet already in Plato and Aristotle, however, we find a nostalgic longing for return to Spartan practice, and this longing persists to the present. It is a craving for a micro-order determined by the overview of omniscient authority.

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 prowess 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: civilisation 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 not 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)). during recurrent `times of trouble’ when government control was temporarily weakened. But these rebellions or aberrances were regularly smothered by the might of a state preoccupied with the literal preservation of traditional order (J. Needham, 1954). This is also well illustrated in Egypt, where we have quite good information about the role that private property played in the initial rise of this great civilisation.

In his study of Egyptian institutions and private law, Jacques Pirenne describes the essentially individualistic character of the law at the end of the third dynasty, when property was `individual and inviolable, depending wholly on the proprietor’ (Pirenne, 1934:I1, 338-9), but records the beginning of its decay already during the fifth dynasty. This led to the state socialism of the eighteenth dynasty described in another French work of the same date (Dairaines, 1934), which prevailed for the next two thousand years and largely explains the stagnant character of Egyptian civilisation during that period. Similarly, of the revival of European civilisation during the later Middle Ages it could be said that the expansion of capitalism – and European civilisation – owes its origins and raison d’etre to political anarchy (Baechler, 1975:77).

It was not under the more powerful governments, but in the towns of the Italian Renaissance, of South Germany and of the Low Countries, and finally in lightly-governed England, i. e. , under the rule of the bourgeoisie rather than of warriors, that modern industrialism grew. Protection of several property, not the direction of its use by government, laid the foundations for the growth of the dense network of exchange of services that shaped the extended order. Nothing is more misleading, then, than the conventional formulae of historians who represent the achievement of a powerful state as the culmination of cultural evolution: it as often marked its end.

In this respect students of early history were overly impressed and greatly misled by monuments and documents left by the 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. ` Where There Is No Property There Is No justice’ If the Roman decline did not permanently terminate the processes of evolution even in Europe, similar beginnings in Asia (and later independently in Meso-America) were stopped by powerful governments which (similar to but exceeding in power mediaeval feudal systems in Europe) also effectively suppressed private initiative. In the most remarkable of these, imperial China, great advances towards civilisation and towards sophisticated industrial technology took place 32

Nor did wise observers of the emerging extended order much doubt that it was rooted in the security, guaranteed by governments, that limited coercion to the enforcement of abstract rules determining what was to belong to whom. The `possessive individualism’ of John Locke was, for 33 THE FATAL CONCEIT THE ORIGINS OF LIBERTY, PROPERTY AND JUSTICE example, not just a political theory but the product of an analysis of the conditions to which England and Holland owed their prosperity. It was based in the insight that the justice that political authority must enforce, if it wants to secure the peaceful cooperation among individuals on which prosperity rests, cannot exist without the recognition of private property: “Where there is no property there is no justice,” is a proposition as certain as any demonstration in Euclid: for the idea of property being a right to anything, and the idea to which the name of injustice is given being the invasion or violation of that right; it is evident that these ideas being thus established, and these names annexed to them, I can as certainly know this proposition to be true as that a triangle has three angles equal to two right ones’ (John Locke: 1690/1924:IV, iii, 18). Soon afterwards, Montesquieu made known his message that it had been commerce that spread civilisation and sweet manners among the barbarians of Northern Europe. For David Hume and other Scottish moralists and theorists of the eighteenth century, it was evident that the adoption of several property marks the beginning of civilisation; rules regulating property seemed so central to all morals that Hume devoted most of his Treatise on morals to them.

It was to restrictions on government power to interfere with property that he later, in his History of England (Vol. V), ascribed that country’s greatness; and in the Treatise itself (III, ii) he clearly explained that if mankind were to execute a law which, rather than establishing general rules governing ownership and exchange of property, instead `assigned the largest possession to the most extensive virtue, . . . so great is the uncertainty of merit, both from the natural obscurity, and from the self-conceit of every individual, that no determinate rule of conduct would ever follow from it, and the total dissolution of society must be the immediate consequence’.

Later, in the Enquiry, he remarked: `Fanatics may suppose, that domination is founded on grace, and that saints alone inherit the earth; but the civil magistrate very justly puts these sublime theorists on the same footing with the common robbers, and teaches them by severe discipline, that a rule, which, in speculation, may seem the most advantageous to society, may yet be found, in practice, totally pernicious and destructive’ (1777/1886:IV, 187). Hume noticed clearly the connection of these doctrines to freedom, and how the maximum freedom of all requires equal restraints on the freedom of each through what he called the three `fundamental laws of nature’: `the stability of possession, of its transference by consent, and of the performance of promises’ (1739/1886:11, 288, 293). Though his views evidently derived in part from those of theorists of the common law, such as Sir Matthew Hale (1609-76), Hume may have been the 34 irst clearly to perceive that general freedom becomes possible by the natural moral instincts being `checked and restrained by a subsequent judgement’ according to ‘justice, or a regard to the property of others, fidelity, or the observance of promises [which have] become obligatory, and acquire[d] an authority over mankind’ (1741, 1742/1886:111, 455). Hume did not make the error, later so common, of confusing two senses of freedom: that curious sense in which an isolated individual is supposed to be able to be free, and that in which many persons collaborating with one another can be free. Seen in the latter context of such collaboration, only abstract rules of property – i. e. , the rules of law – guarantee freedom.

When Adam Ferguson summed up such teaching by defining the savage as a man who did not yet know property (1767/73:136), and when Adam Smith remarked that `nobody ever saw one animal by its gestures or natural cries signify to another, this is mine, that is yours’ (1776/1976:26), they expressed what, in spite of recurrent revolts by rapacious or hungry bands, had for practically two millennia been the view of the educated. As Ferguson put it, `It must appear very evident, that property is a matter of progress’ (ibid. ). Such matters were, as we have noticed, also then investigated in language and the law; they were well understood in the classical liberalism of the nineteenth century; and it was probably through Edmund Burke, but perhaps even more through the influence of German linguists and lawyers like F. C. von Savigny, that these themes were then taken up again by H. S. Maine.

Savigny’s statement (in his protest against the codification of the civil law) deserves to be reproduced at length: `If in such contacts free agents are to exist side by side, mutually supporting and not impeding each other in their development, this can be achieved only by recognising an invisible boundary within which the existence and operation of each individual is assured a certain free space. The rules by which these boundaries and through it the free range of each is determined is the law’ (Savigny, 1840:1, 331-2). The Various Forms and Objects of Property and the Improvement Thereof The institutions of property, as they exist at present, are hardly perfect; indeed, we can hardly yet say in what such perfection might consist. Cultural and moral evolution do require further steps if the institution of several property is in fact to be as beneficial as it can be. For example, we need the general practice of competition to prevent abuse of property.

This in turn requires further restraint on the innate feelings of the micro-order, the small group discussed earlier (see chapter one above, and Schoeck, 1966/69), for these instinctual feelings are often 35 THE FATAL CONCEIT THE ORIGINS OF LIBERTY, PROPERTY AND JUSTICE threatened not only by several property but sometimes even more so by competition, and this leads people to long doubly for non-competitive `solidarity’. While property is initially a product of custom, and jurisdiction and legislation have merely developed it in the course of millennia, there is then no reason to suppose that the particular forms it has assumed in the contemporary world are final.

Traditional concepts of property rights have in recent times been recognised as a modifiable and very complex bundle whose most effective combinations have not yet been discovered in all areas. New investigations of these matters, originating largely in the stimulating but unfortunately uncompleted work of the late Sir Arnold Plant, have been taken up in a few brief but most influential essays by his former student Ronald Coase (1937 and 1960) which have stimulated the growth of an extensive `property rights school’ (Alchian, Becker, Cheung, Demsetz, Pejovich). The results of these investigations, which we cannot attempt to summarise here, have opened new possibilities for future improvements in the legal framework of the market order.

Just to illustrate how great our ignorance of the optimum forms of delimitation of various rights remains – despite our confidence in the i ndispensability of the general institution of several property – a few remarks about one particular form of property may be made. The slow selection by trial and error of a system of rules delimiting individual ranges of control over different resources has created a curious position. Those very intellectuals who are generally inclined to question those forms of material property which are indispensable for the efficient organisation of the material means of production have become the most enthusiastic supporters of certain immaterial property rights invented only relatively recently, having to do, for example, with literary productions and technological inventions (i. e. , copyrights and patents).

The difference between these and other kinds of property rights is this: while ownership of material goods guides the use of scarce means to their most important uses, in the case of immaterial goods such as literary productions and technological inventions the ability to produce them is also limited, yet once they have come into existence, they can be i ndefinitely multiplied and can be made scarce only by law in order to create an inducement to produce such ideas. Yet it is not obvious that such forced scarcity is the most effective way to stimulate the human creative process. I doubt whether there exists a single great work of literature which we would not possess had the author been unable to obtain an exclusive copyright for it; it seems to me that the case for copyright must rest almost entirely on the circumstance that such exceedingly useful works as encyclopaedias, dictionaries, textbooks and 36 other works of reference could not be produced if, once they existed, they could freely be reproduced.

Similarly, recurrent re-examinations of the problem have not demonstrated that the obtainability of patents of invention actually enhances the flow of new technical knowledge rather than leading to wasteful concentration of research on problems whose solution in the near future can be foreseen and where, in consequence of the law, anyone who hits upon a solution a moment before the next gains the right to its exclusive use for a prolonged period (Machlup, 1962). Organisations as Elements of Spontaneous Orders Having written of the pretence of reason and the dangers of `rational’ interference with spontaneous order, I need to add yet another word of caution. My central aim has made it necessary to stress the spontaneous evolution of rules of conduct that assist the formation of self-organising structures. This emphasis on the spontaneous nature of the extended or macro-order could mislead if it conveyed the impression that, in the macro-order, deliberate organisation is never important. The elements of the pontaneous macro-order are the several economic arrangements of individuals as well as those of deliberate organisations. Indeed, the evolution of individualist law consists in great measure in making possible the existence of voluntary associations without compulsory powers. But as the overall spontaneous order expands, so the sizes of the units of which it consists grow. Increasingly, its elements will not be economies of individuals, but of such organisations as firms and associations, as well as of administrative bodies. Among the rules of conduct that make it possible for extensive spontaneous orders to be formed, some will also facilitate deliberate organisations suited to operate within the larger systems.

However, many of these various types of more comprehensive deliberate organisation actually have a place only within an even more comprehensive spontaneous order, and would be inappropriate within an overall order that was itself deliberately organised. Another, related, matter could also mislead. Earlier we mentioned the growing differentiation of various kinds of property rights in a vertical or hierarchical dimension. If, elsewhere in this book, we occasionally speak about the rules of several property as if the contents of individual property were uniform and constant, this should be seen as a simplification that could mislead if understood without the qualifications already stated.

This is in fact a field in which the greatest advances in the governmental framework of the spontaneous order may be expected, but which we cannot consider further here. 37 THREE EVOLUTION OF THE MARKET: TRADE AND CIVILISATION THE EVOLUTION OF THE MARKET: TRADE AND CIVILISATION What is worth Anything But as Much Money as it Will Bring? Samuel Butler Ou il y a du commerce Il y a des moeurs douces. Montesquieu The Expansion of Order into the Unknown Having reviewed some of the circumstances in which the extended order arose, and how this order both engenders and requires several property, liberty and justice, we may now trace some further connections by looking more closely at some other matters already alluded to – in particular, the development of trade, and the specialisation that is linked to it.

These developments, which also contributed greatly to the growth of an extended order, were little understood at the time, or indeed for centuries afterwards, even by the greatest scientists and philosophers; certainly no one ever deliberately arranged them. The times, circumstances, and processes of which we write are cloaked in the mists of time, and details cannot be discerned with any confidence of accuracy. Some specialisation and exchange may already have developed in early small communities guided entirely by the consent of their members. Some nominal trade may have taken place as primitive men, following the migration of animals, encountered other men and groups of men. While archaeological evidence for very early trade is convincing it is not only rare but also tends to be misleading.

The essentials that trade served to procure were mostly consumed without leaving a trace – whereas rarities brought to tempt their owners to part with these necessities were often meant to be kept and therefore more durable. Ornaments, weapons, and tools provide our chief positive evidence, while we can only infer from the absence in the locality of essential natural resources used in their manufacture that these must have been acquired by trade. Nor is archaeology likely to find the salt 38 that people obtained over long distances; but the remuneration that the producers of salt received for selling it sometimes does remain. Yet it was not the desire for luxury but necessity that made trade an indispensable institution to which ancient communities increasingly owed their very existence.

However these things may be, trade certainly came very early, and trade over great distances, and in articles whose source is unlikely to have been known to those traders engaged in it, is far older than any other contact among remote groups that can now be traced. Modern archaeology confirms that trade is older than agriculture or any other sort of regular production (Leakey, 1981:212). In Europe there is evidence of trade over very great distances even in the Palaeolithic age, at least 30,000 years ago (Herskovits, 1948, 1960). Eight thousand years ago, Catal Huyuk in Anatolia and Jericho in Palestine had become centres of trade between the Black and the Red Seas, even before trade in pottery and metals had begun.

Both also provide early instances of those `dramatic increases of population’ often described as cultural revolutions. Later, `a network of shipping and land routes existed by the late seventh millennium B. C. for carrying obsidian from the island of Melos to the mainland’ of Asia Minor and Greece (see S. Green’s introduction to Childe, 1936/1981; and Renfrew, 1973:29, cf. also Renfrew, 1972:297-307). There is `evidence for extensive trade networks linking Baluchistan (in West Pakistan) with regions in western Asia even before 3200 B. C. ‘ (Childe, 1936/1981:19). We also know that the economy of predynastic Egypt was firmly based on trade (Pirenne, 1934).

The importance of regular trade in Homeric times is indicated by the story in the Odyssey (I, 180-184) in which Athena appears to Telemachos in the guise of the master of a ship carrying a cargo of iron to be exchanged for copper. The great expansion of trade which made possible the later rapid growth of classical civilisation appears from archaeological evidence also to have occurred at a time for which almost no historical documentation is available, that is, during the two hundred years from about 750 to 550 B. C. The expansion of trade also seems to have brought about, at roughly the same time, rapid increases of population in Greek and Phoenician centres of trade.

These centres so rivalled each other in establishing colonies that by the beginning of the classical era life at the great centres of culture had become wholly dependent on a regular market process. The existence of trade in these early times is incontestable, as is its role in spreading order. Yet the establishment of such a market process could hardly have been easy, and must have been accompanied by a substantial disruption of the early tribes. Even where some recognition 39 THE FATAL CONCEIT EVOLUTION OF THE MARKET: TRADE AND CIVILISATION The Density of Occupation of the World Made Possible by Trade of several property had emerged, further and previously unheard of practices would have been required before communities would be inclined to permit members to carry away for use by strangers (and for purposes only partly