Sumitra Shah wrote:
>classical economists did not make the economy or markets autonomous, 
>and separate from society. Heilbroner preferred the term  'economic 
>society' which describes the market phenomenon accurately without 
>attributing characteristics to it which are misleading as far as 
>outcomes are concerned. I find it puzzling that Hayek's economics, 
>rich in institutional analyses, would elevate the unplanned nature 
>of the market above all.
>
>Sumitra Shah


I am not sure what you mean by "autonomous," Sumitra, but surely you 
would agree that the classical economists attempted to conceive of an 
economy with minimal government. In other words, they surely tried to 
build an imaginary construction of what one might call a pure market 
economy. Smith referred to something like the system of natural 
liberty, did he not? When Hayek spoke of a spontaneous order in 
reference to a market economy, is this not what he had in mind?

As I see it, this effort to debunk Hayek or the Austrians for not 
taking account of institutions is dead wrong. One must keep in mind 
that Hayek was comparing an unplanned market society with a planned 
socialist society. In making such a comparison, he was not interested 
in whether there is order in the workplace or whether the employment 
agreement is part of a spontaneous order. He was interested in 
socialism. Is it possible, he asked, to plan a system as complex and 
so much in the interests of members of society as the "market society?"

Hayek did not have opinions like those seemingly expressed by 
economists like Fred Foldvary, perhaps following Murray Rothbard. 
Hayek did not believe that the "system of natural liberty" always 
leads to good results; while government intervention always leads to 
bad ones. Nevertheless both the classicals and Hayek recognized that 
free market conditions lead to a situation in which individuals take 
advantage of the fact that human beings can achieve higher 
productivity through a division of labor and specialization. When 
this occurs, the separate self-interested choices of individuals lead 
to an outcome that is not only in the interests of those who make the 
choices but in the interests of others as well. They generate 
consequences that were not the primary intention of the individuals 
making the choices.

I don't like the word "spontaneous," "unplanned," or "interests of 
society." But find me a better term, please, instead of trying to 
read something into the words that these great figures in the history 
of economic thought have chosen.

It is easy to get confused on this issue. But, ultimately, one who 
criticizes Hayek for terminology must confront the reason why he 
introduced terminology which, if transferred to some other context, 
seems strange.


Pat Gunning