The view of Mandeville as a pioneer of laissez-faire is difficult to reconcile with his repeated insistence that private vices were turned into public benefits by the 'dexterous management of the skilful politician'. Even if references to the skilful politician are regarded as shorthand for a legal and institutional framework, there remains the question of whether such a framework is a spontaneous order or the product of purposeful experiment as Mandeville thought? Mandeville warned about the harmful effects of meddling but (...) his complaint was about the actions of fashionable do-gooders rather than government. He understood that the voluntariness of a transaction could be regarded as a defence against complaints of unfairness but he was quick to point out the limitations of voluntariness especially in the market for labour. Mandeville's objective was to teach people what they are not what they should be. He pointed to the strengths of the emerging market system but was not afraid to expose its faults. (shrink)

Hayek's social theory presupposes that rules are unintended consequences of individual actions. This essay explicates one kind of Hayekian explanation of that claim. After noting the kinds of rules that Hayek believes are subject to such a theory, the essay distinguishes three functional explanations advocated by Hayek. He combines one of these functional explanations with an invisible hand explanation. A schema suitable for constructing invisible hand-functional evolutionary theories is employed to outline this combination.

In spite of the important discoveries made by Adam Smith and later by the economists of the Austrian School, Friedrich Hayek remained intellectually challenged by the miracle of the price mechanism. As it turned out there was still some pioneering to do in describing the price mechanism. This became clear when Hayek identified the dispersal of information relevant to exchange transactions as the central issue of economic study. In the context of his distinction between competition as a state of things (...) and as a process the price mechanism manifests itself as a powerful integrator of information which is at first sight hopelessly dispersed in modern society. In 1945 he pointed out another intellectual challenge which the miracle of the price mechanism poses: How could such a marvelous functionality come into existence? “I am convinced that if it [the price mechanism] were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind”. It is precisely because the free determination of prices is obviously not an invention, and because actors on the market in general do not realize that their decisions are at once also signals for the information-processing system that the market is, that in general this market order is not highly estimated. The market order is nevertheless the best illustration of the dual principle that the most beautiful forms of complex functionality are not deliberately created and are not deliberately maintained. (shrink)

This paper traces the historical origins of Friedrich A. Hayek's theory of cultural evolution, and argues that Hayek's evolutionary thought was significantly inspired by Alexander M. Carr-Saunders and Oxford zoology. While traditional Hayek scholarship emphasizes the influence of Carl Menger and the British eighteenth-century moral philosophers, I claim that these sources underdetermine what was most characteristic of Hayek's theory, viz. the idea that cultural evolution is a matter of group selection, and the idea that natural selection operates on acquired as (...) well as on inherited properties. (shrink)

Discoverers of “market failures” as well as advocates of the general efficiency of a “true, unhampered market” sometimes seem to disregard the fundamental fact that there is no such thing as a “market as such.” What we call a market is always a system of social interaction characterized by a specific institutional framework, that is, by a set of rules defining certain restrictions on the behavior of the market participants, whether these rules are informal, enforced by private sanctions, or formal, (...) enforced by a particular agency, the “protective state,” in J. M. Buchanan's terminology. (shrink)