Quotes from Individualism and Economic Order

By F.A. Hayek (1949)

• If goods, men, and money can move freely over the interstate frontiers, it becomes clearly impossible to affect the prices of the different products through action by the individual state.#
  EconomicsPolitics
• There is no sense in talking of a use of resources “as if” a perfect market existed, if this means that the resources would have to be different from what they are, or in discussing what somebody with perfect knowledge would do if our task must be to make the best use of the knowledge the existing people have.#
  Economics
• Much more serious than the fact that prices may not correspond to marginal cost is the fact that, with an intrenched monopoly, costs are likely to be much higher than is necessary. A monopoly based on superior efficiency, on the other hand, does comparatively little harm so long as it is assured that it will disappear as soon as anyone else becomes more efficient in providing satisfaction to the consumers.#
  EconomicsMonopoly
• In a democratic society, at any rate, once the principle is admitted that the government undertakes responsibility for the status and position of particular groups, it is inevitable that this control will be extended to satisfy the aspirations and prejudices of the great masses.#
  Politics
• The increasing preoccupation of the modern.world with problems of an engineering character tends to blind people to the totally different character of the economic problem and is probably the main cause why the nature of the latter was less and less understood. #
  EconomicsScience
• To admit the possibility of changes in the legal framework is not to admit the possibility of a further type of planning in the sense in which we have used the word so far. There is an essential distinction here which must not be overlooked: the distinction between a permanent legal framework so devised as to provide all the necessary incentives to private initiative to bring about the adaptations required by any change and a system where such adaptations are bro’ught about by central direction.#
  EconomicsInstitutions
• To assume that it is possible to create conditions of full competition without making those who are responsible for the decisions pay for their mistakes seems to be pure illusion.#
  Institutions
• In no sense can costs during any period be said to depend solely on prices during that period. They depend as much.on whether these prices have been correctly foreseen as on the views that are held about future prices.#
  Economics
• Economic frontiers create communities of interest on a regional basis and of a most intimate character: they bring it about that all conflicts of interests tend to become conflicts between the same groups of people, instead of conflicts between groups of constantly varying composition, and that there will in consequence be perpetual conflicts between the inhabitants of a state as such instead of between the various individuals finding themselves arrayed, sometimes with one group of people against another, and at other times on another issue with the second group against the first.#
  Politics
• It is only because, in consequence of [economic frontiers], the standard of life of all the people in a country will tend to move in the same direction that concepts such as the standard of living or the price level of a country cease to be mere statistical abstractions and become very concrete realities.#
  PoliticsEconomics
• That there will always be communities of interest which will be similarly affected by a particular event or a particular measure is unavoidable. But it is clearly in the interest of unity of the larger whole that these groupings should not be permanent and, more particularly, that the various communities of interest should overlap territorially and never become lastingly identified with the inhabitants of a particular region.#
  PoliticsNationalism
• It is only in a market where adaptation is slow compared with the rate of change that the process of competition is in continuous operation. #
  Economics
• in order that a particular industry should benefit from a tariff, it is necessary that the tariff on its products should be higher than the tariffs on the commodities which the producers in that industry consume.#
  EconomicsTrade
• Government by agreement is only possible provided that we do not require the government to act in fields other than those in which we can obtain true agreement.#
  Politics
• In a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan.#
  EconomicsEpistemology
• Economic problems arise always and only in consequence of change. So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a new plan.#
  Economics
• Which of these systems [central or decentral planning] is likely to be more efficient . . . depends on whether we are more likely to succeed in putting at the disposal of a single central authority all the knowledge which ought to be used but which is initially dispersed among many different individuals, or in conveying to the individuals such additional knowledge as they need in order to enable them to fit their plans with those of others.#
  Economics
• Even when quoted prices have become quite rigid, however, the forces which would operate through changes in price still operate to a considerable extent through changes in the other terms of the contract.#
  Economics
• To make a monopolist charge the price that would rule under competition, or a price that is equal to the necessary cost, is impossible, because the competitive or necessary cost cannot be known unless there is competition.#
  Economics
• Coercion can probably only be kept to a minimum in a society where conventions and tradition have made the behaviour of man to a large extent predictable.#
  Politics
• Only because men are in fact unequal can we treat them equally. If all men were completely equal in their gifts and inclinations, we should have to treat them differently in order to achieve any sort of social organisation. Fortunately, they are not equal; and it is only owing to this that the differentiation of functions need not be determined by the arbitrary decision of some organizing will but that, after creating formal equality of the rules applying in the same manner to all, we can leave each individual to find his own level.#
  Politics
• The concept of equilibrium itself and the methods which we employ in pure analysis have a clear meaning only when confined to the analysis of the action of a single person and we are really passing into a different sphere and silently introducing a new element of altogether different character when we apply it to the explanation of the interactions of a number of different individuals.#
  EpistemologyEconomicsEquilibrium
• Though the declining influence of religion is undoubtedly one major cause of our present lack of intellectual and moral orientation, its revival would not much lessen the need for a generally accepted principle of social order. We still should require a political philosophy which goes beyond the fundamental but general precepts which religion or morals provide.#
  ReligionPolitics
• Smith’s chief concern was not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst.#
  Politics
• All the possible differences in men’s moral attitudes amount to little, so far as their significance for social organization is concerned, compared with the fact that all man’s mind can effectively comprehend are the facts of the narrow circle of which he is the center.#
  EthicsEconomics
• To the accepted Christian tradition that man must be free to follow his conscience in moral matters if his actions are to be of any merit, the economists added the further argument that he should be free to make full use of his knowledge and skill, that he must be allowed to be guided by his concern for the particular things of which he knows and for which he cares, if he is to make as great a contribution to the common purposes of society as he is capable of making.#
  EthicsEpistemology
• Another misleading phrase, used to stress an important point, is the famous presumption that each man knows his interests best. In this form the contention is neither plausible nor necessary for the individualist’s conclusions. The true basis of his argument is that nobody can know who knows best and that the only way by which we can find out is through a social process in which everybody is allowed to try and see what he can do.#
  EpistemologyEconomics
• Far from being opposed to voluntary association, the case of the individualist rests, on the contrary, on the contention that much of what in the opinion of many can be brought about only by conscious direction, can be better achieved by the voluntary and spontaneous collaboration of individuals.#
• What the individual mayor may not do, or what he can expect his fellows to do or not to do, must depend not on some remote and indirect consequences which his actions may have but on the immediate and readily recognizable circumstances which he can be supposed to know.#
  Ethics
• Society is greater than the individual only in so far as it is free. In so far as it is controlled or directed, it is limited to the powers of the individual minds which control or direct it.#
• The real content of the assertion that a tendency toward equilibrium exists… can hardly mean anything but that, under certain conditions,… the expectations of the people and particularly of the entrepreneurs will become more and more correct.#Quoted in Israel Kirzner, How Markets Work (1997)
  EconomicsEquilibriumExpectations
• Correct foresight is then not, as it has sometimes been understood, a precondition which must exist in order that equilibrium may be arrived at. It is rather the defining characteristic of a state of equilibrium.#
  EconomicsEquilibrium
• [T]he assertion that a tendency toward equilibrium exists . . . can hardly mean anything but that, under certain conditions, the knowledge and intentions of the different members of society are supposed to come more and more into agreement.#
  EconomicsEquilibrium
• We never observe states or governments, battles or commercial activities, or a people as a whole. When we use any of these terms, we always refer to a scheme which connects individual activities by intelligible relations; that is, we use a theory which tells us what is and what is not part of our subject. #
  Epistemology
• All that the theory of the social sciences attempts is to provide a technique of reasoning which assists us in connecting individual facts, but which, like logic or mathematics, is not about the facts. . . . The theory itself, the mental scheme for the interpretation, can never be “verified” but only tested for its consistency. It may be irrelevant because the conditions to which it refers never occur; or it may prove inadequate because it does not take account of a sufficient number of conditions. But it can no more be disproved by facts than can logic or mathematics.#
  Epistemology
• if, of the infinite variety of phenomena which we can find in any concrete situation, only those can be regarded as part of one object which we can connect by means of our mental models, the object can possess no attributes beyond those which can be derived from our model. Of course, we can go on constructing models which fit concrete situations more and more closely – concepts of states or languages which possess an ever richer connotation. But as members of a class, as similar units about which we can make generalizations, these models can never possess any properties which we have not given to them or which do not derive deductively from the assumptions on which we have built them. Experience can never teach us that any particular kind of structure has properties which do not follow from the definition (or the way we construct it).#
  EpistemologyScience
• Just as the existence of a common structure of thought is the condition of the possibility of our communicating with one another, of your understanding what I say, so it is also the basis on which we all interpret such complicated social structures as those which we find in economic life or law, in language, and in customs.#
  Epistemology
• The real problem in [the question of competition] not whether we will get given commodities or services at given marginal costs but mainly by what commodities and services the needs of the people can be most cheaply satisfied. The solution of the economic problem of society is in this respect always a voyage of exploration into the unknown, an attempt to discover new ways of doing things better than they have been done before.#
  Economics
• Enthusiasm for perfect competition in theory and the support of monopoly in practice are indeed surprisingly often found to live together.#
• Where we have a highly organized market of a fully standardized commodity produced by many producers, there is little need or scope for competitive activities because the situation is such that the conditions which these activities might bring about are already satisfied to begin with.#
  Economics

Lord Acton, “Nationality” (1862)

• Whenever a single definite object is made the supreme end of the State, be it the advantage of a class, the safety or the power of the country, the greatest happiness of the greatest number or the support of any speculative idea, the State becomes for the time inevitably absolute.#
  Politics