Hayek’s The Fatal Conceit

The "micro-cosmos" in the "macro-cosmos".

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

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

(M)an's insticts, 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 milion years while the biological constitution of homo sapiens was still 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 environment (Hayek 1988, 11-12).

Part of our present difficult 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 civilization), as our sentiments 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.

We have to have two ways of thinking about the world. One is in small bands, tribes, families, and communities where we have a socialist enterprise. We do not sell stuff to our children, typically, but we share our stuff. It is top-down, not-bottom up. In the family, the parents tend to run things and that is very appropriate in a small group that is held together by bonds of love, genetics, or whatever keeps the family together. We have to have a different mindset when we go out into the extended world where we are traders, or commercial actors. We have a tendency to try to take the beautiful and the poetic ethos of the family and extended it into the larger order. But that leads to tyranny.

Sidebar Commentary: There is no Utopia. There is just social tyranny.

The tribalism that we are hardwired for seems to be spreading beyond the family. It is disastrous to treat the larger family as a tribe and it is disastrous to treat your family as a contractual society.

Sidebar Commentary: There are scaling properties to social systems.

The family is almost like a communist regime. Each family member does something based on their abilities.

Sidebar Commentary: Social systems need trust, and trust is made through competency. In larger systems, the risk stemming from a lack of competency could be hidden in the tails.

Human Nature

You can chase nature out with a pitchfork but it always comes running back in.
- Horace

Human nature is always with us; that is the preloaded software of the human condition and you cannot erase that hard drive. All you can do is channel and harness human nature towards its productive ends as best as you can. When you don’t do that then human nature will assert itself.

Second law of thermodynamics: If you do not keep up with anything eventually nature will reclaim everything.

What inevitably happens is that the logic of the microcosm, the desire to live tribally, starts to infect politics. If you are not on guard for it, then it will start to swap politics. Virtually every form of authoritarianism and totalitarianism are all reactionary. And this is on both on the radical-left and radical-right. They are all trying to restore that tribal sense of social solidarity: Monarchy, father of the country, the entire society as one family, nationalism, socialism, populism. All of these things are basically the resurgence of human nature that says I don’t like your artificial constraints on my human desires and my desire for my group to be victorious.

Sidebar Commentary: Art of the Advantage

The veneer of civilization is thinner than you might think.

Is it fair to say that civilization is like an automobile out in the field that may be reclaimed by nature if you do not take care of it? Explosion of prosperity and the sovereign of the individual comes about because of words, and these mean the spread of ideas.


In the absence of relationship with God, all curiosity is sin.

Curiosity is not only about the spectacles in the world. Curiosity is also about seeing yourself in relationship to the spectacles of the world. The curious man is not only curious about an object but also about himself in relationship with that object.

Catholicism says: Therefore, in the absence of a relationship with God, all curiosity is sin since the person being curious will have a sinful relationship with the object of their curiosity. This is true even if the unbeliever does good out of curiosity. As with Adam and Eve, he desires himself to be in relationship with the fruit of the tree of the knowledge of good and evil outside of his relationship with God.

Rhetoric in the Suicide of the West

Rhetoric matters. Rhetoric is the way we frame, the way we see ourselves, and the language we use to describe the narrative of our lives.

Civilization is the story the society tells itself about itself.

The Achilles Heel of Words: What can be created by words can be destroyed by words.

Sidebar Commentary: Art of the Advantage

Children of the rich want to become idea merchants. We have people in humanities better financially committed to their ideas. They become increasingly hostile to the stories we tell about ourselves. People are saying that we should not be grateful but that we should be entitled for the society. And that we should be resentful.

We have to defend and fight for the good things about our culture and the institutions that we have created for market. We can do this by using rhetoric for positive aims. The people that could be defending this aim are too busy with their own lives to defend it. The people who are attacking are attacking because they’re financially incentivized to uphold their own ideologies. This is the Suicide of the West.

(What are the best ideas about ourselves one of the founding principles of ourselves. John Locke?)

The Temporal Nature of Factions

We’ve gone to a world of case-by-case basis. If you look at a car in a field day-by-day you will not notice any changes. But look at a car between the time that you leave it in the field and the time it becomes rusted you will notice a significant change. The same is happening with the Constitution.

The founders of the constitution and authors of the Federalist papers were not worried about specific policies; they were worried about power consolidation.

Self-interest is built into us. If a group has a common interest they will conspire against the greater good. That is true of teachers unions, football teams, and global organizations. This is the Coalition instinct. The founders called this coalition instinct "Faction". Factions only become bad when you enlist the power of the government to your side and pick one winner against other factions. Any faction claims they can use government force in anyway they want. For example, compelled speech.

We have to stop talking about principles and just do what is right.


Absolute power corrupts absolutely. It is not at that absolute power corrupts the most powerful but it corrupts the people around them. The corruption is that all the people are willing to say that you have great clothes on, in the story of the king with no clothes.

Is it that a politician shifts their views because they want to be on the right side of power? Or on the right side of history?

The world that we are living in: One dog says to the other dog, "You know it’s not good enough that dogs succeed. Cats must also fail." It is a statement or policy so long as the other side suffers and fails.

For a long time now the presidency has become a symbol in the culture wars. No different than in the English Church of 1600s that Catholics and Protestants fought. Our side is winning and we are heading towards an America that we want. When the other side is on the throne and everything is becoming unraveled.

Sense of Meaning

You get a feeling of success in the macrocosm usually only in war.

The only place where you can have a reliably sense of real meaning is in the microcosm, a feeling of earned success and true belonging — you get can cheap fake version during war, when logic applies. Nationalism serves as substitute. You can only feel fulfilled as in "needed" that others value you in the microcosm. Society is in the microcosms (family, community, religion). We are hard-wired to live in Platoons. When we lose that microcosm we look elsewhere. The only people doing it is the Democrats. "Government is the one thing we belong to." National Party is selling meaning. Republicans have capitulated to it. If civil society doesn’t give it, they look elsewhere and follow politics like its entertainment.

Media is about a hero and the villain. It is a big reality show.

There is a willing suspension of disbelief — when we sit in the movie we pretend it is real. We cry when a character dies even when it is a fictional character. But it is not the willingness, it is the unwillingness.

Celebrities are becoming a de facto aristocracy. Trump has broken the blood brain barrier between politics and entertainment. Our brains are not immersed enough to say, this is fake, as we are immersing ourselves into TV.

Sidebar Commentary: Kayfabe

Tribalism appears and appeals to our emotions not a reason. We like to think of ourselves as truth seekers but we seek for what the tribe wants and we figure out the argument later.

Hume: Pragmatists. Righteousness mind. No, rationality doesn’t matter.

Use reason and persuasion to get people to come to your side.

You can make it pretty good career talking to people who already agree with you.

Cultural Identity in Capitalism

Mass immigration created a backlash of populism because people feel they are losing their community identity and with that their moral or cultural foundation.

Capitalism cannot provide meaning spirituality, it cannot provide community, and it cannot provide a sense of belonging. Those things are upstream of capitalism.

Capitalism is the greatest cooperative system for maximizing prosperity and peace ever emerged. Cooperation, in this sense, is a grass roots, bottom up, from the ground, process. We get meaning in our lives and the people around us, The institutions that we are a part of. Capitalism can provide opportunities for the aforementioned. The capitalism itself cannot. It cannot fill the holes in one soul. Family, faith, friends, experience, meaningful contribution. Capitalism provides the opportunities for you to find that niche in the ecosystem. When people retreat from these things, then they try to create political systems that will make up for that. The problem is that it is fools gold. They do not take it to its logical conclusion.

Merging Microcosm and Macrocosm

The only things that can make your life meaningful are in the microcosm not the macrocosm. You just need to get the opportunities to fulfill those needs and the microcosm. Capitalism gives you more options to live the life that you want to live.

Every Western civilization is constantly bombarded by barbarians. They’re called children. Parents are the first line of defense against the barbarian invasions. Family turns babies into human beings and then citizens. Schools and local community functions also play in that. The state cannot fix them and neither can capitalism.

If they fail, the state cannot fix them, and neither can capitalism.

Kids that are not properly socialized, and this is mostly true of rich people as well, they will be filled with a sense of ingratitude of what came before them. They will start making arguments and they will start marshaling words.

Sidebar Commentary: Nietzsche: The Genealogy of Morals.

The priest will start using words to make all those things that were once virtuous into vices. Children are doing this today.

We do not teach people to be grateful for the circumstances in which they are born in and we do not teach people to be grateful for the sacrifices made to get here. Instead we have an entire industry dedicated to resenting everything that we have. That is the real threat.

Sidebar Commentary: Tearing everything down with nothing to replace it.

Opponent of teleology, the right side of history, and that everything is foreordained. We got into everything by accident.

The Talmud: It is not up to you to finish the work but neither are you free to desist from it.

In the macrocosm, friendship is corrupting.

The Road To Serfdom

Adam Smith was an impartial spectator. In The Road To Serfdom, Hayek wrote what he thought and that helped us stop it (ideas of Macrocosm on the Microcosm).

Is there a greater tragedy imaginable than that in our endeavor consciously to shape our future in accordance with high ideals we should in fact unwittingly produce the very opposite of what we have been striving for?

The contention that only the peculiar wickedness of the Germans has produced the Nazi system is likely to become the excuse for forcing on us the very institutions which have produced that wickedness.

Totalitarianism is the new word we have adopted to describe the unexpected but nevertheless inseparable manifestations of what in theory we call socialism.

In a planned system we cannot confine collective action to the tasks on which we agree, but are forced to produce agreement on everything in order that any action can be taken at all.

The more the state ‘plans’ the more difficult planning becomes for the individual.

The economic freedom which is the prerequisite of any other freedom cannot be the freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and of the power of choice: it must be the freedom of economic activity which, with the right of choice, inevitably also carries the risk and the responsibility of that right.

The economic freedom which is the prerequisite of any other freedom cannot be the freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and of the power of choice: it must be the freedom of economic activity which, with the right of choice, inevitably also carries the risk and the responsibility of that right.

What our generation has forgotten is that the system of private property is the most important guarantee of freedom, not only for those who own property, but scarcely less for those who do not

We shall never prevent the abuse of power if we are not prepared to limit power in a way which occasionally may prevent its use for desirable purposes.

We shall all be the gainers if we can create a world fi t for small states to live in

The first need is to free ourselves of that worst form of contemporary obscurantism which tries to persuade us that what we have done in the recent past was all either wise or unavoidable. We shall not grow wiser before we learn that much that we have done was very foolish.

We need to cultivate a tribal attachment to principles or axioms. Not ideas.

Sidebar Commentary: Bushido.

Christianity takes some of the principles of Judaism and universalizes it.

America takes the culture views of the British — my home is my castle and be wary of central power — puts it in the centrifuge and steals principles.

Assimilation is not a bad word.

You cannot steal titles and you cannot steal ideas.

The fall of means that it is inevitable. Where as suicide is a choice.

There’s no such thing as lost causes because there’s no such thing as truly one cause. As long as there are people in the fight and the fight is worthy then the fight is not over.
TS Elliott

The goose that lays the golden egg is not about greed, it is about and gratitude.

Echos of History

Stop looking at the downside of everything and start looking at how better off we are than we have been at any other time in history. We can find ideas of the past though and apply them to the present and future to make things better.

Free Trade

The reason is that free trade is literally counterintuitive. It seems to violate so many ideas that feel right. How can it be better to fly stuff half way around the world than to produce it locally? How can it be right to rely on one sector instead of encouraging the growth of a balanced economy? Doesn’t it make sense to shield infant industries from competition until they’re strong enough to go it alone? Shouldn’t we aim to be self-sufficient in basics, such as food?

Just as we can understand that an optical illusion isn’t what it seems, so we see through false intuitions (of which, indeed, optical illusions are a sub-category). A good example is the question of comparative advantage, perhaps the single most counter-intuitive notion in the whole of economics. If Country A is more efficient than Country B in every respect, we can see why Country A stands to gain from free commerce between the two. But surely, we assume, Country A’s gain will be Country B’s loss? Country B’s industries will be overwhelmed by cheaper competition, its workers thrown onto the streets. Won’t they?

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Image from the United Kingdom Conservative Poster Archive, poster 1909/10-14.