Watch his video about the rationality of different election systems.

http://www.youtube.com/watch?v=c0pZ9LTZW1g

Advocating liberty while having the wrong philosophical ideas -- as Hayek did -- has serious consequences. Philosophy matters. Some people say the liberty movement should have a "big tent". That is fine as long as we recognize when the people we let in are mistaken and do not let those mistaken ideas speak for us. We must recognize the difference between principled advocates of liberty like Ayn Rand or Ludwig von Mises and socialist sympathizers like Hayek who make concessions the liberty movement should repudiate.

Here are quotes of Hayek followed by commentary.

http://mises.org/resources/4015/Individualism-and-Economic-Order

from chapter 8: Socialist Calculation II: The State of the Debate

the same must be said of the hope that such a socialist system would avoid crises and unemployment. A centrally planned system, although it could not avoid making even more serious mistakes of the sort which lead to crises under capitalism, would at least have the advantage that it would be possible to share the loss equally between all its members. It would be superior in this respect in that it would be possible to reduce wages by decree when it was found that this was necessary in order to correct the mistakes. But there is no reason why a competitive socialist system should be in a better position to avoid crises and unemployment than competitive capitalism.

But at least the decision cannot be made before the alternatives are known, before it is at least approximately realized what the price is that has to be paid. That there exists still so much confusion in this field and that people still refuse to admit that it is impossible to have the best of both worlds is due mainly to the fact that most socialists have little idea of what the system they advocate is really to be like, whether it is to be a planned or a competitive system.

No pretense is made that the conclusions reached here in the examination of the alternative socialist constructions must necessarily be final. ... No one would want to exclude every possibility that a solution may yet be found [a solution to how to implement socialism without destroying the economy too much]. But in our present state of knowledge serious doubt must remain whether such a solution can be found.

From Hayek on Hayek: An Autobiographical Dialogue by F. A. Hayek, edited by Stephen Kresge and Leif Wenar (Chicago: University of Chicago Press, 1994)

I have always said that I am in favor of a minimum income for every person in the country.

And Hayek in a 1978 interview:

http://blog.mises.org/9657/the-ucla-interviews-with-friedrich-hayek/

At first we all felt he [Mises] was frightfully exaggerating and even offensive in tone [in his 1920 economic calculation paper and 1922 Socialism book]. You see, he hurt all our deepest feelings, but gradually he won us around

Mises’s was a book with which I struggled for years and years, because I came to the conclusion that his conclusions were almost invariably right, but I wasn’t always satisfied by his arguments.

Hayek got some other stuff right, but here is where I disagree:

I do not think it is right to "share loss equally" -- men must take responsibility and gain profits or losses on the merits of the ideas/projects they pursue. When another man makes a mistake, I should not share the loss with him. Sharing loss equally is morally wrong and also economically harmful because it is incompatible with capitalism.

I do not think that the possibility of the Government reducing wages by decree is a good thing.

Hayek speaks of the "best of both worlds". He sees the economic consequences of capitalism as ideal, but the morality (or ethos) of socialism as ideal. He is conceding that socialism is the best world in one way. What way does he have in mind? He doesn't fully specify here but I think he has in mind standard stuff about capitalism being too mean and selfish and unfair. Hayek wants to accept capitalism anyway. But that is different from Ayn Rand who does not want to accept capitalism *despite some disadvantage* but whole heartedly. Capitalism is the most moral *and* economical system, not a consolation prize because socialism has a fatal flaw.

When Hayek says "no one would want to exclude" the possibility of finding a way to make socialism work, he is denying the existence of e.g. Ayn Rand. He's in opposition to people with *thoroughly* capitalist values. He must think there is something wrong with capitalism, that there's some kind of valid grievance -- but there is none. He thinks that trying to reform socialism is a reasonable project to pursue, but it is a philosophical dead end.

From the minimum income position we can learn something about why Hayek liked about socialism. He liked the idea of providing for everyone, regardless of their merit, and regardless of his ability to persuade the men he takes the money from to give it as voluntary charity.

The interview touches on another subject which is that Hayek's economic arguments made concessions to socialism too. Mises in 1920 (correctly) argued that socialism makes rational economic calculation *impossible*. Hayek later made *weaker* arguments. Why? Because he thought Mises' criticisms of socialism were "exaggerations". But they were not; Hayek was overestimating socialism. The difference is on the one hand Hayek deemed socialism *inefficient* (a matter of degree) while Mises said that when the State owns the means of production then there is no way to rationally plan economic activity. It's not just inefficient but impossible and attempts will lead to the destruction of society into chaos or syndicalism. (See: http://mises.org/books/socialism/part2_ch6.aspx )

Hayek did accomplish some good but he also told a lot of people that socialism has various merits it does not have. That is dangerous; it slows the spread of correct, principled and fully capitalist ideas like Rand and Mises put forward. He made an effort to understand these matters and did better than most people, and contributed some good ideas. But his positions have flaws including sympathy with the ethics behind socialism, and I think the liberty movement should be careful about who it chooses to represent it. Considerable harm can come from telling people stuff like that socialism with a non-broken economy would be the ideal if it were possible -- as long as people are yearning for *that* we are going to have a hard time persuading them to implement thoroughly capitalist policies.

Because Hayek is seen as a champion of capitalism, but is actually mixed, he's in the dangerous position of giving capitalism a bad name. He misrepresents what capitalism is really like. He lets people say, "even arch-capitalist Hayek would concede that..." And Hayek is no innocent in this reputation. He could have said, "Guys, I'm a moderate with mixed views. Mises is a serious representative of capitalism, I'm just a guy trying to figure things out." If he'd said that, he'd be an OK guy, better than many. But he didn't, so he ended up doing large harm. (And Hayek also did things like claim Mises' economic calculation criticism of socialism was flawed, and that he knew better.)

men are born tabula rasa, both cognitively and morally

Ayn Rand, _The Virtue of Selfishness_, p54

If you aren't anything, you can't be accused of anything.

I just saw someone making an argument that something is unbiased because no one tried to bias it or designed it to be biased.

In other words, he thinks that not being biased is the automatic default.

I think this is what many inductivists think: that all the theories they make up and claim to have induced are not just bias talking. And why do they think it's not bias but rather a hint coming from the evidence itself? Because it can't be bias because they didn't intend any bias or do it on purpose. Simple as that.

But actually epistemology/reality is the other way around: everything is biased by default (a lot, not a little), and it is only with great care and effort that we can get anything that isn't biased.

It's as Feynman said: it's easy to fool ourselves, and science is what we've learned about how to not fool ourselves. Or in other words, bias is the default and the scientific method consists of doing everything we know how to in order to reduce bias.

You can tell there is a lot of bias to overcome because of how careful scientists have to be to get good results. It's not that the scientists are bad people or anything like that, it's simply that avoiding bias takes skill and effort not just a lack of bad intentions.

David Deutsch says about this (quoted with permission):

It's the intentional fallacy. If something is bad, a bad person must have done it. If something is biased, a biased person must have done it. And therefore if we are all pure and unbiased, we are infallible.

That reminds me of *early* induction. According to Popper (with textual evidence and good arguments), Bacon's conception of induction was a bit different than what you usually run into today. The main idea was to *purge your mind of bias*[1]. Then you can read nature like an open book and make zero mistakes and finish learning all of science in a few years.

This is (again via Popper) building on the *original* meaning of induction which comes from Aristotle (who falsely attributed it to Socrates) which was about maieutics. The idea is, very roughly, that the truth is trivial (and already inside us, I think) and the only obstacle to the truth is therefore bias.

[1] How do you know what is a bias and what isn't? Easy. It's all bias. Just empty your mind completely. That's Bacon's way.

Socialism is (from dictionary):

a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

One of the means of production is knowledge contained in people's minds. If the community owns or regulates people's minds that is an especially harsh form of slavery.

http://mises.org/econcalc.asp

Economic Calculation in the Socialist Commonwealth
by Ludwig von Mises (1920)

In this essay Mises criticizes socialism (in short socialism is impossible because it does not provide means for rational economic calculation and decision making). In doing so, he has to talk about what socialism says. He makes a good attempt to give a fair and reasonable interpretation. One of the things he says is socialism differentiates between consumption goods and the means of production. If a socialist citizen wishes to trade his allotment of beer for his friend's allotment of concert tickets, that's allowed. But there can be no trade of the means of production because they are communally owned.

That makes sense because otherwise the planners have to know everyone's tastes so they know who to give beer to and who to give concert tickets to. (Or they can try a rather implausible scheme such as making everythign free for the taking and asking people to only take modestly.)

There is a problem here: this distinction rests on a naive and false conception of the kinds of goods that exist. It assumes household cleaners are for consuming and hammers are for producing and every good is is one type or the other. This is false. Consider the Macbook. This is a consumer product which people use to play games, but it's also a means of production for programmers, video game artists, people who need a spreedsheet program to manage a warehouse or factory, architects, and sales people who need to create presentations.

Even household cleaners can be used in production (to make drugs, for example) and hammers can certainly be used for either hobby work or professional work. Jewelry can be melted into gold or silver which can be used in production. Factories can be remodeled into living spaces. There can be no distinction between consumer and productive goods.

This is not Mises' problem. It is socialism's problem. If socialism wishes the factors of production to be communally owned, but for consumption goods to be privately owned, then it's socialism's problem to (impossibly) draw a distinction between the two.

My conclusion is that socialists have a choice:

1) Socialism is impossible.

2) Socialism must intrude into its citizens' entire lives: everything is communally owned and its use determined by the planners.

3) Socialism must make arbitrary declarations about which goods are to be communally owned and which not. Doing that will cause economic harm by preventing goods from switching categories even when doing so is efficient.

Do you like to learn things? Critical discussion is the best way. Join these email lists and post in comments if you know any other great ones:

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EDIT: These are all superseded by the Fallible Ideas list: http://groups.yahoo.com/group/fallible-ideas/