Saturday, December 13, 2008

Rules & Purposes

Hayek in Law, Legislation and Liberty, Volume 1: Rules and Order:
Man is as much a rule-following animal as a purpose-seeking one.
It seems to me most of economics emphasizes the purpose-seeking and pretty much misses the rule-following. Does this mean economics misses about half of what it should pay attention to?


Tim Canon said...

I think yes, man creates rules and for the most part in most societies he seems to abide by them, but only because it serves his interest in staying a part of the community, outside of which one is basically lost and abandoned.

But man also constantly creates rules and order among his fellow man, resulting in "unwritten laws" and I think this is key: If Hayek were right, man would not create these laws because Hayek's two halves would already be covered. On the one hand, man obeys orders because he is a rule-following animal, but on the other hand he does so out of self-interest in following his own purpose. Add this to society's unwritten laws which are undoubtedly created for some purpose, and it seems that man is much more purpose-seeking than rule-oriented.

However, I think economics still misses much of what it should pay attention to. For example, I don't know that most economists would even engage me in this discussion of "unwritten societal laws"...Is that even coverable in the current state of neo-classical economics?

Larry Eubanks said...

Not easily because neoclassical economics takes institutions as given for the most part. And, when neoclassical economists do take a look outside the institutions-as-given box, the look tends not to be dynamic and evolutionary.