The Division of Labor in Economics by Sun Guang-Zhen

Author:Sun, Guang-Zhen.
Language: eng
Format: epub
Publisher: Taylor & Francis (CAM)
Published: 2012-02-29T16:00:00+00:00

Hayek’s summary of what emerged from Bernard Mandeville’s writings on spontaneous order (see Subsection 6.1.2, above), appears to apply equally to his own scholarship on the subject, in addition to the fact that Hayek, of course, has gone much further and advanced the study of spontaneous order from a much broader perspective and in a wider variety of disciplines. Particularly important is Hayek’s endeavor to integrate what he finds in Mandeville, “the twin ideas of evolution and the spontaneous formation of an order” (Hayek [1967] 1978: 250). Accordingly, his greatest achievement and most important scientific legacy appears to lie in two closely related but nonetheless separable aspects. The first is his highly original and penetrating analysis of the decisive part played by utilization of the dispersed knowledge, rendered possible by the decentralized price system, in the formation of the spontaneous market order, which stands as a special case of spontaneous social order. This part is of course most relevant to the present book on the subject of the division of labor (and hence on the division of knowledge as well). We shall therefore devote the two following sections exclusively to this aspect of Hayek’s scholarship, which is rooted in, and must be seen as a significant development of, the Smithian economics of the market process. The second aspect is his painstaking inquiry into the general principles of how social institutions, especially legal and political institutions, spontaneously evolve, a process that is often somewhat vaguely referred to as a theory of cultural evolution, or a theory of institutional evolution. It is this aspect of his scholarship that makes Hayek so widely influential, and much debated, as a social scientist; however, this is nonetheless not very relevant to the themes dealt with in the present book, except in the special sense that, in my view, much remains to be done in carrying forward Hayek’s unfinished legacy in the study of how knowledge, necessarily dispersed in society, is not just utilized but generated and diffused throughout the system, and in spelling out the implications of creation of knowledge as such for institutional evolution. For that matter, two remarks on some weaknesses and limitations of Hayek’s highly admirable study of the evolution of social order are in order. First of all, as has been pointed out by quite a few authors,16 there are tensions between Hayek’s theories of the “twin ideas” of individualist theory of spontaneous order and cultural evolution based on group selection. The well-known problems associated with the theory of group selection in biology apart, Hayek’s analysis of the mechanism of natural selection and the level of units at which the selection operates in cultural evolution is quite incomplete, if not problematic, and is far less satisfactory than his penetrating and thorough analysis of the market order that spontaneously arises from the discovery-by-competition process in a decentralized price system. In other words, there is some unmistakable tension between the “twin ideas” of spontaneous social order, of which the prototype is the price-induced market order, on the one hand, and cultural evolution on the other (Barry 1982).

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