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Tom O’Connor Working Paper Series

Department of Government, UCC

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‘The Significance and Context of Hayek’s

1945 Finlay Memorial Lecture’

Mark Nolan

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No. 39, November 2014

The Significance and Context of Hayek’s 1945 Finlay Memorial Lecture

Mark C. Nolan

1. Introduction

Austrian philosopher and 1974 Nobel prize winning economist, Friedrich August Von Hayek delivered the Twelfth Finlay Memorial Lecture at University College Dublin, titled ‘Individualism: True and False’ on the 17th December, 1945, soon after his iconic political book The Road to Serfdom (Hayek 2007[1944]) that had outlined how fascism and communism both represented totalitarian centrally controlled systems (2007: 23), had been launched to acclaim (Hazlitt 1944: 1, 21) and criticism (Thomas 1945: 38-41)[1]in both Britain and America (2007: 18-19).

Considered one of the fathers of classical liberalism and more modern Neoliberalism, Hayek’s ideas would inspire his prodigy Milton Friedman and his apostles Margaret Thatcher and Ronald Reagan. More recently his 1944 book returned to the international best seller lists due to Glenn Beck’s Fox News television[2] programmes and 2012 Republican vice presidential candidate Congressman Paul Ryan.

Hayek’s original 1945 University College Dublin lecture outlined the origins and evolution of two different interpretations of ‘individualism’, comparing and contrasting what Hayek terms ‘true’ and ‘false’ individualism notwithstanding the misleading contemporary interpretations and distorted perceptions of the assumptions underlining ‘true’ individualism.

Individualism underpins one of the most important movements in political and economic thought that would dominate the second half of the last century.

The term Neoliberalism began in the 1930s when the Colloque Walter Lippmann was held in Paris in 1938 and became known as the Mont Pelèrin Society after the war under the leadership of Hayek and Albert Hunold (Plehwe 2009: 15). Early neoliberals such as Hayek and his fellow Austrian and mentor Ludwig von Mises searched for an alternative to constructed statism and omnipotent governments to encourage personal liberty and initiative within naturally occurring competitive free markets. They considered the function of the state was to be decentralised whilst ensuring the rule of law and individuals’ private and property rights are democratically secure.

In acknowledging Hayek’s Road to Serfdom John Jewkes contemporaneously asserted that;

“At the root of our troubles lies the fallacy that the best way of ordering economic affairs is to place the responsibility for all crucial decisions in the hands of the State”(Tribe 2009: 84).

This working paper outlines the significance and context of Hayek’s Finlay Memorial Lecture, a lecture that I consider a prelude to one of his greatest works, his 1960 The Constitution of Liberty (2011). In his Constitution of Liberty Hayek outlined how in a free society rules

“have never been deliberately invented but have grown through a gradual process of trial and error in which the experience of successive generations has helped to make them what they are... and how such a mutual adjustment of the spontaneous activities of individuals is brought about by the market, provided that there is a known delimitation of the sphere of control of each individual” (Hayek 2011: 225, 229).

Hayek was later to include his University College Dublin lecture (1946), as a chapter in his 1948 Individualism and Economic Order (2010: 46-74) notwithstanding that his Dublin lecture was originally intended by Hayek to be the introduction section of his never to be completed ‘Abuse of Reason’ project.

Writing to his fellow Austrian Fritz Machlup in 1939, Hayek told him that he had envisioned that his proposed ‘Abuse of Reason’ book “should form the basis of a a systemic intellectual historical investigation of the fundamental principles of the social development of the last hundred years (from Saint-Simon to Hitler)” (2010: 1, fn. 2).[3]

2. Irish Context

The Finlay annual lecture series was in honour of the Rev. Thomas A. Finlay SJ (1848-1940), the first Professor of Political Economy at University College Dublin, a university originally founded by the Jesuit order (McRedmond 1991: 234-236). Finlay was a prominent member of the Irish intelligentsia and he was instrumental in the formation of the Irish agricultural co-operative movement and its umbrella organisation, the Irish Agricultural Organisation Society, together with Sir Horace Plunkett (O’Brien 1940). John Maynard Keynes had delivered the inaugural Finlay Lecture in 1933 (Keynes 1933)[4] followed by other distinguished economists such as John Jewkes (1952), Bertil Ohlin (1934) and Redcliffe N. Salaman (1943).

Amongst the University College Dublin audience were the Irish Free State’s Minister for Finance, Frank Aiken, and Minister for Local Government, Mr. Sean MacEntee. From the opposition benches were the Irish Free State’s first Taoiseach W. T. Cosgrave and his son and future Taoiseach Liam Cosgrave, TD with General Richard Mulcahy TD, former GHQ chief-of-staff during the Irish War of Independence and commander-in-chief during the subsequent civil war.[5] The Irish Free State government politicians from the Fianna Fáil party and the Fine Gael opposition party attending Hayek’s 1945 lecture were certainly more focused on political matters a-la Sir Horace Plunkett’s maxim that in Ireland, political economy was spelled with a large ’P’ and a small ‘e’(Meenan 1967).[6]

The embryonic Irish Free State had remained neutral during World War Two, and the Irish government would eventually break the last formal link with Great Britain, since the 1921 Anglo-Irish Peace Treaty by declaring a Republic in 1948 (Lee 2006: 299-301). Between the First and Second World Wars, the Irish Free State as a Dominion of the British Empire “enjoyed all the advantages and none of the disadvantages of a republic” (May 1995: 302).

It had been a tough decade, from the mid 1930s to the end of World War Two, for the embryonic Irish Free State. The six year dispute known as the ‘Economic War’, against its largest trading partner Britain, involving the refusal to pay land annuities,[7] removal of the subjugative oath of allegiance (Crowe 2004: 4,25,31-33)[8], and the removal of the Governor-General was almost immediately followed by the rationing during the war (Crowe 2004: 539). Eamon de Valera had been Taoiseach since 1932, the same year he was appointed to the prestigious international role of President of, the Geneva based Council of the League of Nations.

Six months before Hayek’s 1945 Dublin visit, de Valera, according to John J. Horgan, had brought unfavourable international attention to Ireland due to his “ceremonial tomfoolery”[9]of personally expressing formal condolences on behalf of the Irish government to the German ambassador Dr. Edouard Hempel following Adolf Hitler’s suicide.

Writing to the Irish ambassador in Washington two weeks later, de Valera had justified his very deliberate visit to the German ambassador, by claiming that a failure to have called on the German ambassador would have been “an act of unpardonable discourtesy to the German nation” (Ferriter 2007: 272). Winston Churchill, in his BBC radio victory broadcast on the 14th of May 1945, criticised Ireland’s neutrality during the Second World War “owing to the action of Mr. de Valera, so much at variance with the temper and instinct of thousands of Southern Irishmen”[10]because Britain could only use the “the north-western approach between Ulster and Scotland through which to bring in the means of life and to send out the forces of war.”[11]

In a response Irish radio broadcast three days later, de Valera very calmly outlined the reasons why Ireland had remained neutral for the previous five years, notwithstanding Churchill “abusing a people who have done him no harm…continuing the injustice of the mutilation of our country”[12]despite that “Ireland was the only British Dominion which exercised her right to remain neutral”[13]and not ignoring the fact that fifty thousand Irishmen died in the first war believing that the Home Rule Bill of 1914, suspended for the duration of the war, would be honoured.

The damage to Ireland’s reputation and standing in the International community still lingered by the time of Hayek’s visit to Dublin six months later. Corkman John J. Horgan, the Irish Correspondent of The Round Table journal contemporaneously wrote in July 1945; “so Ireland re-emerges from the fog of war, somewhat chastened, slightly dubious, yet not without hope.”[14]

Professor George O’Brien, Hayek’s host for Hayek’s 1945 Dublin visit and lecture, had succeeded Rev. Finlay as Professor of Political Economy at University College Dublin. O’Brien had abandoned his first career as a lawyer following a catastrophic legal case in 1916 and he then embarked upon his first major work, The Economic History of Ireland in the Eighteenth Century (1918)[15], dedicated to his mentor the Professor of Political Economy at University College Dublin, Rev. Thomas A. Finlay SJ. Through his membership of the Arts Club, George O’Brien made contacts which enabled him to switch from practice of law to academia. He had attended one of the Jesuit schools, Belvedere College, where he first met Fr. Finlay who used to give religious retreats to students.

Following the formation of the Irish Free State in 1922, O’Brien became a member of various Committees, such as Banking, Fiscal and Agriculture, established to formulate financial and agricultural policies for the new Dominion State. Between 1923 and 1947 he wrote twenty-six articles for the Irish quarterly journal, Studies including an incisive and insightful obituary on John Maynard Keynes in 1946 (O’Brien 1946) as well as being the Dublin correspondent for The Economist (Meenan 1980: 172).

O’Brien was vehemently anti-de Valera, and in his later years, according to his biography written by his successor, he would boast that his 1936 book Four Green Fields on the partition of modern Ireland,[16]was written “without mentioning the name of Mr. de Valera.” Apparently O’Brien revelled in enacting Eamon de Valera searching the index of his 1936 book, to find that his name didn’t appear under ‘d’or‘V’ (Meenan 1980: 184).

His 1936 Four Green Fields book correctly and presciently concluded that the “settlement of the Irish question is in the hands of the Ulster ascendancy who have it in their power to make such a settlement possible or delay it indefinitely” (O’Brien 1936: 139). In his book, O’Brien outlined how “for over seven hundred years the English have never left the Irish peacefully alone in their own island”(O’Brien 1936: 20) and that having conquered Ireland, it was a crime for Britain to have withdrawn from the island of Ireland in 1921 leaving it divided.

Upon his return from his 1945 Dublin visit, Hayek is reported to have said that Dublin had reminded him of the Vienna he had known prior to the First World War and that his host Professor George O’Brien “had the best cellar of any professor of Political Economy that he had ever met” (Meenan 1980: 174).

O’Brien had got to know Dr. Hayek in 1943 following O’Brien’s discovery of a box full of two sets of letters; one set containing correspondence between John Stuart Mill and Irish economist John Elliot Cairnes the other set between David Ricardo and James Mill (O’Brien 1943).

3. Lecture

Hayek’s seminal 1945 Dublin lecture titled ‘Individualism: True and False’ was an example of the intersection of the disciplines of politics, philosophy and economics at a time when each discipline was undergoing transformative change following the conclusion of the Second World War and the onset of the Cold War. In his Dublin lecture, Hayek undertook to set out his preferred general principle of social organisation and social order by comparing and contrasting two opposite types of what he termed ‘Individualism’ because “the same word frequently appears to unite people who in fact believe in contradictory and irreconcilable ideals” (1946: 5) and he asserted that no political term had suffered worse distortion and misunderstanding by its opponents, in this respect, than individualism.

He warned how we “should always remember that political concepts which are to-day out of fashion are known to most of our contemporaries only through the picture drawn of them by their enemies” (1946: 5).

To Hayek, the word socialism was originally coined in the early 19th century by the Saint-Simonians to describe the type of competitive society to which they were opposed to in contrast to a centrally planned society in which all activity was controlled by a central authority. Hayek had already written extensively in 1941 about “one of the great landmarks in the history of socialism which deserves to be much better known outside France than it is” (1941: 140). Saint-Simon’s nineteenth century doctrinaire solution was for a planned society in the form of a new order where the rights of property would be abolished overseen and directed by “a spiritual power which can choose the direction to which the national forces are to be applied” (1946: 5, fn. 1).

In his Dublin lecture, Hayek then outlined his understanding of the historic development of the intellectual tradition underpinning what he considered ‘true’ individualism which his University College Dublin lecture would try to defend.

According to Hayek, ‘true’ individualism began its modern development in the eighteenth century Scottish Enlightenment with John Locke, Bernard Mandeville and David Hume and was subsequently more fully developed by Josiah Tucker, Adam Ferguson, Adam Smith and his contemporary Edmund Burke. This eighteenth century group of writers’ most significant social, political and economic contribution is the theory of spontaneously generated social orders.

‘Spontaneous order’ theory, which Hayek would further develop and extend in the twentieth century, holds that the social arrangements under which we live take their form from the unintended aggregate outcome of numerous discrete individual actions, not the outcome of deliberate intentional design and calculation (Hamowy 2005: 3). In the nineteenth century Hayek claimed, in his Dublin lecture, that both Alexis de Tocqueville and Lord Acton best represented his conception of ‘true’ individualism.

The opposite type of individualism, which Hayek referred to as ‘false’ individualism, originated, he maintained, primarily in France as Cartesian Rationalism represented by Rousseau and the Physiocrats (1946: 6). The term individualism had been introduced to English in 1835 through Henry Reeve’s translation of Alexis de Tocqueville’s ‘Democracy in America’ (1946: 7, fn. 5) and also aided by J. S. Mill’s comprehensive review of Reeve’s translation in the London Review. In a footnote of his 1862 translation, Reeve apologises that he knew “of no English word exactly equivalent to the expression” (1862: 119) that de Tocqueville had coined.

Man’s whole nature and character is determined by his existence in society according to Hayek, who cites Professor Albert Schatz’s conclusions that individualism isn’t based on the existence of isolated or self-contained individuals. Hayek, who had already cited Schatz in his 1941 Economica paper (1941: I, 22), claimed that Professor Schatz deserved to be better known (1946: 7, fn. 6). Albert Schatz (1879-1940)[17] had been a law professor at the French University of Dijon, and he had written a book on the origins and development of Individualism which was published in 1907 and his doctorate was on the works of David Hume (Schatz 1902).

4. Fable of the Bees

In 1903 Schatz published a paper on Bernard Mandeville’s 1714 allegorical Fable of the Bees (Mandeville 1988[1924])[18] linking ‘libéralisme’ to Mandeville’s works; notably the propositions that in matters economic individuals were principally guided by self-interest, and acted harmoniously in a liberal society, under a political policy of abstention by the state except as guarantor of private property and as a protector of members of society (Schatz 1903: 440).

According to Edwin Cannan, Mandeville’s allegorical poem depicted a human society which paradoxically prospered tremendously so long as it was full of vice until the members of the society begged the King of the Gods, Jove, to rid their beehive of fraud and vice except that once the beehive became virtuous, frugal and honest, trade was forthwith ruined by the cessation of personal expenditure (Smith 1904[1798]: xliii-xlvi).

Schatz in his study of Mandeville, found that the origin of the doctrine of economic liberalism is found “first and foremost in the psychological study of individuals living in a society contained within the moral philosophy work of the author of the Fable of the Bees”(Schatz 1903: 436). Furthermore, Schatz claimed that Mandeville could not be credited with exclusively creating the new doctrine of liberalism (la doctrine libérale) even though he considered that David Hume and Adam Smith had each in turn drawn much inspiration from Mandeville and that some of their expressions were borrowed from Mandeville’s Fable (Schatz 1907: 127).[19] Schatz suspected that Mandeville had been neglected in studies of the history of economic doctrines due to his acerbic irony and his religious orthodoxy (Schatz 1903: 63).

According to Schatz, Mandeville’s Fable claimed how, due to self-interest, individuals always resorted to division of labour in order to reduce their own efforts which Schatz described as the principle of spontaneous adaptation - “spontané d’adaptation” (Schatz 1907: 74).

Hayek identified Mandeville’s Fable as the source of the theory of ‘spontaneous order’ and furthermore he acknowledged the influence of Schatz’s studies on Mandeville in formulating his own theory of ‘spontaneous order’.[20] Earlier in the twentieth century, Schatz had already claimed that the important origins of individualism could be found in Mandeville’s Fable-“Tel est dans sa composition externe l’ouvrage capital où se trouvent tous les germes essentiels de la philosophie économique et sociale de l’individualisme” (Schatz 1907: 62).

Schatz outlined the evolution of the eighteenth century realisation that regulated “artificial” economic order could be substituted by “un ordre naturel économique” underpinned by the solid foundation of a rare phenomena called “cet ordre spontané” (this spontaneous order) whose “majestic simplicity and harmonious splendour has not yet been fully revealed except by a few discerning thinkers” (Schatz 1907: 32).

5. French connection(s)

This section of Schatz’s 1907 book could, I consider, be the inspiration for Hayek coining the term for his ‘spontaneous order’ theory as he owned a copy of Schatz’s 1907 book that is still held in his personal library collection.[21] Additionally, a reference in Schatz’s 1907 book is probably the source of inspiration for the title of his 1945 Dublin lecture. We know that Hayek told his Dublin audience that he was much indebted to Schatz’s book as a contribution to both individualism and to the history of economic theory (1946: 7, fn. 6) and he conceivably could have borrowed Schatz’s use of the term “le principe d’ordre spontané” for his own ‘spontaneous order’ theory.

Hayek had already admitted in his Dublin lecture to borrowing de Tocqueville’s “formule de la servitude” (Tocqueville 1878: 541) phrase to use as the title for The Road to Serfdom (1946: 16, fn. 16).

In a footnote cited on page 558 in the concluding chapter of Schatz’s 1907 book that Hayek had quoted in his 1945 Dublin lecture, Schatz recommended reading a 1899 Journal des Economistes paper by Henry-Léon (Schatz 1907: 558).

It is probably more likely that the origination and inspiration of the title of Hayek’s 1945 Finlay Memorial lecture emanated from sources that Hayek cites and also from references contained within his 1945 Finlay Memorial lecture. In addition to Henry-Léon Follin’s 1899 paper, possibly being an inspiration for the title of Hayek’s Dublin lecture, there is another supplementary possibility namely John Stuart Mill’s 1861 essay Of True and False Democracy (1904: 131-154), which could be considered as an alternative inspiration for Hayek’s title ‘Individualism: True and False’.

In his 1861 essay Mill asserted that proportional representation ensures minorities are adequately represented in contrast to plurality voting. Without minorities being represented, there is “nothing but a false show of democracy”, Mill claimed (1904: 138). Mill queried why the majority ought to prevail over the minority and why it is necessary that the minority should not even be heard (1904: 133). Mill had quoted Alexis de Tocqueville’s 1835 insight that “for he who to-day is not in the majority will perhaps form part of it tomorrow” (Mill 1835a: 128). In his 1945 Dublin lecture, Hayek concurred with de Tocqueville’s insight, which Mill had in turn quoted, in his 1945 Dublin lecture. Hayek disagreed with the common view at the time, that government aims had to reflect the views of the majority;

“On the contrary, the whole justification of democracy rests on the fact that in course of time what is today the view of a small minority may become the majority view”(1946: 30).

The formation of Mill’s true and false democracy theme first began in his 1835 review of the first volume of Alexis de Tocqueville’s examination of the state of society and democracy in America. De Tocqueville’s seminal book was based on a nine month trip across America with his friend Gustave de Beaumont, from May 1831 to February 1832.

The first volume of de Tocqueville’s book was reviewed in 1835 by Mill in his London Review journal, co-incidently following de Tocqueville’s and de Beaumont’s six week tour of Ireland in August 1835 (1990). In his London Review, Mill wrote that de Tocqueville’s book, “has at once taken its rank among the most remarkable productions of our time” (1835a: 94). In his 1835 London Review of the first volume of de Tocqueville’s book,- Mill was also to review the second volume five years later in The Edinburgh Review(1841) - Mill concentrated on the distinction between true and false democracy (Burns 1957: 166).

Under true democracy, de Tocqueville stated that people must be able to hold their representative rulers responsible for results and the people must be able to dismiss their rulers if their elected rulers do not exercise their knowledge and their ability for the good of the people (1835a: 110). If people abuse their entitlement to remove rulers by using it as a means to interfere in order to make their legislators mere delegates for their vested interests, Mill termed this type of behaviour as false democracy (1835a: 111).

In his London Review of de Tocqueville’s ‘On Democracy in America’, Mill advised his readers, that five months earlier, he had already examined “the difference between the true and the false idea of a representative democracy”(Mill 1835a: 109-110) in an earlier London Review article, Mill enthused that de Tocqueville’s book was the first philosophical book ever to be written on democracy, and that de Tocqueville’s book constitutes “the beginning of a new era in the scientific study of politics”(1841: 3).

Hugh Brogan, de Tocquville’s 2006 biographer, considers de Tocqueville’s theory of individualism “perhaps the most purely original notion that he ever formed” (Brogan 2006: 355).

Hayek was a great admirer of Schatz’s l’individualisme éconimique et social whom he told to his Dublin audience deserved to be better known (1946: 34, fn. 6). Four decades later he would accept an offer from Albert Schatz’s son Jacques Schatz to write the preface for a proposed publication of l’individualisme éconimique et social in English.[22] At the time of his Dublin visit, we know Hayek was researching Mill’s writings. Mill in turn, seems to have based his true and false democracy writings on opinions formed from Alex de Tocqueville’s examination of American democracy.

Indeed, Alexis de Tocqueville’s ‘formule de la servitude’ phrase had even provided the inspiration for the title of Hayek’s 1944 Road to Serfdom book which Hayek, in his 1945 Dublin lecture acknowledged for the first time that it was de Tocqueville’s phrase “which suggested to me the title of a recent book of mine”(1946: 16, fn.16).

Fifty years later, Hayek was to explain how he didn’t like the sound of the direct translation of de Tocqueville’s phrase- the road to servitude- so he “changed ‘servitude’ into ‘serfdom’ for merely phonetic reasons” (Ebenstein 2001: 116). In his Dublin lecture, Hayek outlined the different interpretations of the term ‘individualism’ similar to de Tocqueville’s famous description, from his 1848 address to the French Constitutional Assembly during a debate on the contentious issue of the right to work.

In his 1848 address to the French Constitutional Assembly, de Tocqueville had insightfully and incisively described the different interpretation of the common word ‘equality’ by both democrats and socialists, equality in liberty and equality in servitude respectively (1878: 546).

In his speech to the French Constitutional Assembly, de Tocqueville had utilised the same expositional technique of outlining the different interpretations of the same word to argue his point and affirm the ‘true’ etymological meaning of the word democracy “quelle est l’etymologie vraie de ce mot démocratie” (1878: 544) as Hayek would use a century later in his 1945 Dublin lecture to outline the different interpretations of individualism.

We now know that Hayek was familiar with de Tocqueville’s 1848 speech to the French Constitutional Assembly because a section of de Tocqueville’s speech was the original source for the title of Hayek’s 1944 Road to Serfdom (1946: 16, fn.16).

The format and style of Alexis de Tocqueveille’s 1848 speech to the French Constitutional Assembly, combined with Hayek’s knowledge of de Tocqueville’s chapters on individualism in the second volume of his ‘On Democracy’, as Hayek outlined in his Dublin lecture (1946: 7, fn. 5) no doubt aided by Mill’s comprehensive and enthusiastic reviews in the London Review and the Edinburgh Review, could also possibly be considered the inspiration for the title of Hayek’s 1945 Dublin lecture (Nolan 2013b: 61-64).

Hayek also warned in his 1945 Dublin lecture, that ‘true’ individualism affirms the value of the family and all the common efforts of the small community and group whereas ‘false’ individualism wants to impose coercive rules by the state and to make all social ties prescriptive (1946: 23).

The confusion, Hayek told his Dublin audience, between the different interpretations of individualism commenced when the classical economists of the nineteenth century such as Mill and Herbert Spencer who were almost as much influenced by the French (‘false’) tradition as by the English (‘true’) tradition. This led to all sorts of conceptions and assumptions, completely alien to ‘true’ individualism, being regarded as essential parts of the doctrine of individualism (1946: 10).

6. Equality

In his 1945 Dublin lecture, Hayek acknowledged the mistaken common belief that individualism approves and encourages human selfishness (1946: 13) whereas his definition of individualism is that people “ought to be allowed to strive for whatever ‘they’ think desirable” (1946: 15). A year earlier in his Road to Serfdom, Hayek had already written how the fundamental premise of individualism was based on the fact that man can only be aware of a limited number of matters, so that man isn’t subject to any dictation or coercion by others. In summary, Hayek claimed that the essence of the individualist position is the recognition of individual man;

“as the ultimate judge of his ends, the belief that, as far as possible, his own views ought to govern his action” (1946: 18).

Under Hayek’s concept of ‘true’ individualism, governments should be configured to make rules which inform the individual as to the sphere of responsibility within which an individual may shape his own life rather that a government by orders that attempts to impose specific duties on individuals. In other words, “government should be confined to making the individuals observe principles which they know and can take into account in their decisions” rather than a government expediently decreeing, in an absolute manner, what is to be “the interests of society” (1946: 18, 19)..

These rules or principles in turn should be designed to remain valid for long periods because the rules and principles serve “as signposts to the individuals in making their own plans” (1946: 24) in a social process where the individual has choice between alternatives, even if some of them are unpleasant, rather than a society where the individual is coerced to choose what the government decrees (1946: 28).

Hayek decried political structures where the concentration of all decisions in the hands of an all-powerful central government, ostensibly to provide stability and order, leaves a society without the capacity to spontaneously evolve and develop its own differentiations due to society’s “dependence on a power which deliberately moulds and shapes it” (1946: 28).

In his Road to Serfdom Hayek believed in leaving each individual to find his own level, under a social and legal framework underpinned by equal applicability of rules to all- equal in the complete and absolute sense rather than in the ‘greater equality’ sense of socialism[23]- because as he elaborated in his Dublin lecture; only that “men are in fact unequal can we treat them equally”(1946: 15) otherwise, if men were completely equal in their abilities we should have to treat them differently to achieve any sort of cohesive social organisation.

“There is all the difference in the world between treating people equally and attempting to make them equal. While the first is the condition of a free society, the second means, as de Tocqueville described it, ‘a new from of servitude’”(1946: 16).

According to Hayek, another misleading common belief in the rational ‘false’ individualism is the presumption that each person knows his or her interests best whereas Hayek’s “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” and that “they ought to be allowed to strive for whatever they think desirable”(1946: 15) and that it is better that individuals have choice as,

“..it is better to have a choice between several unpleasant alternatives than being coerced into one”(1946: 24).

Six decades later there is still misleading interpretations and assumptions about individualism. Ireland’s President, Micheal D. Higgins in his 2012 speech delivered at the London School of Economics criticised the myth of rational markets. President Higgins denounced what he considered the extreme individualism of recent decades based on the influence of the ideas of theorists such as Friedrich Von Hayek.[24] Five months previously, as a presidential candidate, President Higgins had referred to individualism as a corrosive deadly vision.[25]

Despite Hayek’s best efforts in his 1945 Dublin lecture to differentiate the two traditions of thought by tracing the original source of the confusion between the two types of individualism, each bearing the same name but divided by fundamentally opposed principles, the confusion between Hayek’s ‘true’ individualism and the rational ‘false’ individualism continues.

Hayek informed his Dublin audience in 1945 that ‘true’ individualism, was at any rate the only kind of individualism which he was prepared to defend, and indeed he believed, ‘true’ individualism was the only kind which could be defended consistently (1946: 32).

7. ‘Spontaneous order’

In the second seminal concept outlined in his 1945 Dublin lecture, Hayek described how many of society’s social and political institutions developed without a central designing and directing mind quoting Adam Ferguson’s eighteenth century maxim that:

“nations stumble upon establishments, which are indeed the result of human action but not the result of human design” (1946: 8).

This Adam Ferguson insight, even though it was slightly modified by Hayek to make it easier to understand, (Hayek 2010: 53, fn. 14) was to play a crucial part in development of Hayek’s central idea of spontaneous order, originally formulated by the Scottish Enlightenment thinker, Adam Ferguson. Hayek argued that the knowledge requisite for the structure of the social, political legal and economic institutions under which we live is far too complex to be comprehended by any single mind or group of minds because these institutions evolve over time without any deliberate design (Hamowy 2005: xii).

In his Dublin lecture, Hayek described how “spontaneous collaboration of free men often creates things which are greater than their individual minds can ever fully comprehend”(1946: 8), the classical political economy theme commenced by Josiah Tucker, Adam Smith, Adam Ferguson and Edmund Burke. Hayek claimed that ‘true’ individualism believes social processes evolve best if man is left free, where man will “often achieve more than individual human reason could design or foresee”(1946: 11). In his 1767 Essay on the History of Civil Society, Ferguson had cited the axiom as originating from Cardinal de Retz’s Memoirs (Ferguson 1767: part III, sec. II, 183).

The late eighteenth century Ferguson maxim actually refers to the preceding seventeenth century remark ascribed to Oliver Cromwell by Cardinal de Retz in his memoirs about how “we are mounting highest when we ourselves do not know whither we are going” (De Retz 2010[1896]: 264) which Hayek was to acknowledge in a footnote twenty years after delivering his lecture in Dublin (1967: 96, fn.1).

In the late eighteenth century, Ferguson was to rely on Cromwell’s seventeenth century maxim, originally quoted in Cardinal de Retz’s memoirs. Ferguson had used the Cromwell maxim to outline how he believed that “no government is copied from a plan” (Ferguson 1767: 183) whereas de Retz upon learning of Cromwell’s maxim had said “that I abhor Cromwell; and whatever is commonly reported of his great parts, if he is of this opinion I must pronounce him a fool” (De Retz 2010[1896]: 264).

This assessment of Oliver Cromwell by Cardinal de Retz is a sentiment that most in Hayek’s 1945 Dublin audience would have agreed and found favour with, due to Cromwell’s brutal 1649 ‘sojourn’ in Ireland.

Ferguson, like Hayek, understood that social change was as result of unintended human action and in his writings Ferguson deprecated any theories that placed excessive focus on ‘great legislators’(Smith 2007: 65).

The notion of spontaneously generated social orders developed by Ferguson was incorporated by David Hume and Adam Smith into their explanations of the origin of complex social structures (Hamowy 2005 39).[26]

Since the dawn of history, intellectuals with varying degrees of success have tried to explain and understand the nature and meaning of society and its social order. During the Scottish Enlightenment of the late eighteenth century, thinkers such as Adam Smith, Ferguson and Hume began to formulate a new theory that social order was the result of unintended human action rather than the result of some superior being’s conscious design.

Ferguson insightfully observed that language also constituted a perfect example of ordered social structure that evolved without deliberate design “and without the intervention of uncommon genius, mankind” (Ferguson 1792: 43).

According to Barry Norman, the classic example of spontaneous order is the free market economy in which the co-ordination of the aims and purposes of countless actors is achieved by the mechanism of prices (Barry 1992: 10).

8. Conclusion

The Cartesian school’s belief in an elite knowing best, deciding and designing social and economic processes for society is, according to Hayek, ‘false’ individualism, which Hayek illustrated by quoting Descartes’s passage from part II of Discourse on Method, that “there is seldom so much perfection in works composed of many separate parts, upon which different hands had been employed, as in those completed by a single master” (1946: 9).[27]

The key characteristic of the ‘true’ anti-rationalistic type of individualism that Hayek defends in his Finlay Memorial Lecture is that “it is primarily a theory of society, an attempt to understand the forces which determine the social life of man” (1946: 7).

Hayek concluded his insightful and seminal 1945 Twelfth Finlay Memorial Lecture by reminding his Dublin audience that society is greater than the individual only in so far as society is free, rather than been controlled or directed by a central authority (1946: 32) that decides and determines what is to be “the interests of society”(1946: 19). .

Two decades later Hayek would further develop this theme when in his 1974 Noble Prize lecture he would warn his Stockholm audience that man must guard against trying to control and manipulate civilisation,

“..which no brain has designed but which has grown from the free efforts of millions of individuals” (Hayek 1974).

In his Dublin lecture, Hayek was continuing his Road to Serfdom theme that “a policy of freedom for the individual is the only truly progressive policy”(2007[1944]: 246), freedom of individuals as members of society as opposed to the ‘collective freedom’ of totalitarian politicians offering “the unlimited freedom of the planner to do with society what he pleases”(2007[1944]: 162). Hayek described how central planners denied individuals freedom by restricting freedom to “the good and the wise” (1946: 12, fn. 14) of ‘false’ individualism or as Hayek’s mentor Ludwig Von Mises answered to the question whether individuals plan for themselves or that a government exclusively plan for all individuals, “it is freedom versus government omnipotence” (Von Mises 2008[1949]: 726).

Hayek’s profoundly insightful 1945 Dublin exposition of ‘true’ individualism in comparison to the fundamentally different ‘false’ individualism and his development of spontaneous order theory in his lecture, is an example of a man sharing his exploration of using theory as an apparatus of the mind, a sort of early manifesto for neoliberals.

In his 2011 introduction essay in the definitive edition of Hayek’s Constitution of Liberty, Ronald Hamowy declared that Hayek’s insights into the nature of social organisation and how the complexity of institutions “put them beyond the ability of any one mind or group of minds to comprehend or design pervades all of Hayek’s social theory” (Hayek 2011: 5). Therefore significantly, I consider that it was in Dublin in December 1945 where Hayek first outlined his insights into the nature of social and political organisation and how they evolve spontaneously underpinned by his ‘true’ individualism that treats everyone equally rather than trying to make them equal.

Hayek’s 1945 lecture was a defence of ‘true’ individualism, an early example of Hayek’s pervading social theory insight that helped him explain the origins of complex social, political and economic structures, “which have not been designed or understood by any individual and are indeed greater than individual minds”(Hayek 1946: 32).

Hayek’s lecture outlined the origins, evolution and the fundamental role of ‘true’ individualism in a free society which he asserted “is primarily a ‘theory’ of society, an attempt to understand the forces which determine the social life of man, and only in the second instance a set of political maxims derived from this view of society” (Hayek 1946: 7) is as valid today in the second decade of the twenty-first century as it was in the preceding three centuries since Mandeville’s 1714 Fable of the Bees.

Undoubtedly Hayek’s interpretation of Schatz’s study of Mandeville’s allegorical Fable - that anticipated Ferguson’s maxim that society’s social and political institutions were “indeed the result of human action but not the execution of human design” (Ferguson1767: 183) - helped him develop and formulate his own ‘spontaneous order’ theory. I consider Ferguson’s maxim as the bedrock assumption underpinning Hayek’s ‘spontaneous order’ theory that is in-turn the touchstone of ‘true’ individualism.

Hayek’s great question, posed to his 1945 Dublin audience was whether individuals’ minds will be allowed to continue to grow, in a free society, as a result of their cumulative unintended actions rather than being centrally controlled or directed by governments (Hayek 1946: 32).

What Hayek’s ‘true’ individualism “teaches us is that society is greater than the individual only in so far as it is free” (Hayek 1946: 32) a far-reaching maxim that followed a tradition of thought of other deeply aware political thinkers in a direct line from Bernard Mandeville to Adam Smith to Alexis de Tocqueville continuing through to Albert Schatz and onwards to Hayek himself.

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[1] See also E. F. M. Durbin’s critical review of Hayek’s book in The Economic Journal (Durbin 1945) and Ronald Hamowy’s outline of Professor Hermann Finer’s 1945 “venomous” book, ‘The Road to Reaction’ written in response to ‘The Road to Serfdom’ (2011: 3, fn. 4).

[2] See Glenn Beck Presents: F. A. Hayek’s ‘The Road to Serfdom’ on YouTube parts 1, 2 & 3

[3] See also Introduction page 1 to page 45 for an in-depth evaluation on the purpose and context of Hayek’s ‘Abuse and Decline of Reason’ two volume project and the proposed title of the introduction The Humility of Individualism .

[4] See also Mark C. Nolan’s monograph on the inaugural 1933 Finlay Lecture (Nolan 2013a).

[5] ‘Small Countries ‘Last Oases of Freedom’, Irish Press, Dublin, December 18th, 1945, p. 3.

[6] Meenan, James (1967). Even though it appears Sir Horace Plunkett initially believed the opposite to a large ‘P’ and a small ‘e’ being applicable to Irish political economy issues. According to his paper ‘The Irish Question in a New Light’, The North American Review, Vol. 166, No.194 (Jan., 1898) pp.107-120, on page 111, Plunkett wrote that “The Irish difficulty has long been rather economic than political, and it is so more than ever today”. Twenty three years later, in his paper titled ‘Rural Regeneration’ about the economic development of the Irish agricultural co-operative movement in Ireland, in the same journal, Sir Horace Plunkett complained on page 472, that “the politicians put a spoke in our wheel.” See The North American Review, Vol. 214, No. 791 (Oct., 1921), pp. 470-476.

[7] Papers of Eamon de Valera (1882 -1975), University College Dublin Archives, Dublin, Ref., UCDA IE P 150/2238, p. 1-9.

[8] cf The Daily Mail, ‘Plain Words on The Irish Treaty’ by Winston S. Churchill MP, Tuesday March 29th ,1932, p. 8.

[9] ‘Ireland Re-Emerges, The Round Table, Sept., 1945, Vol. 35, Issue 140, p. 309.

[10] ‘Mr Churchill’s War Review-Five Years’ Drive To Victory-Eire’s Policy of Neutrality Criticised’, The Irish Independent, Monday 14th May, 1945, p. 3.

[11] Ibid., p. 3

[12] ‘Mr De Valera Replies to Mr.Churchill-Reason for Irish Neutrality’, The Irish Independent, Thursday 17th May, 1945, p. 3.

[13] ‘Ireland Re-Emerges’, The Round Table, Sept., 1945, Vol. 35, Issue 140, p. 307.

[14] Ibid., p. 313

[15] See also George O’Brien’s follow-up book on the preceding century (1919) because according to O’Brien, in page one of the introduction, the two centuries were so inextricably interwoven that “a study of one by itself seemed doomed to be incomplete, just as an examination of the lower reaches of a river would be incomplete without some study of its source.”

[16] O’Brien cites an extract on the inside cover of his book, from W. B. Yeats’s 1902 play Cathleen Ni Houlihan, about Ireland’s struggle for independence, as her ‘four beautiful fields’ representing the four provinces of Ireland, that were unjustly taken from her. Yeats’s play was set in the West of Ireland in 1798, when a French expeditionary force had landed in Killala to help Wolfe Tone’s separatist revolutionary organisation, the United Irishmen, repel the English, but ultimately the French force were surrounded and surrendered (Jeffares 1975: 27-36).

[17] See Cyrille Ferraton et Benoît Prévost’s preface in the reprint of Schatz’s book (Schatz 2013[1907]) and also see Pierre Curty’s study on the life and writings of Schatz (Curty 1995).

[18] Dutch Medical Doctor and philosopher Bernard Mandeville’s work originally published anonymously on the 2nd of April 1705 as a six-penny pamphlet consisting of a four hundred line poem called The Grumbling Hive: or Knaves Turn’d Honest, (Kaye 1921: 425). In 1714 he added more prose and a new title The Fable of the Bees: or Private Vices, Public Benefits; with an Essay on Charity and Charity Schools and a Search into the Nature of Society. In 1729 Mandeville further added a Part Two consisting of six dialogues and a final 1732 edition before he died in January 1733. Because Mandeville’s Fable was published in two parts at different times, F. B. Kaye’s edition of the Fable two centuries later would use the 1732 text in volume one and the text of the 1729 edition in volume two including notes listing all significant variations in the different editions that were issued during Mandeville’s lifetime (Mandeville 1988[1924]: I, ix).

[19] In his 1966 London lecture on Mandeville Hayek, echoing Schatz, claimed that Mandeville made Hume possible and how, through Hume, Mandeville exercised his most lasting influence (Hayek 1978: 264).

[20] Edwin Cannan (1861-1935), an eminent historian of economic thought at Hayek’s LSE, first championed Mandeville in his thirty six page editor’s introduction to the 1904 reprint of Adam Smith’s The Wealth of Nations. Cannan posited that Adam Smith originally obtained the belief that self-interest worked for the benefit of the whole economic community from his study of Mandeville a writer who, according to Cannan, has had little justice done to him in histories of economics (Smith 1904[1798]: xliii-xlvi). Cannan had further outlined how Adam Smith in his Moral Sentiments had concluded that the economic and social system described by Mandeville would not have elicited such a response from so many “had it not in some way bordered upon the truth” (Smith 1904[1798]: xlvi).

[21] Universitätsbibliothek Salzburg, Fakultätsbibliothek Rechtwissenschaften, Hayek Personal Library, Salzburg Österreich, Shelfmark No. 642.

[22] See the 1983-84 correspondence between Hayek and Jacques Schatz on the proposed publication of an English translation of his father’s 1907 l’individualisme éconimique et social with the preface to be written by Hayek held in Box 48, Folder 13 of the Friedrich A. Von Hayek Collection, The Hoover Institution Archives, Stanford University, CA.

[23] Hayek, F. A., “The Road to Serfdom”, George Routledge & Sons, London, 1944, reprint 2007, p.113-114

[24] Higgins, Micheal, D., President of Ireland, Public Intellectuals, Universities, and a Democratic Crisis, LSE European Institute, 21st February, 2012.

[25] Nihill, Cían, ‘Higgins Critical of ‘Corrosive’Ethos of Individualism’, The Irish Times, October, 6th, 2011.

[26] See also chapter 3, pages 10-22 (Hamowy 2005).

[27] In a New York Times Magazine article six months before his Dublin lecture, Hayek was weighed down by the development toward all-controlling state power and he claimed that the century “from 1848 to 1948 will probably come to be known as the century of Socialist delusion” (1945: 25).

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