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____________________________________________________________


THE CONSILIENCE REPORT:

                                         A Bionomic Meditation
                                         Number Nine
                                         10/13/98

_____________________________________________________________

                                        A SOLDIER OF THE GREAT WAR



Last Waltz in Vienna
================

In the summer of 1918 the Great War was
grinding through its fourth year. Thirty millions
already dead or wounded -- or more --  no one
really knows -- and the wreck of Europe still
staggered on, like a blind man into oncoming
traffic.

In Italy the Austrian army was making its
last futile bid for a military victory with
an attack across the Piave River.  In ten
days they would lose 100,000 men -- twice
all the American deaths in Vietnam, but
barely a footnote in the endless slaughter
of WW1.

If you had been on the Italian front that June --
if you had been, say, young Ernest Hemingway
from Michigan, tending your ambulance -- and
had looked up at just the right time and place,
you might have seen one of the biplanes of that
era: an observation craft buzzing westward
from the Austrian lines.

The skinny boy-officer in the rear cockpit was a
spotter for an artillery regiment of the Austro-
Hungarian army.  He had dropped out of high
school in his senior year to enlist and experience
a small part of the catastrophe.

He was Lieutenant Friedrich August von Hayek,
eldest son of a distinguished family of the minor
Austrian nobility.  He was just nineteen years old
and, like all the young men so engaged that year,
had no good prospect of getting much older.

Hayek had been born in Vienna in 1899, in the
reign of "der Alte Kaiser," the Emperor Franz-
Joseph, next-to-last of the durable Habsburg
dynasty.

Unlike many of his age and class, Lt. von Hayek
survived his war.  He contracted malaria in the
long retreat in the fall of 1918 but made it back
-- thin and sick, but alive -- to a city that was no
longer the glittering capital of a polyglot empire.

Vienna was now just the largest city in the tiny
rump state of the Austrian Republic -- redundant,
impoverished, and on the edge of starvation. But
it still possessed enough intellectual and cultural
capital for one last burst of achievement before
the Nazis rolled in fifteen years later. Here, Hayek
considered his prospects in a changed world and
prepared to enter the University of Vienna.


A Shift of Attention
===============

His first love had been the natural sciences. His
grandfather had been a prominent ornithologist
and Hayek, like his father, had been a fervent
amateur botanist.  One of his brothers became
an anatomist, the other a chemist.

By the time he was sixteen he had progressed
from a collector's interest in taxonomy to
paleontology and evolutionary theory -- but the
war changed things. The experience of serving
in a multinational army, shifted his interest from
the natural to the social sciences.

As he drily remarked:

   I served in a battle in which eleven different
   languages were spoken. It's bound to draw
   your attention to the problems of social
   organiization.

As unbearable as 1914-1918 had been, events
were already in motion to ensure that the rest
of the horrible twentieth century arrived on
schedule.

Austria's senior ally --  the other Kaiser -- had
just put the Russian emigre Vladimir Ulyanov
(nom de guerre: Lenin) into a sealed train bound
for St Petersburg,  like a plague bacillus into the
artery of a sick man.  And within a year another
Austrian veteran, Adolph Hitler, would make his
way to Vienna, tramping through a rougher
neighborhood than Hayek's, completing his own
education among the crackpots and anti-semites
that had long been flourishing like weeds in the
brilliant but decadent capital.

Europe, broken and bleeding, waited patiently
while the scenery was shifted and the principal
players learned their lines for the next act. Hayek
had little to do with that -- few would be ready to
listen to him or his ideas until the National Socialists
and Communists had shot their bolt, and not many
even then.


Some Piety
=========

We would like to think that everyone knows
of, and esteems Hayek but, for the benefit of
students arriving late here is a brief recitation:

F. A. Hayek (1899-1992) was one of the foremost
economists of this century before he morphed into
a later and even more important career as a social
and political philosopher.  He won the Nobel prize
in economics in 1974 and America's presidential
Medal of Freedom in 1991.

Those are some of the bare facts as they are
cited in reference books, but there is much more
to be said: He was a mighty scholar, an original
thinker, a gentleman in a nearly-forgotten sense
of that word.

Above all, he was a man of unflinching moral
courage who did as much as anyone to keep the
idea of individual freedom alive.  In an age when
many of our leaders have tried to tell us that
liberty is an embarrassing relic of another age --
something that we should happily trade in for
something shinier -- our nation, or our race, or
equality, or security, or social justice, or some
other fabulous chimera -- Hayek quietly,
persistently said: No, we won't.

For that, and for other things, we owe him.

Hayek had a long and useful life, doing important
work on into his 70s and 80s, but he won't quite
have made it into his centenary year of 1999. We
expect that hosannahs will be going up from all of
the various libertarian enclaves as his 100th birth-
day approaches, but TCR would like to be among
the first to pay our respects.

We expect we will need two or three more essays
to talk about his life and work, connect it to our
present concerns, and to try to make it clear that
he is somewhat more than just another dead
economist.

There's something to be said for the old Greek
ideal of piety -- civic reverence toward what
has gone before -- and if anyone in our century
deserves a bit of that,  it is certainly he.


London
======

Between the wars, even before the Nazis would
have made his departure obligatory, Hayek left
Vienna and alighted in London, a place he found
very much to his liking.

In 1895, Sidney and Beatrice Webb, doyen and
doyenne of English socialism, had founded the
London School of Economics and Political Science,
intending for it to be the West Point of their sect.
But things had loosened up a bit, and Lionel
Robbins, the moderate scholar who headed the
economics department, decided that a young
visiting lecturer from Vienna was a comer.

Robbins discovered that Hayek, notwithstanding
his anti-socialist views, seemed to  know more
about the history of the English monetary system
than any man in England. His English was passable
and he was a genial, well-bred sort -- "clubbable"
as the English say.  Robbins offered young
Dr Hayek a faculty position.

LSE didn't have quite the cachet of Oxford or
Cambridge but, for a young foreigner whose
own country offered poor prospects, it was a
plum.


The Great Debate
=============

In the small world that concerned itself with
economic theory, Hayek emerged in the early
Thirties as the great rival of John Maynard
Keynes.  In the journals, they conducted a public
debate about monetary and fiscal policy and
what, if anything, economists (and the governments
they advised), could do about the Great Depression
that seemed to be swallowing up the wealth of
the planet.

Keynes, brilliant and charismatic, had dabbled
in several fields, but now believed he had
solved the problem of booms and busts -- what
the economists genteelly referred to as "economic
fluctuations." When Keynes published his  _Treatise
on Money_, Hayek, uncharismatic but persistent,
fired back with a series of penetrating criticisms.
Later Keynes extended his ideas in_The General
Theory of Employment, Credit, and Money_,
and again Hayek returned fire.

Personally, Keynes and Hayek became
good friends, sharing a passion for history
and book collecting.  Publicly, they fought on.

As we all know, Keynes won the debate and
Hayek lost it, or so it seemed at the time, as
governments gravitated to Keynesianism.
Then came the Second War, which seemed
to justify extension of government control over
whatever bits of their economies that central
planners in Washington and London had not
already comandeered to fight the depression.

We can't pause here to consider the substance
of the Keynes-Hayek debate (and aren't compe-
tent to do so), except perhaps to say that it was
rooted in a basic conceptual clash about whether
macroeconomics as proposed by Keynes and
others really made any sense.

Hayek (and the Austrian school from which
he sprang) held that the aggregate measurements
of economic activity -- which Keynes proposed
to track and control through state action --were
statistical illusions that could only mislead policy-
makers about microeconomic reality.

Later, Hayek himself said of the great debate:

   In the middle 1940s... I was known as one of the
   two main disputing economists: there was Keynes
   and there was I . Now Keynes died and became
   a saint; and I discredited myself by publishing
   _The Road to Serfdom ...


A Discreditable Book
================

In the summer of 1939, even after Austria's
annexation by Hitler,  Hayek took train across
Europe for his annual holiday in the Austrian
Alps. He was a vigorous forty and an experienced
mountaineer, confident that even if war befell, he
could walk out of the country across the mountains,
depending on his skills and knowledge to reach
Switzerland.

He did his best thinking in the mountains and
here, perhaps, in Nazified Austria, he mapped
out his own little piece of the next war.  He had
seen, at closer-hand than his English colleagues,
the extinction of liberal Europe, the ascendency
of barbarism, and the steps by which it had
been wrought.  He had already published a little
article called "Freedom and the Economic
System" in a popular magazine. It contained
the germ for an argument he knew many people
wouldn't want to hear.

His loyalty was to England now, but he
began to wonder if his new countrymen really
understood how easily their liberty could slip
through their fingers.

An ex-enemy alien, with a German accent
and a "von" in front of his name was not
considered a suitable candidate for a government
post -- it would have involved PR problems that
Mr Churchill didn't need.  So Robbins and Keynes
became government advisors, while Hayek
taught. His contribution to the war effort was
philosophical and polemical rather than
bureaucratic. And, as it turned out, the war
that preoccupied his thougtsa wasn't precisely
the same one that the English thought they
were fighting.

In his spare time between 1940 and 1943 he
wrote _The Road to Serfdom_, and published
it in Britain in 1944.  It was a book that nearly
ruined his reputation as an economist and set
his life on a new course.


On the Road
=========

When Hayek was awarded the Nobel prize in
1974, the first reaction of many was surprise
that he was still alive. A few recalled that he
had debated Keynes many years ago, then he
had published a polemic that upset everyone
and wrecked his career. Where had he been?

Unlike his friend and rival Keynes, Hayek
didn't think of himself as a wit. When he
dedicated RTS to "The Socialists of All Parties,"
he was not being arch or ironical. They were
precisely the people he was addressing. If it was
a polemic, it was an uncommonly polite one.

In a long and disputatious life Hayek always
carefully attributed only seemly motives
to his opponents -- never suggesting that they
sought anything but the good and the true. In
his own case it may have been so, but he was a
very unusual man. His opponents were often
not so delicate.

What he told them, in fine, was that he believed
in their good intentions:

   There can be no doubt that most socialists
   still believe profoundly in the liberal ideal of
   freedom and that they would recoil if they
   became convinced that the realization of
   their program would mean the destruction
   of freedom.

Then, for two hundred pages, he tried to so
convince them and bring about that recoil.

He argued that the planned economies to which
so many well-meaning people had pinned their
hopes for a better world would inevitably and
tragically lead to a worse one. That all of their
ideas had already been tried in Germany or Russia
or both. That the results were there for anyone
with the eyes to see them. That their good intentions
would not save them.

The book was written by an Austro-Englishman
specifically to warn his new countrymen -- full of
examples and arguments calculated to move
an English mind. It received a respectful hearing
there, where Hayek was something of a minor
public figure. It never occurred to him that it
would become a popular best-seller in the United
States, where he was completely unknown.

When Hayek arrived in the United States in the
spring of 1945, he was planning to lecture to
audiences of economists at a few universities.
Instead, he discovered that RTS had been
published not just by the scholarly University
of  Chicago Press, but had been condensed in
The Readers' Digest, the largest-circulation
magazine of its day, then re-printed in a cheap
edition as a Book-of-the-Month. In the pre-
television, pre-Internet world of 1945 it was a
media blitz.

He was astounded to discover that he was an
instant celebrity.  In New York, instead of
lecturing to a few professors he found himself
addressing an overflow crowd in a 3000-seat
auditorium, and carried live on network radio.


Aftermath
========

It would be pleasant to report that the socialists
of all parties had actually been persuaded, or at
least cowed, by RTS, but of course no such
thing happened. Not then, and not now.

Hayek had his bewildering few weeks of
American celebrity, and here and there RTS
penetrated deeply.  Hayek continued to work
and write, spent time in the United States and
in  liberated Europe, and did what he could to
marshal a revival of what he quaintly still insisted
on calling "liberalism."

His American critics, calling themselves
liberals, insisted that he was a reactionary
conservative and an enemy of progress. A
comedy of errors that persists to this day.

Although Hayek and RTS outlived many
critics -- always the most satisfactory way
to win an argument -- there were plenty of
them.

One of the three American commercial
publishers that rejected the book found
it so politically repulsive that they reportedly
said it was "unfit for publication by a
reputable house."

As he recalled it:

   The English socialists, with few exceptions,
   accepted the book as something written in
   good faith...In America it was wholly
   different... The great enthusiasm about the
   New Deal was still at its height...the American
   intelligentsia...felt that this was a betrayal of
   the highest ideals which intellectuals ought to
   defend. So I was exposed to incredible abuse...
   It went so far as to completely discredit me
   professionally.

When efforts were made to bring Hayek to the
University of Chicago a few years later, the
school's economists rose in angry disdain.
Hayek had to settle for a berth with the
prestigious Committee on Social Thought,
where he was pointedly not expected to
profess economics.

It was only in 1974 when he made his trip
to Stockholm to receive his Nobel gong,
that there was a general revival of interest
in the forgotten man.

And there the tale will have to rest for now.


Postscript and Preview
=================

At the Fourth Bionomics Conference in 1996,
Eric B. Baum of the NEC Research Institute gave
a workshop on genetic algorithms, featuring
a program he called "The Hayek Machine." The
name was not whimsical -- it pointed back to an
obscure book by Hayek called _The Sensory Order_,
a foray by the economist into theoretical psychology --
published in 1952, but based on notions he had
sketched out in the 1920s.

Genetic algorithms are a subset of artificial
intelligence research, but they also have important
implications for economics, psychology, biology,
and other disciplines. Baum's Hayek1 and Hayek2
are "dumb" programs operating with limited infor-
mation about their environment, but which manage
to solve complex problems. It is Adam Smith's
Invisible Hand, as enriched by F. A. Hayek and
formalized by cutting-edge computer science.

We think the value of history is self-evident, but our
interest in Hayek is mainly forward-looking. He tried,
very persuasively, to show us the social world as a
field of self-organizing institutions co-evolving in an
almost Darwinian fashion -- what he called
spontaneous order.

Hayek's work anticipated and partly inspired
research now being carried out in many disciplines.
It implies a world-view that is still inchoate and hard
to encapsule in a word or a phrase.  "Complex
self-organizing systems" catches some of it. But it
could just as well be called simply Hayekian.

It also happens to be a way of looking at things
that is congenial to libertarians.  If the social
world were not, in fact, essentially Hayekian, then
order could never arise spontaneously.  But
our growing understanding of complex systems
in many contexts is confirming the reasonings and
intuitions of Hayek.  Our human world is a place
where order need not be imposed by planners and
despots -- a world where a free society operating
within an impersonal framework of basic rules
is an available option.

As intimated above, we hope to tease out various
Hayekian insights in future TCRs: spontaneous
organization, the role of information in the economy,
and his re-thinking of the problem of constitutional
govenment, among others.

And along the way: an occasional nod of gratitude
to the old soldier himself.

======================================

Resources:

1.  A Soldier of the Great War

Our title was swiped from the excellent novel
of the same name by Mark Helprin. It is a
fictional reminiscence of an old man who, in his
youth, fought with the Italian Army in World
War One. A convenient way to learn something
about that war, which also happens to be a fine
piece of writing.


2.  Hayek had been born in Vienna...

There are several biographical sketches of Hayek
here and there, but no proper biography exists.

For this essay we relied heavily on  _Hayek on
Hayek: An Autobiographical Dialogue Edited
by Stephen Kresge and Leif Wenar_.

It has been cobbled together from several tape-
recorded interviews with Hayek  in the 1970s
and '80s, and gives us Hayek in his own words.

It's a companion to the collected works of
Hayek, being published in 20-odd volumes by
University of Chicago Press with the support
of a dozen classical liberal/libertarian groups
in several countries, including Cato and the
Reason Foundation.

The introduction by Stephen Kresge is the best
short summary of Hayek's life and works that
we know of. The book includes some wonderful
photos, including young FAH in the regalia of
an Austrian officer, and writing al fresco in the
Alps.

All extended Hayek quotes arefrom this work.

Available from Amazon  (1994 HC edition)
for $27.50:

   http://www.amazon.com/exec/obidos/ASIN/
      0226320626/002-2884821-8302613


2a.  The Hayek Interviews

One of the tapes included in _Hayek on Hayek_
is a 1977 interview conducted by Prof. Tom
Hazlett.  It was printed in Reason magazine in
1992 following Hayek's death.

Available at:

  http://www.reasonmag.com/hayekint.html

Also, for those who want to see and hear the
man himself, several recordings are available
from the Idea Channel. Selected clips can be
seen/heard for no charge at their website:

   http://www.ideachannel.com/HayekDiscussions.htm


3.  The Hayek-Keynes Debate

No short piece can resolve this tangled and very
theoretical fifty-year-old controversy.

The most lucid and concise account of this
dispute (for non-economists) we know of is an
essay by Fritz Machlup in _Essays on Hayek_
(1976).

Machlup is another eminent Austrian
who taught at Princeton and is a past president
of the American Economics Association. He is
sympathetic to Hayek but fair to Keynes.

The book is, unfortunately, out of print, but
probably not difficult to find.

As to the final fate of Keynes, we can only note
that his reputation is much diminished in
recent years, while Hayek's has risen. At the 1997
convention of the American Economics Association,
there was a session called "Is there a Core of Practical
Macroeconomcs That We Should all Believe?,"
suggesting that there is considerable disarray in the
macro school which was once confident that it was
smart enough to not only understand but "fine-tune"
modern economies.

See also:

Ben W. Bolch, "Is Macroeconomics Believable?"
in The Independent Review, vol 2, No4 (Spring 1998).


4.  _The Road to Serfdom_

The fiftieth anniversary edition was published
by University of Chicago in 1994, and is still
in print.  It includes a new introduction by
Hayek's friend and fellow Nobel laureate
Milton Friedman and Hayek's lengthy preface
to the 1956 edition.

RTS has been roundly praised, here and elsewhere,
as a classic, and it surely is. But it should be noted
that much of the book's argument turns on people,
issues and events of the 30s and 40s which some
readers born after WW II may find a bit murky.

The "classical" central-planning socialism
criticized by Hayek in 1944 has been succeeded
by socialism "lite" -- the pervasive regulate-and-
redistribute regimes with which we cope at
century's-end, and a bit of translation is required
to see that it is the same vinegary wine in a new
bottle. A reader who wants a short, sharp
summing-up adjusted for recent fashions in
statism might prefer _The Fatal Conceit_
(1989), Hayek's parting shot in his ninetieth year.

No single book encompasses all of Hayek's
thought, but those who are not much interested
in technical economics, are pressed for time, and
want to read the best single, systematic statement
of Hayek's philosophy might better take up his
_The Constitution of Liberty_ (1960).

RTS is available for a paltry $8.76 from Amazon
at

   http://www.amazon.com/exec/obidos/ASIN/
      0226320618/o/qid=908170736/sr=2-1/
      002-2884821-8302613

CoL  (1978 trade PB edition) is $19.95:

   http://www.amazon.com/exec/obidos/ASIN/
      0226320847/qid%3D908170912/
      002-2884821-8302613

TFC (1991 trade PB edition) is $12.00:
   http://www.amazon.com/exec/obidos/ASIN/
      0226320669/r/002-2884821-8302613


4.   The "Hayek" genetic algorithm program...

A brief abstract of Dr Baum's presentation is
available at:

   http://www.bionomics.org/text/events/conf96/
      abstracts/abBowlBaum.html


5.  Hayek on the Web

There are a number of good Hayekian resources
on the Net, but the only one you really need is the
excellent Friedrich Hayek Scholars' Page at

   http://members.aol.com/gregransom/
        hayekpage.htm

It's maintained by Professor Greg Ransom of Mira
Costa College, and contains links to every substantial
bit of Hayekiana on the Web.  A cornucopia.

==============================================

TCR is published by Steve Hyde and John LeGere, and written,
more often than not, by John LeGere..

Comments, brickbats, and inquiries can be addressed to
us at CONSILRPT@aol.com

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If you know discerning people who would like to receive TCR,
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-----------------
Robert A. Hettinga <mailto: rah@philodox.com>
Philodox Financial Technology Evangelism <http://www.philodox.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'