I was recently reminded of this quote from Friedrich Hayek. He describes how our actions are ruled by two different spheres of order. The manner of our obligations to our children does not extend past the front doors of our house. An acceptable reprimand in a workplace between boss and employee may be considered uncaring in a network of friends.
Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e., of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once. [italics original]
The Fatal Conceit (page 18)
The value we create through our network of friends or commitments to associational fellowship operates in a different sphere from the unfettered obligations of commerce.
When I went to my copy of the book I started reading from the top of the page. Before Hayek gets to acknowledging that the two spheres of activity must work together or they will crush each other, he depicts a bunch of different players other than individuals.
Moreover, the structures of the extended order are made up not only of individuals but also of many, often overlapping, sub-orders within which old instinctual responses, such as solidarity and altruism, continue to retain some importance by assisting voluntary collaboration, even though they are incapable, by themselves, of creating a basis for the more extended order.
The Fatal Conceit (page 18)
The simplistic model portrays the selfish man using the capitalist system to maximize his interest in a zero-sum game. The state watches the public good and provides products and services to that end. But Hayek suggests that economic players can be groupings established through solidarity and altruism. These are abundant and overlapping.
Think of a formal grouping that provides public services to its members, such as a teacher’s union. When the union negotiates it is acting in a competitive ego-centric way against the public. It is a private player. Yet ever member of the union shares equally in the spoils of the union’s efforts and hence obtains a public good. It is the manner of the activity defined by the boundaries of the group which makes a wage increase public or private.
This morphing of the nature of a good through action within defined boundaries presents challenges to an accurate accounting of the whole system.
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