Hayek and International Economic Order

Abstract

Summary Hayek wrote very little on international economic order. In his few writings on the subject, going back to the 1930s and 40s, he follows Robbins in advocating „international authorities“ to solve the problem of international political and economic disorder. The paper argues that Hayek indulges in „naive constructivism“. First, he ignores the classical liberal insight, from Hume and Smith to Ropke and Tumlir, that, fundamentally, a liberal international economic order is generated „from below“ as a by-product of proper constitutional observance within national orders; it does not result directly „from above“ through international political cartels. Second, „international authorities,“ berefit of requisite moral and political preconditions within nation-states, would likely degenerate into politicised, interventionist agencies rather than being apolitical enforcers of an International Rule of Law. The second part of the paper shifts attention to Hayek’s wider work in national political economy and seeks to make it relevant to international economic order. His core insights into the division of knowledge and the spontaneous order, with their surrounding rules and conventions, can be transposed to the international level and provide a „vision“ of a dynamic and institutionally dense international economic order. This would be a useful complement, and indeed a salutary corrective, to a static view of international trade-and-payments in the modem neoclassical tradition. Seen from a Hayekian standpoint, the origin, growth and maintenance of a liberal international economic order, like the national catallaxy, rely on the division of knowledge and its overwhelmingly spontaneous coordination. Supporting rules and conventions for property and contract have also emerged and spread in largely (although not wholly) spontaneous fashion. At the level of political deliberation, market-friendly rules have been put in place mainly within nation-states, and then diffused by a process of competitive emulation; mostly, they have not been a product of international political cartels. These evolutionary Hayekian insights would fit in well with and buttress a „bottom-up“ and dynamic classical liberal view of international economic order, as initially set out by Hume and Smith