At the ripe old age of 90, Nobel Laureate Friedrich von Hayek tackled in this book the origin and nature of ethics.

Like Marx, Hayek sees an inherent contradiction in Western capitalistic societies. Unlike Marx, however, Hayek sees this contradiction in terms of an ethical dualism, not a materialistic dialectic, and he also feels that this contradiction is both necessary and beneficial though nonetheless problematic.

Hayek approaches ethics from an entirely different angle from most philosophers. While philosophical ethics usually entail rationalistic system-building from certain assumptions about human nature or from bits of empirical data, Hayek's ethics are non-rationalistic and based upon thre historical process. Hayek rejects the explicit, rationalistic construction of most ethical systems because such constructions rest upon the "fatal conceit" of human reason. Reason, Hayek argues, is incapable of commanding the information necessary to design an ethical system.

Hayek believes that ethics lies somewhere between instinct and reason. Ethics -- like language, the marketplace, and the common law -- are a spontaneous order that, in the words of Adam Ferguson, is the product of "human action, but not human design."

Our ethical system was not designed by anyone; it is traditional, handed down from generation to generation, and learned by imitation. Its progress and development were achieved by a process of social evolution: those cultures which adopted "good" ethical systems survived and flourished, while those with "bad" ones either floundered or adopted more successful ethical systems. This subtle process of trial-and-error has produced Western ethics, a highly successful system.

In what way do Westem ethics contain a "contradiction"? To umderstand tnis proposition, one must examine Hayek's theory of the actual historical development of ethics. Hayeck holds that the original human ethical system was that of the small group -- the hunter/gatherer tribe. These "small group" ethics were both solidaristic and altruistic. The primitive tribes at the dawn of man's historywere each united by a shared purpose -- rudimentary survival in an uncontrollable, hostile envuonment -- that superseded the different purposes of the tribes' individual members.

As time passed, agricultural techniques were developed and cities were formed. These events provided a basis for two further developments that made "small group" ethics untenable: economic trade and population growth. Trade placed members of closed communities in close contact with "foreigners" who usually did not share the group's purposes or beliefs. Population growth, spurred by relative economic security, made the small group rather large, with the result that members of the same group were often strangers to one another and often pursued different ends.

These social changes were matched by changes in the ethical sphere. "Small group" ethics were not applicable to diverse, cosmopolitan communities; groups that failed to adapt became isolated and economically stagnant. Through the social evolutionary process, "small group' ethics" were gradually replaced by what Hayck calls "extended order" ethics. "Extended order" ethics abandoned commands that tought collective ends im favor of abstract, generally applicable rules that facilitated varied individual ends. These ethics served as an impersonal mechanism for the coordination of individual actons and plans, whereas "small group" ethics were dependent upon the highly personal rule of the tribal leader, who directed the group to a common goal.

While "extended order" ethics replaced "small group" ethics as the dominant system, "small group" ethics continued to exist side by side with their more successful ;ounterparts. Families, friendships, and businesses continued to operate according to the solidaristic principles of 'small group" ethics for obvious reasons. Love, camaraderie, and shared purpose -- so necessary to human fulfillment -- are possible only within the small group. Thus, contemporary Westem ethics are a heterogeneous mixture: "extended order" ethics tell individuals and groups how to act within the larger social order, while "small group" ethics instruct imdividuals how to behave within the confines of the various voluntary organizations to which they belong.

But, as Hayek notes, individuals have only a "limited ability to live simultaneously within two orders of rules." The dividing line between the two ethical structures often becomes fuzzy in application, leaving individuals confused conceming their obligations. For instance, one would clearly have an obligation to assist a friend or family member in financial need. But what about a needy stranger who accosts one on the street? Or a fellow businessman, teetering al the edge of bankruptcy, `with whom one is competing in the marketpIace of the extended order?

Hayek warns that, as strong as the tension may be, the balance between tbe two systems of ethics must be maintained. Both systems serve vitally important functions within their own spheres: "small group" ethics provide for warmth and compassion essential to man as a social animal, while "extended order" ethics provide a coordination function necessary to maintain economic security and further growth im both population and wealth.

While no one (with the possible exception of Ayn Rand's followers) is calling for an extension of "extended order" ethics imto the realhm of the small group there is an influential intellectual group, the socialists, calling for just the opposite: the reconquest of the West by "sma11 group" ethics. Needless to say, Hayek looks upon this prospect unfavorably. Hayek, while admitting that such an event might initially satisfy our instincts, points out its long-range consequences: poverty, starvation, and widespread death. "Extended order" ethics, Hayek notes, are chiefly responsible for making possible our present level of quality of their lives ... such people can inspire the multitude whose ideas are too vague to generate convictions one way or another. A little Icaven raises the entire lump ief de;rugh; a s;nal1 rudder turns a huge ship. And a handful of people possessed oi ideas anre a drean1 has go~ ho: d of the han.~lle which can turn a nation around-especially a nation that is searchiing for new ansvwers and a new direction.

The Reverend Mr. Opitz is a member of the staff of The Foundation for E`;;onomic Education, a seminal lecturer, and author of the book Religion and Capitalism: Allies, Not Enemies.

This essay is adapted from an article that appeared in the lanuary 1977 issue of The Freeman.

This article is from The Freeman, August, 1992.