Hmmm this is a very difficult topic to really do justice to. I don't think that Hayek is necessarily contrary to anything I am saying. The problem though is a definition of virtue.
> You line up the list of virtuous things (curing AIDS, feeding poor people) and the list of valuable things (Ruby on Rails programmers, inanimate chunks of metal) and discover that they just don't line up. At all.
But the problem here is that without a framework for deciding what is virtuous, all you are doing is assigning your own measure of value. In that regard your argument boils down to "what you think is valuable is not necessarily a solution that lots of people will pay money for." But I do think that virtuous solutions are valuable to the extent they are virtuous. A cure for cancer would be worth, I would expect, thousands or millions of times what a hollywood blockbuster would be.
However there are limits to this analysis. While I think valuable = virtuous with regard to solutions it doesn't necessarily follow that the coal miner is less virtuous than the Ruby programmer. Wages are determined in ways that both do and don't resemble market economics as even Adam Smith noted (he saw wage levels as being indicative of negotiating power differences between various professions).
So my caution is to avoid looking at wages (ruby programmers vs coal miners) in the same way you look at solutions (cure for cancer vs the next big MTV hit).
From memory, Hayek also mentions the problem of coming up with the ranking function for virtue. Basically "virtue" here is standing in as an alliterative reference to systems of ethics, morality, justice and justness etc etc. Huge fields of human thought in their own right. That sometimes value and virtue align is inevitable, simply because there's so many combinations available to test.
His general point is that trying to make complex, emergent systems fit into neat theories tends to break the systems.
That book I mentioned -- Essence of Hayek -- is worth getting. I began to review it on my blog and never finished writing my follow up ditties.
FWIW what I understand Hayek as discussing is something different, which is that centrally imposed definitions of "good" have very little to do with local decisions that people make. Hayek is arguing, as I read him, against the idea that "social good" as we culturally construct it through centralized structures (church and state) is the goal of the economy.
There is a way out of this, and that is a 19th century Catholic idea (I am not even a Christian but Catholicism is interesting to me to the extent the Catholic Church is a torchbearer for pagan Greek and Roman phylosophy) called "subsidiarity."
The idea of subsidiarity is that it is theft for a group to accomplish what an individual could accomplish by him or herself, and for the same reason it is theft for a larger, more centralized group to do what a smaller group could do. The goal of larger groups should be to support, not supplant, smaller organizations. This idea of subsidiarity thus seeks to reformulate society and the economy on Aristotelian grounds, with the family household in the center (rather than the multinational corporation of liberal capitalism, or the state). From this view, virtue and economic value are the same to the extent that people seek to live just lives, and to the extent that central authorities only seek to accomplish on their own what are fundamentally impossible for the smaller entities.
I think this is one reason why libertarians have associated the Catholic idea of subsidiarity with the private sector which only makes sense in terms of Hayek (I don't think that equivalence quite works but one can easily see the similarity).
I don't know if Hayek would be on board with it. The main problem is that it introduces a new criterion for arranging production which doesn't emerge from the existing order.
Hayek isn't trying to build the Ideal World. He's taking the world he saw and said "here's how it works", and then, "here's why it wouldn't work if we decided to design a system instead of having it emerge".
So for example, if subsidiarity is imposed, how does that play out? You already create a requirement to deduce what the smallest group capable of producing a thing is. But we already have something like that in the market. It's lumpy and fuzzy, but it does eventually kill off the too large and the too small (modulo endless tinkering by legislators).
Coase explained that firms emerge because of transaction costs. Sometimes it's easier and cheaper to do a thing in existing groups. Sometimes it's not. The tension between these allows firms to emerge from the social order. I'd add that the rise of IT has enabled coordination on a vastly greater scale, which has helped to create the modern corporation.
The point of subsidiarity though is that it puts central authorities in the position of midwifery for having such a world emerge rather than in the position of architecting, designing, and building it.
The problem though is that these are huge fields of thought and also that the very contentious. Ethics for example is usually defined to be asking the question of "what is good?" Obviously defining "what is good" is an undertaking which leads different people in different directions.
I take the approach of saying "what is good is what is conducive to human flourishing." This is largely an Aristotelian approach (and so you can't really accuse me of deriving terms to meet economics). Therefore I would say there is some virtue in entertaining people or rather that such is at least potentially virtuous.
The problem is that if you accept that human flourishing is the goal and thus the definition of virtue, and if you assume that to a large extent this is also the goal of the economy (something I think that both most economists and the Classical philosophers shared), then virtue and value can't be seen as separate at least in terms of solutions (as I say, wages are different).
Or are you saying that Hayek does not see distributive human flourishing as the ends to which our economic systems work?
> You line up the list of virtuous things (curing AIDS, feeding poor people) and the list of valuable things (Ruby on Rails programmers, inanimate chunks of metal) and discover that they just don't line up. At all.
But the problem here is that without a framework for deciding what is virtuous, all you are doing is assigning your own measure of value. In that regard your argument boils down to "what you think is valuable is not necessarily a solution that lots of people will pay money for." But I do think that virtuous solutions are valuable to the extent they are virtuous. A cure for cancer would be worth, I would expect, thousands or millions of times what a hollywood blockbuster would be.
However there are limits to this analysis. While I think valuable = virtuous with regard to solutions it doesn't necessarily follow that the coal miner is less virtuous than the Ruby programmer. Wages are determined in ways that both do and don't resemble market economics as even Adam Smith noted (he saw wage levels as being indicative of negotiating power differences between various professions).
So my caution is to avoid looking at wages (ruby programmers vs coal miners) in the same way you look at solutions (cure for cancer vs the next big MTV hit).