One of the things that I find interesting about the general response to some of the terminology in the divine economy theory is a disconnect – in the minds of those who act like the terminology is incomprehensible – with the essence of classical liberalism and Austrian economics in the literature. I am not sure when Hayek first mentioned ‘fatal conceit’ or if he is the true originator of the term but I am curious about the reaction and response that he got when he laid it out with clarity. Was the new terminology received well?
Of course Fredrich von Hayek was a renowned scholar and academic which I am sure aided in the acceptance of the idea of ‘fatal conceit’ but at the same time Hayek deviated from pure subjectivism. He was a socialist and an empiricist when he read Socialism by Ludwig von Mises and he immediately recognized the fact that interventionism is error-based. His occasional weakness in championing subjectivism may be attributed to his earlier ingrained ideological leanings or maybe it was the consequence of the tendency towards atheism in academia. Humans as unique creatures with the potential to mirror all the virtues or attributes of God is the true essence of their subjective nature but academia in these – the Dark Ages of economics – has a difficult time permitting such a realization.
Back to fatal conceit, Hayek lays out the following:
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account.” The Fatal Conceit : The Errors of Socialism (1988), p. 76