Analysis Paper: Taxis and Cosmos
In overview, the views exuded by Friedrich A. Hayek consistently border on the relationship between the structure of the society and the behavior of the market. Based on his reading, Law, Legislation and Liberty, Hayek provides a complex yet understandable elucidation of the different forms of order in society. These aspects, which comprise taxis and cosmos, are disparate in nature and pose an effect on the economy. Furthermore, the distinction between both variants of order further explains the constraints that the human system possesses based on the manner it attempts to control that which is abstract and independent. Without further discussion, the analysis will concentrate on the major ideas explored, a further description of the most significant idea and their relation to entrepreneurship in the general market.
Most of the ideas explored by Hayek sustain a focal point on the distinctions of order. Foremost, Hayek commences by providing an explanation of the concept of order. Accordingly, he defines it as a condition in structural elements cooperate considerably enabling people to engage in activities without disruption. By harmonizing the expectations and intentions of individuals, which determine the activities carried out by them, the materialization of order takes place in relation to social life (Hayek 36). After defining order, Hayek also attempts to provide a clear distinction of different forms of order: taxis and cosmos. Accordingly, the taxis constitute the made order, in which humans are responsible for the creation of its structure. It is created exogenously. Conversely, the cosmos is a spontaneous order (Hayek 45). Furthermore, Hayek also distinguishes both variants by addressing their distinctive features.
Major Ideas and Their Relation to Entrepreneurship
Certain ideas based on Hayek’s explanation of order undergo elucidation in relation to economic activities. However, the major idea within the discussion comprises the significance of the unplanned order. Much of the system that people understand constitutes a made order established by elements such as laws, force and propaganda. Indeed, the order evident in most societies possesses an authoritarian predisposition. In addition to this, this inclination towards bureaucracy asserts that every action committed by an individual or a government needs to result from a calculated design or blueprint applied by professional sovereigns (Hayek 46). However, this is not necessarily concise. In contrast, it is possible to engage in actions without having to create a plan based on the authority’s deductions. Hence, order has the capability of being a property that emerges solely from individual action rather than bureaucratically planned actions.
The importance of the spontaneous order relates considerably to entrepreneurship in a given economy. Based on Hayek, the market is uncontrollable. By implementing policies and guidelines in order to streamline economic fluctuations, the notion of the free market becomes obsolete. Hence, with reference to the cosmos, governments should not involve themselves in controlling the market. The same ideology also applies to entrepreneurship. Accordingly, sovereigns should allow entrepreneurs to remedy market failures in a natural way. Through the acquisition of information, it is possible to establish businesses that are innovative and creative. Over-reliance on structural concepts such as the Efficient-Market Hypothesis rejects the fact that every person possesses access towards information that other individuals do not have. Hence, due to this, governments can only assist by allowing individuals to exploit such information in order to remedy market failure in a natural and spontaneous manner.
The next idea expressed by Hayek concerns the disparities in ordering systems (organizations) and the human society. Undeniably, it is evident that small societal structures such as the family are capable of flourishing with a series of specific regulations (Hayek 49). However, as the complexities of the respective structure increase and approach the intricacy of society, the particularity of such regulations becomes counterproductive. Corresponding to entrepreneurship, it is evident that guiding the actions of entrepreneurs rather than establishing strict regulations facilitates the utilization of knowledge, which individuals do not possess all together. Hence, failure in a market does not necessarily require the direct intervention of the government through regulations, but rather by support for individual knowledge and actions.
Lastly, the other idea exuded in the discourse involves the impact of rules in limiting or enabling opportunity. Planned orders (taxis) are capable of decreasing or eradicating the potential for valuable complexity. By using the society as a vivid illustration, Hayek explains the significance of a society’s organization on the development of individuals. Indeed, through the interplay of different minds of numerous minds, the society has become capable of progression at a rapid rate (Hayek 50). A similar notion also applies to entrepreneurship. By depending on rules that allow people to utilize their knowledge and aptitudes, it is possible to establish opportunities that facilitate the development of much greater outcomes. For example, establishing policies that limit barriers to entry for entrepreneurs such as decreases in interest rates and free trade policies can enable to exploit markets innovatively and competently on a considerable basis.
Discussion and Conclusion
Indeed, the discussion carried out by Hayek further explains his stance on the autonomy of the market. By focusing on order and its subsequent variants, the discourse explains the effect that authoritarian dogma can impose in an economy based on its understanding of the constituents of order. Due to this, much of the discussion revolves around the taxis (planned order) and the cosmos (spontaneous order) as imperative aspects. Furthermore, the argument concerning the taxis and cosmos influences the establishment of ideas that are applicable in human society and therefore, appropriate for selection.
Hayek, Friedrich A. Law, Legislation and Liberty: A New Statement of the Liberal Principles of Justice and Political Economy. Vol. 1, Rules and Order. Chicago: University of Chicago Press, 1973. Print.