Political Economy

Asmar Ismayilova

MPP 2015

Second short essay answer

After watching the video “A Battle of Ideas: Commanding Heights” we can state that not only Buchanan discuses about constitutional economics but also Hayek made contributions to this sphere. According to Buchanan the foundational assumption of normative constitutional economics states that no single individual's goals or values can supersede the value of another's. Moreover, the politics is a form in which individuals actions are based on exchange. They agree to exchange the goods and this was done in their own self-interest if the decision is voluntary and informed. From the Hayek’s point of view, constitutional democracy is the best structure of government. He defended the freedom and was aimed to establish criteria for a regime of freedom.

Hayek is one of the supporters of the statement of spontaneous order, which is usually used to describe the emergence of different kinds of social order in which we can find the combination of self-interested individuals who are not intentionally trying to create order though planning. Hayek used this term in supplement to liberal democracy. Hayek distinguishes between the spontaneous order and the term “made orders” which while pursuing self-chosen goals aimed to ignore the goals pursued by other participants. On his point of view, the coordination should be independent by participants’ intentions. Hayek assumes that the market should integrate more information rather than impose planning and it will help to successfully achieve more individual purposes in compare with the controlled social order.

In his book “The Road to Serfdom” he discusses about the economic efficiency. He states that personal, self-interested decisions of individuals participating in markets can lead to the economic efficiency. He opposes the Keynes point of view, arguing that centralized decision-makers can’t achieve goals of large-scale planning because of its...