In 1993, the Center for Market Processes published Wayne Gable and Jerry Ellig’s revelatory monograph, Introduction to Market Based-Management. Charles Koch later expanded their work in his excellent books, The Science of Success and Good Profit. We learned that F. A. Hayek’s work could not only help us make sense of our economic world, but also help us be better managers and leaders.
Teaching leadership, I observed that an individual’s avowed political views did not predict the person’s leadership style. Some understood that central planning is a failed approach to economic policy and yet did not understand that strict hierarchical management practices often cause businesses to run inefficiently and unhappily. Employees don’t enjoy being ordered around or feeling blocked from using and developing their skills. I often heard “my boss is a control freak” from those lower in the hierarchy. Thankfully, leadership styles are evolving, as Charles Koch puts it, in the direction of “enabling… employees to apply their talents to create value for others.”
Just as Hayek’s insights apply to economies and management, they can inform our personal lives. You can stifle markets, stifle the talents of your employees, and stifle your gifts. As you suppress your gifts, your chances of success and happiness fall.
You can’t count on greater personal wealth or societal prosperity to bail you out of poor personal choices. In The Constitution of Liberty, Hayek writes that progress “says little about whether the new state will give us more satisfaction than the old.” He adds, “The pleasure may be solely in achieving what we have been striving for, and the assured possession may give us little satisfaction.”
Certainly, the advances of civilization produce more opportunities to enjoy pleasurable feelings, but it turns out that good feelings have little to do with happiness. In The Happiness Trap, physician and therapist Russ Harris points out that the common meaning of happiness leads to confusion.
Happiness is commonly referred to as “feeling good… feeling a sense of pleasure, gladness or gratification.” Harris focuses on the “less common meaning of happiness… living a rich, full, and meaningful life.” Notably, “a profound sense of a life well-lived” yields a “powerful sense of vitality” that is not fleeting. Yet, such a life, Harris points out, brings forth both pleasurable and uncomfortable feelings as not all expectations are met.
People reveal their expectations when asked, What will make you happier? Many will answer a different job, a new partner, a new car or house, or more leisure time. Changes such as these may confer some benefits, but researchers have found that surprisingly little of our happiness depends on life circumstances.
Psychology professor Sonya Lyubomirsky’s research findings show “differences in life circumstances or situations” explain “only about 10% of the variance in our happiness levels.” Happiness does not depend on “whether we are rich or poor, healthy or unhealthy, beautiful or plain, married or divorced, etc.”
There is nothing wrong with buying the latest iPhone, Peloton, or Tesla, but what Lyubomirsky calls “puddles of pleasure” will only temporarily drown out uncomfortable feelings; they won’t produce happiness. She observes, “We exaggerate the effect a life change will have upon our happiness because we can’t perceive that we won’t always be thinking about it.”
Hayek’s insights can help us navigate life confidently with a sense of purpose and search for genuine happiness in places where it is most likely to be found.
In his essay “Individualism: True and False,” Hayek helps us understand that we give too much relevance to our thinking. Our thinking process has profound implications for our lives.
False individualism, Hayek explains, “is the product of an exaggerated belief in the powers of individual reason and of a consequent contempt for anything which has not been consciously designed by it or is not fully intelligible to it.”
Hayek differentiates false individualism from true individualism. He describes true individualism as “a product of an acute consciousness of the limitations of the individual mind which induces an attitude of humility toward the impersonal and anonymous social processes by which individuals help to create things greater than they know.”
Many do not acknowledge the limits of their minds. They are very sure of what they think without having much understanding of their own thought processes.
False individualism assumes that “everything which man achieves is the direct result of, and therefore subject to, the control of individual reason.” It is easy to see how false individualism leads to collectivism. If everything is subject to individual reason, collectivists think, why not let the “wisest” people fix the problems we see?
Hayek’s antidote for such hubris is “true individualism.” He regards the individual “not as highly rational and intelligent, but as a very irrational and fallible being, whose individual errors are corrected only in the course of a social process, and which aims at making the best of a very imperfect material.”
Every human being, even the most expert among us, makes errors. Uncoerced interactions with others are essential to finding and correcting our errors.
Many of us have adopted a mindset of false individualism in our personal lives. We understand one aspect of life, and from that point of view, we pretend we understand all of life. In the process, we shrink our lives to fit the boundaries of our understanding. When our limited understanding bounds our attention, there is a lot to be miserable about. Relying on our habitual mode of thinking, we become rigid, predictable cartoon-like characters, or borrowing video game terminology, an unadaptable NPC (non-player character).
It is time to acknowledge that we are all imperfect material. The sooner we get over ourselves, the more meaningful our life becomes.
In his book, A Liberated Mind, psychology professor Steven C. Hayes describes “psychological rigidity” as “an attempt to avoid negative thoughts and feelings.” Hayes explains the downside of psychological rigidity:
Psychological rigidity predicts anxiety, depression, substance abuse, trauma, eating disorders, and almost every other psychological and behavioral problem. It undermines a person’s ability to learn new things, enjoy his or her job, be intimate with others, or rise to the challenges of physical disease.
The explanation Hayes offers for why we are “so given to psychological rigidity” is consistent with Hayek’s description of false individualism. Hayes describes the phenomenon of the “Dictator Within” who, like an external central planner, promotes “rigid problem-solving formulations.”
Even if a wiser part of our minds knows what is good for us, a domineering problem-solving part does not. I call this aspect of our minds the Dictator Within, because it is constantly suggesting “solutions” for our psychological pain, even though our own experience, if we listen carefully, whispers that these solutions are toxic. As with many political dictators, this voice within our minds can cause great harm. It can lead us to buy into a damaging story about our pain and how to deal with it. It weaves its advice into tales about our childhoods, about our abilities and who we are, or about the injustices of the world and how others behave. It seduces us into acting on these stories even though there is a part of us, deep inside, that knows better.
By complying with the Dictator Within, Hayes cautions, “We are being conned by ourselves.” The con is widely shared. Hayes suggests how quick-fix solutions reinforce the trap of psychological rigidity:
Liberating ourselves from the trap of rigidity is made harder by the messages we’re barraged with by the culture at large. Many businesses thrive on this messaging. Are you worried about your appearance? A beauty product will remove the worry. Unhappy? The right beer will cheer you up. Look at the themes of virtually all the major self-help books and programs—it’s more of the same: manage your anxiety, feel good, control your thoughts, and life will be better.
Seeking to avoid uncomfortable thoughts and feelings, we treat ourselves as objects, expecting we can be easily reprogrammed like an NPC. Friends and family scold us to snap out of it. We send ourselves the same message. Hayes explains that self-soothing solutions rarely work.
Most self-help books also ask people to do one or another form of self-soothing or self-correction. Somehow, we are supposed to relax, focus on the positive, or have different thoughts. In the conventional conception, our names for mental conditions hang the hook of blame on emotions and thoughts. We have “anxiety disorders” or “thought disorders.” An array of pills and therapy approaches promise the elimination of difficult thoughts and feelings (for example, notice that term anti- in antidepressants). And yet as the adoption of this entire model has spread around the world, misery and disability have increased, not decreased.
In short, Hayes explains that we are misled to believe “that you can and must learn to change your thoughts at will, and only if and when you do so will you reduce or eliminate uncomfortable emotions.”
Hayes once suffered from crippling anxiety. His Dictator Within was the cause: “The problem was that the foundational message my mind was sending me was toxic: anxiety is my opponent and I have to defeat it. I have to watch out for it, manage it, and suppress it. My anxiety itself became my chief source of anxiety.” Hayes adds,
I had fallen completely under the iron grip of the Dictator Within. The voice in my head was telling me more and more urgently either to avoid my anxiety or to somehow overpower it. We all know this self-judging, bullying voice within our minds. One could think of it as our internal advisor, judge, or critic. When we learn to tame it, it can be very useful. But if we allow it free rein it deserves the name Dictator because it can become that powerful.
Of course, the Dictator Within can also sell us on “delusions of grandeur—convincing us that we are so special that we are secretly envied or assuring us that we are smarter than other people and are unequivocally right while others are just flat-out wrong.”
Our intellect works overtime to solve problems created or contrived by our thinking. Hayes cautions that we often solidify thoughts that are flat-out wrong about ourselves and others. More controls, and more thinking can’t possibly solve such contrived problems.
The Dictator Within, like the dictator without, impedes human flourishing. Without a willingness to look in a direction that is greater than our understanding, as Hayek quoting Edmund Burke puts it, we “are shrunk to the dimensions of our minds.”
During Covid, shrinking to the “dimensions of our minds” allowed politicians to exploit our ramped-up fear. This fear has caused us to support authoritarian policies we would never have supported without our Dictator Within being on overdrive. This fear has increased tribalism, and the lack of respect for the choices of others has undermined a free society.
Beware of treating human beings, in an economy or organization or your personal life, as problems to be solved. Hayes, like Hayek, points to a process. “We are paying,” he writes, “a psychological price because what is really wrong within is treating life as a problem to be solved rather than a process to be lived.” We are imperfect material; our errors are corrected in the course of a social process.
In the second part of this essay, we will consider how to set ourselves free.