Where did Homo Economicus come from?

06/08/201606/09/2016 Zachary Woodman Economics, Liberty, Philosophy behavioral economics, epistemology, F.A. Hayek, Friedrich Nietzsche, History of Thought, Homo Economicus, irrationality, Karl Polanyi, Karl Popper, Ludwig von Mises, Michael Polanyi, neoclassical economics, Paul Feyerabend, Philosophy of Science, Pragmatism, psychology, rationality, Richard Bernstein, Richard Rorty, Willard Quine, William Stanley Jevons

Over on my Facebook page, I posted a short criticism of both neoclassical and behavioral economic scholarship on rational choice (drawing from a paper I’m working on exploring that topic). Stated a bit polemically, though homo economicus has largely been dead in neoclassical theory, his spirit still haunts the work of most modern neoclassical scholars. Likewise, though behavioral economists are trying to dig the grave and put the final nails in the coffin of homo economicus, their nightmares are still plagued with the anxieties of his memory.

This led a former colleague from Hillsdale to ask me where I thought homo economicus came from historically. I wrote the following in response (lightly edited for this post):

It could be argued, in a sense, that the protestant Christian aim to complete moral purity and the Enlightenment aim to make man perfect in knowledge in morality (as embodied in Franklin’s virtue ethics) helped give rise to a culture that would be primed for such a model. Within economics, historically it comes from Bentham’s utilitarianism and Jevon’s mathematical extrapolations from Bentham’s psychology. However, I’d say this comes from a deeper “Cartesian anxiety” in Bernstein’s use of the term to make economic a big-T True, capital-C Certain, capital-S Science just like physics (which Jevon’s himself stated was an aim of his work,[1] and has preoccupied economists since the days of JS Mill). If economic science cannot be said to be completely positive and “scientific” like the natural sciences with absolutely falsifiable propositions and an algorithmic means of theory-choice, it is feared, it must be written off as a pseudo-scientific waste of time or else ideology to justify capitalism. If economics cannot make certain claims to knowledge, it must be solipsist and relativist and, again, be another form of pseudo-science or ideology. If economic models cannot reach definitive mathematical results, then they must be relativistic and a waste of time. This is just another example of the extreme Cartesian/Katian/Platonic (in Rorty’s use of the term) either/or: objectivity OR relativism, science OR nonscience, determinate mathematical solutions OR ideological emotional bickering. Homo economicus was erected as a means to be an epistemic foundation to solve all these anxieties and either/ors.

Of course, as any good Deweyan, I think all these either/ors are nonsense. Their understanding of science, as revealed through the so-called “growth of knowledge” literature in postempiricist philosophy of science (ie., the work of Thomas Kuhn, Lakotos, Karl Popper, Paul Feyerabend, Michael Polanyi, Richard Bernstein, Richard Rorty, etc.) has shown that this positivist conception of science, that is science consists of algorithmic theory choice selected based off correspondence with theory-free, brute “facts” of the “external world,” is woefully inaccurate. Dialogical Aristotelian practical reasoning in the community of scientists plays just as much of a role in formulating a scientific consensus as empirical verification. This does not undermine science’s claims to objectivity or rationality, in fact it puts such claims in more epistemically tenable terms.

Further, the desire to make the social sciences just another extension of the natural science, as Hayek shows in the Counterrevolution of Science, and as even positivists like Milton Freidman argue, is a completely misleading urge that has led to some of the worst follies in modern social theory. Obviously, I cheer the fact that “homo economicus is dead, and we have killed him,” but now that we’ve “out-rationalized the rationalizer of all rationalizers,” we must try to re-evaluate our economic theories and methods to, as Bernstein or Dewey would put it, “reconstruct” our economic science.

In short, immenatizing the eschaton in epistemology and philosophy of science created homo economicus.

For the record, you don’t have to be a radical scientific anti-realist like Feyerabend or Rorty to agree with my analysis here.[2] I myself wax more towards Quine than Rorty in scientific matters. However, the main point of philosophy of science since positivism is the exact type of foundationalist epistemology undergirding modern positivist methodology in the mainstream of the economics profession, and the concept of rationality that is used to buttress it, is a naive view of science, natural or social.

Notably, this critique is largely unrelated to much of the Austrian school. Mises’ own conception of rationality is mostly unrelated to homo economicus as he understands rationality to be purposive action, emphasizing that economists first understand the subjective meaning from the point of view of the economic actor him/herself before declaring any action “irrational.”[3] [4]

What are your thoughts on this? Are neoclassical and behavioral economics both still way too influenced by the spirit of homo economicus, or am I off the mark? Is my analysis of the historical conditions that led to the rise of homo economicus right? Please, discuss in the comments.

[1] Consider this quote from Jevon’s magnum opus Theory of Political Economy “Economics, if it is to be a science at all, must be a mathematical science.”

[2] In fact, I doubt anybody mentioned is really a scientific anti-realist, I agree with Bernstein that Feyerabend is best read as a satirist of the Cartesian anxiety and extreme either/or of relativism and objectivism in philosophy of science and think Rorty’s views are more complex than simple scientific anti-realism, but that’s an unrelated point.

[3] Of course, any critique of epistemic foundationalism would apply to Mises, especially his apriorism; after all, Mises did write a book called “Ultimate Foundations of the Social Sciences” and the Cartesian anxiety is strong with him, especially in his later works. Notably, none of this applies to most of Mises’ students, especially Schutz, Machlup, and Hayek.

[4] For a more detailed discussion of Mises and the Austrians on rationality, see my blog post here or this paper by Mario Rizzo. For a more general discussion of the insights of the type of philosophy of science I’m discussing, see Chapter 2 of Richard Bernstein’s excellent 1983 book Beyond Objectivism and Relativism: Science, Hermeneutics, and Praxis.

Libertarians and Pragmatists on Democracy Part 4: Why Market Anarchism is more Democratic than Democracy

05/30/201606/01/2016 Zachary Woodman Economics, Law, Liberty, Philosophy anarchism, decentralization, democracy, F.A. Hayek, income inequality, inequality, John Dewey, libertarianism, Ludwig von Mises, market anarchism, Michael Huemer, Murray Rothbard, political theory, political thought, Sidney Hook

Note: This is the final part of a series on democracy. It is assumed the reader is familiar with part one, defining democracy, part two, summarizing classical liberal perspectives on democracy, and part three, which analyzes how pragmatists conceive of democracy as a broader philosophy. Here, I will argue that a synthesis of libertarian and pragmatist perspectives on democracy will yield an argument in favor of market anarchy.

The insights of classical liberalism, and particularly modern libertarianism, have shown that democracy is likely to lead to a tyranny of an irrational and ignorant majority and public choice theory has shown how it results in awful policies thanks to a number of collective action issues. However, as pragmatists have argued, democracy’s philosophical aspirations to scientific public deliberation, seeking the consent of the governed, valuing the dignity of every individual, and decentralizing political authority to take advantage of dispersed intelligence are still admirable. However admirable these philosophical aspirations are, real-world democracies completely fail to fulfill them.

The natural question is, if not democracy, what political arrangements can live up to the philosophical goals of Dewey and Hook? I think the answer lies in market anarchism. In what follows, I will show how market anarchism could succeed in realizing the aspirations of philosophical democracy where political democracy has failed.

Before we get started, let’s take into account a few minor housekeeping notes. It is assumed that the reader has at least a cursory knowledge of how market anarchism and polycentric law works. If you are not familiar with these concepts I highly recommend watching this video by David Friedman before continuing. Also, I am in no way arguing that any of the thinkers discussed in this series are “really” anarchists unless they’re obviously so such as Huemer. I will not even claim that any of them “should have been” anarchists (with the exception of Hayek). I am simply arguing that if we take into account the insights of their various perspectives, one could plausibly defend market anarchism.

Market Anarchism, Unlike Democracy, Does Rest on the Voluntary Consent of the Governed

As Michael Huemer convincingly has shown, democracy does not actually “rest upon the freely given consent of the governed” as Sidney Hook claims. The bar tab example illustrates that we would not consider majority rule “consent” in any everyday interaction and there is little reason to think it should be any different in the context of political institutions. By contrast, market anarchism is almost by definition based off of consent. This is the primary reason why many deontological market anarchists, such as Murray Rothbard, are market anarchists in the first place and why they oppose the coercive, non-consensual nature of the state. While democracy’s claim to legitimacy is that the governed vote but they are still forced to follow the (unjustified) authority of a state that has the monopoly on force whether they agree or not to, market anarchism is based off of voluntarily consented to contracts between individuals and defense agencies and contracts between those defense agencies and private, voluntary court systems and arbitrators. Further, the content of the laws is agreed to and law becomes a product one buys in voluntarily agreeing to sign up with a defense company, just as one buys a car, a piece of furniture, or any other good.

It is curious that many pragmatist defenses of democracy sound very similar to what many market anarchists and libertarians write. Not just in Sidney Hook’s definition of a democracy as a government that “rests upon the freely given consent of the governed,” but perhaps most strikingly in John Dewey’s 1939 essay “I Believe.” In this essay, Dewey walked back some of his early Hegelian collectivist lines of his early years:

My contribution to the first series of essays in Living Philosophies put forward the idea of faith in the possibilities of experience at the heart of my own philosophy. In the course of that contribution, I said, “Individuals will always be the center and the consummation of experience, but what the individual actually is in his life-experience depends upon the nature and movement of associated life.” I have not changed my faith in experience nor my belief that individuality is its center and consummation. But there has been a change in emphasis. I should now wish to emphasize more than I formerly did that individuals are the final decisive factors of the nature and movement of associated life.

Indeed, throughout the whole essay he emphasizes “the idea that only the voluntary initiative and voluntary cooperation of individuals can produce social institutions that will protect the liberties necessary for achieving development of genuine individuality.” Throughout the essay, he decries (like many left-anarchists do) “state socialism” just as much as he does “state capitalism.” Dewey’s opposition to capitalism is well-known, but what is less known is his opposition to so-called “public collectivism.” His criticisms here could just as easily have been written by someone like Hayek:

Recent events have shown that state socialism or public collectivism leads to suppression of everything that individuality stands for. It is not too late for us in this country to learn the lesson taught by these two great historic movements [ie., the rise of state capitalism and state socialism]. The way is open for a movement which will provide the fullest opportunity for cooperative voluntary endeavor. In this movement, political activity will have a part, but a subordinate one. It will be confined to providing the conditions, both negative and positive, that favor the voluntary activity of individuals.

It is interesting that, like anarchists who favor direct action, he emphasizes that political activity is subordinate to the political movement he sees as necessary.

Of course, there are still notable differences between Dewey and libertarians, he still defends what he calls “functional socialism” in the socialization of medicine and still berates more than many libertarians would be comfortable with (except, of course, for left-anarchists) inequality caused by state capitalism. His vision of a truly individualist society, even in his later years, was one with localized, experimental democratic institutions and economics controlled by those localized governments in a “functional socialist” fashion (as I mentioned earlier, that economic vision is at odds with Dewey’s epistemological commitments).

However, I would argue that it is more than a mere superficial coincidence that Dewey’s criticisms of state capitalism are almost identical to those of market anarchists who decry “crony capitalism,” that his criticisms of state socialism are very similar to some individualist libertarian criticisms, and his overall rhetoric defending democracy on the grounds of “voluntary cooperation of individuals” sounds remarkably similar to many libertarians. This is because, largely, the philosophical ends Dewey seeks in politics are the same as those sought by libertarians, market anarchists, and classical liberals. However, the institutional means he advocates are very different and fail to meet those ends.

There is, conversely, one potential criticism that Sidney Hook would raise at this point: that market anarchism does not really rest upon the freely-given consent of the governed due to its allowance for economic inequality. Hook argued that income inequality undermines consent in democracy and, as a result, economic organization should be controlled by a democratically elected government. There are two points to be made. First of all, when economic organization is controlled by government in democracies it exacerbates the problem of income inequality. Rent-seeking culture arises in which concentrated interests use, through lobbying power, government force to accumulate and protect their wealth. Indeed, as I mentioned earlier, there have been empirical studies showing how over-regulation lobbied for by those concentrated benefits have regressive effects. Even fairly anti-free market economists such as Joseph Stiglitz have argued that income inequality is not an inevitable result of market institutions, but a result of bad government policies such as corporate welfare.

Second, it is questionable to what degree income inequality would exist in pure market anarchy. Of course, much of the bad inequality experienced under state capitalism is the result of bad policies, but some if it is also just a result of market’s tendencies to disrupt economic distributions (which, as Mises argued in Liberalism: The Classical Tradition is not a bad thing because it allows for luxury markets which can serve as an experimental market for expensive, new goods that one day become popular consumer goods). Some market anarchists, such as Anna Morgenstern, have argued that the type of mass accumulation of capital under capitalism would be impossible under market anarchism. I am unsure to what extent I agree, and a systemic analysis of the economic roots of inequality is outside of the scope of this post. However, suffice it to say that it is an open, empirical question whether purely free markets would result in problematic levels of inequality, as Hook seems to think, and we have some good reasons to think it would not. At the very least, it is clear that the democratic institutions favored by Hook are not a serious solution to the problem.

Market Anarchism, Unlike Democracy, Relies on a Decentralized Process of Political Decision Making

Dewey argued in “Democracy and Educational Administration” that “it is the democratic faith that [the distribution of knowledge and intelligence] is sufficiently general so that each individual has something to contribute and value of each contribution can be assessed only as it enters into the final pooled intelligence constituted by the contributions of all.” He seems to echo Hayek’s knowledge problem critique of socialism when he argues that the democratic faith is based on the wisdom that “no man or limited set of men is [sic] wise enough or good enough to rule others without their consent[.]” As we have seen, democracies tend towards heavily centralized governments that undermine this faith and fail to take advantage of the dispersed knowledge (in Hayekian terms) among individuals in society.

Market anarchy, on the other hand, by definition takes advantage of this feature of dispersed intelligence. Rather than having law be designed by a centralized legislature, law arises out of voluntary market exchanges between individuals and, like common law, the precedent of judges in private courts. Of course, both Dewey and Hayek embraced democratic institutions (in Hayek’s case, as well as free market economic coordination) to take advantage of decentralized knowledge. However, both Dewey and Hayek, particularly the ladder (Dewey never wrote about market anarchism as it did not exist as a unique perspective until almost a decade after his death), failed to appreciate the extent to which a polycentric legal system does this much better. Peter Stringham and Todd Zywicki have noted this tension in Hayek’s thought in particular, as they put it in an abstract for their excellent paper on the issue:

Should law be provided centrally by the state or by some other means? Even relatively staunch advocates of competition such as Friedrich Hayek believe that the state must provide law centrally. This article asks whether Hayek’s theories about competition and the use of knowledge in society should lead one to support centrally provided law enforcement or competition in law. In writing about economics, Hayek famously described the competitive process of the market as a “discovery process.” In writing about law, Hayek coincidentally referred to the role of the judge under the common law as “discovering” the law in the expectations and conventions of people in a given society. We argue that this consistent usage was more than a mere semantic coincidence — that the two concepts of discovery are remarkably similar in Hayek’s thought and that his idea of economic discovery influenced his later ideas about legal discovery. Moreover, once this conceptual similarity is recognized, certain conclusions logically follow: namely, that just as economic discovery requires the competitive process of the market to provide information and feedback to correct errors, competition in the provision of legal services is essential to the judicial discovery in law. In fact, the English common law, from which Hayek drew his model of legal discovery, was itself a model of polycentric and competing sources of law throughout much of its history. We conclude that for the same reasons that made Hayek a champion of market competition over central planning of the economy, he should have also supported competition in legal services over monopolistic provision by the state — in short, Hayek should have been an anarchist.

There is one possibly fatal objection to this line of reasoning, that is also the most substantial objection to market anarchism as a whole: the possibility that market anarchy, like democracy, will eventually lead to a centralized state that undermines its attempt to take advantage of dispersed knowledge. This argument was initially hinted at by Robert Nozick in Anarchy, State, and Utopia in his argument about the “immaculate conception of the state” but was expanded on most convincingly by Tyler Cowen. Ultimately it is an empirical question whether market anarchy would eventually lead to more centralization, and it is outside the scope of this post to analyze that fascinating question in any satisfactory amount of detail. I will say, however, that Bryan Caplan has given more or less convincing reasons why this may not be the case.

Market Anarchism, Unlike Democracy, Values the Dignity of the Individual

One of the features central to the pragmatist “democratic faith” is the belief that “belief that every individual should be regarded as possessing intrinsic worth or dignity[.]” As I argued, the conflation of democratic governments with the “collective will” of the people undermines this faith as political dissenters and individual thinkers become viewed as opponents to “the people.” Indeed, it seems that the type of “public” and “private” collectivisms that Dewey ridiculed in “I Believe” are a result of democratic institutions run amuck.

Market anarchism, meanwhile, suffers from no such issues. Instead, the intrinsic worth of the individual is respected as their free choices and associations is the main driving mechanism for political organization. There is no violation of free speech and free thought by a deliberative government as such a government does not exist in the first place under anarchy, and thus the intrinsic worth and dignity are not found in the “will of the people” as in democracies, but in the sovereign individual’s choice of which defense provider to contract with.

Market Anarchism, Unlike Anarchy, is Scientific and Deliberative

Contrary to Dewey and Hook’s characterization of democracy as a deliberative, intelligent application of the scientific method to social issues, democracy is instead characterized by polarizing populist pandering and rationally ignorant and irrational voters casting meaningless ballots based cultural associations rather than reasoned consideration of policy issues. Market anarchism, meanwhile, does have the deliberative, scientific nature the pragmatists vainly hope democratic institutions could aspire to. While under democracy the cost of casting an informed vote is very high and the benefits very low resulting in massive amounts of rational ignorance, under market anarchism individuals have every incentive to ensure they are informed about the legal rules they are purchasing, so to speak, by contracting with rights defense agencies. Unlike in democracy where the benefits of casting an informed vote are extremely low because your vote has an infinitely small probability of making a difference, under market anarchy the rights defense agency you chose to contract with has immediate and certain impacts upon your life, thus creating a much larger incentive to cast an informed (metaphorical) vote by choosing to purchase the services of a preferred rights defense agency.

Deliberation about legal policy is far more likely to be more reasoned in market anarchy than in democracy. First, because market anarchism is more radically experimental than political democracy. Freedom of speech and of thought in democracy is often likened to a metaphorical “marketplace of ideas,” but in market anarchy it is a literal marketplace in which the ideas are not chosen just by speculation and public deliberation, but actually experimented with and acted upon in practice. Democracy is only “experimental” in a priori public deliberation about policies, but market anarchy is “experimental” in actually applying those policies and assessing their results a posteriori. Under democracy, once a policy is chosen it becomes difficult to assess counterfactually if another potential policy could have yielded better results, thus it is difficult to ascertain which was the superior policy. It is as if scientists in a lab simply talked about the hypothetical results of various hypothetical experiments and chose theories based on their discussions rather than actually testing the theories by actually running the experiments. Because of the polycentric nature of law under market anarchy, multiple policies are taken on at the same time, making it easier to tell which is more desirable in practice rather than simple theoretical deliberation.

Another reason why political deliberation is more likely to be reasoned in market anarchy than democracy is because of the institutional mechanisms for choosing policy. The main way law is “made” in democracy is through legislation voted on by representatives, who are ultimately accountable to the public through general elections. Often, debate on the floor of legislative bodies is anything but reasoned and deliberative, and clearly discussion about elections quickly devolves into mindless partisan bickering, sensationalist “scandals,” and populist rhetorical flair rather than reasoned discussion about policies. In market anarchy, however, law is “discovered” by private arbitrators and judges who are ultimately accountable to the defense firm’s consumers in the marketplace. It is pretty clear that real-world courtrooms tend to have a more elevated level of dialogue than legislative bodies, to say less of public elections, and I fail to see why this would not be the case under market anarchism.

Further, there wouldn’t be a need for partisan bickering and debates that bring down the level of public discourse in market anarchy, for similar reasons why there isn’t nearly as nasty debates about preferences for consumer goods as there are about politics. To use an analogy, in democracy, if we’re voting on what soda to consume, whoever wins the vote gets a monopoly on their preferred soda; so my preference for Coke could possibly eliminate your ability to enjoy Pepsi; but in a market, if I prefer Coke you still can drink Pepsi, meaning we don’t need to bicker about our consumer preferences. It is similar (though clearly not identical because when we’re talking about law it’s quite a bit more consequential) with legal policies: in democracy, if I prefer one set of legal rules to another which you prefer, we must fight over how to vote because the two are mutually exclusive; but in market anarchy, because law is polycentric and not monolithic, they are not mutually exclusive so we don’t need to fight nearly as hard for it. There’s a good reason why debates among consumers for products they prefer (Coke v. Pepsi, Apple v. Windows, Android v. iPhone) rarely get as nasty as debates in democratic politics, because there is room for disagreement at the end of the day in a market that there is not in politics.

Conclusion

Clearly, democracy is far from the ideal method of political organization. As classical liberals throughout history have shown, despite the fact that it may be possible to other political forms such as oligarchy and monarchy, it has a tendency towards the tyranny of the majority and massive collective action problems. However, the philosophical aspirations of the most ardent defenders of democracy are still extremely valuable, even if their preferred institutions fail to deliver. Market anarchism is a reasonable synthesis of these two insights; it has the potential to live up to the aspirations of pragmatist democrats without the major, systemic problems of real working democracies that undermine those aspirations.

John Dewey once said “democratic institutions are no guarantee for the existence no guarantee for the existence of democratic individuals,” what is needed is a better set of institutions that have a higher probability to cultivate Dewey’s idea of “democratic individuals.” Market anarchism appears to be a viable candidate for such a set of institutions.

Libertarians and Pragmatists on Democracy Part 3: Pragmatists on Democracy as a Way of Life

05/20/201602/04/2017 Zachary Woodman Economics, History, Liberty, Philosophy classical liberalism, decentralization, democracy, epistemology, ethics, F.A. Hayek, John Dewey, libertarianism, political economy, political thought, Pragmatism, progressivism, public choice theory, Sidney Hook

eNote: This is part of a series on democracy. It is assumed the reader is familiar with part one, defining democracy, and part two, summarizing classical liberal perspectives on democracy. In this section, we’ll analyze how pragmatists conceive of democracy as a broader philosophy. The final post will argue that a dialectical synthesis of libertarianism and pragmatism on democracy will yield an argument in favor of market anarchy.

As classical liberals have pointed out throughout history, particularly in since the mid-nineteenth century, democracy as a system of political decision-making can be extremely dangerous to individual liberty and social prosperity. It could lead to tyranny of the majority, it may be characterized in practice as the rule of the ignorant and irrational and yield awful policy, and it leads to a reification of the state as the just “voice of the people” which can cause further tyranny. For these reasons, there is a very strong argument from moving away from constitutions which rely primarily on democratic means for decision making for the protection of individual liberty. The natural question is: what is our current democratic regime to be replaced with?

To answer this question, perhaps it is worth examining what is admirable in democracy. Thus far, I have mostly been referring to democracy in the second sense mentioned in the introductory section (henceforth referred to, for want of a better term, political democracy), as a means of political decision making. However, there is also the fourth sense which, although related, is distinct from political democracy which may be called philosophical democracy. To further explore this meaning of democracy, and perhaps give an answer to the aforementioned question, it is worth engaging with the thought of some of the most strident defenders of democracy: the American pragmatists.

Pragmatists on Philosophical Democracy

The writings of John Dewey and Sidney Hook are exemplars of philosophical democracy (though certainly others in this tradition are as well). Dewey, in his 1888 essay “The Ethics of Democracy,” specifically argues against Henry Maine’s view that “democracy is only a form of government.” Dewey explicitly defines democracy as a much broader “way of life,” as he says in his 1937 work “Democracy and Education:”

Democracy is much broader than a special political form, a method of conducting government, of making laws, and carrying on government administration by means of popular suffrage and elected officials. It is that, of course. But it is something broader and deeper than that. The political and governmental phase of democracy is a means, the best means so far found, for realizing ends that lie in the wide domain of human relationships and the development of human personality. It is, as we often say, though perhaps without appreciating all that is involved in the saying, a way of life, social and individual. The keynote of democracy as a way of life may be expressed, it seems to me, as the necessity for the participation of every mature human being in the formation of the values that regulate the living of men together: which is necessary from the standpoint of both the general social welfare and the development of human beings as individuals.

Indeed, Dewey’s emphasis on how democracy allows for participation in the formation of social values is a common thread throughout his entire political philosophy. In his earlier days, he was deeply influenced by the Hegelian notion of society as a “social organism” (although, in his later work he became a bit more cautious about the collectivist and possible authoritarian implications of this doctrine; see his 1939 essay “I Believe”). In 1888, he argued that democracy, by allowing participation of all, “approaches most nearly the ideal of all social organization; that in which the individual and society are organic to each other.” He explains:

In every other form of government there are individuals who are not organs of the common will, who are outside of the political society in which they live and are, in effect, aliens to that which should be their own commonwealth. Not participating in the expression of the common will, they do not embody themselves. Having no share in society, society has none in them.

…The government is not made up of those who hold office, or who sit in the legislature. It consists of every member of political society. And this is true of democracy, not less, but more, than of other forms. The democratic formula that government derives its powers from the consent of the governed…means that in democracy, at all events, the governors and the governed are not two classes, but two aspects of the same fact—the fact of the possession of a unified and articulate will.

Thus, Dewey argues that “Democracy, in a word, is a social, that is to say, an ethical conception, and upon its ethical significance is based its significance as governmental.”

Dewey expands upon the sense in which Democracy is an “ethical conception” in his much later work “Creative Democracy: The Task Before Us,” in which he characterizes democracy as a “personal way of individual life” (his emphasis). In this sense, democracy is not only to be found in institutions but in “free gatherings of neighbors on the street corner to discuss back and forth what is read in uncensored news of the day, and in gathering of friends in living rooms of houses and apartments to converse freely with one another.”

The sense in which democracy is a personal way of life is characterized by what Dewey calls the “democratic faith.” There are two elements to this democratic faith, one is faith in “the possibilities of human nature.” That is, faith that “every human being, independent of the quality or range of his personal endowment, has the right to equal opportunity with every other person for the development of whatever gift he has.” Second, is a “faith in the capacity for human beings for intelligent judgment and action if proper conditions are fostered.” These two faiths combine to make democracy an overarching philosophy that characterized by “belief in the ability of human experience to generate the aims and methods by which further experience will grow in ordered richness.” It can be seen, then, how these faiths may be found in not so much the political institution of democracy but in every day deliberative discussion and face-to-face encounters like neighbors and friends discussing news.

Sidney Hook in his 1938 essay “The Democratic Way of Life” further expands on the ethical character of democracy as a personal way of life. He argues that there are “three related values which are central to democracy as a way of life.” Those are the “belief that every individual should be regarded as possessing intrinsic worth or dignity,” the “belief in the value of difference, variety and uniqueness,” and, to mediate between such values, a belief in “the method of intelligence, of critical scientific inquiry.”

In regards to that last value, it could be said that for Dewey and Hook participatory democracy is not only a “way of life” or an “ethic,” but also a social epistemology. He argues in “Democracy and Education” that, although intelligence is unevenly distributed among individuals, “it is the democratic faith that it is sufficiently general so that each individual has something to contribute and value of each contribution can be assessed only as it enters into the final pooled intelligence constituted by the contributions of all.” He says in Liberalism and Social Action that rapid changes in society “have to be directed” and “controlled that it will move in some end in accordance with the principles of life, since life itself is development.” For Dewey, taking advantage of the dispersed intelligence through the democratic process is essentially the application of the scientific method to political problems. Indeed, the idea of democratic experimentalism comes to the forefront in this philosophical conception of democracy precisely because of Dewey’s epistemological commitments to the scientific method.

Thus, democracy in this pragmatist sense is a personal philosophy and social epistemology that accepts scientific deliberation, humanism, and pluralism as necessary conditions for growth of individuals and society as a whole.

Dewey on Political Democracy

Of course, the pragmatists not only conceived of democracy as a way of life but defended democratic institutions. What is striking about this is how Dewey characterizes political democracy as a means to the aspirations of philosophical democracy rather than an end itself. Indeed, he writes in “Democracy and Administration” that the institutions of political democracy “are not a final end and a final value. They are to be judged on the basis of their contribution to end.” The end here, of course, is the extent to which it allows individuals to participate in the formation of social values and the defense of liberty necessary for such participation.

Recall that in The Constitution of Liberty Hayek also conceived of political democracy as an end, and there is a striking similarity between Dewey and Hayek on this point. One may be tempted to say that the ends they are seeking are entirely different as Hayek is seeking individual liberty. However, this is not necessarily the case, as Dewey argued in Liberalism and Social Action that the end of liberalism is “a social organization that will make possible the effective liberty and opportunity for personal growth in mind and spirit of all individuals.”

To be sure, Dewey’s and Hayek’s conceptions of what constitutes liberty are very different: Hayek specifically cites Dewey as conceptually confusing “power” with “liberty” for accepting a positive rather than negative conception of liberty. For Hayek, liberty simply means “the absence of coercion.” For Dewey, liberty means “the liberation of individuals so that realization of their capacities may be the law of their life.” However, what at first seems to be two contradictory beliefs in liberty are not necessarily contradictory. One may say, with Dewey, that positive liberties are necessary so that individuals may grow in mind and spirit and participate in the formation of social values, but agree with Hayek that a necessary prerequisite for such liberties is absence of coercion. Indeed, this defense of negative liberty for the sake of positive liberty is precisely the stance many modern neoclassical liberals take, most notably Jason Brennan and David Schmidt. Thus, Dewey’s and Hayek’s views on democracy as a means to the end of liberty are quite possibly complementary. (This is not to be confused with claiming they really said the same thing, which they clearly did not.)

Dewey defends democracy as the most effective means to this end on the basis that “no man or limited set of men is [sic] wise enough or good enough to rule others without their consent[.]” Political democracy is understood by the pragmatists, as Sidney Hook says, to be a society “where the government rests upon the freely given consent of the governed.” This consent (which Hook acknowledges is not in complete existence in reality) is given through voting.

Criticisms of the Pragmatist Incorporation of Political Democracy

The pragmatist conception of philosophical democracy is certainly admirable from a classical liberal standpoint. Its emphasis on dispersed knowledge, its call for liberal tolerance of diversity, its humanistic respect for the dignity of every individual, and its use of a broadly scientific (though not scientistic) approach to social issues are all well in line with classical liberalism’s goals. However, clearly the incorporation of political democracy as the political ideal by the pragmatists would irk many classical liberals and especially modern libertarians. In fact, I would argue that political democracy in practice is somewhat antithetical to the philosophical aspirations of the pragmatists.

There are four ways in which political democracy undermines the aspirations of philosophical democracy. First, in no meaningful sense could it be said that political democracy has the consent of the governed. Second, political democracy in practice is in no meaningful sense actually an application of intelligence and the scientific method to political issues in practice. Third, the centralization of political authority and planning in democracies undermines Dewey’s point that intelligence is distributed throughout society (particularly in his extremely interventionist views on economics). Finally, the democratic process undermines the mutual respect of individual human dignity philosophical democracy exalts.

Both Dewey and Hook argue that political democracy’s legitimacy and its epistemic superiority rest on its ability to take the freely given consent of the governed through the electoral process. Dewey is, at best, vague on what this means, but Hook is a bit more explicit in “The Democratic Way of Life:”

In saying that government rests upon the “consent” of the governed, it is meant that at certain fixed periods its policies are submitted to the governed for approval or disapproval. By “freely given” consent of the governed is meant that no coercion, direct or indirect, is brought to bear upon the governed to elicit their approval or disapproval. A government that “rests upon” the freely given consent of the governed is one that in fact abides by the expression of this approval or disapproval.

Hook gives three conditions of how this consent must be reached. First, the method of giving consent must not be obstructed (in this case, free elections without coerced voting). Second, there can be no economic threats to political dissenters, so the economic policy must be controlled through political means. Third, there can be no monopoly in education or the press. I argue, though the third may be reached in political democracy, the first two are nearly impossible to be achieved in political democracies.

On the first point, it is highly dubious that voting is truly a method of consent in the first place. Michael Huemer in The Problem of Political Authority identifies three arguments that are typically given to claim democracy has the consent of the governed. First, “naïve majoritarianism,” which believes that if all vote or have the opportunity to vote in an election the majority has just authority to govern as they please. Second, deliberative democracy, which holds that if participants can publicly reason about their proposals, have an equal voice, and a consensus can be aimed at, the resulting consensus or majority vote is just. Third, equality from authority which holds that treating others as equals means we must respect democratic decisions. Though neither Hook nor Dewey explicitly explain why they think a vote constitutes consent, it is safe to say that their beliefs fall somewhere between naïve majoritarianism and deliberative democracy, thus it is worth rehashing Huemer’s arguments against those views. (The equality argument is mostly irrelevant for present purposes.)

Against naïve majoritarianism, Huemer asks us what if such a principle were applied to everyday situations through a thought experiment of a number of friends trying to decide who pays for the tab in bar. Imagine that, against your wishes, everyone among your friends says they should take a vote on who should pay for the bar tab, and they happen to choose you. Are you morally obligated to pay the tab? Do your friends have the right to forcibly take your money away from you and pay the tab? Our intuition says no and that this isn’t really consensual, so why, Huemer asks us, is it any different with political institutions?

The more interesting argument Huemer takes up is Joshua Cohen’s conception of deliberative democracy, which certainly bears some similarity to the pragmatists. Huemer characterizes Cohen’s notion of deliberative democracy as bearing the following features:

Participants take their deliberation to be capable of determining action and to be unconstrained by any prior norms

Participants offer reasons for their proposals, with the (correct) expectation that those reasons alone will determine the fate of the proposals.

Each participant has an equal voice.

The deliberation aims at consensus, however if consensus is not achieved, it is decided by voting.

First of all, as Huemer notes, there is little reason why deliberation in democratic institutions should legitimize the claim that participants have consented to the results. If we return to the bar tab example, imagine if we just added the stipulation that before the vote was taken everyone gives you reasons and arguments about why you should pay the tab, fail to convince you, and still vote that you pay for it. Nothing changes in terms of your consent to their taking your money. Indeed, the fact that government coercion involves deliberation is irrelevant to whether that coercion was consented to.

However, there is a second reason why the argument for political authority from deliberative democracy fails, and this brings me to my second argument against the application of political democracy for the ends of pragmatist philosophical democracy. Dewey and Hook, as well as Cohen, act as if democratic discourse is actually deliberative as if reasons are actually given, as if everyone participates in the process. Dewey likens this process to the scientific method, holding that it is the “intelligence” that can control and direct changes in society.

This is decidedly not the case in any actual modern democracy. As public choice theorists note, the incentives facing voters is not to apply their intelligence and knowledge to voting, they instead vote as rationally ignorant. Further, contrary to Dewey’s democratic faith in the ability of people to make good decisions voting, they are systemically biased and irrational, as Bryan Caplan argued in The Myth of the Rational Voter. The result is not the controlled, experimental, scientific deliberation and discourse the pragmatists describe, but rule of an ignorant, irrational majority. How one can look at the cacophonic caterwauling in political discourse, the superficial pomp and circumstance of the electoral process, the irrational partisanship that low-information ideological voters possess, and the sensationalism of media coverage and call it “deliberative” or “intelligent” in any sense is quite beyond me. It seems that democracy is more like cheap pornography than science and deliberation, deliberative democracy and intelligence in the scientific method of actual democratic institutions is a myth.

Further, the idea that everyone has an equal say in any existing democracy is, at best, absurd. A fraction of the population votes and their votes are controlled by an even smaller fraction of the population in the press, policy research, and who controls campaign ads. The actual policies are not controlled by elections, but by backroom deals and bureaucracies in modern democracies. As public choice theory teaches us, this makes policy in democracy the whim of special interests who contribute to the politician’s campaigns, who engage in rent-seeking and regulatory capture, not the majority and this certainly undermines the idea that anyone has an equal say in political democracies.

Hook has another condition of consent for political democracies, that there is no indirect economic coercion. He elaborates on this point:

There are less obvious but no less effective ways of coercively influencing the expression of consent. A threat, for example, to deprived the governed of their jobs or means of livelihood, by a group which has the power to do so, would undermine a democracy even if its name were retained. In fact, every overt form of economic pressure, since it is experienced directly by the individual and since so many other phases of his life are dependent upon economic security, is an overt challenge to democracy…Where it cannot influence the expression of consent, it may subvert or prevent its execution. This is particularly true in modern social instruments of production, necessary for the livelihood of many, are privately own by the few…Genuine political democracy, therefore, entails the right of the governed, through their representatives, to control economic policy.

My strong disagreement with Hook here brings me to my third point, that political democracy’s tendencies towards centralization are antithetical to Hook and Dewey’s arguments that philosophical democracy acknowledges and takes advantage of the dispersed intelligence among individuals. Anyone schooled in public choice theory immediately sees the problem with Hook’s analysis that government policy controlling economics is necessary to reduce indirect economic coercion. As the concept of “concentrated benefits, dispersed cost” shows, the reality is that when policy is controlled by the government in democracies a select few special interests have the incentive to use government policy to their ends at the expense of the public good. In other words, what Hook calls “economic democracy” is undemocratic in every way due to the public choice problems embedded in the democratic process for selecting economic policy. Further, Hook’s point about unequal distribution of wealth needing to be subverted by state intervention is far off the mark; that exact state intervention is what causes such centralization of wealth in the first place.

But this brings me to my broader point about how political democracy is inconsistent with Dewey’s assertion that “it is the democratic faith that it is sufficiently general so that each individual has something to contribute and value of each contribution can be assessed only as it enters into the final pooled intelligence constituted by the contributions of all[.]” Political democracy has resulted in the centralization of decision making into ever larger governments by an increasingly elite group of bureaucrats, politicians, and special interests. This is not taking advantage of the intelligent contributions of each individual.

Further, Dewey’s general views on economic policy and favoring for big government that were bordering on socialism at times and were definitely in favor of progressive state intervention, are at odds with his broader epistemic commitments which are closely linked to philosophical democracy. This may be seen by directly comparing Dewey on these points with Hayek.

In a great paper entitled “Hayek’s Challenge to Dewey,” Alan Reynolds points out that both Hayek and Dewey have very similar epistemic views and both derive their political views from their respective epistemologies. However, Hayek’s and Dewey’s respective visions of liberalism are very different. Hayek counts himself in the old classical liberal tradition which seeks limited government to maximize individual negative liberty, while Dewey, despite acknowledging this older liberalism’s success at progress in the past, sees classical liberalism as an obstacle in Liberalism and Social Action and says it should be replaced with a “renascent liberalism” that embraces large government policies to guarantee positive liberties.

Yet, as Reynolds notes, both Hayek and Dewey have similar epistemologies, and his analysis is worth quoting at length on this point:

Dewey constantly argues that the philosophical tradition, starting with Plato but achieving its sharpest articulation with Descartes, portrayed humans as fundamentally rational beings, whose rationality has a single universal structure and is capable of detaching itself from experience to grasp universal truths. Dewey instead puts forward a radically different view, in which knowledge is fallible, limited, social, embodied, and contextual. He argues against the “old notion that intelligence is a ready-made possession of individuals.” This view is a “purely individualistic notion of intelligence” that fails to recognize the social character of intelligence. Knowledge, for Dewey, is not primarily acquired and developed in detachment from social interactions, but is embodied in them. We live “in an environment in which the cumulative intelligence of a multitude of cooperating individuals is embodied.” This means that knowledge is much broader than the articulation of it found in the philosophical tradition. Dewey’s conception of knowledge, according to Posner, “includes tacit (‘how to’) knowledge as well as the articulate knowledge acquired by formal reasoning and systematic empirical methods, for both are useful.” Knowledge is not confined to the articulate and explicit, but includes the knowledge weaved into the emotions, common sense, know-how, and intuition. This broader sense of knowledge is not reducible to the articulate and explicit.

…Hayek’s vision of epistemology similarly deflates the pretensions of human rationality and broadens out our notion of knowledge to include those practical aspects of our know-how that remains unthematized (and possibly unthematizable). Hayek offers a distinction between two opposing conceptions of “the place which reason plays in human affairs.” There is the Enlightenment (and specifically Cartesian) view that “assumes that Reason, with a capital R, is always fully and equally available to all humans and that everything which man achieves is the direct result of, and therefore subject to, the control of individual reason.” In contrast to this rationalist epistemology, he offers what he refers to as his evolutionist, “antirationalist approach,” which “regards man not as a highly rational and intelligent but as a very irrational and fallible being, whose individual errors are corrected only the course of a social process, and which aims at making the best of a very imperfect material.” Human reason is able to provide the on-the-ground knowledge that helps to navigate particular contexts and situations – and this knowledge will be overwhelmingly what we might call “practical knowledge,” or know-how, which is not easy to formalize into know-that type information. It is false (and potentially dangerous) to view humans as beings that are specially equipped to access universal truth via universal reason; contrarily, we are creatures that can navigate certain kinds of situations via practical problem-solving. A great deal of this knowledge is “tacit, inarticulable, and therefore uncommunicable.” In this view, “man has achieved what he has in spite of the fact that he is only partly guided by reason, and that his individual reason is very limited and imperfect.” This rejection of Cartesian-inspired rationalism, and defense of an anti-rationalistic, fallibilist epistemology, is central to Hayek’s picture of the individual and the limits of knowledge.

Unlike Dewey, Hayek continually applies this critique of a hyper-inflated view of reason to government policy where Dewey stops short. Hayek’s point that our knowledge is inarticulate, incomplete, and fallible means that no man or group of men possess the knowledge to design an economy. Instead, we must rely on the decentralized decision making of the price system, on the spontaneous order of markets to allocate resources. Any attempts to design, plan, or control an economy are destined to fail due to this fundamental knowledge problem so closely linked to Hayek’s critique of Enlightenment rationalism that Dewey shares. Reynolds comments:

This assumption that socialist planning is possible and desirable relies, I argue, on the following moves on Dewey’s part: (1) Dewey throws out bad Enlightenment “Reason” and puts in its place the notion of “intelligence;” and (2) although “intelligence” does not harbor the pretenses of coming into contact with absolute truth like “Reason” does, it is still powerful enough to be capable of successfully planning and guiding the economy. While Hayek joins Dewey in step (1) (deflating the pretensions of Reason), Hayek would rightly be concerned with step (2). For Hayek, the shift from Enlightenment “Reason” to fallible “intelligence” should make us far more skeptical about the possibility and desirability of economic planning. If Deweyans took Hayek seriously, they might find themselves in agreement with Richard Rorty when he asks the Left to “stop talking about the ‘anticapitalist struggle,’” and content itself with “sticking to small experimental ways of alleviating misery and overcoming injustice.”

It is a little strange, however, that Dewey failed to anticipate this Hayekian challenge. He does acknowledge in Liberalism and Social Action does acknowledge the very Hayekian point that “society in general is served by the unplanned coincidence of the consequences of a vast multitude of efforts put forth by individuals without reference to any social end” as a “new formulation” in classical liberalism. Further, his criticisms of aristocracy and the progressive tendency to over-rely on technocratic experts for government administration come close to Hayekian knowledge problem critiques of socialism at times. However, Dewey’s excessive focus on the historical abuses of early industrial state capitalism blinded him to the potential for markets to be a spectacular coordinating mechanism.

Getting off the topic of economics and back to democracy, it is clear that political democracy’s tendency to centralize everything and apply a one-size-fits-all approach to social problems based off of majority rule are at odds with the social epistemology of Deweyan philosophical democracy.

The final reason why political democracy fails to meet the end of philosophical democracy is it undermines the democratic faith in the dignity of humans, and deliberative discussion and hermeneutical openness to opposing opinions necessary for such a faith. Turn on cable news while covering a political issue or read the comments of the majority of internet political forums and you’ll be hard-pressed to find any examples of people respecting the dignity of “the other side.” Indeed, Jonathan Haidt notes in The Righteous Mind that political discussion tends to go ugly do to the way our minds process morality. Michael Huemer notes just how irrational political discourse in modern democracies can so often get. This bodes ill for any political project that seeks to use outright public debate (as opposed to dialogue) to be “deliberative,” especially pragmatist democracy.

Yet there’s another sense in which modern political democracy completely undermines the dignity of the human person. Modern democracies lead to a false identification of the state with “the will of the people,” a false identification Dewey himself bought in his earlier writings though repudiated after the rise of totalitarianism. Any individual who goes against the state, then, is going against “the people,” all of humanity. Often times, these people are written off with such labels as “unpatriotic,” “irrational,” “anti-democratic” (in the first sense as a meaningless insult) and the sort. That seems completely contrary to respecting the dignity of each individual, and to openness in dialogue and deliberation with other opinions that Dewey wants to embrace.

As we have seen, on almost every aspect political democracy fails to deliver the promises of philosophical democracy extolled by the pragmatists. Dewey himself did acknowledge in a later essay entitled “I Believe” that “democratic institutions are no guarantee for the existence no guarantee for the existence of democratic individuals.” Further, he insists that democratic institutions are a means to the philosophical ends and “are to be judged on the basis of their contribution to end[.]” It seems that it is not inconsistent, in light of recent evidence from public choice theory and experience, to oppose political democracy from a pragmatist perspective yet still embrace Dewey’s broadly “democratic” philosophical commitments.

Of course, Dewey would reject completely separating the means of democracy from the intended ends. As he wrote in an essay called “Democracy is Radical,” “The fundamental principle of democracy is that the ends of freedom and individuality for all can be attained only by the means that accord with those ends.” Further, he was immensely critical of Trotsky and revolutionary radicals for their attitude that the means justify the ends.

What is needed, then, is an alternative set of political institutions to democracy that can approximate the pragmatist philosophical aspirations of humanism, pluralism, open dialogue and serious scientific inquiry that are also consistent with individuality and liberty. In the next post, I will argue that this set of institutions can likely be found in market anarchism with a polycentric legal system.

Libertarians and Pragmatists on Democracy Part 2: Classical Liberal and Libertarian Criticisms of Democratic Institutions

05/12/201605/30/2016 Zachary Woodman Economics, History, Liberty, Philosophy American Founding, democracy, F.A. Hayek, Friedrich Bastiat, George Washington, Hans-Hermann Hoppe, Jason Brennan, John Locke, JS Mill, liberalism, libertarianism, Ludwig von Mises, Michael Huemer, political economy, political philosophy, political thought, public choice theory, Thomas Jefferson

Note: This is part of a series on democracy. It is assumed the reader is familiar with part one prior to reading, in which the basic direction of this series is introduced and democracy is more concretely defined. This post is meant to do be a non-comprehensive, though fairly inclusive, look at a variety of views of democracy in classical liberal thought. The next post will survey progressive and pragmatist views of democracy, and the final post will argue that the truth in classical liberalism and pragmatism perspectives on democracy lead to a defense of market anarchy.

As alluded to in the introduction to this series, democracy has occupied a tricky place in the history of classical liberal thought. Despite the fact that the prevalence of democratic institutions in the West is at least partially a result of the influence of classical liberalism (in fact, I’d argue classical liberalisms’ role has been extremely significant in this regard), classical liberals have always been at best ambivalent to democracy. In recent years, libertarians have been critical and outright hostile towards democracy. For this reason, I’d argue that classical liberalism is, on net, critical of democracy, and there is a lot to learn from these criticisms. As a matter of housekeeping, it is important to note that I am using the term “democracy” in the second sense—as a system of political decision making—through most of this section unless otherwise noted.

Early Liberalism’s Cautious Enthusiasm for Democracy

At classical liberalism’s conception, democracy was in many ways the end-goal. No doubt, most classical liberals of the Enlightenment preferred democracy to the absolutist monarchism that had dominated Europe in their times. John Locke’s entire political project can be read as a criticism of absolutism, and he tended to more democratic views. In his Second Treatise on Government “democracy” is only mentioned twice by name in Chapter 10, mostly to define it in contrast to oligarchy and monarchy. However, throughout Locke there is a tendency to emphasize what we today would call “popular sovereignty”—a concept which strikes at the heart of the appeal of democracy. As Peter Laslett writes in his introduction to the Cambridge edition of Locke’s Two Treatises:

In his analysis of politics in terms of force as well as in rightful authority Locke is closer to the thought of our own day on the subject of sovereignty than the assumptions of his own time. Behind the superior power of the legislative in his system there is always to be seen the finally supreme, all-important power of the people themselves, again conceived of as a force, though justified once more by the concept of trust. It was a power which would only rarely display itself, and, as we have tried to show, there is considerable obscurity about the actual circumstances in which it could come to action and more about what it might achieve. Nevertheless, this residual power must be called Locke’s idea of what we now think of as popular sovereignty.

Drawing off of Locke, the American founders; inherited a skepticism towards absolutism and a little bit of faith in popular sovereignty. Of course, there is a slight difference in the founders’ conception of popular sovereignty and Locke’s in that it is far more individualist; in fact, it might be more accurate to say the founders did not so much believe in popular sovereignty as individual self-governance, but there is still an affinity between Locke and most of the founders’ on this point. Contra most west coast Straussians (ahem, Tom West and Harry Jaffa), it is important to note that the founders’ were influenced by much more than the classical liberal philosophy of John Locke. They, particularly John Madison, John Dickinson, and most of the early federalists, were just as influenced (if not more-so) by classical Greek and Roman political philosophy and the style of old whig conservatism of Burke and his contemporaries as classical liberalism. This can be illustrated in their perspective on democracy.

Though certainly wary of democracy’s dangers, most of the founders overall could still be described as democratic in some sense of the term. Of course, this point must be nuanced with the founders’ healthy criticisms of democracy influenced by classical liberal thought, whiggish conservatism, and Aristotelianism. Maddison is probably the most frequently cited example of an American founder who waxed pessimistic about democracy, given his writings on the “problem of factions” in Federalist No. 10. To be sure, most of the founders, as Ben Franklin famously said at the end of the constitutional convention, would have probably preferred the term “republic” to “democracy.”

Because of Madison’s Federalist No. 10 and a variety of quotes that were harshly critical democracy from the founders (many of which are false), a number of right-wingers today, particularly populist and nationalistic constitutional conservatives, argue that the founders were not democratic at all and are adverse to anything that refers to America as a “democracy.” To be sure, America is not a pure democracy, however there is little doubt that the founders still had at least some affinity for democracy, particularly in contrast to absolutist monarchy, with the possible exception of Hamilton sometimes (I would also argue that Hamilton was the least classically liberal of the founders and is largely my least favorite founder, but that’s another issue).

Further, it is obvious the constitution incorporated democratic decision-making far more than any other of that time; in fact, the preamble beginning with “We the People” screams of the democratic, Lockean notion of popular sovereignty. Further, there is little doubt that even the America of the founders can be described as “democratic” at least in the third sense of the term (as a general term for modern Western governments).

Finally, some of the founders were pretty avidly pro-democratic, particularly Thomas Jefferson. As Jefferson wrote to John Taylor:

It must be acknowledged that the term “republic” is of very vague application in every language… Were I to assign to this term a precise and definite idea, I would say purely and simply it means a government by its citizens in mass, acting directly and personally according to rules established by the majority; and that every other government is more or less republican in proportion as it has in its composition more or less of this ingredient of direct action of the citizens.

Note how Jefferson’s definition of a “republic” is virtually indistinguishable from the way democracy is typically defined (in the second sense). Of course, Jefferson, especially in his later years in his later years was skeptical about the workability of this democratic/republican vision, writing “[s]uch a government is evidently restrained to very narrow limits of space and population. I doubt if it would be practicable beyond the extent of a New England township.” Nonetheless, it’s hard to consider Jefferson anti-democratic, especially in his younger years, when the notion of Jeffersonian democracy has been so influential in the history of American politics or if one considers Jefferson’s excuberance for the much more populist French Revolution prior to the Reign of Terror.

The Decline of Democracy in Classical Liberal Thought

After the founder’s era, however, experience with real-world democratic institutions began to contrast sharply with the theoretical hopes Enlightenment-era liberals had for democracy. The Jacobin reign of terror and aftermath of the French Revolution were sobering reminders of the dangers of the tyranny of the majority. As Edmund Burke wrote in Further Reflections of the French Revolution “such a Democracy is a thing which cannot subsist by itself” and the specter of Robespierre led Burke to continually warn of mob-rule and the excesses of democracy. In America, the extremely low level of decorum in early elections (particularly in 1800 between Jefferson and Adams) must have made the more aristocratic and conservative of the founders (the likes of Washington, Hamilton, and John Dickinson) fearful of the direction in which their experiment was going.

By the Jacksonian era, it is safe to say that most classical liberal observers were waxing a bit more pessimistic on the prospects of democracy than their intellectual ancestors. The rise of a populist president in Andrew Jackson who had committed so many acts of tyranny against the Native Americans, the democratization of religious faith by the likes of Lorenzo Dow in the Second Great Awakening, and the growing of democracy into almost a political religion were signals of a disturbing trend to many of the surviving founders and European liberals like Mill and de Tocqueville. In fact, Jefferson even said of Jackson, in an interview with Daniel Webster:

I feel much alarmed at the prospect of seeing General Jackson President. He is one of the most unfit men I know of for such a place. He has had very little respect for laws and constitutions, and is, in fact, an able military chief. His passions are terrible. When I was President of the Senate, he was Senator; and he could never speak on account of the rashness of his feelings. I have seen him attempt it repeatedly, and as often choke with rage. His passions are, no doubt, cooler now; he has been much tried since I knew him, but he is a dangerous man.

No doubt, Jefferson’s critique of Jackson’s inability to control his passions mirror Plato’s critique of the “democratic soul” in the Republic.

However, it wasn’t until Alexis de Tocqueville’s famous Democracy in America that the classical liberal view of democracy truly turned critical. De Tocqueville saw democracy’s influence in America as resulting in the decline of an aristocratic class that “furnished the best leaders of the American revolution.” Socioeconomic egalitarianism was far from the worst of democracy’s problems in de Tocqueville’s eyes. He saw the concept of popular sovereignty as leading to “unlimited power of the majority” that was corroding the checks and balances of the American constitution in every branch of government. Indeed, there has perhaps never been as eloquent a critic of “tyranny of the majority” as de Tocqueville.

In England, JS Mill also was beginning to see the dangers of excessive democracy. Much of On Liberty can be read as building on and responding to de Tocqueville. For example, his warnings against the tyranny of majority opinion in the first chapter of On Liberty echo de Tocqueville’s concerns and are worth quoting at length (also, note how much of this anticipates much of the later insights of the Virginia School of Political Economy):

The notion, that the people have no need to limit their power over themselves, might seem axiomatic, when popular government was a thing only dreamed about, or read of as having existed at some distant period of the past. Neither was that notion necessarily disturbed by such temporary aberrations as those of the French Revolution….In time, however, a democratic republic came to occupy a large portion of the earth’s surface, and made itself felt as one of the most powerful members of the community of nations; and elective and responsible government became the subject of the observations and criticisms which wait upon a great existing fact. It was now perceived that such phrases as “self-government” and “the power of the people over themselves” do not express the true state of the case. The “people” who exercise the power are not always the same people with those over whom it is exercised; and the “self-government” spoken of is not the government of each by himself, but of each by all the rest. The will of the people, moreover, practically means, the will of the most numerous or the most active part of the people; the majority, or those who succeed in making themselves accepted as the majority: the people, consequently, may desire to oppress a part of their number; and precautions are as much needed against this as against any other abuse of power. The limitation, therefore, of the power of government over individuals, loses none of its importance when the holders of power are regularly accountable to the community, that is, to the strongest party therein.

…Like other tyrannies, the tyranny of the majority was at first, and is still vulgarly, held in dread, chiefly as operating through the acts of public authorities. But reflecting persons perceived that when society is itself the tyranny—society, collectively, over the separate individuals who compose it—its means of tyrannizing are not restricted to the acts which it may do by the hands of its political functionaries….Protection, therefore, against the tyranny of the magistrate is not enough: there needs to be protection also against the tyranny of the prevailing opinion and feeling[.]

By the generation of liberals after Mill, the insight that democracy itself can turn into tyranny became influential on the continent as well. French liberals such as Bastiat and Germans such as Mises became critical of democratic institutions. Both Bastiat and Mises noted how democracies are ultimately controlled by public opinion which can, often times, be irrational. Bastiat took note of this in regards to protectionist economics writing, “Protectionism is too popular for its adherents to be regarded as insincere. If the majority had faith in free trade, we should have free trade.” Mises elaborated on Bastiat’s insights more writing in Human Action:

Democracy guarantees a system of government in accordance with the wishes and plans of the majority. But it cannot prevent majorities from falling victim to erroneous ideas and from adopting inappropriate policies which not only fail to realize the ends aimed at but result in disaster.

(Note: Bryan Caplan has a great, more detailed analysis of Bastiat and Mises’ criticisms of democracy, it is highly recommended.)

Most of these problems of the tyranny of the majority highlighted by de Tocqueville and Mill, as well as the issue of a completely misinformed public, seemed confirmed in World War II after the rise of fascism via the democratic process in Germany and Italy.

Public Choice Theory and Democracy’s Continued Decline

In the middle of the twentieth century, classical liberals became influenced by a field of study that seemed to confirm and deepen their worst fears of democracy. I’m referring, of course, to the public choice theory of the Virginia School of Political Economy associated with the likes of James Buchanan, Richard Wagner, and Gordon Tulloch. It is important to note at this point, of course, that public choice theory itself is not a part of classical liberalism as it is a positive scientific research program that simply applies economic analysis to the political process that has been contributed to by libertarians, conservatives, and liberals like rather than any sort of political ideology; however, many of the founders of Public Choice Theory were themselves classical liberals and there is little doubt that this style of economic thinking has had more influence on libertarianism than any other political philosophy.

The new public choice theory found that democracy could result not only in the potential tyranny of the majority, but also in horrible policies thanks to the accumulation of special interests (akin to Madison’s analysis of the problem of factions). The idea that voters are rationally ignorant, the insight that elected representatives do not act in the public interest but out of their own rational self-interest and those of their lobbyist friends, and a number of concepts from the short-sightedness effect to the Arrow’s impossibility theorem seemed to cast poor prospects on democracy’s ability to protect individual liberty. The fact that so many democracies were adopting horrible Keynesian economic policies, and the explanation that this is due to the self-interest of politicians, caused further doubt on the compatibility of free markets and democratic institutions. Later insights from public choice theory revealed that voters were not only ignorant but also systemically biased and irrational, as Bryan Caplan’s Myth of the Rational Voter argued, only added to this anxiety.

This is not to say, of course, that classical liberals since the mid-nineteenth century have been wholly opposed to democracy. Indeed, Mill, Bastiat, Mises, and most of the public choice economists continued to prefer representative democracy strongly limited by a well-designed (well, at least for Buchanan) constitution to alternative systems of political organization. Even Mises in Liberalism: In the Classical Tradition defended democracy on the following grounds:

In the long run, no government can maintain itself in power if it does not have public opinion behind it, i.e., if those governed are not convinced that government is good….There is, therefore, in every form of polity a means for making the government at least ultimately dependent on the will of the governed, viz., civil war, revolution, insurrection. But it is just this expedient that liberalism wants to avoid. There can be no lasting economic improvement if the peaceful course of affairs is continually interrupted by internal struggles…Here is where the social function of democracy finds its point of application. Democracy is that form of political constitution which makes possible the adaptation of the government to the wishes of the governed without violent struggles.

The attitude of FA Hayek in The Constitution of Liberty towards democracy is perhaps the most typical attitude of most classical liberals and libertarians since the days of de Tocqueville, and the majority of libertarians in mainstream political discourse today. Hayek defends a heavily limited concept of democracy as a means to the end of individual liberty; as the most efficient of current possible political constitutions to ensure the freedom of the individual. He echoes Mises in the fifth chapter entitled “Majority Rule” where he writes:

If democracy is a means rather than an end, its limits must be determined in the light of the purpose we want it to serve. There are three chief arguments by which democracy can be justified, each of which may be regarded as conclusive. The first is that, whenever it is necessary that one of several conflicting opinions should prevail and when one would have to be made to prevail by force if need be, it is less wasteful to determine which has the stronger support by counting numbers than by fighting. Democracy is the only method of peaceful change that man has yet discovered.

Modern Libertarianism’s Hostile Opposition to Democracy

Since Hayek penned those words in 1960, before many of the most depressing insights of public choice had risen to prominence, classical liberals and libertarians—particularly more radical anarchists—have grown even more skeptical of democracy and are, at times, outright hostile to it. Hayek himself in his next major work on political theory, Law, Legislation, and Liberty, waxed a bit more pessimistic on constitutional representative democracy than he did in The Constitution of Liberty. Just thirteen years after he spent over five-hundred pages defending and articulating liberal constitutionalism, he opens the introduction to the first volume of his next major work by declaring “The first attempt to secure individual liberty by constitutions has evidently failed.” Though he still proclaims the destruction of liberty that was running rampant in the immediate aftermath of World War II was “not a necessary consequence of democracy,” he laments the role democracy had played in recent politics:

If I am right, it would indeed seem that the particular form of representative government which now prevails in the Western world, and which many feel they must defend because they mistakenly regard it as the only possible form of democracy, has an inherent tendency to lead away from the ideals it was intended serve. It can hardly be denied that, since this type of democracy has come to be accepted, we have been moving away from that ideal of individual liberty of which it had been regarded as the surest safeguard, and are now drifting towards a system which nobody wanted.

In other corners of classical liberal thought, the prospects for democracy were even grimmer. This hostile attitude is perhaps best exemplified by Hans Herman Hoppe’s book Democracy: The God that Failed. Hoppe argues that democracy suffers from a problem akin to the tragedy of the commons; whereas medieval monarchies, aristocracies, and feuds had some sense of ownership over the state, democracies have no clear sense of ownership and so democratic representatives have little incentive to make good policies that protect liberty and economic prosperity.

Though Hoppe spends far too much of the book on anti-intellectual, abrasive, and, at times, bigoted (in the literal meaning of the term) polemics, there is some truth to his central insight and it certainly has a resonance with the public choice research on the short-sightedness effect. I doubt that Hoppe’s insights have the radical implications he draws of by necessity (mainly that monarchy is preferable to democracy); there might be a case to be made that pre-democratic institutions had lower taxes and better protection of property rights, on virtually every non-tax matters it is fairly obvious that such governments were far more tyrannical. Freedom of movement, which was so important to Mises in Liberalism and is among our most important of liberties, was non-existent in feudal Europe; indeed, serfs in many European manors were little more than slaves, pieces of property tied to their land, rather than sovereign, free individuals. Further, social freedom and freedom of religion were virtually non-existent in such polities; homosexuals were executed, Muslims and Jews were persecuted, and there were a number of other violations of human rights I doubt even Hoppe (in his implicit and occasionally explicit homophobia) would defend. (Of course, Hoppe would throw a fit because his argument is purely deductive and a priori whereas mine actually uses empirical evidence, but his simpleton, idiosyncratic, and laughably unintelligent economic methodology and epistemology is another topic.) I highly doubt even the most dogmatic Rothbardian Hoppe-lover would rather live in a medieval Europe feudal manor or monarchy than a modern democracy, despite their flashy polemics.

More recently, Michael Huemer has had criticisms of democracy’s morality in his book (which I highly recommend) The Problem of Political Authority. Heumer’s argument throughout the book is that all attempts to justify the legitimacy of government authority or to argue that there is any real consent between real-world governments and citizens fail, and a better form of government may be found in market anarchism. He notes how democracy has created a false identification of voting with actual consent that can morally legitimize government, and argues against all attempts to claim that citizens of democracies—real world or hypothetical—are under legitimate authority by virtue of the fact that they are living in a democracy. In another chapter, Huemer analyzes the problematic psychology of authority and how democracy contributes to the idolization of government.

Even more recently, Jason Brennan has a forthcoming book out that is perhaps more critical of democracy than any other classical liberal—save perhaps Hoppe—aptly titled Against Democracy. Brennan argues, like Huemer, that our relationship to democracy is non-consensual. In line with most public choice theory, he argues that democracy is truly the “rule of the irrational and the ignorant” and that democratic deliberation, voting, and electoral participation actually makes people worse, more biased, more irrational citizens. Brennan, instead, defends what he dubs “epistocracy”—a sort of aristocratic rule of the knowledgeable. (I have yet to read through Brennan’s book as it hasn’t been released yet and I’m basing this entirely off of reviews and Brennan’s other writings, particularly BHL blog posts, so I may be butchering some of the details of his argument in this description.)

Clearly, the classical liberals—from de Tocqueville to Jason Brennan—have very good reason to be skeptical of democracy, and perhaps even to feverishly oppose democracy. I still do not take the conclusions to the extremes of Hoppe and (at least from my limited knowledge of his writing on this topic) Brennan. I would agree with Hayek and Mises that constitutional representative democracy is the n^th best alternative to other systems such as feudalism, absolutist monarchy, and any form of authoritarianism. (Although my general opposition to nation-states for both anarchist and communitarian reasons makes me more critical of democracy than most moderate classical liberals.)

However, it is clear that democracy is far from the best of all possible governmental arrangements. At the very least, the truth that Aristotle emphasized in his Politics that it matters not so much the make-up of the government (rule of the many, few, or one) but the quality of government, whether it is tyrannical or not. There is very good reason to believe, due to most of the arguments by the great thinkers discussed above, that democracy is, unfortunately, more likely than not to lead to tyranny—even if it is less likely to do so than the existing alternatives.

Having said that, perhaps not all is lost for the spirit of democracy. In the next post, I will analyze the pragmatist conception of democracy perhaps most popular among American twentieth-century liberals and progressives. This conception of democracy is far more than a form of political decision making discussed by the classical liberals, but a broader social epistemology and philosophy as mentioned in the introduction. I hope it will be clear by the end of the next post in this series that it is possible to affirm some of the philosophical commitments of democracy extolled by thinkers such as John Dewey, Sidney Hook, and Richard Rorty without necessarily embracing democracy as a political decision-making progress or, as Hayek would argue, democracy as it presently exists.

Friedrich Hayek’s recollection of Ludwig Wittgenstein

05/08/201605/09/2016 Chhay Lin Lim Economics, Liberty, Philosophy F.A. Hayek, Friedrich Hayek, Ludwig Wittgenstein, Wittgenstein

Today is F.A. Hayek’s birthday, and if he would have been alive he would have been 117 years old now. Hayek is one of the most seminal economists and social philosophers of the 20th century. His works have left a deep impression on me when I first encountered them at the age of 20. The first three works of Hayek that I read were: 1. The Constitution of Liberty; 2. The Road to Serfdom; and 3. an essay entitled The Use Of Knowledge In Society. They have greatly influenced my views on political philosophy and the social sciences.

However, it was not so long ago that another illustrious philosopher, Ludwig Wittgenstein who was a second cousin and 10 years senior to Hayek, was born 127 years ago. In the same year that I became acquainted with Hayek, I also read Wittgenstein’s Tractatus Logico-Philosophicus or to put it more precisely: I attempted to read it. The work is incredibly dense and until today I still don’t feel confident that I have a sensible understanding of the book. Nonetheless, as a small tribute to both of them, I thought it would be nice to post a memoir that Hayek wrote of Wittgenstein.

F.A. Hayek – Remembering My Cousin, Ludwig Wittgenstein

BETWEEN THE RAILS and the building of the railway station of Bad Ischl there used to be ample space where, sixty years ago, in the season, a regular promenade used to develop before the departure of the night train to Vienna.

I believe it was on the last day of August 1918 that here, among a boisterous crowd of young officers returning to the front after visiting their families on furlough in the Salzkammergut district, two artillery ensigns became vaguely aware that they ought to know one another. I am not sure whether it was a resemblance to other members of our families or because we had actually met before that led us to ask the other, “Aren’t you a Wittgenstein?” (or, perhaps, “Aren’t you a Hayek?”). At any rate it led to our travelling together through the night to Vienna, and even though most of the time we naturally tried to sleep we did manage to converse a little.

Some parts of this conversation made a strong impression on me. He was not only much irritated by the high spirits of the noisy and probably half-drunk party of fellow-officers with which we shared the carriage without in the least concealing his contempt for mankind in general, but he also took it for granted that any relation of his no matter how distantly connected must have the same standards as himself. He was not so very wrong! I was then very young and inexperienced, barely nineteen and the product of what would now be called a puritanical education: the kind in which the ice-cold bath my father took every morning was the much admired (though rarely imitated) standard of discipline for body and mind. And Ludwig Wittgenstein was just ten years my senior.

What struck me most in this conversation was a radical passion for truthfulness in everything (which I came to know as a characteristic vogue among the young Viennese intellectuals of the generation immediately preceding mine only in the following university years). This truthfulness became almost a fashion in that border group between the purely Jewish and the purely Gentile parts of the intelligentsia in which I came so much to move. It meant much more than truth in speech. One had to “live” truth and not tolerate any pretence in oneself or others. It sometimes produced outright rudeness and, certainly, unpleasantness. Every convention was dissected and every conventional form exposed as fraud. Wittgenstein merely carried this further in applying it to himself. I sometimes felt that he took a perverse pleasure in discovering falsehood in his own feelings and that he was constantly trying to purge himself of all fraud.

THAT HE WAS VERY highly strung even at that time cannot be doubted. Among the remoter relatives he was thought of (though hardly known by them) as the maddest member of a rather extraordinary family, all of whom were exceptionally gifted and both ready and in a position to live for what they most cared for. Before 1914 I had heard much of (though being too young to attend) their famous musical soirees at the “Palais Wittgenstein”, which ceased to be a social centre after 1914. For many years the name meant to me chiefly the kind old lady who, when I was six years old, had taken me for my first car-ride—in an open electromobile round the Ringstrasse.

Apart from an even earlier memory of being taken to the luxurious apartment of an extremely old lady and being made to understand that she was the sister of my maternal great-grandfather— and, as I now know, Ludwig Wittgenstein’s maternal grandmother—I have no direct knowledge of the Wittgenstein family at the height of their social position at Vienna. The tragedy of the three elder sons apparently all ending their lives by suicide had attenuated it even more than the death of the great industrialist at its head would otherwise have done. I am afraid that my earliest recollection of the name of Wittgenstein is connected with the shocked account of one of my Styrian maiden great-aunts, surely inspired by envy rather than malice, that their grandfather “sold his daughter to a rich Jewish banker. . . .” This was the kind old lady I still remember—just.

I DID NOT MEET Ludwig Wittgenstein again for ten years; but I heard from him from time to time through his eldest sister who was a second cousin, an exact contemporary and a close friend of my mother. The regular visiting had made “Aunt Minning” a familiar figure to me (actually, she spelt her name, which is an abbreviation of Hermine, with a single “n”, but this would sound odd to English ears), and she remained a frequent visitor. Her youngest brother’s problems evidently occupied her much, and though she deprecated all talk about the “Sonderling”, the crank, and strongly defended him when occasional and undoubtedly often much-distorted accounts of his doings circulated, we did soon learn of them. The public eye did not take notice of him while his brother Paul Wittgenstein, a one-armed pianist, became a well-known figure.

But I did, through these connections, become probably one of the first readers of Tractatus when it appeared in 1922. Since, like most philosophically interested people of our generation I was, like Wittgenstein, much influenced by Ernst Mach, it made a great impression on me.

The next time I met Ludwig Wittgenstein was in the spring of 1928 when the economist Dennis Robertson, who was taking me for a walk through the Fellows’ Gardens of Trinity College, Cambridge, suddenly decided to change course because on the top of a little rise he perceived the form of the philosopher draped over a deckchair. He evidently stood rather in awe of him, and he did not wish to disturb him. Naturally, I walked up to him, was greeted with surprising friendliness, and we engaged in a pleasant but uninteresting conversation (in German) about home and family to which Robertson soon left us. Before long Wittgenstein’s interest flagged, and evident signs of his not knowing what to do with me made me leave him after a while.

IT MUST HAVE BEEN almost twelve years later that the first of the only real series of meetings I had with him took place. When I went to Cambridge in 1939 with the London School of Economics I soon learned that he was away working at some war hospital. But a year or two later I encountered him most unexpectedly. John Maynard Keynes had arranged for me to have rooms in the Gibbs building of King’s College, and after a while I was asked by Richard Braithwaite to take part in the meetings of the Moral Science Club (I think that was the name) which took place in his rooms just below those I occupied.

It was at the end of one of these meetings that Wittgenstein quite suddenly and rather dramatically emerged. It concerned a paper which had not particularly interested me and of the subject of which I have no recollection. Suddenly Wittgenstein leapt to his feet, poker in hand, indignant in the highest degree, and he proceeded to demonstrate with the implement how simple and obvious Matter really was. Seeing this rampant man in the middle of the room swinging a poker was certainly rather alarming, and one felt inclined to escape into a safe corner. Frankly, my impression at that time was that he had gone mad!

It was some time later, probably a year or two, that I took courage to go and see him, after having learnt that he was again in Cambridge. He then lived (as always, I think) in rooms several flights up in a building outside the College. The bare room with the iron stove, to which he had to bring a chair for me from his bedroom, has often been described. We talked pleasantly on a variety of topics outside philosophy and politics (we knew that we disagreed politically), and he seemed to like the very fact that I strictly avoided “talking shop”, not unlike one or two other curious figures I have met in Cambridge. But, though these visits were quite pleasant and he seemed to encourage their repetition, they were also rather uninteresting and I went along only two or three times more.

After the end of the War, when I had already returned to London, a new kind of contact by letter began when the possibility arose, first to send food parcels, and later to visit our relatives in Vienna. This involved all kinds of complicated contacts with bureaucratic organisations about which, he rightly assumed, I had found out details before he did. In this he showed a curious combination of impracticability and meticulous attention to detail which must have made all contacts with the ordinary business of life highly unsettling for him. However, he did manage to get to Vienna fairly soon after me (I had succeeded for the first time in 1946), and I believe he went there once or twice again.

I THINK IT WAS in the course of his return from his last visit to Vienna that we met for the last time. He had gone to see his dying sister Minning once more, and he was (though I did not know it) himself already mortally ill. I had interrupted the usual railway journey from Vienna via Switzerland and France at Basel and had boarded there the sleeping-car at midnight the next day. Since my fellow occupant of the compartment seemed to be already asleep I undressed in semi-darkness. As I prepared to mount to the upper berth a tousled head shot out from the lower one and almost shouted at me, “You are Professor Hayek!” Before I had recovered sufficiently to realise that it was Wittgenstein and to register my assent, he had turned to the wall again.

When I woke up next morning he had disappeared, presumably to the restaurant car. When I returned I found him deeply engrossed in a detective story and apparently unwilling to talk. This lasted only until he had finished his paperback. He then engaged me in the most lively conversation, beginning with his impressions of the Russians at Vienna, an experience which evidently had shaken him to his depth and destroyed certain long-cherished illusions. Gradually we were led to more general questions of moral philosophy, but just as it was getting really exciting we arrived at the port (in Boulogne, I believe). Wittgenstein seemed very anxious to continue our discussion, and indeed he said that we must do so on board ship.

But I simply could not find him. Whether he regretted having become so deeply engaged, or had discovered that, after all, I was just another Philistine, I do not know. At any rate, I never saw him again.

A Hayekian View of Safe Spaces

05/04/201605/06/2016 Zachary Woodman Current Events, Politics Academic Freedom, civil liberty, F.A. Hayek, free speech, Safe Spaces, social justice, Social Theory

The concept of a “safe space” has dominated the discourse in identity politics for the last several years. Proponents of safe space, mostly left-leaning millennials are now demanding that colleges, schools, corporations, and various other institutions remove potentially offensive or triggering ideas or images that might harm minorities. Much of the time, this leads to hilariously captious nitpicking over things like Halloween costumes and ethnic food. Other times, it leads to what critics (mostly conservatives and libertarians) see as threats to free speech. It has led to violent reactions to opposing candidates, the ridiculous firing of college presidents, and censoring of speakers at universities.

Largely, the conservatives and libertarians are right. College and society as a whole are not and should not be “safe spaces.” Especially in education, one should be exposed to offensive, radically different ideas and world views. The reason free speech and academic freedom exists, as JS Mill argued in On Liberty, is because stifling freedom of expression robs humanity of potentially true ideas in the future. There is a similarity the merits of freedom of speech and entrepreneurship in the market; dissenters with public opinion are essentially ideological entrepreneurs who are discovering better vocabularies and better ways of thinking. If we stifle the free market, we are stuck with the same suboptimal products, services, technologies and methods of production; if we stifle free speech we risk being stuck with the same false ideas.

There is little I can say in defense of free speech on college campuses that hasn’t been said before. How coddling the youth leads to intellectual stagnation, or how tolerance is a two-way street and if we are to tolerate liberal point of views, we should tolerate bigotry. However, there are two points that are too often overlooked in the debate over safe spaces by the right wing critics.

First, the idea that the drive for safe spaces and censorship of ideas is solely a left-wing phenomenon is a complete and total myth. Conservatives like to fashion themselves as the “strong” defenders of free speech and inquiry, and the wimpy leftists as fascists seeking to protect their fragile little feelings. Beyond the fact that these are over-generalizations, it is a fact that conservatism is occasionally as much an enemy to free speech in trying to create “safe spaces” for people who agree with conservative, Christian values as the leftists are in trying to create safe spaces for minorities. I might have selection bias in that I recently left the ultra-conservative Hillsdale College, but there were many comical attempts there to censor ideas of those who disagreed with the college’s overwhelming conservatism; whether it was the administration’s banning of an LGBT group, students protesting a theatrical performance that included gay characters, or the students throwing a fit over the college using Starbucks because their CEO is a liberal. Look no further than some of the policies at colleges like Bob Jones, Patrick Henry, or Liberty University (my mother’s alma mater, for the record) where free speech is regularly suppressed to support conservative propaganda. Or the events which bear an uncanny resemblance to the recent incident at Claremont at William and Mary last decade.

As a further anecdote, I was a co-founder of the Gadfly Group at Hillsdale which sought to intellectually provoke Hillsdale students by promoting non-conservative political and philosophical viewpoints. One day, the president of the college (Dr. Larry Arnn) flat out told me and the group’s main founder that he didn’t think the group should or needed to exist on campus. While we were forming, at least according to Arnn, one of the deans had attempted to stop our approval by the administration (though, thankfully, the provost disagreed). After the group’s formation, though we had a number of popular events and many of the students were supportive of us, many students ridiculed us as “pseudo-intellectuals” engaging in “intellectual masturbation” (actual words said to me), calling us “angry libertarians” (even though I was the only libertarian in the group and we did events on people like Rawls), and some students were extremely offended by our presence and said the group should be banned. If that’s not evidence of right-wing censorship on college campuses, I don’t know what is. It’s enough that I’d consider writing a book in the spirit of Buckley entitled Ubermensch and Man at Hillsdale College.

Second, despite the problems with safe spaces when applied to macro level social institutions, freedom of association is consistent with a limited concept of safe spaces when applied to micro level social organizations. Though I detest their means, I do sympathize with many of the ends of these so-called “social justice warriors.” I am a liberal in the Rortian sense that I think cruelty is the worst thing you can do, and much of this attempt to create “safe spaces” is an attempt to what they perceive reduce cruelty to minority groups. Of course, they take it way too far in complaints about cultural appropriation which are not cruel to anyone, but it doesn’t diminish the fact that safe spaces are a potentially useful construct if done correctly.

The biggest problem that the Social Justice Warriors commit is a problem that Hayek pointed out so eloquently in The Fatal Conceit. As Hayek points out, modern man exists in “two worlds at once.” One, we live in the micro-level war world of intimate social relations such as families, immediate communities, and friends. (The type of people who are included in Dunbar’s number.) But we also exist in the “extended order,” the macro-level relationships that include humans we interact with and know, but only distantly; like trading partners in a large market, other citizens of a nation, or other members of our larger culture. Hayek’s writings on this are worth quoting at length:

Moreover the structures of the extended order are made up not only of individuals but also of many, often overlapping, sub-orders within which old instinctual responses, such as solidarity and altruism, continue to retain some importance by assisting voluntary collaboration, even though they are incapable, by themselves, of creating a basis for the more extended order. Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to liver simultaneously within different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed rules of the micro-cosmos (ie., of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilization), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of worlds at once. (Bold mine, Italics his)

Those who would seek to create a safe space out of the entire university or society at large are applying the rules of our macro-cosmos to our micro-cosmos. The idea that we should not bring up certain topics or ideas in certain social situations out of considerations for our fellow human beings is the truth behind the safe space. But to apply that principle to every social situation within a university or nation is a huge mistake. Safe spaces make sense for some of those overlapping sub-orders and micro-level organizations, but not for the extended order of society. So while it is a huge mistake and assault to make a safe space out of an entire college campus, perhaps it is reasonable to make safe spaces out of a dorm room, or a professor’s office, or a meeting for a student group. While it is obviously a huge act of the most heinous form of censorship to ban people from questioning the morality of homosexuality, perhaps it makes sense to not bring up that topic at a college GSA meeting where many of the LGBT students are just seeking a place to belong, or when talking to a group of LGBT students who are facing severe psychological issues while being discriminated against.

If you think applying the concept of safe spaces everywhere and anywhere is always wrong, you’re probably apt to attack me for being “politically correct” for defending the concept in some situations. I agree, we shouldn’t be “politically correct” in the way that term is typically used, but perhaps we should be decent human beings and allow people to freely associate.

Another unintentional argument for Hayek’s spontaneous order

04/11/2016 Brandon Christensen History Daniel Chirot, decentralization, F.A. Hayek, spontaneous order, William Easterly

The institutionalization of the Standestaat did not proceed smoothly. It was the result of almost continuous internal and interstate conflicts. Its ultimate beneficial results in strengthening the independence of towns and in providing a legal-constitutional basis for state power were neither anticipated nor necessarily desired by many of the participants in the conflicts, who would have preferred to gain absolute power. But benefits there were: Arbitrary government power was reduced; separation of powers between church and state were formalized; disruptive local feudal lords were controlled; highly specialized legal codes to regulate economic and fiscal exchanges were developed; and finally there began to emerge a loyalty to state structures which went beyond faithfulness to any particular king or ruling house. (186)

This is from sociologist Daniel Chirot’s 1985 article (pdf) “The Rise of the West” in the American Sociological Review. Hayek is not cited in the bibliography. I am reminded of this old tweet by economist Bill Easterly…

Notes On Liberty ART

11/09/201511/10/2015 Chhay Lin Lim Culture F.A. Hayek, libertarianism

Cheerted Keo, who is a friend of mine and an aspiring Cambodian artist by way of Holland, is in the process of creating a banner or logo for our “Notes On Liberty” website. Inspired by the subtitle ‘Spontaneous thoughts on a humble creed’ and by Friedrich Hayek’s insights on ‘dispersed knowledge’, he has come up with an art work that represents our libertarian philosophy. His work symbolizes Hayek’s key observation that information is decentralized and that each individual knows just a small fraction of what is collectively known. The result of that, as Hayek has clearly stated in his seminal work The Use of Knowledge in Society (1945), is that it is best to let those with local knowledge make their own decisions in how to plan their own lives.

Although I know that the product is not finished yet, I would already like to share his work in progress with you – click on the images to enlarge them.

Please share your thoughts with us about the work. He is making the art work for free, but I thought it would be great to give him some exposure in return. Thus, if you appreciate his work, please spread word about this awesome up-and-coming artist.

If you would like to know more about Cheerted Keo’s works, you can visit his website here: www.ckeo.nl. He is quickly building up his portfolio, has had several exhibitions and is also selling some of his art works.

Hayek’s Choice In Currency: A Way To Stop Inflation

10/09/201510/09/2015 Chhay Lin Lim Economics decentralization, economics, F.A. Hayek, free banking, market regulation

I have just finished reading Friedrich Hayek’s short essay entitled ‘Choice in Currency’ (1976). I believe that this essay is highly relevant in our current time as we have become witnesses of the emergence of crypto-currencies. In the essay, Hayek argues for market competition in currencies as a way to stop inflation and its dire consequences. He does not contend that the governments’ right to issue money should be done away with. Instead, he argues that what should be abolished is their “exclusive right to do so and their power to force people to use it and to accept it at a particular price” (p. 16). Hayek concludes that

“the best the state can do with respect to money is to provide a framework of legal rules within which the people can develop the monetary institutions that best suit them… if we could prevent governments from meddling with money, we would do more good than any government has ever done in this regard. And private enterprise would probably have done better than the best they have ever done.” (p. 22)

Hayek starts the essay with a critique on John Maynard Keynes and his idea that governments or central banks should increase the aggregate of money expenditure in order to ensure prosperity and full employment. According to Hayek, an increase in money expenditure would stimulate the economy in the short run, but it would make unemployment worse on the long run. For a more detailed explanation of the Austrian Business Cycle Theory that Hayek has supported, you can read this article of mine – you have to be able to read Dutch though.

What I find most interesting about Hayek in the essay, next to his great arguments why we should allow currency competition on the market place, is that he seems to have become more embittered with politics and the common people at the point of writing in 1976. Just as my opinion of governments and the public have worsened over the years, so too has Hayek’s opinion over the course of his lifetime. He writes:

“I never had much illusion in this respect, but I must confess that in the course of a long life my opinion of governments has steadily worsened: the more intelligently they try to act (as distinguished from simply following an established rule), the more harm they seem to do – because once they are known to aim at particular goals (rather than merely maintaining a self-correcting spontaneous order) the less they can avoid serving sectional interests.” (p. 14)

“No worse traps could have been set for a democratic system in which the government is forced to act on the beliefs that the people think to be true. Our only hope for a stable money is indeed now to find a way to protect money from politics.” (p. 16)

What is Hayek’s proposal for the world in 1976? He writes:

“At this moment it seems that the best thing we could wish governments to do is for, say, all the members of the European Economic Community, or, better still, all the governments of the Atlantic Community, to bind themselves mutually not to place any restrictions on the free use within their territories of one another’s – or any other – currencies, including their purchase and sale at any price the parties decide upon, or on their use as accounting unites in which to keep books. This, and not a utopian European Monetary Unit, seems to me now both the practicable and the desirable arrangement to aim at. To make the scheme effective it would be important, for reasons I state later, also to provide that banks in one country be free to establish branches in any of the others.” (p. 17)

Fortunately, our technologies have rapidly changed since then. We are now able to create crypto-currencies that are in direct competition with governments’ or central banks’ issued currencies. I hope that such alternative currencies like Bitcoins will eventually weed out federal currencies and will stop the erosion of our money’s value. A currency that cannot be printed out of thin air would lead to a much safer world as governments cannot finance their wars through inflation anymore. Nor can they secretly usurp ‘taxes’ on seigniorage.

Reference
Hayek, F.A. (1976). Choice In Currency: A Way To Stop Inflation. Institute Of Economic Affairs

European Union: Creative Destruction Wave?

09/14/201509/21/2015 Barry Stocker Current Events, Politics Adam Smith, Europe, European Union, F.A. Hayek, federation, Immanuel Kant, international relations

Some thoughts in reply to Edwin’s recent very interesting piece on the European Union.

The Greek crisis, the refugees crisis and the recently announced German suspension of the Schengen agreement on free movement are all very testing for the European Union. I certainly agree with Edwin that ideas of a highly integrated European Union superstate are in a bad state, but that has been the case for some time now, it is just that some European Commission people and ‘federalist’ enthusiasts have been very slow to realise this. I put ‘federalist’ in the scare quotes because ‘federalist’ can mean so many things as a form of relation between existing states and should not be only identified with highly integrated forms of federation in which the central state is dominant. Any such idea was effectively killed off years ago by a mixture of British opt outs from the Maastricht Treaty and the Danish referendum rejection of that treaty.

Of course these were thought by some to be secondary events which could be given temporary ad hoc solutions while the integrated superstate juggernaut rolled on. It is worth remembering that the phrase ‘ever closer union’ was in the Maastricht Treaty as a substitute for ‘federalism’ at the insistence of John Major (the then British Prime Minister) as a way of signalling the end of federalist ambitions. Since ‘ever closer union’ is open to not just integrated federalist meanings, but even unitary state interpretation, this is perhaps a bit strange, but the fact is the phrase signalled an end to integrationist federalist dreams in which John Major was probably quietly supported by some other states (including the Netherlands I believe) which did not want to stand out as anti-superstate. All this created the illusion of a process that only the UK and Denmark were standing aside from and they could be expected to join in later.

However, the integrated superstate model of federalism was already a paper tiger, a rhetoric only used as a way of legitimising a Franco-German dominated Europe, in which EU unity was heavily dominated by the wish to keep the French-German partnership going and offer everyone else the hope of a voice in an essentially Franco-German dominated process in which the two key states sought trade offs between individual national goals. Events since then have unravelled the superstate ideology as the French-German partnership has been reduced in importance by German unification, with some help from French failures at internal reform. The emergence of a reality concealed by the older sort of ‘federalist’ language can be seen in the referendum ‘no’ to the Lisbon Constitution in a few countries and the move to a Treaty. The Lisbon process was one of shifting power to the Council, to the place where intergovernmental decisions are made. The Eurozone upheavals have made it clear that Germany has a role in the EU unmatched by France.

On the current refugee crisis, the suspension of Schengen free movement is very disappointing, but an unavoidable response to such a massive tide of refugees. To my mind it may well be possible to integrate them, but clearly it is a challenge and clearly it is a challenge that public opinion does not seek, or not beyond some defined number of the most ‘real’ refugees. Anyway, this is not a completely new problem for the EU, France for example, has previously imposed border controls to deal with migrant influxes and deported unemployed migrants from eastern EU member states. This is a crisis situation which would exist with or without the EU and would lead to exceptional measures with regard to external border controls and internal security measures, including checks on identity papers. So I suggest it is not in itself an end to free movement within the EU, but more an indication that free movement will be subject to qualification in any foreseeable future. That still leaves the very real achievement of the EU in making movement between states easier, with all the attendant benefits for individual liberty and prosperity.

The Greek crisis has emphasised a form of economic integration in the Eurozone dominated by Germany, which is not what anyone would have put on paper as a federalist dream, but the reality is that the Eurozone was always about turning the Deutschmark into a European currency in which all members would benefit from the German reputation for sound finances and a strong currency, and therefore a de facto agreement to be subject to German economic discipline. No one used those words in public and everyone hoped that the crisis situation in which someone would have to impose order would never arise, but it has and we can see what was really been agreed to in the first place. That arrangement has worked at least moderately well so far. Ireland has actually done very well out of going along with German economic discipline. Italy, Spain and Portugal at the very least seem to have got past the worst. Greece is the most dubious case, but wild left populism has now receded in that country and that must be a success for the German led Eurozone. We are waiting to see whether the deal works in the long term in Greece. This does not have to be a complete German hegemony. In defence and foreign affairs, for example France and the UK are still strong compared with Germany.

The current regional tensions make it unlikely to my mind, as Edwin suggests, that the EU will not develop in the foreign and defence spheres. It would be more accurate, I believe, to say that the EU will develop an opt in personality in these areas in which not all states participate, but the core makes the EU more important in that field. Putin’s direct and indirect provocations, the nightmare in Syria and Iraq, and the threat of Islamist fundamentalism in west Africa, have all pushed EU states and previously neutral European states to become more engaged with security and defence issues. Now of course NATO is important here, but US willingness to look after Europe’s security for it is in decline and rightly so.

A response to the dangers I’ve just mentioned requires increased defence spending and and co-operation for European states and we can see this happening. Some of it cuts across the EU, as in co-operation between Nordic countries including Norway, which is outside the EU, but does not separate defence from the EU sphere. The membership of previously neutralist Sweden and Finland in the EU is clearly helping them co-operate with NATO countries. EU states are increasingly working with regard to a total European defence presence in which smaller states will limit the military spheres which the operate so that there is a co-ordinated division of labour. The UK is engaged in co-operation with the EU states on the border and hinterland problems in eastern Europe and the Middle East and this is likely to be a way over time in which the UK becomes more European oriented. This is a gradual process in which we will not see a Euro-army and a treaty in which the EU becomes sovereign in security matters, but we will see the EU mattering more in the defence and security sphere. One of the factors contributing to this is the refugee crisis.

Edwin raises some issue of (classical) liberal thinking in these areas and that is the final topic I will address, hopefully providing a framework for addressing the public policy and institutional issues above. Edwin is correct to say that voters want to see some important issues addressed on the national level and feel remote from the EU level, but let us be clear about what this means in reality. No individual voter has more influence over national policy that EU policy. Even in Luxembourg any one voter has no real voice, does not make a difference, in a community of three hundred thousand. There is no real difference between Luxembourg and the 500 million of the EU on this issue.

What people like when they think of the national level is that decisions are made by people like them, people with whom they can identify. Immigration and other forms of social change which undermine notions of self-contained homogeneity, such as the Internet, increased travel, decreasing identity with national religion, and regionalist movements, do not put am end to national identity, but they do qualify it. The recent EU crises have increased the visibility of European leaders across the continent, Angela Merkel must be more familiar to most Europeans than all but a handful of their own national politicians. The national level will not disappear and we will probably seem more shifts towards national and inter-governmental decision making, but let us not ignore the qualifications and opposite tendencies.

The point of the above paragraph is that we are not returning to the time of absolutely sovereign national governments in Europe (and of course the sovereignty was always limited in practice, particularly for the smaller and poorer countries) and I dispute what I take to be Edwin’s assumption that this is what is happening and should be welcomed. Apologies for any misunderstanding, but it looks very much to me as if he is saying that classical liberalism has preferred and should continue to prefer interaction between sovereign states over federalisation of any kind. He mentions David Hume, Adam Smith and Friedrich Hayek in this context.

However consider this quotation from Adam Smith: ‘Were all nations to follow the liberal system if free exportation and free importation, the different states into which a great continent was divided would so far resemble the different provinces of a great empire.’ (An Inquiry into the Nature and Causes of the Wealth of Nations. IV.v.b). Surely this contradicts Edwin’s claim. Hayek was the author of ‘The Economic Conditions of Inter-State Federalism’, which advocates federation between democracies to entrench free trade and basic rights. Similar comments can be found in The Road to Serfdom. Now maybe Hayek did not mean to advocate something like the EU as it is now, and even less what the most pure advocates for integrationist federalism wish for, but he did offer support to federation and constraints on national sovereignty.

Going back to the Enlightenment, Immanuel Kant, a liberal advocate of market economies, limited government and freedom under law, wrote essays favouring ‘federation’ or ‘confederation’ to enforce world peace. We can take it that Kant meant a kind of European federation as like most of the time he did not really regard non-Europeans as equals, even if he should have according to his own philosophical principles. Anyway, he had liberal arguments for constraints on national sovereignty, even if very limited in scope.

Edwin may perhaps feel that what Smith, Kant and Hayek said fits with what appears to be his desire for a European Union limited to free trade issue. However, it is important to establish that classical liberalism is open to federation or ’empire’ (which for Smith can be a confederation) and furthermore that a federation for very limited purposes is likely to spill over into other spheres. How do you guarantee peace, security and free trade without a lot of other connected government functions. It could be argued that classical liberal federation is limited to pure minarchist functions of national defence, and enforcement of laws, but why should we expect transnational federal states to stay limited within such a sphere when national states never do.

Liberal economics leads us to regard upheaval, change and destruction as healthy, within the limits of law and contract, as this is how there can be innovation and prosperity. We can think of politics in the same way. Current crisis conditions will change the EU but are at least as likely to do so in ways which reconstruct its various activities, and the ways in which they are conducted, to the benefit of its health, as to lead to an EU restricted to free trade or in a state of complete collapse.

Is the European Union Collapsing?

09/14/201509/15/2015 Edwin van de Haar Economics, Liberty, Philosophy, Politics Adam Smith, David Hume, Europe, European Union, F.A. Hayek, free trade, immigration, international relations, liberalism, property rights

Lately, the European Union (EU) stumbles from crisis to crisis. After a long hot spring dominated by the financial crisis in Greece, we now see the collapse of the system based on the Schengen Treaty, which secures the free movement of people within most countries of the EU. The upheaval is the result of the huge numbers of refugees entering the EU, mostly from Syria, Eritrea and Sudan. It is expected that Germany alone will offer asylum to approximately 1 million people this year. With no end of the refugee wave in sight more and more countries are either closing their borders, building fences, or reintroducing border patrols. The situation in Hungary seems worst, especially in the temporary refugee camps. This weekend we saw footage of guards throwing food into the hungry crowds, just like zoo keepers do when feeding the wild beasts. An absurd lack of civilization.

Both crises have at least two factors in common, namely issues of sovereignty and property rights. Sovereignty is claimed back by European politicians, who previously made arrangements at the European level, yet are now confronted by their electorates who want to end the infringements of their property rights. In the case of Greece it was about (mostly) Northern European leaders who were pressed by public opinion to stop paying for the support of what was seen as an almost bankrupt country. Certainly in Germany and The Netherlands it was seen that Greece made a mess of things which itself needed to sort out (this was the dominant perception, I underline that I do not say this is also the right presentation of all relevant facts). In the current refugee crisis public opinion also welcomes large numbers of people who –again as it is widely perceived- are seen a poor sods fleeing from a terrible war. Yet at the same time the people understand that the refugees, no matter how well educated some of them are, also need to receive all kinds of welfare arrangements and will go through an often hard process of integration into society. This against the background of more than a decade of heated debate about immigration and integration in most (Western) EU countries.

In both questions the politicians eventually tend to back out, by reclaiming national sovereignty. Not directly, as this would be embarrassing. So Greece got its third support package, and in the refugees crisis it is underlined that ‘temporary border patrols’ and even ‘border closings’ are still within the letter of the Schengen Treaty. There is also talk of centralizing the intake of refugees at the European level, instead of the current principle of ‘first country of entry is the country where asylum should be requested. This may well be a good idea given the fact that refugees will arrive (as the US experience also makes clear). Yet it is hard to predict how the negotiations will end, because there are large objections against the European Commission spreading refugees among the EU member states at its own peril.

The bigger picture however could well reveal that both events mark the end of the movement towards ‘ever closing union’, the old purpose mentioned in the Treaty Of Rome (1957), the most important founding treaty of European integration. That is significant, because if I am right in my assessment it means we are experiencing a real turning point. There are a number of contributing factors, most of which have been identified before, but that does not make them less significant, such as a lack of European identity among the European people, and the desire to accept only a minimum amount of European policy, due to the much stronger desire to make national decisions, which are easier to correct by the electorates. This, by the way, is fully in line with classical liberal thinkers such as Hayek, Hume or Smith.

Does this mean the EU is about to collapse? Hardly likely. The economic basis is still strong and while large the current problems can be paid for and sorted out eventually. Yet if integration stops here it will also mean that the EU will never get a serious common foreign policy or a common defense policy either, both of which have been tried –and failed- over the past decades. So the EU will then only be a ‘super free trade zone’, with a common trade policy, and strong legal apparatus also spreading out over many non-economic issues. This raises many more issues, but that goes beyond the purpose of this contribution. For one thing: these are once again exciting times in Europe!

Myths of Sovereignty and British Isolation, VIII. Germany’s post WWII contribution to market liberalism

06/30/201508/24/2016 Barry Stocker Economics, History, Politics Austrian School, F.A. Hayek, Freiburg School, Germany, Helmut Schmidt, Keith Joseph, liberalism, Ludwig Erhard, Ludwig von Mises, Margaret Thatcher, United Kingdom, Wilhelm Röpke

World War Two was largely won by the United States and the British Empire in alliance with the USSR. The idea of Britain’s place in the world being defined by its relationship with the US, a relationship in which the US is inevitably the leading partner, and is a very popular – even defining – idea for the predominant brand of sovereigntist-Eurosceptism in the UK. There is surely some paradox in holding onto a sovereigntist view, in which national sovereignty is understood in an absolute manner and national life is understood to be highly distinct, and even unique, while giving the dominant role to another country in matters of international relations, diplomacy, foreign policy, defence, intelligence and the unlimited number of areas which these are likely to spill over into, including trade and commerce.

The sovereigntist-Eurosceptic position in Britain tends to portray not only the EU as threatening sovereignty, but Germany as a threat to sovereignty as the strongest country in the EU. However it is clear enough that Germany is less strong than the United States, so what is the problem? The problem might be defined by the Eurosceptics as that the UK has transferred some sovereignty to the EU reducing the role of the British parliament, but if defence and diplomacy policy is dominated by the United States, along with other areas, there is an inevitable loss of effective parliamentary sovereignty. That the loss of sovereignty is not legally defined should not be the issue, and leaves open the possibility of greater loss of sovereignty because it is not defined by laws or treaties.

Returning to the issue of Germany, the standard sovereigntist position in Britain is dominated by those claiming to be small state free market advocates, and claim that an EU which includes Germany is allegedly a mere instrument of German interests, thus posing a threat to the possibility of a less statist Britain in economics and other matters. As the sovereigntist-Eurosceptics are normally for limiting immigration, their claim to superior purity in matters of individual rights and state power is itself lacking in credibility.

Moving back to more strictly economic issues (though of course free market economics requires a free labour market which means open immigration), Germany has not always been seen as more statist than Britain. There was a period in which Britain administered part of Germany, that is during the occupation of Germany by the Allies after World War Two, shared between the UK, USA, France, and the USSR. The occupation zones evolved into the Federal Republic of Germany (FRG) in the west and the socialist-communist Soviet satellite state, the German Democratic Republic in the east.

The FRG famously experienced an economic miracle in the post-war period. The main architect was Ludwig Erhard, who was strongly influenced by the Freiburg School of free market economists, itself heavily influenced by the Austrian School of Friedrich Hayek and Ludwig von Mises. Erhard had a particularly strong connection with the economist Wilhelm Röpke, who was not a member of faculty at Freiburg University, but was close to that school and was linked with it through the journal Ordo.

The economic liberalism of that period is sometimes known as Ordo liberalism, which is one of great moments in the history of market liberalism. It was a moment which came out of struggle with the British and American occupation authorities who enforced price controls, and other statist measures, and were not supportive of Erhard’s moves to liberalise the price mechanism and other aspects of the market. Erdhard had to defy the occupation authorities in announcing the end of price controls in the period in which German self-government was emerging in the period before the FRG was formed.

Erhard and Röpke developed a program in which federal Germany had a ‘social market economy’, meaning a free market economy, accompanied by a social welfare program to establish minimum living standards and the establishment of those institutions and polices thought most likely to promote a functional market economy and social consensus behind the market economy, as an antidote to the economics and politics of totalitarian statism in what had been Nazi Germany and the existing soviet model Germany in the east.

So successful and influential was this, it was a model, at least rhetorically, for the Margaret Thatcher led government elected in Britain in 1979. Thatcher’s major intellectual influence in British politics was Keith Joseph, who promoted the idea of freeing Britain from statism and collectivism by following the German social market economy. This is not something the surviving Thatcherites, and their successors who are prominent in sovereigntist-Eurosceptic circles, like to emphasise at all. This maybe goes back to the time that German unification became a possibility in the late 1980s as the Soviet Union ended its dominance of large parts of central and eastern Europe.

Thatcher as an imperial nostalgia British nationalist was instinctively opposed to a stronger Germany. Ever since Germany has been damned as a malign influence the sovereigntist Europsceptics, eager to bury memories of the long post-war period in which Germany was more of a market liberal country than Britain. They like to portray Germany as such a statist monster in economic decline that many would be surprised to check the tables of national GDP per capita (including tables adjusted for dollar based purchasing power parity) and see that Germany is ahead of Britain by a significant margin. The comparison should also take into account the issue that despite Margaret Thatcher’s nationalist reservations, the German people exercised their right to unify peacefully and democratically, so that the current Federal Republic of Germany carries the weight of eastern regions, which used to be socialist-communist and have yet to overcome the negative consequences for prosperity and enterprise culture. There are certainly some measures by which Germany has a more statist economy now than Britain, including the levels of public spending and the role of banks linked to regional governments, which suggests an inherently robust market economy, stronger than Britain’s in some ways, able to survive the less market liberal aspects of German political economy.

The period in which Margaret Thatcher did introduce more market based economics and public policy in Britain, an admirable achievement despite her less admirable inclinations towards national, social, and cultural conservatism, began with a centre-left government in the FRG, which had been far more market oriented than the centre-left government which preceded Thatcher in Britain. The FRG under Helmut Schmidt, at least towards the end of his term made cuts to public spending and the public deficit, which mean that it made a contribution, if a very moderate one, to the general shift of industrial democracies towards market liberalisation associated with the 1970s in its beginnings and with the 1980s in its strongest phase.

David Friedman on Judging Outside Your Expertise

06/10/201506/10/2015 Rick Weber Liberty benefits, climate change, costs, David Friedman, F.A. Hayek, Nassim Taleb, risk management, uncertainty

David Friedman writes:

Accepting the views of experts on a question you are not competent to answer for yourself, assuming that you can figure out who they are and what they believe, is often a sensible policy, but one can sometimes do better. Sometimes one can look at arguments and evaluate them not on the basis of the science but of internal evidence, what they themselves say.

He goes on to give examples of inconsistent claims made by global warming alarmists. His (short) post is worth the read. Here are my 2 cents:

First, (in response to the block quote) deferring to experts is sensible but requires a certain degree of expertise in picking out who they are which is a difficult task. We’re all human, and it’s hard to hold something in your head without thinking it’s true. That makes it hard to not be arrogant. We need to emphasize strongly that interpreting information is hard, and the outcomes are not at all obvious. Those concerned with anthropogenic climate change (myself included) are better served by stressing the uncertainty involved and making arguments centered on appropriate risk management.*

Second, The issue of climate change boils down to a series of sub-issues that need to be considered carefully:

We need to think about costs and benefits. A warmer world would be a boon for many people. If we could set the average world temperature, we would want it to be higher than 0 Kelvin. We might even want it to be warmer than it is today.

We need to think about the uncertainty surrounding what’s happening, as well as what we can do about it. We should be particularly skeptical about cost estimates for any effort to try to control the environment.

(This one’s a bit of a non sequitur.) We should use this as an excuse to do things that would help reduce the costs of climate change that we should be doing anyways. Specifically, we need to liberalize immigration policy in wealthy nations. Let’s say there’s a 0.00001% chance that climate change has a bad outcome, and that specifically that outcome is that the entire country of Bangladesh will catch fire and kill everyone. That’s a good excuse to let Bangladeshi’s come to America, but we should be doing that anyways. It’s a low cost (actually a negative net-cost) solution to a potential problem of climate change.

Here’s one that I think the smarter alarmists/deniers already recognize: this is a political discussion. Politics and the truth don’t mix. But recognizing this point and making it widely known may allow people to tone down and argue something closer to the truth.

skepticalscience — Global warming will lead to catastrophic… life?

Both sides like to think of themselves as skeptical (as demonstrated by that masthead which warns that we might have to suffer through the addition of a habitable continent (?)), and good for them. We should value skepticism in this. But that skepticism shouldn’t lead us to make bold claims on one side or the other. It should lead us to ask a lot of “what if?” questions. This is a risk management issue, not a social engineering one.

* I like Taleb but I’m not as worried by GMO’s as he apparently is, but I haven’t read that paper either.

The Fog of Foreign Policy

06/09/201506/10/2015 Edwin van de Haar Links Benjamin Herscovitch, F.A. Hayek, international relations, Iraq, knowledge problem, Syria, uncertainty

“The Fog of Foreign Policy: Why only ‘least bad’ options are available in Syria, Iraq and other global hotspots”

rr4

Sound libertarian analysis, highly recommended!

Epistemological modesty and unintended consequences

04/27/201505/12/2015 Chhay Lin Lim Liberty, Philosophy decentralization, epistemology, F.A. Hayek, Libya, pretense of knowledge, Robert Oppenheimer, unintended consequences

What has attracted me most to libertarianism – next to the Non-Aggression Principle – is its attitude towards our knowledge which can be described as epistemologically modest. Epistemology is a branch of philosophy that is concerned with our knowledge: how do we know what we know, what is the nature of our knowledge, what is its scope, and what is justified belief? Libertarianism is modest in the sense that it promotes an awareness of how little we know about the social forces in our society, and what the particular consequences are when certain social forces are at play.

In ‘The Pretense of Knowledge’ (1974), Friedrich Hayek had given an excellent account on the libertarian epistemological modesty. He writes that when policy makers are epistemologically immodest – meaning that they unjustly believe that they truly understand the social world to the extent that they can plan or direct certain social forces to achieve certain ends – they will do more harm than good in their efforts to improve the social order. Hayek argues that each individual knows just a fraction of what is collectively known. Since knowledge is decentralized and each individual has unique information with regards to his or her particular circumstances, it is best to leave those with local knowledge to take decisions on how to plan their lives. Unfortunately, many do-gooders ignore Hayek’s advice and attempt to plan and control society. The dangers of epistemological immodesty are visible all around us. Take for example the NATO-led war campaign against Gaddafi in Libya in 2011. The meddling with Libya’s internal affairs has led to many unintended consequences that were totally unforeseen by most politicians: in a country that was previously relatively peaceful, manifold precious lives have perished, many have been wounded, many children have become orphaned, millions of people are trying to flee the civil war and to find refuge in other countries, ISIS has taken control of several parts in Libya, and terrorism has now become more widespread. Politicians who believed that they knew enough about the social forces in Libya, and how they could overthrow Gaddafi and turn it into a peaceful democracy have been dead wrong.

The epistemologically modest libertarian knows that military, economic, and political interventionism, always leads to unintended consequences. It is therefore best to refrain ourselves from such interventions as much as possible. This anti-planning sentiment had been graciously expressed by the American physicist Robert Oppenheimer when he discussed world affairs:

It is perfectly obvious that the whole world is going to hell. The only possible chance that it might not is that we do not attempt to prevent it from doing so.[1]

[1] I cannot verify the authenticity of this quote. It was attributed to Robert Oppenheimer by Alan Watts.

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