Lunchtime Links

  1. oil and Kurdistan
  2. after Raqqa, Iraq’s army turns on Kurdistan
  3. “There has been a common and unfortunate tendency among many analysts and policy makers to underestimate the strength of Iraqi nationalism”
  4. separatist movements in Europe don’t actually want independence
  5. GREAT topic, but poor methodology, poor theory, poor use of data, and bad faith
  6. meh (try this book review instead)
  7. Law without the State [pdf]
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On the Difference between Hayek’s Road to Serfdom and Increasing Central Planning

Once, in another place, I had pointed out the misunderstandings of the common interpretation of Hayek’s road to serfdom thesis. This was not an unintended process by which government intervention on markets inevitably leads to further and increasing interventions. That might be Ludwig v. Mises’ thesis, but not Hayek’s.

What Hayek stated in The Road to Serfdom was that the checks- and-balances system of modern constitutionalism appears as an obstacle to the quick achievement of the concrete ends that an interventionist policy aims for. Thus, the road to serfdom is an unintended process by which legal constitutional processes are eroded by decisions based on expediency.

On that occasion it was left pending to solve the question of where the confusion on the central thesis of “The Road to Serfdom” came from.

The source of the answer to this question is yet Ludwig v. Mises. The Road to Serfdom was first published in 1944, but, previously, in essays published in 1935, we find Hayek, still heavily influenced by L. v. Mises, stating opinions that are very similar to the common confusion about the meaning of the road to serfdom: “In fact, however, if by planning is meant the actual direction of productive activity by authoritative prescription to be used, or the prices to be fixed, it can be easily shown, not that such a thing is impossible, but that any isolated measure of this sort will cause reactions which will defeat its own end, and that any attempt to act consistently will necessitate further and further measures of control until all economic activity is brought under one central authority” (“Socialist Calculation I: The Nature and History of the Problem”, first published in Collectivist Economic Planning, London,  1935, and reprinted in Individualism and Economic Order, Chicago, 1948).

F. A. Hayek did not change his opinions of 1935 in The Road to Serfdom (1944), he just shifted the realm of his inquiry from economics to political philosophy. Nevertheless, it would be a crass error to judge Hayek’s political and legal theory -for good or for bad- using his former opinions as an economist.

The Political is about to disrupt the crypto-currency scene -or at least they say so.

According to this Financial Times report, Bitcoin is at the verge of a critical decision.

The implications of the chosen terms (“existential crisis,” “decisive leadership,” “political flaw”) are not casual. It looks like the market that crypto-currency had carried from the beginning contain the germ of its own destruction. As in an Escher’s drawing, Bitcoin has unraveled its political strand and its whole existence is, now, dependent upon a moment of decision of the sovereign: the assembly of miners. The decisionist narrative would be fulfilled if the political decision had to be taken by acclamatio instead of voting.

Nevertheless, the decision by acclamation would be still possible: the ones who want “Bitcoin Core” might follow one direction and the other ones, who choose “Bitcoin Unlimited,” might follow their own way. After all, no existential crisis can be solved by voting.

So, which is inside of which? Is the market framed in a system depending upon a political decision of the sovereign? Or does every decision need to be taken inside a spontaneous framework of rules?

We are used to praising Bitcoin for its independence from any political factor: Bitcoin supply depends on a set of rules which allows the public to form expectations about its value with a high degree of probability of proving to be correct.

Taken in isolation, Bitcoin emulates the market. Nevertheless, being independent of political institutions is not enough for being “the market.” The attractiveness of Bitcoin is that it operates in an open system of competition of currencies. In this system, there are many other crypto-currencies, and there might be several variances of Bitcoins as well –in esse or in posse.

Imagine, for example, that Bitcoin effectively splits into Bitcoin Core and Bitcoin Unlimited. Which of the two will prevail over the other? It does not matter. What really matters is that there will be several variances of currencies in competition. The factors that determine the selection of the prevailing currency depends upon a higher level of abstraction that impose an absolute limit to our knowledge.

So, is Bitcoin in an existential crisis? Does a political decision need to be made? Maybe.

But that does not imply that “The Political” will take over the reins of the crypto-currency market. Moreover, opposite political decisions are the linkages which the spontaneous selection process -in this case, of currencies- is made of. In this sense, “Bitcoin Core” and “Bitcoin Unlimited” are attributes of a competitive system and the final prevalence of one variance among other alternatives will not be the result of a deliberate decision but of an abstract process of evolution.

Lunchtime Links

  1. Trophy-taking and dismemberment as warfare strategies [pdf]
  2. optimally vague contracts and the law [pdf]
  3. Germanic and Carthaginian republicanism
  4. traditional resurgence in tropical Africa [pdf]
  5. crisis bureaucracy: homeland security and the political design of legal mandates [pdf]

Lunchtime Links

  1. violence among foragers [pdf]
  2. building legal order in ancient Athens [pdf]
  3. why Congo persists [pdf]
  4. toward an old new paradigm in American international relations [pdf]

Does business success make a good statesmen?

Gary Becker made the distinction between two types of on-the-job training: general and specific. The former consist of the skills of wide applicability, which enable the worker to perform satisfactorily different kinds of jobs: to keep one’s commitments, to arrive on time to work, to avoid disturbing behavior, etc.. All of them are moral traits that raise the productivity of the worker whichever his occupation would be. On the other hand, specific on-the-job training only concerns the peculiarities of a given job: to know how many spoons of sugar your boss likes for his coffee or which of your employees is better qualified to deal with the public. The knowledge provided by the on-the-job training is incorporated to the worker, it travels with him when he moves from one company to another. Therefore, while the general on-the-job training increases the worker productivity in every other job he gets, he makes a poor profit from the specific one.

Of course, it is relative to each profession and industry whether the on-the-job training is general or specific. For example, a psychiatrist who works for a general hospital gets specific training about the concrete dynamics of its internal organization. If he later moves to a position in another hospital, his experience dealing with the internal politics of such institutions will count as general on-the-job training. If he then goes freelance instead, that experience will be of little use for his career. Nevertheless, even though the said psychiatrist switches from working for a big general hospital to working on his own, he will carry with him a valuable general on-the-job training: how to look after his patients, how to deal with their relatives, etc.

So, to what extent will on-the-job training gained by a successful businessman enable him to be a good statesman? In the same degree that a successful lawyer, a successful sportsman, a successful writer is enabled to be one. Every successful person carries with him a set of personal traits that are very useful in almost every field of human experience: self confidence, work ethics, constancy, and so on. If you lack any of them, you could hardly be a good politician, so as you rarely could achieve anything in any other field. But these qualities are the typical examples of general on-the-job training and what we are inquiring here is whether the specific on-the-job training of a successful businessman could enable him with a relative advantage to be a better politician -or at least have a better chance of being a good one.

The problem is that there is no such a thing as an a priori successful businessman. We can state that a doctor, an engineer, or a biologist need to have certain qualifications to be a competent professional. But the performance of a businessman depends on a multiplicity of variables that prevents us from elucidating which traits would lead him to success.

Medicine, physics, and biology deal with “simple phenomena”. The limits to the knowledge of such disciplines are relative to the development of the investigations in such fields (see F. A. Hayek, “The Theory of Complex Phenomena”). The more those professionals study, the more they work, the better trained they will be.

On the other hand, the law and the market economy are cases of “complex phenomena” (see F. A. Hayek, Law, Legislation and Liberty). Since the limits to the knowledge of such phenomena are absolute, a discovery process of trial and error applied to concrete cases is the only way to weather such uncertainty. The judge states the solution the law provides to a concrete controversy, but the lawmaker is enabled to state what the law says only in general and abstract terms. In the same sense, the personal strategy of a businessman is successful only under certain circumstances.

So, how does the market economy survive to its own complexity? The market does not need wise businessmen, but lots of purposeful ones, eager to thrive following their stubborn vision of the business. Most of them will be wrong about their perception of the market and subsequently will fail. A few others will prosper, since their plans meet -perhaps by chance- the changing demands of the market. Thus, the personal traits that led a successful businessman to prosperity were not universal, but the right ones for the specific time he carried out his plans.

Having said that, would a purposeful and stubborn politician a good choice for government? After all, Niccolo Macchiavelli had pointed out that initiative was the main virtue of the prince. Then, a good statesman would be the one who handles successfully the changing opportunities of life and politics. Notwithstanding, The Prince was -as Quentin Skinner showed- a parody: opportunistic behaviour is no good to the accomplishment of public duties and the protection of civil liberties.

Nevertheless, there is still a convincing argument for the businessman as a prospect of statesman. If he has to deal with the system of checks and balances -the Congress and the Courts-, the law will act as the selection process of the market. Every time a decision based on expediency collides with fundamental liberties, the latter must withstand the former. A sort of natural selection of political decisions.

Quite obvious, but not so trite. For a stubborn and purposeful politician not to become a menace to individual and public liberties, his initiative must not venture into constitutional design. No bypasses, no exceptions, not even reforms to the legal restraints to the public authority must be allowed, even in the name of emergency. Especially for most of the emergencies often brought about by measures based on expediency.

BC’s weekend reads

  1. Generals and Political Interventions in American History
  2. they neglect to take account of the experiences of postcolonial states that form the vast majority of members of the international system. “
  3. The U.S. Hasn’t ‘Pulled Back’ from the Middle East At All
  4. No special sharia rules in American courts for Muslims’ wrongful-death recovery
  5. Is Gary Johnson a True Libertarian? American libertarianism has a purge problem
  6. Identity politics and the perils of zero-sum thinking