Archive for December, 2009

Reply to Seth

Seth disagrees with Timothy Sandefur’s challenge of Hayek’s spontaneous order paradigm and its purportedly normative implications. I tend to agree with Sandefur, and see Hayek’s concept as a good conceptualization of complex systems but inadequate to justify favoring one institutional arrangement over another. Seth objects:

Sandefur oversimplifies.  He wants to classify systems into absolute categories while ignoring the existence of messy continua.  While it is possible to nitpick, we can easily classify the United States as a liberal market economy, and Cuba as a socialist economy.  It would be dishonest to deny these categorizations; we wouldn’t say that because the U.S. has public schools, and that because Cuba has a money supply, we simply can’t distinguish any difference between these economies.

I think this is a misreading of Sandefur. He’s not trying to make a neat divide between spontaneous and constructed orders; to the contrary, he is acknowledging that the divide is more blurred than even Hayek realized. It depends on perspective: the U.S. can be seen as a constructed order, and likewise Cuba can be seen as but one more experiment in a larger spontaneous order. Sandefur surely wouldn’t deny the differences between the nations, but he is saying that depending on the choice of perspective, the differences can be either infinite or nonexistent:

Hayek exploited his concept’s flexibility when he said that “deliberate efforts… [to] improve the existing system by laying down new rules” were actually consistent with the principle of spontaneous order because “it remains true that the system of rules as a whole does not owe its structure to the design” of planners. The phrase “as a whole” is doing all the work here. As a whole, no order is constructed. The term “as a whole” here represents Hayek taking a convenient and unwarranted step back to look at the system through a lens so wide that anything, no matter how rationally constructed, can still qualify as part of the spontaneous order.

Sandefur notes that this is how both the opponents and proponents of gay rights are able to use Hayek’s distinction in their arguments. Opponents say “Stop planning our social norms and systems! They’re spontaneous!” Proponents say “Stop trying to prevent the natural motion of our spontaneous order!” The concept becomes meaningless: it is valid as a perspective, but useless to form imperatives. We could say to socialists “Stop trying to plan our economy! It’s spontaneous!” They retort “Stop trying to prevent our spontaneous experimentation!”

History proved Hayek correct, but departure from spontaneous order is only a proximate cause of socialism’s failure. There are more fundamental arguments as to why socialism fails, e.g. perverse incentives, economic calculation, etc. These arguments were made against socialists’ original claims that socialism would produce more wealth than capitalism. They dropped that claim circa 1991, but it was all the rage (even corroborated in Paul Samuelson’s famous intro textbook) all the way up until then. Socialism always had its egalitarian element, but originally the idea was that capitalism was merely a prerequisite for socialist utopia. Socialist systems fail to efficiently utilize localized knowledge. But it is this “is” that begets the “ought” – it is better to use prices and property rights because they lead to greater efficiencies. Though prices and property rights can be seen as a spontaneous order, it is not the “spontaneity” that leads to the normative statement; it is the positive observation that the price system works. And which is it? Are property rights a constructed or a spontaneous order? It depends on how you choose to look at it.

I think the great virtue of the concept of spontaneous order is that it helps us to wrap our minds around chaotic and abstract systems – and subsequently, to overcome our cognitive biases. Folk intuition leads to the conclusion that individuals pursuing their separate interests will lead to social destruction – but this tribal mentality is proven wrong in elegant portrayals of spontaneous order. Smith’s invisible hand and Hayek’s analogous spontaneous order are deft distillations of complexity, but they have no necessary normative implications.

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This month’s issue of Cato Unbound features a pretty good discussion of Hayek’s conception of spontaneous order.  Timothy Sandefur’s first critique in the lead essay is provocative, but has some flaws.  On Hayek’s description of how law is constructed, Sandefur writes:

“No system of law,” Hayek admits, “has ever been designed as a whole, and even the various attempts at codification could do no more than systematize an existing body of law, and in doing so supplement it or eliminate inconsistencies.” Even the most sophisticated bureaucratic, top-down plan is going to incorporate lessons learned through historical experience. In other words, the “partially different rules” that compete in the spontaneous order are necessarily “constructed” ones. And because Hayek incorporates these elements of constructivism into his account of spontaneous order, he ends up making it impossible to discriminate between a spontaneous and a constructed order.

This misses the point!  Hayek uses the idea of spontaneous order to comment on how centralized or decentralized power, knowledge, and decisions are in a social system.  Sure, a system of primarily constructed order can have feedback from the bottom, and a system of spontaneous order can have top-down universalities.  That doesn’t mean that if features of one type exist within a system of the other that the distinction between each becomes meaningless.  After all, Hayek was contrasting central planning with a market economy.

Sandefur oversimplifies.  He wants to classify systems into absolute categories while ignoring the existence of messy continua.  While it is possible to nitpick, we can easily classify the United States as a liberal market economy, and Cuba as a socialist economy.  It would be dishonest to deny these categorizations; we wouldn’t say that because the U.S. has public schools, and that because Cuba has a money supply, we simply can’t distinguish any difference between these economies.

Hasnas corroborates my sentiment that the difference really is simple:

If there is anything more to this problem, I am blind to it. Spontaneous orders are the product of human action but not human design; constructed orders are the product of human design. That’s about it. The former implies the absence of a conscious final decision maker; the latter implies its presence.

Sandefur attacks Hayek for making a normative critique of constructed orders.  Though he builds this argument from the supposed lack of distinction between spontaneous and constructed orders, he contradicts himself by acknowledging the existence of the difference, so that he can continue.  Given that the distinction does exist, is Hayek justified in making a normative critique of constructed orders?  Yes, he is!  Hayek’s point is that spontaneous order can handle more complex systems than constructed orders.  Constructed order can only be as complex as the central planner can design it, but spontaneous order can handle far more complexity.  This is a good thing.  A more complex system is able to handle more information and processes, and is able to give more people more of what they want.  Sandefur lays this in the introduction, so why not accept this normative claim at face value?

Sandefur chastises Hayek as lacking a basis for advocating social reform since spontaneous order will have provided some optimal socially constructed order.  That could be true, but that’s not how I read Hayek.  I read him as desiring to decentralize power and decisions, which would be social reform in and of itself.  Did Hayek really ever consider reform of social institutions that had already arisen from spontaneous processes?  Wasn’t the point just to criticize social processes that had been implemented from a central authority?

Obviously Hayek was a liberal, in the true sense.  He defined himself as such in “Why I Am Not a Conservative.”  So it doesn’t make sense that he would position himself against social change–he welcomed the dynamism of free markets, which carries a kind of social change.

Hold on!  Was the decision of Lawrence v. Texas justified by spontaneous order?  Sandefur is correct in pointing out that Hayek’s framework is ambiguous enough to both attack and defend the decision.  It’s a strong example of an instance where the logic of spontaneous order does not provide a clear normative prescription.  Does that matter?  Spontaneous order is a useful analytical tool, but it doesn’t apply to everything.

Hasnas’s normative defense of spontaneous order seems accurate, that true spontaneous order advances legitimate moral values, but also indicates the proliferation of them.  Also, Hasnas agrees that Hayek stretched the applicability of spontaneous order when using it to describe law.

Another point that comes up in the discussion is whether Hayek was making normative claims at all.  Caldwell writes:

Another way to make sense of Hayek is simply to assert that he was making no normative claims at all, that he was doing positive science. This would probably be Hayek’s preferred route, given that the Austrians always claimed to be following Weber’s strictures regarding Wertfreiheit. Thus when he criticized central planning, Hayek was actually claiming that, given the goals of socialists, central planning was not the appropriate means by which to reach them.

Is this true?  It seems to me that socialism has always held egalitarianism as its goal, not uplift.  Have you ever heard of a socialist discuss positive-sum game?  I haven’t.

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The triumph over scarcity?

Will Wilkinson picks up a nice tidbit from NYU’s Dean of Social Sciences, Dalton Conley, making this point;

Inequality — and its consequences — is the wrong target. It’s time for progressives to spend less time trying to prove the effects of inequality on health, growth, and politics and instead start focusing on opportunity for those shut out entirely.

There’s  a lot  of other great commentary, I suggest reading the whole post.

The point that a rising tide lifts all boats is echoed nicely in this video from Reason.tv

The gales of creative destruction are not about taking a set number of goods and distributing them, but constantly creating new ways of meeting or creating needs and demands, and desires.

Damn that Nick Gillespie can rock a leather jacket, and bust a Schumpeter reference too.

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Apologies for the light-to-non-existent posting during the holiday season.  Life gets in the way of all good things.

I was struck by this post from Prof. Bourdeaux, on the cost-free signaling aspects of polls and elections, and how this relates to an ongoing argument in our comments on the rationality or credibility of the electorate.  Cost-free signaling should be discounted heavily; as Prof. Hanson might say, it’s an argument for ‘ought’ divorced from ‘is’.

One of the biggest reasons to advocate for market-processes and individual responsibility is the knowledge problem.  We reference it in this blog’s subtitle, but it has deep epistemological implications that we glance over.  Since there’s often no clear consensus on ‘is’, principled consensus on ‘ought’ is much harder to form.  Instead we get political wrangling like health-care, where the argument is over who gets what, not either ‘is’ or ‘ought’.

The Austrians made the point that markets contain significant truth-determining mechanisms, and that the subjective value of a good or service was essentially a consensus, not intrinsic.  Otherwise, how could we explain radical price drops like this?

When I was a philosophy student, we talked endlessly and circularly about the nature of reality, about the limits of perception, and how that should shape a consensual view of existence.  Things like colors are social constructs, since we can never experience something through another set of eyes.  But it’s wrong to take the next step and say that all reality is consensual.

This goes towards my central objection to centralist/liberal/neocon ideology; that we can arbitrarily decree ‘is’ from some discreet principle or emotion, and dictate ‘ought’ in politics.  To put it differently, freedom and markets determine ‘ought’ through accurate and efficient signaling, and in turn tell us much about what ‘is’.

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This is the kind of thing I was referring to. Two Post editorials in the same day opining about how communal property (Metro and GM/Chrysler) should be handled.

Talk is cheap. Reading these pieces brought to mind something Ludwig von Mises wrote in Human Action about socialism: “Socialism is the religion of self-deification.” I’d say it applies to leftism and statism in general. Everyone wants to see things run his own way, even though very few are willing to put money where their mouths are. The beauty of state owned enterprises? One can voice opinions with little to no consequence, and moralize against everyone else. If only the world was run my way…

The Post declared that John B. Catoe, Jr. ought to be left alone as general manager of Metro. “Penetrating reporting” about the poor quality and safety record of the system gives the Post’s opinions credence, they suppose. Right now, I’m not focusing on the fact that it is a moral travesty that some taxpayers help pay for other taxpayers’ Metro use, or that economic justifications for such a system are flimsy. Instead, imagine the Metro were private. Guess what would decide whether Mr. Catoe is an acceptable manager? Patronage and stock prices; e.g. people who actually use the system and people who know what they’re talking about and are willing to put money on it.

That’s the appeal of statism. Everyone gets the benefit of moralizing against this and that policy, and no one has any stake. It’s the same with environmentalism, which Charles Krauthammer dissected on the same pages a few days ago. Comparing the current “green” trend to the “population bomb” craze of the 70s, Krauthammer sees the movement as a facade for a political power-grab.

Think about it from the citizen’s perspective, though. Why is environmentalism so popular? Because it’s the best religion in town, really. It’s all benefit and no cost: you can act morally superior to everyone you know, feel certain that the world would be a utopia if not for those who disagree with you, and best of all, there’s no ethics involved, no uncomfortable moral imperatives.

It’s the same way with government-run enterprises. We all get to feel superior, form opinions that have absolutely no necessary basis in reality, and feel justified in our cowardliness. I’m telling you right now, and Bryan Caplan agrees: democracy is religion for most people. Problem is, it’s an incredibly destructive one.

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Crossposting FTW

I’ve got a new post over at Neighborhood Effects about New York’s recent schizophrenia regarding eminent domain abuse.

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Tiger Who?

Reason #∞ I despise most media outlets. Compared to Tiger’s troubles, this story is far more disturbing while receiving far less coverage.  Maybe it’s because we all tacitly accept that Senators aren’t role models?

(H/T Jesse Walker)

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