What’s What.

An explanation that few will agree with, fewer will like, and fewer still will advocate.[1]
leaves_jtk
First, naturalistic evolution is true. I’m sorry if that disturbs you, but I don’t even consider it controversial. No respectable biologist does either.[2]

I’m going to walk through it anyway, though, because it’s the first of several paradigms that help explain what’s what. The others won’t make sense without it, and/or without the particular emphases I’m going to place on parts of the theory.[3]

Species arise as follows: Genes almost always copy themselves accurately, but sometimes they don’t. Mutants, those who bear genes with just-happened changes, may be better or worse suited for the environment that they share with the members of their species.

Most mutations don’t do very much. Some are instantly fatal. Some just inhibit reproduction. And once in a great while, a mutation constitutes an improvement, in that it makes the bearer more likely to reproduce. It constitutes — unwittingly, of course — an evolutionary Good Trick.[4]

Good Tricks tend to get passed along to descendants, thus they accumulate. The genius of sexual reproduction is that it allows Good Tricks to pass not just down one blood line, but across the entire population of a species, where they can be shared and combined with Good Tricks from other blood lines. This in itself is a Good Trick, of course.

Over time, the happy mutants inherit the earth. Each of us is a big, complex pile of mutations, and all of them began as an evolutionary Good Trick somewhere along the line.

But in evolution there is no designer, no Creator, and no man in the sky directing traffic. Evolution is a spontaneous order.

Daniel Dennett calls the products of evolution Darwinian creatures, and by this he means more than just a shorthand for evolution. He means also that the evolutionary process is, for all merely Darwinian creatures, the only way that improvements to the design can ever be created or passed along. “Darwinian creature” is a paradigm, to which all species belong to some degree, and many exclusively so: Oak trees can never build better oak trees, except by blundering into a Good Trick here or there, and by having those individuals who do so blunder later go on to reproduce.

That’s beautiful in a sense, but it’s also dismaying and horrible. As I’ve said before, in the world of natural selection, Azathoth is king — the blind idiot god of H. P. Lovecraft’s mythos, who, utterly indifferent, creates and destroys with neither regret, nor malice, nor even consciousness. The elephant is sublime, but he is heir to a mountain of tortured, rotting flesh.

Humans are Darwinian creatures too, up to a point. That fact alone is so disturbing that many otherwise quite rational people reject natural selection. It’s downright horrid to think that this is how we came to be.

Well, that’s just what we did. But we’ve also done more, of course.

Some Darwinian creatures are also Skinnerian creatures. Skinnerians are capable not merely of hard-wired responses to environmental stimuli, but also of operant conditioning, in which behaviors are modified according to their consequences. Ceteris paribus, Skinnerian creatures have an advantage over their non-Skinnerian counterparts. Skinnerianism is in itself a Darwinian Good Trick, because it allows individuals to discover a subset of non-genetic, environmentally responsive Good Tricks. The best behavioral responses may vary a good deal from place to place, which is why having a Skinnerian capacity works out very well for a species that blunders into it: They become more adaptable.

Sadly, all the Good Tricks of the merely Skinnerian sort will die out with the organisms that acquired them. They are also largely the products of good luck. These are two huge disadvantages. As Dennett writes:

Skinnerian conditioning is a fine capacity to have, so long as you are not killed by one of your early errors. A better system involves preselection among all the possible behaviors or actions, weeding out the truly stupid options before risking them in the harsh world. We human beings are creatures capable of this third refinement… We may call the beneficiaries of this [refinement] Popperian creatures, since, as Sir Karl Popper once elegantly put it, this design enhancement “permits our hypotheses to die in our stead.” [...] Popperian creatures survive because they’re smart enough to make better-than-chance first moves. Of course, they’re just lucky to be smart, but that’s better than just being lucky.[5]

We allow our hypotheses to die in our stead! How much better this is than the cruel, mindless kingdom of Azathoth. Humans have found a Good Trick that surpasses evolution: An inner selective environment that previews candidate acts, in Dennett’s words.

Being Popperian sets us gloriously free. While we have ideas, while we hold them and make use of them, we are to some limited extent our own masters. And this is the origin of dignity.

We are still built on a Darwinian substrate, of course, on which being Popperian forms a kind of superstructure. Still, by far the larger number of improvements that our species has made have been Popperian, not Darwinian or Skinnerian.

As an added feature, we can import and export successful Popperian hypotheses from other organisms. The result is what Dennett terms a Gregorian creature after the psychologist Richard Gregory. This is much like what Matt Ridley means when he writes that our ideas can have sex with each other,[6] and we can therefore use them as building blocks for new, better ideas. Just as Darwinian creatures use sexual reproduction to mix and match the most adaptive genetic traits, ideas can also be mixed and matched. Except that when we have idea sex, we can also know very well what we are doing, and we can allow certain mixed ideas — the less-fit ones, by Popperian criteria — never to go out and contend with the real world.

Now. All very well and good. But Gregorian creatures quickly encounter a huge problem — too many damn ideas! How can we know when a particular idea really is a Gregorian Good Trick? We might think the idea is good. It’s passed our Popperian tests, anyway. We might enjoy the idea, and we might enjoy it from any number of reasons. But still, Is the idea good? is a different question from Is the idea appealing to me?

If I have an idea — organize factories like this! freeze concentrated orange juice! make a cube-shaped puzzle game! offer worldwide overnight parcel delivery! — how do I know that other people will want it? And how do I know how much they will want it, when weighted against the many other ideas that always proliferate in a Gregorian environment? And how do I know that the resources needed to bring the idea to fruition are not better spent somewhere else?

These are vexing questions. It’s not merely a matter, as in the simple Popperian paradigm, of rooting out the obviously stupid and self-destructive.

If I may be forgiven for adding a layer to Dennett, we now become Hayekian creatures. We resort to markets. Markets are the way we determine which proposed courses of action are the most worth not merely our affinity, but our efforts. To answer this question requires more than the Popperian internal environment can supply. It requires knowledge of the internal environments of others — their needs, wants, values, and tastes.

Even consumers themselves may have no terribly clear idea of these things beforehand. Markets propose things to them. Markets also coordinate the production of things whose full roster of productive techniques can’t easily fit inside one person’s head, Popperian though it may be—“I, Pencil” is the standard description, of course.

The hierarchy among ideal types looks like this: Darwinian creatures live or die by their genes. Skinnerian creatures live or die by genes plus operant conditioning. Popperian creatures add an internal model of the environment that attempts to weed out bad guesses before they do real-world harm. Gregorian creatures share their best ideas and benefit from those of others. Hayekian creatures develop ideas complex enough, and aiming to satisfy diverse enough wants, that they require an advanced, socially mediated discovery mechanism to determine the relative usefulness of various ideas.

Are these nested hierarchies? That is, do the lower levels impose unsurpassable limits on those above them? I don’t know. It’s a difficult question. We have seen many examples of limits that later fall. Our Darwinian immune system is pretty pathetic when up against a wide range of pathogens, and Gregorian medicine dispatches them easily. Lots of other examples can be added, but none of them answers the question, logically speaking. The notion of unsurpassable limits may even be unfalsifiable.

For the Hayekian creature, not only do many ideas die in the internal environment, many others die in the marketplace. As well they should: They’ve turned out to be inadequate in meeting the needs of others, relative to some other set of solutions. This fact can later enhance the internal environments of the entrepreneurs and other participants in a market.

This is indeed one of the market’s most important functions, and it’s a great improvement over the merely Gregorian layer of human life. (Don’t believe me? Read some early modern metaphysics. That is what Gregorianism looks like without the ability to weed out the bad.) But the precautions all aim — every one of them — at making sure that bad ideas will not entail the suffering or death of their creators.[7]

Yet there must be a disincentive. There must be, not as a normative matter, but as one of fact — unlike the Popperian internal environment, the Hayekian market environment always entails some level of risk to its participants. Markets commit resources. So far, we haven’t figured out how to make them work otherwise — how to collect the signals that they manifest about the relative values of resources, how to distribute those signals, and to allow actors to formulate plans accordingly — without the waste, necessary in our own world, that goes into all those failed attempts. That might just be the next step, but I haven’t the slightest idea how to get there.

Notes

[1] Do I advocate it? I do! That’s why I bothered to write. Thanks for asking.

[2] Yes, I’m from Cato, yes that makes me—undeniably, I’m told—a right-winger, and therefore anything I say about evolution must be somehow with a view to denying it. I know, I know already!

[3] No, not that tired old debate again. Theories can be true, and this one is. End of story. Sorry for putting it in a footnote. This clearly signals my evil intentions. I guess.

[4] Hereabouts I begin borrowing language from Daniel Dennett’s superlative book Darwin’s Dangerous Idea. Neither he nor I intend to imply consciousness by using the phrase “Good Trick.” The reason for using it will become clearer later.

[5] In ibid, pp 374-75.

[6] Yes, yes, a TED talk. TED is oversold. So are its critics. So there.

[7] It’s here that a strong argument can be made for a guaranteed minimum income. If the point of all this really is to avoid unnecessary suffering and death, then while failing in the market ought to have some negative consequences, starvation or severe material want ought not to be among them.

I suspect though that this Guaranteed Minimum Income should bear no resemblance whatsoever to any part of the welfare state as we know it, with the sole exception of the Earned Income Tax Credit. But the EITC is a feeble thing compared to a proper GMI. The latter could, if implemented, replace all welfare programs, plus Medicare, Social Security, and the minimum wage. That’s a bit of a long ways off. If I knew a way to get from here to there, I’d take it. But I don’t.

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150 thoughts on “What’s What.

  1. Random follow-on thoughts from endnote 7 before I run off to fencing… The existence of a floor on outcomes implies the existence of a ceiling. In a modern society, that implies a top marginal tax rate of 100%. In most cases no one will have enough income that they have to pay that marginal rate, but the math says it has to be there. A guaranteed floor on outcomes implies a state of some sort that redistributes things. At least, TTBOMK, no group larger than a tribe has ever managed to implement the floor voluntarily, and you might argue that even at the tribal level there’s probably a certain amount of coercion going on. If the goal is to prevent unnecessary suffering and death, then the floor presumably includes health care. Cancer treatment — in the year when you need it — often runs >$100K. That’s too high for a practical floor, so it follows that the floor will only include insurance. Starting to look a lot like single payer, or at least mandatory coverage.
    • The existence of a floor on outcomes implies the existence of a ceiling. In a modern society, that implies a top marginal tax rate of 100%.

      I don’t think I agree. There seems to be no necessary connection between them, to my mind, and if there seems to be one in yours, just imagine your society was slightly wealthier in the aggregate, and the connection should vanish.

      To put it another way, our top marginal tax rates aren’t 100%, and I suspect we could implement a sufficient GMI using the tax revenue that the government takes in today. Particularly if we cut military spending. Remember, it would replace Medicare, Medicaid, Social Security, and all other forms of welfare.

      The floor would have to be enough for everyone to buy insurance, but I believe we’re already there.

      • I think a GMI would be a good idea, but you’d need to have it around $15,000 per person* as an absolute minimum, preferably $20,000 (for a midsized urban area; probably vary it between different regions based on cost of living). I’m basing this on my expenses the first time I lived away from home, when I was being extremely frugal (no car, renting a very basic basement apartment, meat a couple times a week and only ground beef because that was the cheapest – and even then I already had my own furniture and clothes and so didn’t have the expenses associated with them). This seems like it would require a significantly more progressive tax system.

        You also couldn’t use it as a replacement for all social supports, as some people (those with addictions, people who are or have been homeless, people with some mental illnesses or disabilities) need person-to-person assistance that goes beyond just giving them money. There’s also a lot of structural issues around where people live, what their neighbourhoods are like, what interpersonal resources they have that couldn’t be resolved solely by an infusion of cash.

        On the flip side – there are reasons for social conservatives to also support GMI, since it would lead to stay-at-home parents being compensated for their work, and reduce the financial disincentive to one parent staying home.

        * I’m thinking in terms of Canada, which has public health care. If you factor in the cost of health insurance, it would need to be higher in the US. Also – per (single) person, not per household.

      • Am I correct to think that a child would get a guaranteed minimum income sufficient to get a good start in life? Else many, many children unlucky enough to be born to parents who hover just above the floor of outcomes will be able to contribute fewer ideas to the grand machine of the market.
    • I’m not seeing the math that requires a ceiling. Take a working system where the highest tax rate is 50%, and add some gazillionaires. That doesn’t raise the GMI or the demand for it, so how do you conclude that they need to be taxed above 50%?
    • The existence of a floor on outcomes implies the existence of a ceiling. In a modern society, that implies a top marginal tax rate of 100%.

      Not at all, in fact you can actually combine flat income taxes with a GMI. Taxes wouldn’t be flat on average of course, but they can be flat at the margin.

      • Can you explain what you mean by that (ie, what this kind of tax system would look like)?
      • Let’s say everyone paid 33% of their income in tax every year, but then received $10,000 per year back from the government (these figures are just to make the calculation easier). So a person who earned $60,000 would pay $10,000 in tax for an average tax fate of 17%. A person who earned $30,000 would pay no tax at all, and a person with no income would receives $10,000 per year from the government.

        Thus the tax is progressive in average rates (the lower your income, the smaller a share of your income is paid in tax), while flat in marginal rates (everybody pays 33% of their next dollar of income in tax).

      • It’s exactly like a flat tax that exempts the first N dollars of income (30K in this example), except that it’s extended to also be a negative income tax.
    • Let me say first, that I liked the post. I have long been an advocate of the concept that a modern society needs to assure that there is, broadly, a floor on outcomes. If too many receive too little of the production, Bad Things will happen.

      I’ll withdraw the “math” part of the 100% marginal rate statement. I will, however, continue to say that given a meaningful GMI — one that covers health care, shelter, food, energy and transportation, perhaps varying from region to region — there will be a ceiling imposed on personal income. A hedge fund manager, to pick a current example, will not be allowed to take home more than $2B in annual income. Or some other limit that the society will agree upon. No matter the mechanism, there will be a cap imposed on annual income.

      All of that said, I am concerned about a GMI implemented in the form of the EITC. It bails out employers who are unwilling to figure out how to make their workers productive enough to

  2. Mr. Hayek said many interesting things about markets, including the notion that markets fail for a variety of reasons. Chief among those reasons was the fact that markets do not control themselves. Since markets require money and credit to operate, concepts Mother Nature never evolved, we are reliant upon governments to regulate them.

    Government evolved. We see that in Nature. Insofar as markets must be controlled, a point the Libertarians never once grasped in Hayek and continue to avoid to this day, I wonder if we might call them as unscientific as the Creationists? Both sorts of folk are both True Believers.

  3. Sadly, all the Good Tricks of the merely Skinnerian sort will die out with the organisms that acquired them.

    I’d like to clarify what you mean by this – there are plenty of animals who pass down learned behavioural adaptations to the next generation (and to other members of their own generation) by teaching them. Dolphins who worked out novel ways of catching fish, primates who teach tool use to their young, etc. I don’t think you mean to deny this, so I’m not sure what you’re saying.

    Second comment – your argument as a whole seem to be that the market tells us what ideas are good and which are not based on which ones make money. I find this an over-idealized view of the market, because some bad ideas and bad decisions can be very lucrative for a small number of people (look at any stock-market bubble, or the recent financial crisis – people come up with all kinds of financial innovations that help them get richer, but these innovations are detrimental to people and to the economy in the aggregate).

    Furthermore, I disagree in principle with the idea that we can measure the value of an idea by how much money it makes. How much money something makes is not only based on how much people want something, but also on how capable they are of allocating money to it. Developing a vaccine or medicine or other product that vastly improves the lives of the poor but which they couldn’t normally afford to purchase may not be something supported by the market, but it is still highly beneficial.

    Not everything that meets the needs of others is lucrative, and not everything that is lucrative meets a need.

    • Other animals do have limited cultural spreading, but they are very, very poor at accumulating change. They seem to be on the cusp of cultural evolution.

      Markets use profit as the voice of the consumer. In other words, consumers — which are all of us — are part of the selection mechanism to determine which ideas are better according to our decentralized and diverse values. Consumers are not always right and bubbles do occur. Of course nobody is always right. The value of markets isn’t that they are perfect it is that they are complex adaptive systems that seem to seek out consumer solutions. One of the best advantages of markets is that they correct mistakes.

      You are right that there are other ways to measure value rather than just profit. Nobody in this forum recommends market solutions for everything. Just some things. Furthermore, the incentives in markets reach further back. In a market economy it makes sense to bring up your kids to add value to other people so that your kids can get the money to buy value for themselves. It is a self amplifying feedback loop. Safety nets are for those that stumble.

      In other words, markets are possibly the most complex problem solving systems in the universe. But they are not the only problem solving system.

      • Markets are not the voice of the consumer. They are the voice of money in its endless journey from one hand to another. Markets exist only because strong enough governments protect them. Governments supply those markets with money, they enforce laws upon them, they keep competition working with antitrust and securities fraud action. Even black markets are denominated in cash and only exist where governments have forbidden the sale of this or that. No governments, no cash. Look at the current Bitcoin mania: its problems stem from the fact that no government backs the currency.

        Markets don’t solve problems. Markets create problems. Show me a market and I’ll show you a cop on the beat, keeping the kids from stealing fruit from the stalls and thumbs off the grocers’ scales and the con artists from defrauding the public. Effective governments keep banks solvent. Effective governments are the underpinning of every market: they are the flower on the bush of human society and they will wither with surprising speed without thoroughgoing maintenance, from both within and without.

        Bubbles? I wish to Christ just one of you Libertarians would actually read Hayek and take him to heart. What does Hayek say about bubbles? He does a wonderful job of describing how they form and how they fail and how they might be prevented, not that the Libertarians can be convinced otherwise. For them, it’s markets first and government is just a filthy encumbrance upon markets. This is not what Hayek said.

  4. I really enjoyed this post.

    I think the idea that a market for ideas, that we are Hayekian creatures by necessity in a world of idea abundance is compelling. I wonder if this doesn’t run aground on the problem of imperfect information, though. We are very poor Hayekians when it comes to evaluating the consequences of a process or product over the long term – and in particular where the negative consequences of a product are either slow to reveal themselves, are worse for future generations than present ones, or are much greater at some points of the manufacture process than at at others or at the point of end use. I suppose this is just a long way of saying that individuals have a hard time assessing net value in a distributed market (as in I Pencil, where natural resources are regarded as infinite ) and particularly lousy at factoring in externalities that don’t effect us immediately. Of course, your suggestion for a GMI acknowledges one of the negative consequences of the market in general, so I am clearly not making a point you haven’t considered.

    In any case, thanks for giving me something knotty to think about while I take my dog for a walk on a perfect Spring morning.

    • Or, in other words: In an environment (market) that doesn’t assess net value reliably, we have a high chance of propagating malignant mutations.
      • I am not sure why you assume consumers have a tough time assessing value, Max. What is your concern here?
      • I’m familiar with Kahneman and most of the behavioral economics, and don’t see it as being a repudiation of markets.

        Problem solving among non omniscient beings is imperfect. Therefore it is insufficient to state that markets work imperfectly. All decision making systems do. The argument for markets is that they work better than the alternatives within a certain domain. They work extremely well at creatively allocating most scarce resources that don’t have negative externalities. There are other cultural institutions including science and politics which solve problems (again imperfectly) within their domains.

      • You originally wrote “I am not sure why you assume consumers have a tough time assessing value, Max.” My response was to that. It doesn’t repudiate markets; it does give reason to suspect their “certain domain” is narrower than is conventionally thought.

        (Ironic that, in the culture at large, markets are seen more and more as *the* answer at the same time we learn more about their limitations and constraints.)

      • Disagree totally. The limitations of markets that people throw out are invariably a bunch of stuff right out of intro to economics courses. They are the essential and well known characteristics of markets that economists themselves have discovered and which they highlight endlessly.

        I really think a few commenters here are refusing to acknowledge that absent markets we would have two thirds fewer people and the lucky survivors would be at an objectively known level of prosperity known as “impoverished.”. We would be back to the Malthusian limit which ruled humanity for the past hundred thousand years. It equates to about $2 or $3 per day, or about one thirtieth what Americans and Nordic types live off of today because of markets.

        What markets solve for is the discovery and creation of what to produce, how to produce it efficiently and how to get it to the best person or use. Absent these discovery processes, we are dirt poor. The social safety nets and health care and education facilities are grown through the prosperity making machinery of markets. There are no other reasonable theories, and if anyone has one they think is reasonable ( this is where radicals say “unions’ or some other magic word), please share it.

        Shaz loves socialism, but socialism is a free rider on the inventiveness of markets.

      • Roger says: “I really think a few commenters here are refusing to acknowledge that absent markets we would have two thirds fewer people and the lucky survivors would be at an objectively known level of prosperity known as “impoverished.”

        Who is making that argument? I see praise for European-style social democracies and people saying that markets are a Good Trick, just not the Good Trick.

      • I’d say socialist institutions exist and originated alongside market-based institutions, and scientifically through experimenting with different forms of government, we have learned that the best society is a certain mix of the two.
      • I think the list of products where we assess the net value poorly is long, for all the reasons I mentioned in my first reply. Up until very recently (and even now, just barely), we have been pricing (valuing) good with the assumption that their inputs were not scarce in any meaningful way beyond the effort to extract them. This is clearly not true.

        We have been terrible at pricing in externalities in general. The pollution, security, and health consequences of fossil fuel burning is only the most obvious example of this. The list of goods where we have assessed a value based only on the cost of resource extraction and use and not factored in the consequences of that extraction or use is long. Consider HFCs as refrigerants, clean water as limited resource, mercury/mining tailings poisoning resources further down the waterfall, and over-fishing to the point point of fishery collapse as a just a few examples of the market (us) doing a terrible job of assessing net value.

        We are even worse at assessing value if the negative consequences are unequally distributed. In the example of the pencil cited in the OP- it wouldn’t matter at all if the mining was done by well paid miners or forced labor. Or if the refining and chemical treatment processes were poisoning water supplies at some location distant to the end user. Was it the wisest use of California forests to local and future Californians to have those trees cut down to make pencils? Probably not, but because the only way we were judging the viability of the idea/product was that it provided a cheap pencil to perform a function we needed done cheaply, this would be the idea mutation that persisted in the Hayekian evolution ecosystem, right?

        I don’t mean to belabor the point, but this sort of imperfect knowledge (irrationality) seems like a basic limit to to the theory that the market is as efficient a measure as, say, an ecosystem where results are measure in life and death daily and visibly, in deciding best which mutations are viable, ya?

      • Max,

        Thanks for clarifying. My short answer is that markets are great at solving a range of problems, but not effective outside of the domain.

        I don’t get your concern on resources. Overall prices of natural resources has pretty much been negative since the advent of markets. Markets are great at accounting for scarcity and promoting the discovery of new sources and replacements to resources. Unimaginably better than the alternatives.

        Most economists agree that externalities need to be accounted for. There are market and non market methods to do this. This is not a critique of markets, but of improperly functioning or poorly designed markets (where design and can be non planned).

        I agree that markets won’t handle such things as preserving The redwoods or caring for the handicapped. These are outside their usual domain (though some people have ideas on ways to extend them into these domains).

        As for forced labor, this is by definition outside of the domain of markets, as they require voluntary actions with defined property rights. The best thing about markets is that the wages that they “seek” is the ideal wage rate for optimizing economic efficiency. Of course, as Stillwater reminds us, economic efficiency is not our sole value or goal.

        So my long answer is that free markets are unparalleled problem solving systems within their particular domain. And as Jason suggests, there are other cultural problem solving domains. Another obvious one is the domain of science, which also works via a process of experimentation, selection, spreading selections and aggregating and ratcheting solutions.

      • I was actually thinking that public, collaborative, scientific research is an excellent example of Jason’s point.

        I appreciate the long answer, it is well put and well taken.

        Regarding the pricing of natural resources, I was thinking more along the lines that they are considered an “infinite” resource insofar as they are not debited from any store of goods when considering something like GDP. But, that is a separate debate.

    • Thanks. A good deal of writing a post about everything is simply finding a convenient spot to put the weeds. Bad posts about everything pretend that there aren’t any. I try not to write those, of course, and I’ll freely admit that the hierarchies and interplays among the paradigms are pretty messy.
      • A good deal of writing a post about everything is simply finding a convenient spot to put the weeds.

        I love that. I think we should add that to the writing guide.

  5. I loved this post, Jason. If I had one nit-picky thing to say, I confess it would be dependent on the degree to which the post acts as a promotion of libertarianism…. which it admittedly might not be doing at all. You certainly do not expressly state that it is, but it is the argument I heard nonetheless (perhaps due to knowing the author, perhaps due to the term “Hayekian.”). But if that was the intention, then my nitpick would be that you could easily start from the same premise and make the exact same argument about sweeping government controls, especially in a democratic society.
    • It doesn’t need to be. I think it makes an argument for the presence of market institutions, and for their importance, but it says very little about how the market is to be run, or under what conditions, or with what constraints.
      • I should have said up top, but reading I realized what you are saying is something that I have thought for a long, long time without having its essence of message crystalized as wonderfully as you have done here.
      • Sorry, I missed that in the post. My bad.

        Maybe you should call your Hayekianism, “Socratism.”

        You a suggesting, it seems to me, that there is a “marketplace” (“market” synechdocically construed as any place where people make decisions about what is better for them) of ideas that people evaluate by testing them against what we see empirically (which grows over time) and what we know a priori.

        I agree that the is such a marketplace. It’s just not the specific thing that Hayek was talking about (a financial system of exchanging goods and services) so it is misleading, a bit, to name it after him. It should be named after Socrates to show that groups of people can, through debate and testing, learn what is true and what is better for us and implement better ways of living, including some market-based wnd some socialist-based institutions.

      • I don’t agree. The point of setting this process apart as a different thing from Gregorianism is that the price mechanism reaches conclusions in a very different way from merely arguing, and often it discloses information that no amount of arguing would have found.

        Prices are important for that reason, and that’s what Hayek most notably argued. If you want to see how a society runs when people argue about what to produce and how, that would be the Soviet Union. It only worked at all to the extent that people abandoned the pretense and bartered on a black market.

      • Jason, are you actually denying that “markets” and “merely arguing” exhaust the possibilities?
      • Yeah, we tested a certain form of Marxism and it failed. We tested a certain sort of laissez fairecaptialism without real social safety nets before the New Deal and it failed.

        This is testing, where reality determines what works and not, just like in science, not a priori argumentation over metaphysics where winners aren’t picked. But it is not a market that is determining winners and losers, except in the broad sense of “a marketplace of ideas.”

      • 1. The very basic idea about prices and the value of markets seems much older and simpler than anything Hayek is responsible for discovering or articulating, no? Why not call Hayekianism “Smithism?” By associating this concept with Hayek, you seem to be wanting to say someing positive about wholly unregulated markets or libertarianism or Austrian economics that is wholly unjustified by anything else in the post.

        2. We all agree that markets do a good job maximizing efficiency and doing a good job making sure some of people’s wants are satisfied as well as possible, particularly all sorts of consumer goods: food, cars, entertainment, etc, Markets create incentives to adapt to deliver what other people want for a wide variety of goods and services. No doubt,

        3. However, markets don’t do this well for certain sorts of “goods” broadly construed, e.g. healthcare. And markets do this best when they are interfered with and regulated, e.g. to prevent busts and bubbles in the business cycle, to prevent monopolies, to ensure labor has power to negotiate for better wages, etc. There are other institutions that do a better job than markets in some areas and some of those institutions are needed to keep markets running, and they don’t lead us to serfdom.

        4. We don’t know what the future will bring. It may be that we will evolve past markets and figure out a better way of doing the things that markets do well now than markets or even a mixed market system. Remember, at his best, Marx argued that capitalism is a necessary stage and an improvement and evolution from prior stages that best developed the means of production and could only be moved past once we had developed the means of production so much that scarcity was no longer a real problem. (At his worst, he thought we were ready to dump capitalism all together by the mid 19th century.)

        I’ve heard some socialists make a crazy suggestion, that might not be so cazy if you think 100 years out. Maybe computers will become better than markets at determining what people will want, regardless of what they signal through saying they will pay such and such, and will be able to send orders to production facilities to create exactly what is needed and what isn’t. Once you can do that, you’re a lot closer to being able to run a command economy that worked better than a market economy, if you wanted to.

        The liberal in me thinks that sounds like a dystopia because there is something inherently unfree about the whole thing. But it could be more something that will evolve that is even more efficient at meeting human need and wants for consumer goods than markets. And maybe something we haven’t predicted will be better and free. Think how Star Trek has moved past money, that sort of thing.

      • I kind of agree with your “Smithism” point.  

        On your third point, you are incorrect about monopolies.  The dynamic of markets creates a negative feedback loop to extinguish monopolies.  Monopolies are omnipresent in non market economies and extremely rare in free (non coercive) markets. Heck, to some extent the flourishing of markets in GB was a direct response against the corrupt monopolies of the royal master planners. 

        You keep repeating that markets can’t work in health care. I guess if you say it enough, someone will actually believe you.  The trouble with health care and higher education isn’t a failure of markets, it is all the misguided interference. Granted health care as a part of a social safety net cannot be handled completely via markets or philanthropy. The take away from that is that non market solutions will be necessary. The key is to do non market solutions that don’t screw up the market. I have previously explained how to do so in detail with broad agreement from several moderates on the site (not that this means I am right, but whatever). 

        As for wages, you need to abandon this magical belief that price controls, minimum wages and union solidarity does anything to enhance the prosperity of humanity.  It doesn’t. Market interferences of this type tend to lead to less prosperity.  Supply and demand, rising marginal productivity and the power of comparative advantage are what make the common man prosperous.  Not misguided market interference.  

        But in the end, I agree with your projections.  In the future, better problem solving systems may come to build upon or replace the current market based problem solving system. I suspect substantially better institutional systems will also replace “socialism lite” too. The weak spot with socialism as you allude is that it operates via a win lose dynamic which fosters a negative, destructive feedback loop.  An improved version would offer the services of socialism without the coercion and folly of top down master planning.

        It would be fun working out the broad outlines of this with liberals.

      • Well, we disagree on a lot, and that is good.

        Is there empirical evidence that a society with far less gov’t interference in markets would work better than what we have now?

        What we have now is tested and proven to work well. I think the more socialist versions of the mixed economy work best, sort of obviously. Finland’s educational system. British or Canadian socialist healthcare. GI bill level commitment to post secondary education. Etc., etc.

        Where has the libertarian model been tested and proven to work better than the mixed model? (Please cite large and varied places that have had non-mixed economies for decades.)

        Austerity economics have failed absurdly badly. Market-based healthcare has never worked, and socialist healthcare works very well. The world’s best educational systems are public and often heavily unionized. Without redistribution equality of outcome and, more importantly equality of opportunity (and intergenerational class mobility) in the U.S. has fallen well behind more socialist versions of mixed economies, suggesting that a pure laissez faire system would become a caste system soon enough. Etc., etc., etc., etc.,

        I think we have come to an impasse, argumentatively. We just disagree about so much, we will have to come back to our arguments in more specific OP’s.

      • I’m sure I would be happy living in any of these places, as long as they have good surf.

        Your “libertarian model” is, I assume, a nod toward anarchy. I am not an anarchist, and know of none that have frequented this site. I repeatedly stress using markets to solve problems within their domain. You know — at solving consumer problems in areas with scarce resources. This includes health care. The record for free markets vs master planning and price controls is pretty much a slam dunk in favor of markets. The entire 20th century is testament to that.

        Again, you tout the glory of socialized medicine without acknowledging that the socialists free ride on health care solutions generated by the creative market search algorithm. Socialists can free ride off the creative energies of markets. But if you eliminate all markets, guess what happens? Have you considered this at all?

        You bemoan the caste system, but you do recognize that that is exactly what we had up until markets were unleashed, right? You and i are both probably descendants from poor lower caste ancestors, who were able to make their way into prosperity by getting a job, adding value and reaping the benefits in return.

        Our poor have better standards of living than many European middle class. Yes there are problems with male bottom tier income mobility, in the US. These problems cropped up right around the time the “socialist lites” started taking over the schools and paying what has now grown to a trillion dollars in poverty encouragement aid ( you always get more of what you subsidize).

        Unionize workers so that lower skilled workers and minorities can be shut out. Raise the minimum wage or force uneconomic benefits so that the unskilled minorities can’t start climbing the ladder. Destroy schools by stamping out parental choice and competition and turning them into a parasitical appendage of the liberal establishment.

        And yes, I enjoy discussing this with you. You are always a class act.

      • Roger says: But if you eliminate all markets, guess what happens? Have you considered this at all?

        Why do you keep doing this? It’s very annoying.

        Our poor have better standards of living than many European middle class.

        Where do you get this information? I’ve traveled a fair amount in Europe, and that is not what I see. I’m sitting here in a breakfast room in Ostrava, Czech Republic. I’ll soon meet a middle-class Czech. I’ll be coaching his team for the next two weeks. What should I ask him to find out where his standard of living is less than our poor’s? I’m serious: I’m pretty good at wide-eyed questioning.

        Raise the minimum wage or force uneconomic benefits so that the unskilled minorities can’t start climbing the ladder.

        Evidence, please. Australia, which has a quite high minimum wage and something of a minority problem, would be a good example. How are they worse than the US?

        Destroy schools by stamping out parental choice and competition and turning them into a parasitical appendage of the liberal establishment.

        Let’s look back at the glory days of the US public school system. There was much less parental choice and competition than there is now, after the “socialist lites” have ruined everything.

        —-

        Your arguments would be better if you were more measured in your claims.

      • In pure GDP, the 50% percentile in Europe probably have a lower average GDP than the 30% percentile in the US. He probably has a crappier house because hey, not a lot a room to build new subdivisions. As a result, that family might not have a shiny new kitchen or a backyard or even air conditioning. Then again, they can go to college without incurring massive debt, if they get sick, they won’t go bankrupt, and their children have a far better chance to be in the top 10% than the children of the 30% percentile do. Plus, depending on the country, they probably have faster Internet too. And it’s cheaper. :)

        Also, the point about unions closing out access to minorities might have had a point in 1986. Today, the fastest growing unions are unions of service workers, who are disproportionately made up of women and minorities. In 2013, a new union worker is far more likely to be a Hispanic nurse in Nevada than a ironworker in the Midwest.

      • Brian,

        The “eliminate all markets” is a response to the prior suggestion that socialized medicine works better than free markets. My point stands that you can’t have a system that leverages the creativity of markets absent all markets in that field. This shouldn’t be an annoying fact.

        Jesse kind of answered the second objection as he set up for his retort. We can delve into the topic of square footage, air conditioning, car ownership, number of TVs, liesure hours, dollar in means assisted aid, health care, etc between the average Czech and the lower quintile person in America. Let us just say the relative comparison is debatable. If you would like to come visit a bottom tier income household in Chicago, feel free to visit my place. Alternatively you can drop by my son’s place along the beach in California.* Not to suggest that either anecdote should count as representative of the class.

        The argument that raising the price of something lowers the demand is not a point that requires evidence. It is like asking me for evidence that the world is round. The question is how much we can raise minimum wage and mandatory benefits without severely harming the opportunities for lower marginal productivity employees. Another commenter bemoaned class mobility. I included this as one factor among many contributing to mobility problems. It is a pretty easy statement to defend, and I will gladly do so further if you request.

        I rarely use the socialist term, but another commenter started throwing it out there with pride, so I felt it was a wave worth riding. If you would like to review literature on open competition in schools worldwide, I can send you the links, or on charter school comparisons in the US. There are some great recent summaries on the literature.

        I have no argument with your point that schools used to be better or at least more efficient than they are now. That is exactly the nature of the problem absent competition or creative destruction. Monopolistic bureaucracies will accumulate sclerotic overhead, rent seekers and administrative bloat. Incumbents will leverage their position to resist uncomfortable change and to exploit the situation for their advantage rather than that of the customer. A monopoly is suboptimal for several reasons on day one. Decades later they tend to become pathetic disasters. Again, I can back this statement up with lots of details, personal experience, logical arguments and empirical data.

        Yes, I sometimes write hyperbolically. Note that this is also true of those on the left. But that isn’t so irritating to you is it?

        * you need to be fast though as he is letting his lease run out so he can walk the Appalachian trail, at which point his standard of living will be well below that of the poorest Czech.

      • I am in favor of a mixed system: markets plus regulation plus some socialism. Blend with representative democracy and a judiciary to protect basic individual rights.

        I think you are in favor of that too.

        The rest seems to be like a straw man of the position I advocate or a series of red herrings.

        Like I say, I think sane guys like you and I (not that I’m that sane) can probably get further discussing specific issues than these broad generalizations about markets and socialism that we’re both describing.

      • I was going to make a joke about how maybe the elite will get really good at it, with the help of documents given them by the gods, but I see that CT already made a similar joke.

        Dangit.

      • Yeah, that’s a great post by Shalizi. Also, her take on the failures of markets without planning is very relevant to Jason’s OP. (I need to read Red Plenty.)

        Never say never about computers, though. That’s what I always say. Will they never solve this optimization problem. Meh. Maybe not never. Not that what I say is worth much.

  6. Not bad… for a crazed right-wing anti-evolutionist callously unconcerned with the welfare of the poor. ;)

    Less sarcastically, the Animal Collective video was pretty clearly filmed at a dry lakebed about forty miles from my house, frequently used for off-road vehicle recreation and filming, greatly enhancing my personal enjoyment of the post.

    I think the hierarchies may indeed be nested. The internal “thought experiments” described as “Popperian” are obviously an enhancement to the survival of the individual and thus a means for Darwinian creatures to enhance their survivability. There are hints that behaviors such as exchanges of service for value manifest in other primate species.

    But I think what you’ve described as “Hayekian” existence is simply an end-stage or high-level manifestation of “Gregorian” behavior: an internal weighing of benefits and costs on an individual basis for particular kinds of transactions, understood not just on the immediate level but rather as a generalizable abstraction. So far as I can tell, only homo sapiens behaves in a manner that (occasionally) manifests understanding on this level. Nevertheless, I think the difference between what you’ve characterized as “Hayekian” and “Gregorian” is one of degree rather than quality.

  7. Nice post!

    Your conclusion certainly puts a dent in the common rejoinder that libertarians value markets as ends in themselves.

  8. “If I may be forgiven for adding a layer to Dennett, we now become Hayekian creatures. We resort to markets. Markets are the way we determine which proposed courses of action are the most worth not merely our affinity, but our efforts.”

    Hayekianism hasn’t survived and thrived, though.

    Let us also define “Pragmatist Creatures.” Over long periods human societies see what works for maximizing human happiness and weed out the good social structures from the bad. Over time the efficiency maximizing of Hayekian markets has turned out to be not all it was cracked up to be, empirically, in the real world. (Markets fail. They don’t work well in lots of circumstances like healthcare.)

    By contrast, mixed markets like in most of the first world nations have shown themselves to make people muchmore well off and they reproduce themselves in other countries (there was a mass reproduction in the 20th century) and have small mutations (say the difference bewtween Sweden and the U.S.) where the system that is more likely to make people happier is more likely to survive.

    Dennet’s ideas of memes suggests that Hayekianism about markets is an unsuccesful and poorly adapted meme and will die soon.

      • The insight that true value resides in the ephemeral and superficial. I call it Kardashianism.
      • Regulated markets with a social safety net that is paid for with redistributive taxation that exists alongside a series of socialist institutions for heatlhcare and public education.

        This mix has already outcompeted more laissez faire markets. Just like traits that aren’t adapative, belief in the value of unregulated markets survives in a few individuals, and is occasionally passed on, and will do so for a few more generations.

        Brian is right below that we can weed out the worse social structures without Hayekianism.

      • Shaz,

        I think we an all agree that society is more than just markets. Full stop.

        I think it is untenable to say that we can deliver the standard of living that modern societies do absent the power of effective free markets. Seriously, I don’t even think it is worthy of debate. Every society ever prior to free markets that began to emerge post Adam Smith were poor and Malthusian. Markets allow people to solve problems for each other via a process of experimentation and selection. Once problems are solved, they are then repeated,copied, and shared. Then solutions are combined and improved upon. It is a progressive problem solving system, without which most of us would die and the rest of us would be impoverished. this is the power of Hayekian evolution, and the evidence for it is totally overwhelming.

        It is fine and dandy to say that mixed economies will outcompete or outgrow more free markets. Maybe so. Maybe growth isn’t the only value. Maybe the wise move is to allow some places to solve problems via open markets while we ride their wake, in effect letting the other places do the heavy lifting.

      • What does that have to do any of this have to do with Hayek?

        The idea that there will be a pragmatic test of ideas and ways of living is older than Hayek and associated with much greater philosophers who explain it much more effectively: William James, JS Mill, and even the basis of Socratic questioning is testing ideas to push society forward.

        Associating this general idea with Hayek suggests that financial markets, where some form of money is exchanged for goods, is the same thing as the “marketplace of ideas”, which is just misleading.

      • To the extent that you are arguing ad populum, I don’t think you should be terribly pleased with yourself.

        I’m using Hayek here to denote his work on markets as information discovery mechanisms, not to denote his minimal-government constitutionalism. (Which, if you would read The Constitution of Liberty, I think you would find surprisingly moderate. But anyway, it’s just not what I’m about here.)

      • It isn’t ad populum to say that people have tested soviety-style communism and determined that it didn’t work.

        I am saying we have tested mixed market systems and this has shown that they work phenomenally well. Markets don’t test well in providing some things, like healthcare.

        I recognize that sometimes Hayek os a moderate and other times he isn’t, but he never really explains this. He never really explains why some restrictions on pure capitalism are okay and others aren’t. As Keynes pointed out to him in a letter, some effect on the economy by “planners” is a good thing (this is shown to be true by the test of history exactly as much as a pure command economy has been shown to fail) which the moderate Hayek seems to agree. But as Keynes points out, Hayek never tells us anything about what sorts of planning are acceptable, at all, and sometimes apparently contradicts the moderate Hayek by implying that any planning is a slippery slope to serfdom.

      • Except that well-designed social safety nets don’t interfere in the knowledge-gathering function of the market very much.

        As for “regulated markets”, that’s a little vague. Some regulations (particularly the proper responses to market failure) can indeed enhance the market’s operation. Others are not so good.

        Just because Hayek was at the freer-markets end of things, doesn’t mean that Jason’s “Haykeian Creatures”, have to be totally laissez faire types.

      • As long as the Nordic socialist countries are Hayekian, I’m fine with Hayekianism.

        Honestly, Hayek was a pretty poor academic, especially in policital philosophy. Better off referring to Adam Smith if the point is that markets for goods and services are good.

        The Socrtaic marketplace of ideas suggests mixed market societies work best. It may eventually decide that there is a better alternative (some kind of Star-Trek style communism or pure libertarianism.)

      • Many of the Nordic countries combine relatively little regulation with an extensive welfare state (and taxes to match). This strikes me as an eminently reasonable arrangement.
      • As long as society keeps the”Hayekian” markets in check and we have lots of government support and redistribution, theree are different ways of arranging society, yes.

        What did Hayek hImself think? Are we currently on the road to serfdom because of redistributive taxes, regulations, welfare or are we not?

      • Hayek though the democratic socialism of the mid-20th Century would lead to serfdom. He was clearly wrong there, and since he died at the dawn of neoliberalism, I’m not sure what he would have thought of it. I do know that he didn’t object to social safety nets.
      • Where do you think people in Nordic countries get their shoes, cars, bikes, phones, light bulbs, stock markets, warehouses, and so on? Where do you think the productivity of modern economies comes from? Where do you think these ideas or their current manifestations came from? Absent markets, everyone* in these Nordic countries would be poor serfs tilling the land, sleeping with livestock and making $3 per day while they watch their kids die during the bad winters.

        Why won’t you recognize this? What is the source of prosperity in your mind?

        * actually 90%. The other ten percent would be exploiting the rest.

      • Markets sometimes good.

        Markets not always good.

        Usually good market requires extensive support from goverment.

      • You are avoiding the question. Nobody is suggesting markets can exist absent institutional rules, nor are we denying that these can be enforced via government agencies.

        Jason’s point was that modern levels of prosperity that enable common folk like you and me to get college degrees and chat over the Internet while living a life that is unimaginably better than that of our ancestors is due in part to the evolutionary dynamic fostered by markets. Can you agree to that?

        It sounds like you think acknowledging the power of markets to improve human welfare will rub off on you and hurt your social standing or something.

      • Markets sometimes good.

        Socialism sometimes better, sometimes worse.

        Best system is mix of both as determined by the marketplace of ideas.

      • I am saying the market place of ideas, which isn’t a financial market in the way that economists or Hayek particularly would be talking about as they use the word “market,” shows that socialist institutions and market regulations are sometimes preferable to financial market-based institutions.

        The marketplace of ideas doesn’t always pick markets in the narrow sense of the word “market” as a place where money is exchanged for goods and services.

      • Greece is probably going to have to sell some of their cultural heritage, along with anything else they can scrape together, because their thoughts on social safety nets, though winning in the marketplace of ideas, were losing in the marketplace that hires the repo men.

        The marketplace can be a stone cold b**** like that. “It seems like such a good idea at the time. A mix! A mix had to be the better way! Everyone said it. Now they’re taking all my furniture.”

      • I would be extremely cautious about extrapolating the case of Greece to any other nation’s social safety net. The safety net wasn’t really the problem, it’s the pervasiveness of corruption and cronyism that essentially bankrupted them.
      • Actually, without markets some of the Nordic countries would still do reasonably well because their governments are making a freakin’ fortune selling oil to the rest of Europe at inflated prices. Admittedly if the European economy continues to fall apart they might have some customer relations issues, but when your major economic sector resembles Kuwait or the UAE you can party it up for a while.

        Somehow pro-socialists think this proves socialism works efficiently, but actually some of the Nordic countries (like Norway) came close to financial ruin because of the petrodollar windfall and went to a pro-growth, pro-capitalist, more diversified formula and economically outperformed those that remained more heavily socialized, like Sweden.

      • They sell oil which is an idea which flourished because markets identified the value of oil, discovered how to extract it efficiently and use it to solve countless problems for humanity. Oil is valuable to the Nordic countries because markets created the value. Absent marketsl, they are just serfs living near some deep and messy black stuff.
  9. I’m unconvinced by the distinction between the Hayekian and Gregorian creatures. The need for the Hayekian step is: “How can we know when a particular idea really is a Gregorian Good Trick?” I think the Gregorians, and even the Popperians, already have that covered, mostly.

    We’re social animals. As such, our social world – other people, in high-bandwidth communication with us, is a huge part of our natural world. In his earlier, modestly titled book, /Consciousness Explained/, Dennett supposes that our type of creature has (as a Good Trick) the ability to model and query the internal state of other people. That gives us a Popperian way to weed out bad ideas before committing to them. It also gives us a way to test the ideas that aren’t weeded out. There are a great many ideas that can be evaluated perfectly well without Hayekian mechanisms.

    (Dennett’s explanation of consciousness is that it’s derived from the brain applying its modeling-other-minds trick to itself.)

    You have the market as a next logical/inevitable discontinuity in performance. I think you need to counter the argument that most of what we do is non-market, that we use the market as a fallback mechanism when other mechanisms don’t suffice. (Perhaps there is a parallel here to Kahneman’s “effortful” and “automatic” systems in /Thinking: Fast and Slow/.)

    That is: I propose the market is no more than one of the Gregorian creature’s Good Tricks.

    • I’m unconvinced by the distinction between the Hayekian and Gregorian creatures. The need for the Hayekian step is: “How can we know when a particular idea really is a Gregorian Good Trick?” I think the Gregorians, and even the Popperians, already have that covered, mostly.

      Gregorians can argue with each other, but markets test things in a way that mere argument cannot. If discussion and planning were enough, then the Soviet experiment would have worked.

      In one sense, though, you are correct: You have to be Gregorian to learn from markets. Each level builds on the previous, and markets are a Good Trick of the Gregorians, not the only one, but a very important one, I’d argue, and maybe the most important.

      • But Gregorians have now determined empirically that mixed markets and many socialist institutions work better than more pure markets in many cases.
    • Replying to myself: While the metaphor of “ideas having sex” is clever, it misleads by what it leaves out. It’s not ideas having sex: it’s people crossbreeding ideas. It’s not that one person has an idea, makes it concrete (purchasable), and then N other people provide a large number of small bits of information (bought or not). It’s much more often that people closely collaborate on ideas.

      I imagine Graeber’s /Debt/ isn’t real popular around Cato, but I found his earlier /An Anthropological Theory of Value/ a good read. He talks about the limited scope of “transactional” relationships between people, ones in which it doesn’t really matter to me whether I get my candy bar by handing a bill to a clerk or to a vending machine. Your post seems to expand that scope, to make everything about human idea-improvement either transactional or internal to the individual.

      It seems to me a big hole. Sort of as if the ancient Greek agora only had merchants, not Plato and Aristotle.

  10. Jason, forgive me if we have had this conversation before, but you will appreciate Michael Tomasello’s work, particularly the concept of the “ratchet effect.”
  11. I am attracted to this post and it’s thoughts, but the content is terrifying.

    Our primary advantage of creatures has accrued not to us as individuals, not even to us as groups, but only to us as constituted in existant societies.

    In it’s way, it’s a profoundly un-Libertarian assertion.

      • On which part?

        That it’s terrifying? That human society is a gossamer thread of existant culture? If we pulled a bunch of us out somewhere, we could not replicate human society easily? It would take generations and generations to rebuild even a semblance of it.

        That it’s un-Libertarian – is there a more full-throated version of ‘you didn’t build that’ than this? I happen to agree with it, but it’s still frightening to contemplate.
        Now, I would say Jason himself believes it’s perfectly compatible with libertarianism as he conceives it. I think it washes away the foundation for many/most ordinary folks that call themselves such.

      • That it’s terrifying? That human society is a gossamer thread of existant culture? If we pulled a bunch of us out somewhere, we could not replicate human society easily? It would take generations and generations to rebuild even a semblance of it.

        It that likely to happen? There’s no point in being afraid of highly unlikely contingencies.

      • Extremely unlikely? I am not so sure!

        It says a lot about our capacity to colonize other worlds, should we need to someday.

        Or, far more likely (and still really unlikely) would be the question of a societal collapse.
        The ultimate goal of terrorism is often to destroy the existing socio/political order – I think it’s within the realm of possibility that we might move toward a social paradigm where terrorism is much more prevalent and that might threaten our capabilities going forward.
        Dramatic global climate change is a very real possibility and certainly is a big risk for severe cultural disruption. The end of the fossil era will not guarantee we discover a suitable replacement even if we manage to dodge the climate change bullet.
        Fortunately, I think the possibility of a truly global nuclear catastrophe have shrunk considerably.
        None of these would end the human race, per se. But they are threats to our Hayekian nature. Perhaps we might slide back to Popperian or even Skinnerian existance as creatures. We might devolve, as it were.

      • That is odd. I don’t see it as unlibertarian at all. Mises’ working title to Human Action was HUMAN COOPERATION. Hayek’s stuff is all about how the complex interplay of billions of decisions creates order which was not just un designed, but incapable of design. It is above design.

        The roots of libertarianism are of course the classical Scottish and English enlightenment thinkers. And they began to recognize the power of decentralized systems such as common law and markets. Indeed Darwin was influenced by Smith and Malthus.

        I guess I see libertarianism as rooted in the power of cooperation, not individualism.

      • Your concept is more like Jasons, I think. I would assert it’s highly atypical of the self-described.
      • I’m a liberal, Roger, so I can get down with the primacy of the community. I think for me, Libertarianism is a critique.
        As is this post, that we can’t just create an ideal society simply through application of thought experiments. As Jason says above – if we could just do that, then the Soviet experiment probably would have gone an awful lot better!

      • I think you are right but I would put it another way. The freedom of action one surrenders by conforming to the laws and moral code of conduct of an effective and well run society is small compared to the freedom of action one gains from membership of the well ordered group.
      • Well said. We can gain more by agreeing to the rules of an effective society than we lose. I think there is a myth that classical liberalism is some type of rugged individualism. It is essentially about discovering effective problem solving via constructive competition and cooperation, with emphasis on the term constructive.
  12. Jason,

    Here are my thoughts on the topic. I am a big fan of Donald Campbell. My improv on his works are that knowledge and problem solving in general can be stated in a simple algorithm. And it is the algorithm first popularized by Darwin.

    Problems are solved by a process of variation and selection (aka experimentation)

    Solutions are spread by replication, retention and imitation.

    Solutions can then be further improved upon by ratcheting, and recombination. The output feeds into the input of the next generation and the process self amplifies. (you can take what works in one generation and experimentally vary THAT).

    Dennet’s evolutionary hierarchy can be characterized as improvements in the ability, speed, and efficiency of a systems ability to solve, spread and build knowledge. The feedback loop can be improved.

    Humans were the first species to effectively spread non genetic (learned) solutions in a manner capable of both preserving the integrity of the solution and building upon it. In other words, chimps can spread things which they have learned, but they are not good at quickly learning from others, replicating the solution and building upon it or combing ideas into novel solution sets. In the last hundred thousand years or so, we also developed language which helped us to spread, share, preserve and combine ideas better than ever. The result is cultural evolution. It is substantially faster, more efficient, and less wasteful than biological evolution for reasons well documented by Dennett.

    Over time, cultures have learned institutional tricks to improve the efficiency and effectiveness of this evolutionary learning process. Markets are just one of these breakthroughs. Writing was another. Mathematics another. Logic still another. Science (Baconian evolution?).

    Indeed once we clarify that evolutionary learning is a process of solve, spread and build, any cultural solution which helps you generate variation better, select better among competing alternatives , spread better, preserve, replicate or aggregate better becomes a way to improve the problem solving ability of society. We can learn to learn better. We HAVE learned to learn better.

    I agree completely that markets are one such problem solving system. Prior to relatively unfettered markets, we were invariably poor, illiterate, short lived and unhealthy. The complex adaptive institutions of markets, science and democracy ( all three the champions of classical liberalism) allowed us to solve problems faster than Malthusian forces could throw them at us. For the record, I think science is almost as important to cultural progress as markets. I am not as big of a fan of democracy though. It is not sufficiently perfected yet. Give it time….

    You end by asking how we can improve the problem solving ability of markets. My guess is the next breakthrough will be in AI. Once simulations become accurate enough, more and more experimentation can be done virtually. I don’t think this will replace markets, politics or science, but it will add to them within its domain. The key is that virtual reality can be faster, handle more experiments, be less wasteful of resources, easier and more efficient to replicate and share,ratchet and so forth.

    I would also suggest we could improve the effectiveness of politics and democracy. That is another topic, but to understand how, I would start with Campbell and Darwin’s algorithm. The low hanging fruit are in improvements in competing variation and selection.

    I’ve gone on too long already though….

  13. I’d agree that the ability to test ideas is an important additional capability. But by calling that capability “Hayekian”, you’re privileging one particular mechanism of testing. One could just as easily call humans “Baconian creatures”, after Roger Bacon, to emphasize the importance of empirical testing and the scientific method to the marketplace of idea.

    And casting our ability to test ideas in that light changes some of your conclusions. Under the scientific method, there’s a risk that the ideas fail, but not that humans do. Indeed, there’s an argument that too much “Hayekian” thinking in the scientific establishment is actually harming us: scientists’ career advancement depends on producing positive results, and we a real problem with publication bias and failure to publicize negative results.

    • Again, I would emphasize that markets are different from science, different from arguing, and different from just being smart, as great as all those things are.

      Markets find things that these other qualities, while excellent, don’t do so well at finding. This is particularly true in the area of consumer preferences and that of prodcuers’ choice of various methods and materials in production. Markets — and not argument — can make these things much clearer via the price mechanism. And while that mechanism isn’t perfect, it beats rationalistically starting from one’s inner environment and using what one just sort of thinks would be the best process.

      • Are you try to lump science into the “Gregorian” or “Popperian” layer? Because I think that’s wrong. Science is not argumentation. Science is not being smart. Science is not “rationalistically starting from one’s inner environment and using what one just sort of thinks would be the best process.” The scientific method IS testing ideas, determining whether ideas match reality, not whether they sound good.
  14. And of course “Baconian creatures” sounds a bit like a tasty (and I’m a vegetarian) synonym for “pigs.”
  15. I like the basic model you’ve outlined here, Jason. However, I’m afraid you’re reaching more than a little bit with your addition of Hayekian to the hierarchy. Each of the other steps was the result of a bit of additional capability acquired by the biological organism through evolutionary development. In particular, the Popperian step required the development of the cerebral cortex, while the Gregorian entailed the development of complex language abilities. Hayekian markets are just one of many cultural developments enabled by our biological evolution to the Gregorian level, along with art, science, politics, and even religion (as much as I despise it). IOW, markets are just something that Gregorian creatures do, rather than defining yet another, higher kind of creature.

    Perhaps a better way to look at it is that natural selection operates at each of these levels and that markets are (one of) the ways that natural selection operates on the mimetic products of Gregorian creatures. It seems to me also that that there is a higher level still that judges the outcomes of the market process and that gives rise to the rules and institutions that we impose on them.

    I would need to ponder this some more but I wonder if there may well be room for a Hayekian level but in a parallel hierarchy of cultural innovations. Perhaps starting at the bottom with the manner in which bacteria swap bits of genes to acquire abilities and working up.

    • Good points, Rod.

      I would suggest that cultural evolution ( sorry, I have always hated Dennett’s awkward terms, and Dawkin’s memes are even worse) did arise out of good tricks discovered via biological evolution. But biological evolution was the only discovery process in existence. Once cultural evolution arose, we had a faster and more powerful discovery process. Now we are seeing good tricks in culture as we learn how to learn better. As my uniformly ignored long comment suggests, markets are just one of many such good tricks.

      I also agree that markets themselves are embedded in rules and institutions. Of course Hayek’s insight was that these rules and institutions themselves evolved by a process of cultural evolution.

  16. Did the OP slip smoothly from considering biological evolution with its “objective” for social animals of enhancing the chances of the survival of shared genes to “avoiding unnecessary suffering and death” as though these were the same thing?
    • What do you mean by slip smoothly? Conceptually, one can indeed talk about a gene and a social practice as both being adaptive for the organism who has them, as well as for the genes themselves.

      Which one is merely along for the ride? Depends. Who’s asking?

      • You have represented Dan Dennett’s ideas, (and one of your own), as a continuation of evolutionary development by other means. But you don’t seem to regard it as important that along with a different, (or rather additional), method of development comes a different objective. Nor do you seem to see the need for justifying your view of what that new objective is.
    • Gordon,

      I would suggest that biology spreads genetic solutions to the problem of persistence in an entropic world. Culture spreads learned or behavioral solutions. They are most certainly not the same thing, but they share many resemblances.

      • It’s not the assumption of new and additional methods of human development I object to. It’s the assumption of a new objective for development with no argumentation to support it.
  17. An idle thought: couldn’t it be advocated that markets are themselves sortof Skinnerian beasties? In many cases of course their ideas are excellent ones but are they not in danger of being killed by their bad ideas. Commons leap quickly to mind: our markets say eating tuna is a good idea, tuna is tasty, our market assigns tuna a value. Tuna (which lives mostly beyond the reach of individual nation states, a quintessential pure unregulated libertarian commons) is becoming increasingly scarce. Tuna is still valuable but now there’s less of it. Our markets assign the remaining tuna a higher value. More harvesting of tuna ensues. Scarcity increases, the market responds by assigning an even higher price. The commons is hurtling towards complete destruction, the market signals “Good! More! Go! Go! Go!”

    Now tuna’s a depressing but small example. What if our market hits on an idea that consumes a more integral commons (some would suggest Global Warming is such a commons)? Absent outside intervention aren’t our Skinnerian markets in danger of hitting on an idea that could destroy them (and us)?

    Now I could be entirely off base here, my grasp of your excellent post is far from perfect.

    • Heh. Mr. Hayek had a few things to say about such spirals and crashes. Would that the folks who invoke his name, or that of Dr. Skinner, or indeed, as have several folks around here, invoking the Behaviourists such as Kahneman and Tversky — could realise people will always make the least-painful decision at any given moment, future consequences be damned. Skinner works because it hurts more to lose than it pleases us to win.

      Betcha those last few passenger pigeons tasted pretty good. There was a market for them. They used to pack ‘em in barrels.

      • “people will always make the least-painful decision at any given moment, future consequences be damned.”

        This seems empirically false to me. Lots of people defer their enjoyment, work, save, and otherwise willingly undergo suffering to avoid greater suffering later.

        We might argue that they don’t do it often enough, but to say that they never do it seems wrong to me.

      • Perhaps Blaise’s statement makes more sense if you think of “people” in the collective sense rather than singular “persons”. Sure, individuals (some, anyway) will save, invest, delay gratification, and even engage in self-sacrifice for greater causes. But it seems like people, in the form of societies, through our political systems, have a much harder time with this.
    • North’s comment gets at a first objection to this in general quite enjoyable and thoughtful post or rather to its line of argument. Whether or not this scheme is usefully thought of as a “nested hierarchy,” it seems to me to neglect the conflict and feedback effects of that conflict between each “sub-scheme.” So the tragedy of the commons that North describes in relation to tuna is an example of a larger and typical conflict or set of conflicts that we tend today to call ecological and that Polanyi (writing at the same time as Hayek) analyzed in The Great Transformation. For Polanyi – and I think convincingly, regardless of flaws in his some of his anthropological and historical evidence – the rationalizing process of the free market conflicted with “non-market rational” processes: The market logic is, in short, a mathematical or computational logic that destructively re-organizes or seeks to re-organizes land or nature, labor or people, and society. It would always be more profitable to pay the worker less and charge the customer more. The market was thought, long before Hayek of course, to adjust “naturally” to any unwillingness of the worker to work for less and of the customer to pay more, but that process of adjustment, the friction that it generates, the response to that friction, the response to that response, and so on, are experienced and often enacted as violence and suffering, or sometimes precisely where the triumph of the “self-regulating free market” is its most complete, as annihilation of all that pre-existed it and of all that might otherwise have followed it. For Polanyi, it was the most important element of the vast European catastrophe he was observing – the most basic explanation for the rise of fascism and communism and the worldwide crisis of liberalism. In our own time, it provides a way of understanding the perfect triumph of the self-regulating free market as the annihilation of the ecosphere: All wages, all prices = 0 (or infinity).

      This would be the first objection. It would find parallels and support in the larger critique of materialism and scientism.

      • Not even close. The market CONSTRUCTIVELY re-organizes resources to increase human utility. It is essentially a value production process, not a value destruction process. And the value that it is produced leads directly to the flourishing of the human race as opposed to all societies which stamp out the value-seeking algorithm of markets.

        There is of course a creative destruction inherent in markets. But it again loops back down to the evolutionary algorithm. As D. T. Campbell clarified, knowledge, broadly considered, comes about via a process of variation and selection. In markets the destruction is primarily a product of not being selected. In other words, the competition is for who will cooperate best. It is in effect a self amplifying process to discover better or more efficient means of cooperation between all the members of humanity. Indeed, the “losers” in the competition can themselves be compensated out of the productive benefits of markets.

        The track records for markets is vastly superior to any alternatives when it comes organizing human affairs and resources into productive capacities. There are no valid altetnatives. None.

        That said, externalities need to be accounted for and the tragedy of the commons needs to be constrained via institutional arrangements. Neither is a critique of markets, just of improperly operating markets.

      • In markets the destruction is primarily a product of not being selected.
        … cancer economy notwithstanding, eh?

        Being selected as a growth industry is quite hazardous to the industry’s overall health… Look at housing, finance, even health care (grown so malicious AND bloated that they must turn to the government to fix their problems).

      • The market logic is, in short, a mathematical or computational logic that destructively re-organizes or seeks to re-organizes land or nature, labor or people, and society. It would always be more profitable to pay the worker less and charge the customer more.

        It may be more profitable, but your sales volume plummets to nothing so the total amount of profit becomes zero. “I know, I’ll make all my employees quit and raise prices to eliminate market share!” is not something you’ll hear in many offices.

        Colonel John Boyd wrote a fabulous essay on how all intelligent organisms must think, called “Destruction and Creation” as I recall. All mental maps of the universe are incomplete, and thus flawed. The only way to improve the fit between a mental map and reality is to interact with reality, gathering data and adding to the mental model, tweaking it and noting exceptions. This causes a problem because the original mental model was necessarily and fundamentally wrong in certain areas and the new data initially just creates long lists of exceptions and ad hoc explanations for why the real-world data doesn’t conform to the model.

        Once the entropy is great enough the old model collapses from its internal contradictions and the organism is forced to sift through the wreckage to come up with a more accurate, parsimonious model of reality where the new data are no longer glaring anomalies but the predictable result of an underlying truth, principle, or mental construct, one that better fits the real world. The new, improved model of reality then allows for new predictions, new thoughts, and illuminates new relationships between previously unconnected bits of real-world information.

        Without the destructive phase that tears down the fundamental structure of the old model, it’s not possible to build the new more accurate model, and without the new more accurate model further predictions and refinements won’t happen. The organism moves from less fit to more fit. It’s not that it becomes smarter in some absolute term, it’s that its mental image of the world is a much better fit to reality, so its decisions and actions are far more likely to produce results that match its intentions.

        One of Boyd’s insights is that this is how intelligent organisms have to operate, and its such a general principle that it doesn’t just apply to a being with eyes, a mouth, and a stomach. It applies to anything that combines intelligence, action, and learning, from alien AI constructs to markets.

        The destructive phase is key, because without it there can be no fundamental restructuring so its actions will better fit the environment. Without the buildup of entropy (failure, pain, doubt) to bring about the occasional destructive phase, the organism won’t have the big epiphanies that change its internal structure to improve its fitness.

        The mistakes made by market economies aren’t a bug, they’re the fundamental and necessary mechanism of improvement, adaptation, and advancement. The area where the market shows the most dynamic trading, chaotic successes and confusing losses, is the place where the economy is learning. The factories that are closing are like discarded theories that failed experimental testing, or whose early success spawned new theories that expanded and superseded them.

        Chaos and entropy are the drivers of change, leading to increased intelligence and fitness, but only if an organism allows them to operate, and then reacts to their buildup by fundamental and often painful restructuring, rewiring its internals.

        The failure of socialist and communist thought is that it doesn’t allow for where any of this painful restructuring (learning) will actually happen, because their fundamental model of reality, of near optimal economic fitness, is assumed, a priori, to be sound, and the external environment to be unchangeable. But the rules of intelligent organisms won’t be denied, so learning can occur constantly all the time, with accepted ideas and structures continually overthrown, or the organism can desperately and stubbornly cling to a flawed model until the weight of contradictions can no longer be denied and it completely collapses (as happened with the Soviet empire).

      • Mr. Turner, much of what you, or the much more ideological Roger, or the OP, attribute to one or another prophet of profit has been embedded in market ideology in one way or another from the beginning of industrialization. “We” chose glorious productivity over the full range of pre-modern values and customs, or we re-oriented pre-modern institutions – like the Christian churches – to preach the new cruel-to-be-kind productive gospel in a market-supportive mode. Polanyi documents this particular very interesting ideological shift in great detail, as it was at the center of a very lively moral, political, and practical discussion in Great Britain during the first years of what became industrial capitalism and the global expansion of the practice and ideology of the “self-regulating free market.” The aside on “pay less/charge more” was simply meant to point to one axis of conflict or friction fundamental to the market system viewed at a relatively high level of abstraction.

        What makes any externality external is that the market from its own processes, its own inputs and outputs, is unable to price it. The market cannot anticipate that a certain chemical residue of its highly profitable industrial processes poisons drinking water and the Earth. The market may only “learn” the cost after the aquifer, or the ocean, or the biosphere, has been permanently destroyed. The market doesn’t know ahead of time whether the residue will be a minor irritant, or major problem (that the firm won’t want to take responsibility for), or Ice 9. Until truly final, or terminal, limits to growth have actually been discovered, possibly too late for very many of us, no one can say for sure where they are, or whether the new exciting lesson from the learning process is that the learning process is horrifically defective, its own defectiveness always having also existed in the realm of externality. What’s frightening to some of the rest of us is that the ideologues of the free market system sometimes seem so in love with it that a world that didn’t embrace it wouldn’t be worth living in for them anyway, meaning that they are committedly deaf to warnings, that they refuse to consider or even believe in true alternatives, and the next great de-externalization will have to be as or even more cataclysmic than the last ones.

      • Your argument basically amounts to the following (correct me if I am wrong):

        No problem solving system which is less than omniscient can anticipate all the long term ramifications, secondary effects and wakes of solutions. Any short term solution can possibly lead to long term disaster.

        I agree. This is implicit in science, politics, evolution and markets. It is implicit in every real problem solving system.

        Each problem solving system creates new problems even as it solves old ones. And self amplifying problem solving systems can generate really big, nasty problems due to scaling effects. It is fashionable to discuss the horrors of these externalities with markets and science. I suggest the same truth applies to politics. I can provide a few hundred million examples.

      • Roger, you ask me to correct you if you’re wrong: I am not making an abstract claim about problem-solving systems in general, though what I have been discussing can also be comprehended philosophically as having to do with “problem-solving” and its alternatives. I am not sure what purpose you think provision of examples from politics would serve, but I think the idea reflects further mistaken presumptions about what I’m trying to say.
      • But CK, if the externalities are real and not just imagined, then they will have real world impacts. Those impacts will have costs that will manifest as liabilities to the firms that are producing the impacts, affecting their market value. The externalities from Dow Corning’s breast implant business gutted the rest of its operations, and you won’t find too many people bragging about their asbestos stocks.

        In contrast, the all-wise Soviet bloc looked like an industrial wasteland of toxic goo, because if economic good is just opinion subject to whims, then never admitting anything that would result in a loss is trivially easy. As I should’ve said, the problem with liberalism or communism is that it doesn’t have a self-correction mechanism that operates despite the beliefs, desires, and intentions of its participants. It can’t learn, it can only change the fantasy it imagines because the model isn’t correctly connected to the real world so that feedback can operate via the routine destruction and abandonment of beliefs.

        This is why you often see conservatives complain that liberals never seem to learn from their mistakes, or even admit them. No matter how many times something they believe in has failed to produce the intended result, they’ll keep on doing it because it’s supposed to work. No matter how much contrary evidence accumulates, there’s no mechanism to make them try something different because all they lose is other people’s money, which in a successful market economy seems to them to be in infinite supply.

      • Of course, they will have real world impacts, George. That’s the point. The concept of the externality implies a separation in time and space, or between cause and effect. For the person suffering from the effects of bad implants or the person suffering from asbestos, or the countless victims of other similar unintended consequences or by-products of business operations, it may constitute an irremediable harm, whatever wergild the system may throw to the aggrieved survivors.

        These observations are not in favor of Communism, sometimes called “state capitalism,” or its siblings. Nor am I arguing against Democratic Capitalism. American Democratic Capitalism or something like it may even turn out to be the final system, for good or ill, for 1,000 years or more, but that’s a different discussion. Russian Soviet Communism and American Democratic Capitalism exist within the same historical horizon and are susceptible to the same critique or critiques. This idea has been the subject of broad discussion across and beyond the conventional left-right spectrum, and I won’t attempt to summarize it here except by reference to the Polanyian analysis that I’ve already mentioned, since it is especially on point for these discussions.

        From the Polanyian perspective, diverse movements of the so-called right and left both have tended to express improvised social self-defense against the unaccounted-for disruptions of pre-existing natural, socio-economic, and political orders – for example, the system-level externalities of converting or reducing settled pre-capitalist societies in all of their complexity into mobile anomic armies of wage slaves; or relating to the dislocations caused by attempted re-conversion of post-WWI economies back to the gold standard, a key prop or mechanism of the 19th C transnational political-economic order. That we would not choose any of the bad reactions that people have come up with amidst “transitional” (i.e., eroding or devastated) social and economic circumstances doesn’t mean that these and other inimical forces and movements arose or continue to arise without cause or, in fact, without strong justification.

        As we are constantly reminded, it can still be difficult to discuss these matters concretely without awakening suspicions of dangerous or repugnant sympathy for whichever enemies past and present, but I am not here arguing one way or the other about liberal democracy or democratic capitalism. I am observing that Dow Corning breast implants and asbestos may be fully as representative of the essence of technologism, or the nihilistic essence of modernity, as the efficient provision of goods and services to masses of consumers. If the Dow Corning/asbestos potential is an inherent potential of the system, then there is a danger that at some point the entire system will amount to exponentiated Dow Corning/asbestos, with not enough money to pay off the victims or enough survivors to take care of them.

        That this potential is more than an abstract possibility seems, to say the least, observable from history, including contemporary history. To use Roger’s phrase, the “track record for markets” is excellent – from the perspective of a free market ideologue who has already decided the matter with prejudicial definitions of “value,” as well as of subsidiary notions of “compensation.” From every other perspective the record is mixed. Depends a lot on on whether you are flourishing in a penthouse apartment or working at Foxconn or are dying in a sacrifice zone, also whether you think the human race has reached the happy end of history or whether there are still a few more wrinkles to be ironed out. Polanyi makes a good case that the world wars of the 20th Century were conditioned by, if they were not simply, macro-level externalities (or de-externalizations) relative to market logic in its then existent material and political-ideological forms, as were the Depression and by extension any number of mass slaughters that ideologues of the market, typically, cannot recognize the role of their heart’s delight in co-precipitating. Total war, nuclear weapons, transnational terror, overpopulation, climate change, mass extinctions, deforestation, acidification of the oceans, and so on, also seem to be “external” in the same way – that is, not external to the whole system at all, but only to its part-processes and ideology.

      • So someone who recognizes the value to humanity of markets while acknowledging its problems both real and potential is an “ideologue?” If I touted the mixed value of water to fish, would I be a water ideologue?

        You keep avoiding the tough issues, CK. The question has never been what is the perfect problem solving system. It is what is the best system we can have compared to others. The issue has never been to eliminate all problems, it is to solve more than we create in a world where the solution for one can potentially be a problem for another.

        You mention the observable victim working at a factory, and use it as an example of market inadequacy, failing to recognize that to some this is unimaginably better than the non market alternative. Absent water…. I mean markets… Four billion or so of us would never have been born, and if we had been we would be living short lifespans with a standard of living, on average, below the Foxconn worker.

        As I have already stressed before, you are right that the problem solving path we took, has led to spectacular new problems. Produce enough energy, and we begin to change the climate. The same science that improves lives can be used to extinguish them more efficiently. However it is insufficient to play the role of critic. To be responsible requires that we acknowledge both the problems and the solutions across the range of billions of diverse perspectives. My “ideology” as you call it attempts to do so imperfectly.

        So what exactly are your recommendations?

      • Again, Roger, I am not arguing that “our” decision in favor of technologism was a bad decision, or even a true “decision” at all. If it wasn’t a decision we could avoid making, because on balance we would always choose productivity, including the production of an additional 4 or however many billion people against their pre-emptive extinction, then there are no recommendations to be made on this level. If I had such recommendations, to whom would I deliver them? There is no Queen of the World, and an attempt to force a change against the wills of billions does not have good prospects.

        Unless something very far-reaching occurs first, the human race will have to discover whether 7 billion apparently heading toward 10 – 20 billion disastrously exceeds the carrying capacity of Spaceship Earth or turns out to be relatively easily manageable. It may turn out in the latter instance or in any scenario other than abrupt, catastrophic downward adjustments – common in the natural world – that such management will require or be thought to require implementation of new measures that won’t fall comfortably within a market-ideological framework. It may very well turn out that the same implacably materialistic inclinations that got the mass market economy ball rolling will stop it. Could be they will stop it and break it into pieces and declare it a gross error, including the decision to take on all the extra billions so quickly.

        My original reason for commenting on this post was to compliment both the author and a particular commenter, and to suggest that the latter’s comment pointed to one way of critiquing the framework that the post presented. I’ve called your own response ideological because you express it that way: “There are no valid alternatives. None.” You also, however, express a recognition that the market logic is not, after all, complete in itself.

        As I think you end up implicitly, if somewhat inconsistently, acknowledging, what has allowed the market economies to survive themselves thusfar has been the reasonable acceptance of a more moderate course involving the integration or attempted integration of “valid alternatives” – not just practically, which has always been necessarily the case, but also intellectually and ethically, or conceptually. So, however you hedge, as Hayek himself reasonably hedged, it turns out that the enduring and sustainable framework, and only possible real existing implementation of mass market precepts, is a hybrid of the holy value-seeking algorithms plus all of the measures or needs that the moderate libertarian files under “compensation” and “institutional arrangements” and “constraint.”

        From the market ideologue’s perspective, such exceptions are a minor feature of the comprehensive system. From any other perspective they require an admission of the necessity of heterogeneous (or heteronomous) “values” (a somewhat economistic term) that pre-exist or exceed any market system on its own terms. (For Polanyi, it was the difference between viewing society as existing within or for the market vs. the market existing within or for society.) For example, the value of “flourishing of the human race” cannot be derived from the market or its supporting ideologies, and may be deformed if understood solely on the terms of the production-consumption model, as though the main or only point of human existence was to produce more consumers, or consume more product. Other “valid alternatives” existed before mass economies, the free market model, and modern materialism existed, and, unless overindulgence in the “good trick” kills us all off first, will survive them.

      • Oil economy… otherwise known as “free energy” economy, underlies a lot of assumptions about growth. I’m not certain we’ve had a sustained period of “free markets” without it.

        and, ck, great comment…

      • (correction: the catastrophic downward adjustment scenario probably wouldn’t be very positive for free market ideology either – that is, probably would be positive for very un-free political-economic measures)
      • CK,

        Indeed, you are making no recommendations. You passed on critiques of markets, some which I agreed with while latifying they apply to all decision making systems, others which I countered. You then accused me of being an ideologue based upon a statement that no other good alternatives exist today for organizing human productivity. But again you refuse to offer what this mysterious alternative is. Absent an alternative, I am not an ideologue for saying there are no good alternatives. Feel free to enlighten me, or at least change my title to “cheerleader.” Insert smiley face here.

        For the record, I agree that markets exist within society — or the broader comprehensive system. I agree that market systems are built up from heterogenous values, indeed they depend upon and flourish greatly because of heterogenous values.

        I agree that the absolute value of the flourishing of the human race cannot be derived from markets or economics. In addition, I do not believe most people seek this widespread flourishing. I think that people do seek to flourish personally, or for their circle of loved ones to flourish. Economists often call this utility. I prefer “problem solving.” Markets are pretty damn good at solving a particularly complex set of problems. Better than any alternative system. What they do is give people a system to solve their problems in ways which concurrently solves another’s problem. Division of labor and exchange creates massive cooperative networks with an element of constructive competition.

        I disagree completely with the inference that I believe the point of human existence is to produce more consumers or consume more products. The idea is absurd. I will allow people to choose their own values and goals. Markets are simply one system among many to deliver some of these goals, in a way which interferes less with others’ goals. It is a good trick.

        Any path we take can lead to disaster. Failure to take any path could lead to the same. Perhaps a hundred thousand years from now we will all be hunter gatherers again. If so, I have a long list of potential disasters for them to worry about, too.

      • Roger: As I re-read your initial comment on this sub-thread, I still feel justified in calling it ideological.

        I’ll spare you the line by line analysis, especially since in your further comments it turns out that even for you the notion that the market “organizes human affairs… into productive capacities” is a fiction or oversimplification. One alternative to the system as you initially describe it (while cheerleading) would therefore be the actual system as it is, in which (as you acknowledge) markets are guided and constrained, and their determinative values are situated within and derive from a larger system or system of systems for “organizing human affairs,” including into productive capacities, but overall in relation to higher or larger, pre-existing, purposes or needs.

        This understanding, which you say you share, recognizes that a market system that developed without sufficient acknowledgment of its extremely destructive potential and its often extremely destructive history would be dangerous, and a poor alternative to the more mixed system, since however fabulously productive the totalized market system might be in some respects, it would eventually make its own catastrophic self-destruction its final “product.” Your initial comment evoked such a deficiency or one-sidedness, verging on denialism. FOr my own part, I don’t claim to know with certainty whether or not the real existing mixed system is already heading to catastrophe. As I’ve struggled to explain in my other comments, the dangers seem clear, but I don’t claim to know how the story, or history’s future judgments, will turn out.

        Finally, as for your concern with recommendations, anything I say that can be taken as advocacy will, I hope, be understood in specific contest: I mean the context of a blog comment thread. The post invites us to think about “what’s what.” My initial recommendations had to do with “thinking about ‘what’s what,’” and further discussion developed from there. My further implicit recommendation is, I guess, that people reading this thread should try thinking about what’s what less ideologically and prescriptively, and let further discussion develop from there, and not worry about making other kinds of recommendations. In the rather unlikely event that the whole world ends up reading this blog thread, then the whole world can tease out the global political-economic implications.

      • The point which I have tried to stress ( obviously inadequately) is that markets are problem solving systems, and that all problem solving systems are imperfect.  They discover and create problems even as they solve others, often directly as a result of solving others. In addition, all problem solving systems are at risk of running into dead ends and catastrophe. It is always possible that the problems they create are themselves unsolvable within the system.

        Although no problem solving system is perfect or omniscient, some are much better than others at solving problems, at least within a definable domain. Science, for example, is a problem solving system in the  domain of explaining natural phenomena. Markets are a problem solving system in the domain of organizing people and resources in the efficient production and distribution of goods and services. 

        There are less effective problem solving systems in both these domains. Your critique of markets basically amounts to accusing them of that which I emphasize applies to all problem solving systems.  You adamantly refuse to offer up any alternative problem solving system which improves anything. On the bright side, since you suggest nothing, at a minimum you don’t risk being wrong

      • Roger,
        How do we address failure states? More importantly, how do we recognize when we’re heading towards a failure state, and do something about it before we collapse the entire world’s economy? (again)

        I see considerable sectors of our economy in failure states (finance, still), emerging from failure states(real estate), or converging on failure states (higher education).

      • I guess it depends upon what is causing the failure. In education, I would suggest that the failure is not within markets, as it is not currently operating anything close to a market. I would actually suggest we experiment more with using the problem solving mechanism of markets to improve the situation. Finance is trickier because it may be that the inherent booms and busts of markets are untenable to society in general. This leads to Shaz’s mixed system, but the danger here is that those that misunderstand markets will make them worse while trying to fix them.

        My guess is that different societies will try different mixed and pure systems and some will fail dramatically, some will fail a little and maybe some will do well.

        So to answer your question. I will give the standard reply. The way to solve problems is via variation and selection. The way to spread solutions is to preserve, share and replicate what works. The way to improve them further is to take what works best and further experiment with that.

        The really short answer then is ..experimentation.

      • Oh, in terms of the entire world economy collapsing (something not exactly amenable to experimentation), what did you have in mind?

        The question then becomes which systems are less likely to fail catastrophically? Which systems are decentralized? Which ones have self correcting feedback mechanisms that learn from and correct from failure?

      • Thanks for the reference, George. Much of what you shared on the Colonel’s thought mirrors my own, and resembles the writings of Popper, Campbell and to a lesser extent, Hayek.

        I will add that I believe we can learn to learn better and more efficiently by minimizing the destruction that occurs with selection. Corporations may live or die, thrive or flounder, but they don’t do so via the deaths of employees and the annihilation of most resources. People just move on to different jobs and the plant and machinery are sold off to other, more effective uses. Science and markets and Aristotelian logic work by creatively destroying lesser ideas. Competition can be constructive when structured properly.

    • North,

      It seems you are assuming economists or libertarians or Hayekians are champions of the tragedy of the commons.

      On a broader level, I agree with you though. Any problem solving system risks long term ramifications which are catastrophic. Short term solutions can lead to long term problems in several different ways. This is true of science and politics and institutional evolution as well, of course. And Biologists have countless examples.

      • I merely was observing, Roger, that the tragedy of the commons is not addressed in Jason’s very fine narrative. In the case of commons markets can (potentially catastrophically) fail. In my own experience the libertarian response is to eliminate the commons by attempting to apportion ownership of it if possible. Of course in many cases commons exist because ownership can neither be easily apportioned or, if apportioned, ownership rights over the commons cannot be effectively enforced.

        I don’t think Hayek or libertarians champion it at all. I am not educated enough about Hayek to know his opinion on it but most libertarians view the tragedy of the commons much the way modern liberals view the limitations of government; something they can’t precisely address and would prefer to not think about.

      • In my own experience the libertarian response is to eliminate the commons by attempting to apportion ownership of it if possible. Of course in many cases commons exist because ownership can neither be easily apportioned or, if apportioned, ownership rights over the commons cannot be effectively enforced.

        The libertarian analysis of the tragedy of the commons is spot on. Where they fail is in a lack of imagination because their thinking is constrained by their ideology of individualism.

        Georgism neatly cuts through this Gordian knot at both the theoretical/philosophical level and at the practical level. The premise of self-ownership, which I take as self-evident*, entails ownership of the things you create through your labor, as well as those created things that you exchange with others. But what of that which is not the creation of any person; specifically, land and other natural resources? The libertarian answer, following from Locke, has been to assign property rights on the basis of first appropriation. Basically, just the grade-school concept of first-come, first-served, which entails the other grade-school concept of finders-keepers, losers-weepers. In a world of practically infinite resources, which was the prevailing, and not entirely unreasonable, view when these philosophers put pen to paper, that was all well and fine. However, we now know better. The earth is a sphere of finite dimensions and finite resources. Fully a third of the available land surface is under cultivation, fisheries are crashing, fossil fuel resources are dwindling and becoming ever more expensive to exploit, fresh water supplies are strained to breaking, and the gigatons of carbon we’ve pumped into the atmosphere are changing the climate faster than even the doomsayers predicted.

        These problems are all instances of tragedies of commons. Where no one can rightfully claim ownership the garden is untended and when no one is tending the garden it goes to weeds. So who should be entitled to claim ownership? Individuals, or their proxies, corporations? To the extent that we have assigned property rights to the commons hasn’t that assignation led us to the state we find ourselves? Aren’t the natural resources of our planet actually the common inheritance of us all? Then how about government acting as our agent? Even a liberal such as myself has witnessed the fickleness of politics, as well as the very real issues raised by public choice theorists.

        What’s needed is a third kind of entity. An entity that like individuals and corporations, can legally own property, buy and sell, sue and be sued. Also an entity that like a government operating in an ideal fashion**, would administer the property for the well-being of all interested parties.

        Such a form of legal entity actually exists. It’s called a “trust,” similar to those arrangements that wealthy people set up to provide for their minor children. Rather like a board of directors, a trust is administered by a trustee who is legally obliged to carry out her duties in accord with the trust charter. And rather like stockholders or citizens, the trust has beneficiaries which are also outlined in the charter. The trustees are held to account by the ability of the beneficiaries to sue for non-performance according to the charter. Furthermore, the beneficiaries can be any definable class, up to and including the entire population of the planet, generations unborn, and perhaps even non-sentient species.

        The specific case of the tuna fisheries is perhaps a harder implementation of this principle, entailing something like a U.N. level charter or extensive treaty negotiations, but in theory it’s doable. In short, the trust would be entitled with the property rights over the world’s tuna population with the mandate to sustainably manage the stocks for the greatest benefit of the beneficiary class, i.e., everyone including generations not yet born. For example, the trust could set world-wide catch quotas and then auction off permits to the highest bidders. The proceeds would be used to support the scientific research and management activities with any surplus going to a per capita world citizen dividend fund.

        This isn’t an interference in a market but rather a perfection of a market. I like markets; let’s see if we can make them work as advertised.

        * My own personal take on it is that human beings are members of a class of entities that cannot, by nature, be owned. So the concept of chattel slavery then becomes a kind of category error. It also follows that “owning yourself” is also a category error but there’s little practical room between the two concepts.

        ** Stipulated that no such beast currently exists or is likely to arise.

      • It sounds like a plausible solution to me Rod, but difficult to enforce effectively which is, of course, the tragedy. I could imagine a global tuna trust or an international atmospherics trust but unless every single country signed on (and every government was capable of enforcing signing on) the incentives to cheat when any given trust began constraining supply would be huge. I’d expect that the International Tuna Trust would need some kind of UN Navy to enforce their edicts and I can’t even begin to imagine the kind of force an International Atmospheric Trust would need to rein in abuses.

        And of course Trusts of such pervasive commons would be necessarily very large, complicated and potentially capturable. Ugh, the dystopian potential could be high. Yet despite that I can’t say that they’d be worse than the alternatives.

        I don’t, however, see a political path from the current state of affairs to there.

      • I doubt that the solution to the commons is to turn everything into the commons. If you have a world tuna trust, wouldn’t all the fishermen who catch the fish that the tuna eat sue it into oblivion for letting tuna run amok? Following the pattern, the solution to that would of course be a world fish board, and its problems would be solved by the creation of the world ocean board, followed by the Earth board. Given the vastness and complexity of the Earth and the very limited abilities of any small group of decision makers, what followed the Earth board would be people sitting in caves wondering how to spear an antelope.
      • Is this even worth responding to? Your powers of reading comprehension are… less than spectacular. The tuna fisheries are already part of the commons. High seas and all that, get it? The libertarian bemoans the fact that no one currently owns these commons, leading to the tragedy. I’m suggesting an alternative.

        Nowhere have I suggested turning everything into the commons, rather simply recognizing those things which already are in the commons and devising institutions to deal with them on that basis. Furthermore, I’m suggesting a non-governmental institutional solution. Granted that such an entity would be initially chartered by government but so are corporations. It’s the way things work.

        Finally, I acknowledged at the outset that this is kind of an extreme version of this principle since it would have to be international in nature. Being global in scope necessarily makes it the hardest species of nut to crack. But, you know, I like tuna fish sandwiches. The way things are going my grandkids aren’t likely to share that pleasure.

        Sue me for thinking outside the box, dude.

      • Oh, I’m just saying that a top-down, single-entity approach tends to behave the same way whether you call it private or public, corporate or “people’s”. It ends up “managing” a resource instead of growing it, and in the most natural case the fisherman compete is by bribing the people in charge of giving out permits and quotas, or in the more honest case (after a few bribery scandals), they don’t really compete. Nothing in the system ever ups tuna production, and since the whole organization is a tuna monopoly, they’ll up prices and decrease the catch.

        A more bizarre approach would be to figure out how a fisherman could brand a school of tuna and follow them throughout the year, leading them to the best spots to eat and feeding them tuna chow at times, while chasing off predators. That would be “tuna ranching.” Following on behind that would be giant space settlements near the orbit of Mercury that could produce almost infinite amounts of crops and seafood from the abundant sunlight, shipping rice and tuna to sushi bars throughout the solar system.

      • Tuna ranches already exist although they have their problems as well. The most basic is that the tuna are fed pellets made from other fish, less desirable to humans but still important to the food chain and dwindling as well. There are also environmental concerns that look solvable to me.

        I would suggest that you not concentrate overmuch on this particular example because it’s probably not the best application. The larger point is to reconsider this deathmatch we seem to be engaged in between proponents of for-profit capitalism on the one hand and more socialistic approaches on the other. The truth is that both approaches have their strengths and weaknesses and both sides should honestly acknowledge that fact. We need to devise new institutional solutions that leverage the strengths of both of these approaches while minimizing the weaknesses.

        These aren’t originally my ideas, much as I would like to claim that. I would encourage you–everyone really, liberal, libertarian, and conservative alike– to take the time to read Peter Barnes’ Capitalism 3.0 [pdf]. He lays out the case much better than I can do here in this comments section. FWIW, he isn’t some ivory-tower, academic liberal, rather he is a successful businessman.

  18. I wonder what the chances are we could ever get Dennett’s response to this extension of his thought.
  19. I’d have quibbles to relatively major disagreements about some of this, both in the choices involved in where you’ve drawn lines, but also in some of the excluded stages or Darwinian superstructures or whatever (something about language, let’s say Saussurian or hell Chomskyan creatures, and something about theory of mind might help too, which we could call Premackian creatures), but just going on your account, I think it’s interesting that your final superstructure, the Hayekian, is essentially a cultural product built on top of mostly innate (though culturally refined) substrates. This implies that it is possible, in fact almost certain, that culture will eventually (perhaps quickly) find a better superstructure.

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