Dear Lee A. Arnold,
There has never been anything like a big bang creating capitalism. Capitalist structures have been around for thousands of years and proved resilient enough to survive even in severely anti-capitalist environments - such as the Soviet Union (SU), whose survival critically hinged on the disproportionate contributions made by "capitalists" - consider the private provision of food in the SU, for instance.
On the level of society taxis [an order intended and brought about by man] is always embedded in cosmos [a self-generating order, partly influence by human action but not the result og human design] - and the question is: how do we make sure that taxis is not a destructive influence on cosmos - as when, for example, a central plan stifles spontaneous forces, creating unintended consequences (by definition on the level of cosmos) of the most detrimental kind (SU = Burkina Faso + atom bomb). How the prevalent political system in the West causes incongruence between taxis and cosmos, I shall explain below and in a second entry.
The circumstances which led to capitalism's historical break-through, in the sense that thanks to larger markets and a more comprehensive adoption of practices and institutions favourable to it (see North/Thomas "The Rise of the West") men were able - for the first time in history - to achieve sustainable growth (population growth + productivity growth = rising welfare for all) are too many faceted to be dealt with here - but they certainly represent a complicated and protracted evolutionary pattern (an intricate process of trial and error, in which those prevailed that followed superior practices, without necessarily understanding that these should turn out superior), rather than a single ignition event, let alone a premeditated conspiracy of capitalists (the latter notion being another example of primitive anthropomorphic thinking). Yes, capitalism created the proletariat - for without capitalism these workers would not have been able to survive or be born, in the first place.
As for the atrocious conditions supposedly brought about by capitalism, let me quote from a letter written about 1843 by a London lady, who refers to a man, who refused to visit Lancashire because: "...it was a horrid place - factories all over. [The man claiming] that the people, from starvation, oppression, and over-work, had almost lost the form of humanity...[On asking him in what part he had seen such misery:] He replied, that "he had never seen it, but had been told that it existed...This gentlemen was one of the very numerous body of people who spread reports without ever taking the trouble of inquiring if they be true or false. [The lady reports from her visit to the "atrocious"place]: "Now that I have seen the factory people at their work, in their cottages and in their schools, I am totally at a loss to account for the outcry that has been made against them. They are better clothed, better fed, and better conducted than many other classes of working people." (Capitalism and the Historians, Chicago 1963, p. 20 f)
Sensationalist propaganda lies from the 19th century (easier to grasp than the roundabout process of wealth-creation) continue to befuddle people today, who think their kind disposition and powerful minds can understand and direct adequately the station in society of hundred of millions.
The idea of "social justice" can be given meaning only when we are prepared to elect an absoute authority entitled to determine each persons position, income and duties in society - and pronounce their conduct "just" or "unjust" depending on their compliance with these determinations.
Only human conduct can be called just or unjust. If we apply the terms to a state of affairs, they have meaning only in so far as we hold someone responsible for bringing it about or allowing it to come about. To apply the term "just" to circumstances other than human actions or rules governing them is a category mistake.
A category mistake - which we are happy to make every day, and base our confused and counter-productive political convictions on.
If there is anything "admirable" about our present political order, it is its ability to entice people to believe in its sanctity and in the delusion that it truly represents what we want - though there is enough information around to comprehend the fiction.
Arnold, you seem to complain about social injustice (whatever you may mean by it) and lopsided distribution, while being at the same time happy with the system that creates it. Presumably because you think that what is bad about the system is the result of capitalism, while what is good about it is given to us by countervailing democracy. This attitude strikes me as the result of understanding neither capitalism nor democracy (in its present form):
"The fundamental reason why the best that a government can give a great society of free men is negative is the unalterable ignorance of any single mind, or any organization that can direct human action, of the immeasurable multitude of particular facts which must determine the order of its activities. Only fools believe that they know all, but there are many. This ignorance is the cause why government can only assist (or perhaps make possible) the formation of an abstract pattern or structure in which the several expectations of the members approximately match each other, through making these members observe certain negative rules or prohibitions which are independent of particular purposes. It can only assure the abstract character and not the positive content of the order that will arise from the individuals' use of their knowledge for their purpose by delimiting their domains against each other by abstract and negative rules.
[...]
Not only peace, justice and liberty, but also democracy is basically a negative value, a procedural rule which serves as protection against despotism and tyranny...or to put it differently, a convention which mainly serves to prevent harm. But like liberty and justice, it is now being destroyed by endeavours to give it a 'positive' content." (LLL, Volume 3, p. 130 ff, Chicago 1981)
I shall continue the quote in another entry.
Kind regards,
IGTU
Posted by: IGTU at Feb 23, 2007 10:33:27 AM
Continued:
"...under the prevailing system it is not the common opinion of a majority that decides on common issues, but a majority that owes its existence and power to the gratifying of the special interests of numerous small groups, which the representatives cannot refuse to grant if they are to remain a majority. But while agreement of the majority of a great society on general rules is possible, the so-called approval by the majority of a conglomerate of measures serving particular interests is a farce. Buying majority support by deals with special interests, though this is what contemporary democracy has come to mean, has nothing to do with the original ideal of democracy, and is certainly contrary to the more fundamental moral conception that all use of force ought to be guided and limited by the opinion of the majority. The vote-buying process which we have come to accept as a necessary part of the democracy we know, and which indeed is inevitable in a representative assembly which has the power both to pass general laws and to issue commands, is morally indefensible and produces all that which to the outsider appears as contemptible in politics. It is certainly not a necessary consequence of the ideal that the opinion of the majority should rule, but is in conflict with it.
This error is closely connected with the misconception that the majority must be free to do what it likes. A majority of the representatives of the people based on bargaining over group demands can never represent the opinion of the majority of the people. Such 'freedom of Parliament' means the oppression of the people [such much for the 'road to serfdom', IGTU]. It is wholly in conflict with the conception of a constitutional limitation of governmental power, and irreconcilable with the ideal of a society of free men. The exercise of the power of a representative democracy beyond the range where voters can comprehend the significance of its decisions can correspond to (or be controlled by) the opinion of the majority of the people only if in all its coercive measures government is confined to rules which apply equally to all members of the community.
So long as the present form of government persists, decent government cannot exist, even if the politicians are angels or profoundly convinced of the supreme value of personal freedom. We have no right to blame them for what they do, because it is we who, by maintaining the present institutions, place them in a position in which they can obtain power to do any good only if they commit themselves to secure special benefits for various groups. This has led to the attempt to justify these measures by the construction of a pseudo-ethics, called 'social justice', which fails every test which a system of moral rules must satisfy in order to secure a peace and voluntary co-operation of free men.
...what in a society of free men can alone justify coercion is a predominant opinion on the principles which ought to govern and restrain individual conduct. It is obvious that a peaceful and prosperous society can exist only if such rules are generally obeyed and, when necessary, enforced. This has nothing to do with any 'will' aiming at a particular objective.
What to most people still seems strange and even incomprehensible is that in such a society the supreme power must be a limited power, not all-comprehensive but confined to restraining both organized government and private persons and organizations by the enforcement of general rules of conduct. Yet it can be the condition of submission ["it is the condition of submission of free men" makes the sentence clearer, I think, IGTU] which creates the state that the only authorization for coercion by the supreme authority refers to the enforcement of general rules of conduct equally applicable to all. Such a supreme power ought to owe the allegiance and respect which it claims to its commitment to the general principles, to secure obedience to which is the sole task for which it may use coercion. It is to make these principles conform to general opinion that the supreme legislature is made representative of the views of the majority of the people." (LLL, Volume 3, p. 134 f.)
Posted by: IGTU at Feb 23, 2007 11:13:47 AM
IGTU, that was the very first thing I asked you: whether you believe taxis and cosmos are concomitants.
2 The problems with democracy do not negate the needs for social action.
3 It is "freedom" that centralism stifles, not "spontaneous forces," which is a scientism after physics. Misplaced concreteness.
4 You write that I think "that what is bad about the system is the result of capitalism." That is wrong. Although historically, you should not doubt that capitalism brought atrocious conditions, only they got better in most areas, and partly because they were charged to do so, by movements for social justice. These got to the floor of Parliament several times. The employment of young children was knocked down from 12 to 10 hours, then 8 hours a day! How do you deny the necessity of non-market institutions, beyond those of law for property and contracts?
5 I think I'll go with the "sensationalist propaganda lies from the 19th century" of Charles Dickens. Who achieved several different kinds of social good.
6 Pareto efficiency does NOT require any certain distribution of productivity gains, (a result nicely finessed by both Kaldor and Hicks,) so therefore, the concept of "rising welfare for all" means the poor eat out of better garbage cans. Meanwhile, at the other end of town, for the same reason, there will never be a one-to-one relationship between desert and entrepreneurial creativity.
7 If humans cannot have enough knowledge to know the whole, -- which we all agree with -- if no fool can know everything, then there will NOT be a spontaneous solution to all systemic problems, BECAUSE no one could see them coming in time. Spontaneous order does NOT cause the good of systems outside of economics, and these may impinge on the economic system. We see this in our new era of natural ecological, climatological constraints. (That is why The Rise of the West does not refer to historical economic growth as "sustainable growth.") So you will need new institutions there too.
Or else, spontaneous order is communicated to you by God: Hayek's system needs a Perfect New Hayekian Man, who is psychologically identical to the New Communist Man that would make communism work.
Posted by: Lee A. Arnold at Feb 23, 2007 9:55:55 PM
Dear Lee A. Arnold,
Apologies for calling you by (what I take to be) your last name - an error of haste.
ad 2 ( = concerning your point no. 2)
While I prefer not to use the indeterminate term "social action", I agree that for democracy not to be fraught with unacceptable problems, action needs to be taken - and I have suggested the requisite direction - while I don't see what exactly you propose.
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I do not understand "scientism after physics", while - in the relevant passage - I have meant to use "spontaneous forces" in the sense of forces allowed to operate under conditions of "freedom". Your charge of "misplaced concreteness" I do not comprehend.
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I am a little uncertain regarding the expression "non-market institutions" (not knowing which exactly are meant - but I hope to have made it clear that institutions which one might regard as non-market (the separation of powers, democracy, the rule of law etc.) are absolutely essential for capitalism to work as best as it can.
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Our picture of the rise of capitalism is much tarnished by inappropriate claims and incorrect attributions of vice and misery. The rise of capitalism meant that for the first time in history one group of people found it in their interest to use their earnings on a large scale to provide new instruments of production to be operated by those who without them could not have produced their own sustenance - the proletariat was literally created by capitalism - that is: before some of the proletariat's (self-styled) representatives could later claim as a right a share in the ownership of the resources and output that had enabled them to be around at all. It created the wealth that made it possible to address more deficiencies (including those in the social realm) more effectively than ever before. It created also the resources needed to redistribute wealth injudiciously and to organize action to weaken the benefits of the market order. It keeps feeding its enemies to this day. All the great catastrophes that came upon mankind after the rise of capitalism were the outcome of anti-libertarian government action and incompatible with a freedom-based market order (breakdown of free trade that led to the I. WW, the Great Depression, the II. WW (read Keynes brilliant and very non-Keynesian account "The Consequences of the Peace") the Bolshevik Revolution, Chinese Communism etc)
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To describe the fate of the workers and low-income strata since the rise of capitalism up to this day with the words "the poor eat out of better garbage cans" is absurd. Equally absurd is equilibrium economics of the Arrow-Debreu type - which totally misrepresents the spontaneous order of the market and in its models makes a concentration camp look like the mother of all freedom, so restricted are markets and their agents under the assumptions chosen in these models.
I don't know what you mean by "a one-to-one relationship between desert and entrepreneurial creativity". My view is this: Remuneration in the market is determined by what the services offered are worth to those who wish to receive them. That's all there is to it. If I have three heads and get people to pay me a fortune to display them in shows, then I get what I deserve, irrespective of how much luck or effort may be involved. Entrepreneurial creativity may be an asset (or a regrettable liability, if I can't make money with it), but it does not represent a "desert", a foregone entitlement. One has to find out whether a product or service turns out to attract a reward or not.
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Do not misrepresent me: I clearly defined the way in which I used "sustainable growth" above.
You don't seem to have understood that a spontaneous order like the market brings forth more information than any single mind can be expected to acquire, process and act upon of its own accord. Your position reminds me of a Russian leader who thought it incomprehensible that the astounding variety of offerings in an American super-market he was visiting had not been the result of the foresight and detailed prescription of a central planner.
For a good account of the polycentric "mystery" that connects individuals to form an intelligence and effect welcome solutions no single mind is capable of see Charles Lindblom "The Market System". Incidentally, I like to think of the higher functions of the human language (those that it does not share with animal language) - the descriptive and the argumentative function (the ability to describe things and derivatively to disagree and argue over descriptions - to be in some ways analogous to prices, at least in that they allow us to produce an overarching intelligence (as manifested e.g. in the progress of science) that no single person could ever bring about alone.
It is not likely that challenges arising in any area of exceedingly high complexity (including the environment) will be dealt with more successfully by arrangements cognitively more truncated than those describable as a spontaneous order - that is true both for the ability to penetrate the issues at hand and the material capacity (the availability of means) to handle them. Try to imagine where we would stand if we had appointed a Chief of Physics two hundred years ago to make sure physics is done right. Unfortunately, we are trying to do something like that by delegating (environmental and other) issues to an unduly large extent to authorities considered capable of making a cognitive quantum leap on the strength of being elected or appointed by an elected body.
Kind regards,
IGTU
Posted by: IGTU at Feb 24, 2007 3:14:22 PM
You write, "You don't seem to have understood that a spontaneous order like the market brings forth more information than any single mind can be expected to acquire, process and act upon of its own accord."
I understand this perfectly, if you INCLUDE other non-market institutions (like retirement security transfer, the welfare system, national parks, simple criminal laws against pollution, regulation of toxic chemicals, nuisance laws, etc.) as PART OF the "spontaneous order," --in other words, if they are, or become, necessary to mitigate the bad effects (shall we say inaccuracies, or blindnesses) of the market, --then I have no difference with you.
Posted by: Lee A. Arnold at Feb 24, 2007 5:52:45 PM
And if a spontaneous order needs institutions ASIDE FROM the provisions of property for the market, then suddenly Hayek's distinction starts to vanish. Unless you start counting all sorts of things under the provisions of property. Perhaps, as Tyler Cowen asks, Hayek doesn't make sense. But that gets back to my first question: does every cosmos have taxis? Why is that?
Posted by: Lee A. Arnold at Feb 24, 2007 5:56:00 PM
Or perhaps we should say: maybe Hayek doesn't make sense on this issue, except to warn the "forces" of freedom against state ownership.
Posted by: Lee A. Arnold at Feb 24, 2007 5:58:57 PM
Dear Lee A. Arnold,
Hayek tries to understand self-generating order, which is the very subject-matter of the social sciences, the mystery that gave rise to the social sciences hundreds of years ago (roughly starting with the late scholastics) - economics, the philosophy of law, anthropology, linguistics, ethics and so on. This search for the manner in which self-organizing systems work inspired Darwin and other natural scientist to explore evolution - a concept developed by "Darwinians before Darwin" - the fathers of the social sciences. I like to call classical liberalism a cosmologically rare, maybe even unique event - namely the self-discovery of evolution. (Note, this has nothing to do with crude versions of Social Darwinism). Unfortunately, modern social scientists, especially economists, have become mesmerized by the scientific ideal of the 19th century (classic physics, most notably mechanics). Classic physics has given us tremendous power to succeed by way of taxis - i.e. by way of man-made order. Regrettably, these successes have caused many scientists to become one-sided. In the face of great inventions and discoveries made possible by natural scientists, the social scientists became the "poor relatives" of the former, developing an inferiority complex, which to this day they try to overcome with a lot of maths, econometrics and a mechanistic bend of mind (equilibrium economics is a sad case in point). See for this Hayeks "Theory of Complex Phenomena" in "Studies..." or "New Studies..."
If you want to make sense of Hayek, be clear that he - like all genuine liberal ( = libertarian) thinkers - is interested in the interplay between taxis [man made order] and cosmos [self-generating order], and how man can utilize and not destroy the power of self-generating order.
With this in mind, I recommend that you get it from the horse's mouth. "Law, Legislation and Liberty" - is one of the chief works of Hayek - and as the title correctly suggests, Hayek is dedicating a lot of effort to understanding "non-market institutions", as you put it, or the "public sector", as Tyler Cowen put it. That's why I encourage you - in a friendly way - and Tyler Cowen - in a less friendly way - to r-t-f-m - as the lady, who helps me with my computers says: read the f....... manual (especially before you review it).
Kind regards,
IGTU
Posted by: IGTU at Feb 24, 2007 8:41:10 PM
Dear IGTU,
You mention: "...polycentric "mystery" that connects indivuals to form an intelligence..." and a book by Charles Lindbloom. I am interested the the possibility that a "mind" in a real sense is formed by the connecitons formed by human interaction. Does Hayek suggest that an actual concious intellegence is formed and present in this "mind," assuming it exists? I am interested in the implications of this possibility, I would like to know if there is an existing theoretical framework discussing the apparatuses of cognition, memory, and the dimensions of individuality for such a "market mind."
Could you reccomend me some more reading (perhaps in Hayek) that explores this possibility? Is the Lindbloom book the best source on the subject? I would appreciate any input you could offer on the subject.
A further question, if such an entity exists, does it invalidate Ayn Rand's notion that "there's no such thing as society" as an entity? From one of your quotes of Hayek, it seems that he implies that questions of ethics for humans are in fundamentally different terms than the equivilent of ethics for a "market organism," which seems to at least be a way around the argument.
Thanks,
TJ Murphy
Posted by: TJ Murphy at Mar 4, 2007 6:21:26 PM
Dear Timothy (TJ Murphy),
It is difficult for me to pinpoint the meaning of your expressions "a 'mind' in a real sense" and "actual conscious intelligence". The philosophy of mind is a vast and difficult subject-matter; I can do little more than suggest some literature pertinent to your questions: As for Hayek's output, I recommend his books "The Sensory Order", "The Counter-Revolution of Science", various articles from his two volumes "Studies in Philosophy, Economics..." (I do not recall the exact titles of these two volumes) and "New Studies in Philosophy, Economics..." (including his "Theory of Complex Phenomena" and other articles of epistemological import) and always "The Constitution of Liberty" and the deepest and most complete book on the fundamental issues of the social sciences (including their epistemological implications) "Law, Liberty and Legislation".
Lindblom I mentioned only because I find the first part of the book which is concerned with the coordinative capabilities of the market order remarkably graphic - I don't seem to remember that the book is otherwise particularly concerned with the philosophy of mind.
A readable echo (and in many ways re-representation of Hayek) can be found in "Knowledge and Decision" (also epistemologically interesting) by Thomas Sowell, whose books on economics especially "Basic economics" and "Applied Economics" and Gwartney's and Stroup's textooks on economics are about the best and most one needs to know concerning the economic underpinnings (rather than wasting time doing an economics degree in the shallow, name dropping, narrow-minded and conceited environment of "everything-must-be-Economics-for-I-am-an-Economist"-types).
As for a theoretical framework, dear Timothy, you will find the above literatur useful, but also Karl Popper - especally his theory of Worlds 1, 2, and 3 (see for this also his last book with Eccles). The best introduction to Popper is his own "Objective Knowledge", from which I personally derived the ideas of a "super-human" intelligence made possible not by any individual mind but by human language and the interaction of human minds mediated by it. I was totally fascinated by Popper's idea (my reading) that objectivity does not mean "ultimate, indubitable truth" (in which way we often like to use the word) but simply "outside our own minds", "the creation of an object of critical discourse", which only man is capable of as other thinking animals are largely locked up in their subjectivity, severly limited, practically incapable of a critical exchange with other minds.
I hate to admit that I have never read Ayn Rand, but as I have implied somewhere above (in this thread), Hayek seems to be in agreement with her in that to him just or unjust conduct is a quality reserved to human beings. One may discover certain analogies between an anonymous order (such as the market) and the human mind (or other animated entities), but for the purposes of moral discernment and responsibility, Hayek is adamant that there is " as an entity". It is a recurrent theme in Hayek to warn against anthropomorphism, personification, animism - which is a main barrier against an appreciation that order and great aggregate achievements (economic coordination and wealth, scientific progress, cultural and civilizatory advancement) may come about as a consequence "of human action but not of human design" and that the more complex an order is the more likely will it be the outcome of spontaneous processes rather than the realization of a blueprint.
Kind regards,
IGTU
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