OK, I have to apologize for my post two posts back on Don's comments about North Korea. I really botched communicating my point and only have myself to blame for that. The fact that I rarely agree with Don and Russ probably confused the point as well. But commenter Edwin was able to zero in on my point:
"Trying to smash the topic of freedom into a little box labeled "economic policy" ignores that there are preconditions for a free market economy, and there are more general preconditions for the whole condition of freedom."
Exactly. I don't agree with Don on government because I think his views on government are not conducive to a free market or a free society. And I don't buy into this notion that I am "turning up the government dial" a little more than Don is, and that that's the difference. Vernon Smith highlights that the important thing in understanding the operation of markets is understanding the rules of the game, and of course there's the issue of what rights are binding and enforced in a free market and what aren't. It's not a "more government" or "less government" thing. It's a "preconditions of freedom" government or "not preconditions of freedom government" thing.
Edwin goes on:
"Movement towards a freer market economy in a free society is possible as preconditions are met, but attempting to cure North Korea or to stave off totalitarianism with market prescriptions is not guaranteed to work (to put it mildly): North Korea is structured such that a free economy cannot work, and America is structured such that there will always be vigorous opposition to any policy that limits somebody's economic freedom (and more besides)."
Again - exactly. Edwin is starting to sound like Joe Stiglitz during the collapse of communism. Price liberalization and privatization are all essential, Stiglitz said. But they won't do a damn thing to help if you don't have the institutional environment in place for the market to work.
Thursday, December 22, 2011
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Let's stop pretending that anyone has a very good idea of how to make a "free society" go. This is an issue full of nested chicken and egg problems (yeah, that was supposed to be clever). Ex. You can say at such and such time Parliament created an act which codified certain property rights, but where did that idea start with in the first place? Possibly as some local experiment in informal property rights.
ReplyDeleteYou could also go on talking about blind men and elephants and the like too.
It seems that everyone has some sort of pet hypothesis about how to create a "free society" (which means the society they want to live in), but I wouldn't lay a bet on any of them.
Right -
ReplyDeleteI'm of the position that pet hypotheses are bad. This is the problem with social engineering. Successful market societies seem to emerge out of a complex interaction of practice, informal institutions, and formal institutions - all shaping each other. One can't just note that informal institutions are important, and thus we can dispense with the formal institutions that seem to have coevolved with the market.
That sort of projection out of sample is dangerous.
"Successful market societies seem to emerge out of a complex interaction of practice, informal institutions, and formal institutions - all shaping each other."
ReplyDeleteMaybe. But that is as clear as saying they emerge ex nihilo. Not meaning to disparage you or anything there.
That being my last non-practical thought of the day I will just say that you don't know the power of the dark side!
Daniel, would you say Boudreaux's views on government are as simplistic as somebody who says Ron Paul is just like Rush Limbaugh, except that Limbaugh wants to be rich while Ron Paul wants to be president?
ReplyDeleteI agree with Lord Vader here, too (actually, in my neck of the woods, we don't believe in titles, so it'll just be "Vader, the Magnificent" from now on, OK? We'll forget about that prequel trilogy too). My faith is disturbingly weak, you see.
ReplyDeleteThere is ample evidence that the particular nostrums advocated by Don Bordreaux and others are having consequences for democratic freedoms and markets, and these consequences are other than their explicitly avowed aims. I think that there is a strong case that a lot of their spiel additionally attempts to delegitimize democratic choice, even when democratically policy excess - even democratically validated excess - can be criticized and corrected within a democratic order.
I agree with your Parliament example and it is very close to the thought I had when writing my earlier comments. However, the use of Parliament to put into writing what everybody has already been doing in practice does not create the precondition. The precondition is not the passage of a law; it is that neither kings nor pundits force people to do aught that avoids the betterment of the human condition.
The funny thing about chicken and egg problems, though, is that there should exist a point in the series where you may say "if we have this state, we know what the next state could be, and we can make a guess about the previous state of affairs too." So in other words, an egg is a precondition for a chicken, and a chicken is a precondition for an egg. (So it would seem: I've written a comment at this blog about that particular problem; it is possible to approach that that one in different promising ways. I do not want to be too critical of Vader the Magnificent for using a turn of phrase here.)
For markets, it isn't necessary (for the moment) to determine all the preconditions in the chain, going back to a first absolutely true belief; this is where a proponent of strong foundationalism will step in to cut short a lineage of the "begats" of chickens and eggs.
At some point we are justified in saying that there is a certain range or collection of likely preconditions for chickens, eggs, and successful market-oriented societies; going further back (if it is possible) will be absolutely useful - but it is not strictly necessary for many purposes (for example, coming up with a non-insane account of the relationship or potential for emergent totalitarianism in market economies).
What is important is not to inflate the set of likely preconditions with thinks that are policy preferences of individuals or certain groups, and to keep that set of identifiable conditions that promote and stabilize a democracy as small as possible - no "blue laws" for growth, please.
I acknowledge that it's interesting to question fundamentalism in democratic beliefs. I can't fault, categorically, the thinking that if we don't believe X and do Y, we get totalitarianism. The theory of natural rights, while I believe it to be unproven at best and a useful fiction at worst, nevertheless has never been shown to be a net malignant force. In fact, there's many good reasons for a person to be generally fundamentalist on due process (for example) and free speech issues, even in those cases where we know that it can allow unwanted outcomes when our compliance is exploited by a self-interested actor.
Still, I cannot shake the feeling that the additional fundamental beliefs Don Bordreaux would like to saddle us with are far less useful for ensuring egalitarianism than most of the classical Enlightenment ideals we promote today. Perhaps the issue is related to parsimony: By propagating rules, they ignore that these rules make the system more "musclebound" and less adaptable.
Daniel, you still are not addressing what he actually said.
ReplyDeleteThis arbitrary idea of a government dial or a spectrum running from government to no capitalism....
Boudreaux REJECTED it. He didn't support it. He rejected the idea explicitly in his blog post. He never proposed any such idea. You ascribed it to him. He didn't suggest it. You did.
EDIT: "government to capitalism"
ReplyDeletere: "This arbitrary idea of a government dial or a spectrum running from government to no capitalism....
ReplyDeleteBoudreaux REJECTED it. He didn't support it. He rejected the idea explicitly in his blog post."
Prateek I tried to point you to what he actually said - please read the section where you think he said this again.
What Don said was that there were non-linearities in CONSEQUENCES. That's very different from having a non-linear conception of government itself. Think of it this way - f(x)=x^2 is non-linear in f(x), but linear in x.
There is a very clear sense in Don's post that there is this thing called "government". Krugman supports some "government", while North Korea supports a lot of "government". Krugman is somewhere between Don and North Korea on this thing called "government".
Yes he says the consequences of this spectrum progress non-linearly. He still sees this spectrum.
Perhaps to help communicate my point I should present my alternative more explicitly. I don't think we can talk about "government" as some amorphous blob. Liberal government and illiberal government are two very different beasts. I would say that Kim Jong Il supports having a lot of illiberal government, Krugman supports having a lot of liberal government, and Don supports a small quantity of liberal government.
That's a very different proposition from the one Don presents, where there is one thing called "government" and one thing called "capitalism", despite any non-linearities he agrees exist in the consequences.
Perhaps I could put it this way: one could argue that Hitler's government and FDR's government were equally interventionist on economic concerns.
ReplyDeleteThe way Don seems to think about government, they would have to be put on par (certainly if we're thinking about economics). DON IS NOT ALONE ON THIS! Lots of people have drawn Hitler-FDR parallels, including a lot of Don's buddies.
What I am saying is that this is a category error. You can't just say "well they both intervene in roughly the same things". Liberal and illiberal government are categorically different.
To smooth things over, I actually liked Don's quote of the day today quite a bit - and it managed to change my mind on a criticism I had about something Mario Rizzo said just last week. I'm flying out early tomorrow morning, but I'll try to blog on it so people don't think I have some kind of grudge against Don!
ReplyDelete"Successful market societies seem to emerge out of a complex interaction of practice, informal institutions, and formal institutions - all shaping each other."
ReplyDelete..and Daniel is entirely correct as far as the historical record goes. These rights (as they exist in the modern world) emerged not entirely organically, but not completely formally either. It may not do for a simple explanation (Marxists, for instance, would like them to be entirely a formal creation so they can decry them while Libertarians want the opposite), but its more or less the fact of the matter.
Edwin,
"I agree with your Parliament example and it is very close to the thought I had when writing my earlier comments. However, the use of Parliament to put into writing what everybody has already been doing in practice does not create the precondition."
The Parliament example is actually a case of something very different than this though. Its an example of new practice being imposed on a reasonably reluctant society. It was certainly not the case that people gradually gave up their traditional rights within the commons and parliament simply codified what had already happened de facto.
Warren, I don't think that is what we were talking about - referring to where Vader, The Magnificent, wrote this:
ReplyDelete"Ex. You can say at such and such time Parliament created an act which codified certain property rights, but where did that idea start with in the first place? Possibly as some local experiment in informal property rights."
I'll acknowledge that I think that "some local experiment in informal property rights" is probably historically incorrect - in the example given you'd have to say that no "experiment" was needed to reflect what everybody believed to be true (that you can own things privately). It's close enough, though.
I'm not seeing how the case of a Parliament codifying property rights is an example of repressive legislation pressed upon a "reasonably reluctant society."
Taken by itself (you could raise the point that property rights were bundled with other measures, however) it does not imply anybody "gives up" rights: At the time we are presumably talking about there was no professional constabulary in London until about 1753, but rather local groups of watchmen and professional "thief takers."
A little bit of thought proves, of course, that "property rights" must have been in place, in law, long before the Norman Conquest. But to get back to the theoretical example, you still don't show how codifying law happens to "impose" a condition on society when it merely reflects the majority's preference. Or do you take it as controversial that most people don't like to have their things stolen?
Edwin Herdman,
ReplyDeleteYeah, my example may have been stupid.
_A little bit of thought proves, of course, that "property rights" must have been in place, in law, long before the Norman Conquest._
After the Romans left for their European cruise there is sort of a historical blank spot, but yeah by the time of the latter centuries of the first millennium it does exist, but how these institutions get going isn't really clear to me (obviously there are various hypotheses but that is what they are).
Daniel Kuehn: Instead of Joseph Stiglitz, you could also have invoked Adam Smith to make the same point about balance between government and market in an earlier post.
ReplyDeleteEdwin,
ReplyDeleteI agree that we' seem to be talking past each other. I was making a point about how our clearly defined land holding rights evolved; not a universal point on property rights.
With that established I don't see much else to disagree with!
"Or do you take it as controversial that most people don't like to have their things stolen?"
Come on, Edwin, I was saying "in the past many communities did not have the clearly defined freeholding plots we have today" not "in the past stealing was ok because everyone didn't decide it was wrong until the French Revolution," or some such nonsense.
FYI: Lord is just an honorific; I'm not a peer or anything.
ReplyDelete