He shares a great quote from Walter Lippmann, communicating a very important idea:
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UPDATE: I want to head off a bad response that I'm sure many will be tempted to make. While I'm a free market economist, government obviously holds more legitimacy for me than it does for Boettke. I often hear that I'm the one that thinks I can plan things because I think government has an appropriate role in this or that. This seems like very poor reasoning to me. Let's start with government itself. If you think that government is a thinker sitting in his study planning society then you have no idea how government works. Government is about exchange, just like the market economy is - only it is exchange between political and bureaucratic actors without a price as a coordinating mechanism (which is why we don't like it for most allocation decisions - particularly allocation decisions where we value efficiency). This exchange occurs within a constitutional context that sets the "rules of the game", and the constitutional context exerts a powerful influence on the results of the political exchange process. Our constitution also allows for regular intervention by voters as well, to discipline and guide policymakers. The only real case I can think of that's analagous to a thinker sitting in his study is the nine Supreme Court justices, which is precisely why it's so important for them to be above reproach in their dedication to the law. So the constant refrain "but you're the one that's OK with government" just doesn't work. Now - whether our constitutional or institutional framework is a good one is a reasonable question. But the point is, the political order emerges as well. No thinker sat in his study and designed our political system. We have had open and flexible rule/constituion-making that has generated an extremely robust decentralized polity that seems to focus on what most of us consider to be the right stuff (public goods, externalities, social insurance, and egalitarian issues). Those two things are not unrelated. It's because we have institutions in the liberal tradition that we get results consistent with the liberal tradition. But the point here is, nobody planned the political system we have today and nobody in the political system plans what the government does. In contrast, lots of libertarian bloggers do sit in their studies and plan what they think the ideal alternative would be.
I'm not smart enought to do that, but I do think I'm smart enough to propose tweaks here and there that will hopefully work out.
Wednesday, August 8, 2012
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I think there may be a couple of conflations here - no doubt due to the simplistic metaphor being debated here.
ReplyDelete(1) Planning of a social order (i.e. the rules of the game) vs. planning of the activities within economy/society (i.e. planned production and distribution).
(2) A spontaneous order emerging from basic rules of the game which produces efficient results (i.e. a market society, language etc) because it emerges from consensual interactions, and a spontaneous order emerging from non-consensual interactions. Admittedly, this distinction is less clear, with the political order involving majority-rule (semi-consensual) and a market order riddled with inequities of starting-place, disadvantages of luck, etc, not to mention the tight coupling of markets and politics in any real-world system.
Still, the conflations in both #1 and #2 make your argument weak in my opinion. Planning a set of rules may be possible even if planning breakfast is not. And the emergence of the market order may be completely different in kind to the "emergence" in a political order, which may come from rent-seeking, power plays, and generally not from individual voluntary exchange.
Right - planning a set of rules is definitely possible. Indeed it's the bedrock of a free society: rules of the game and free agents acting in it. We plan that, but to be honest it also evolves over time in response to experience and above and beyond the (admittedly good) brainchild of a single man like Madison or whoever else you'd like to cite.
DeleteBut I'm not sure this is what goes on at Coordination Problem or Cafe Hayek or Econlog or even to a certain extent Marginal Revolution. Every day I read all sorts of deep thoughts on how specific decisions ought to be changed. On Coordination Problem we get lots of specific complaints about the level and nature of spending and monetary decisions. At Cafe Hayek we get lots of specific complaints about financial, environmental, and corporate regulations. At Econlog we get lots of very specific suggestions for how to order the educational system as well as housing finance and fiscal policy.
This isn't rules-of-the-game constitutional stuff they're proposing.
And it's not tweaking an existing order or pointing out excesses in certain programs either. I do that on here a lot. If I were king for a day I wouldn't vastly change our system because I like it in broad terms and because I know such radical changes are dangerous. But I do propose tweaks and point out flaws.
But that's not what's on their blogs. Generally what is on their blogs is a complete revamping of every facet of policy in this country, and it all is to the tune of the same broad blueprint that is primarily given to us by thinkers in their study: a libertarian social order.
And it is very rare (in the political area) - very rare indeed - to see any of them acknowledge the value of the order that has emerged slowly over time through the contributions and pulling and pulling of a variety of actors within the rules of the game of the constitution.
There is always a thinker in a study that has an entire suite of different policies that would allegedly do better - not at a rules-of-the-game level, but at a policy level.
I'm not sure I agree with your last sentence too. There is definitely individual, voluntary exchange in the political order. It doesn't have a price system, which is it's problem. This is James Buchanan's crucial insight - that individual exchange occurs in the political order as surely as it does in the market order.
DeleteLet me put it this way:
DeleteCan you name me an economics department in this country whose "thinkers in studies" (on the basis of an academic literature) advocate a more radical break - not just with the existing rules of the game (that would be plausible) - but with actual existing policy decisions - than George Mason University's economics department?
I can think of perhaps one, and it's located a ways south of GMU.
This is roughly the problem I have with libetarianism. (as a libertarian myself) Here is a concrete example: my wife recently began her PhD program at UC Irvine and I got to learn about Irvine and the Irvine company. The Irvine company has basically created a planned community. It is a development at the scale of a city. They have neat little rows of houses which are grouped in thematic villages. You don't buy the land, you just rent it for 100 year (IIRC), they also have lots and lots of rules as to what will be built where, what businesses can be run where, etc, etc... One way to look at it is to say: The Irvine Company isn't a governmental entity and therefore, they are subject to market forces, and therefore, Irvine is a product of emergent order. But that's preposterous. There was a committee that sat down, and planned out the land use to an extent that would make city planners pale with envy. On the other hand, a city council must usually respond to the wishes of their constituents and their decisions are usually made in a very organic manner due to the ebbs and flows of political forces. At the end of the day, I'm very dissatisfied with the way libertarianism distinguishes government from non-government. It seems rather arbitrarily based upon labels rather than behaviors or essential properties. I love the free market, I'm just not sure whether the Irvine Company is a free-market actor and by extension, every city and town in the US or not.
ReplyDeleteThe planning in the community sounds extensive and therefore problematic to me too.
DeleteI'm not sure government/market is a distinction I'd invoke in this case. Living there is voluntary in a very real sense. But perhaps you're right (after all, living in one municipality vs. another is quite voluntary).
But my point is we don't need to conflate planning with government. The point that Elinor Ostrom's co-laureate, Oliver Williamson, makes is that there is "planning" (one could even say central planning) within firms too. Anyone who's worked for a big corporation knows this. Hell, even if you've worked for a medium sized corporation you know this. With a few notable exceptions allocation decisions are not made with markets they are made by fiat and often hierarchically. It's planning but it's definitely not government.
Oliver Williamson points out that there are many cases where using such planning makes a lot of sense (and of course lots of cases where it doesn't).
So I think in the public sphere we have a constitutional phase/policy phase distinction that liberty and I have been focusing on - and there's good reasons (I think) for providing different things with public decision making.
But then there's also your distinction, which I think is a little separate, between "planning" and an unplanned order. In a lot of ways government is quite unplanned as you say (and as I was saying in the post), and there's lots of planning in non-governmental entities. Planning always has certain risks, but of course I'm not anti-planning. It has benefits too otherwise we wouldn't do it!
Also, how does Bartleby feel about the free-market and emergent order?
ReplyDeleteBartleby is pro-free-market, pro-emergent order, and at the moment very anti-kitty-bath but forgetting about the injustice of that one very quickly it seems.
DeleteWell, that kitty-bath probably appeared centrally planned.
DeleteTo the extent that they are computational devices to solve problems, both the market and democratic gov't are forms of crowd-sourcing. In both, money talks, but money talks more directly in the market. Plutocracy may take over a democracy, but plutocracy is the natural bent of markets.
ReplyDelete"We have had open and flexible rule/constituion-making that has generated an extremely robust decentralized polity that seems to focus on what most of us consider to be the right stuff (public goods, externalities, social insurance, and egalitarian issues). Those two things are not unrelated. It's because we have institutions in the liberal tradition that we get results consistent with the liberal tradition."
ReplyDeleteI would be careful of concluding what "most of us consider to be the right stuff". Separately, the liberal tradition includes many variations ranging from high liberalism to libertarianism (read Tomasi's Free Market Fairness for a good discussion of this). Therefore, the results that Boettke and others discuss would also be consistent with liberal tradition (though you may prefer the current variation).
It's true that nobody planned the current political system, yet many people throughout history (from all political affiliations) have attempted to shape the system towards a specific end. Suggesting that libertarians, due to views on a limited government, cannot share in this process, implies that libertarians can only object to political orders that are planned (which would be too late for anyone's good). If the political order that emerges ultimately allows an individual or group of individuals to plan the future order and actions of government, should we simply accept that fate? I sincerely hope not.
The point is that while the political order may have emerged spontaneously, this implies little about whether that structure will continue to allow spontaneous order or promote greater planning. I interpret the GMU community (speaking broadly) to be in favor of institutions that promote the continued emergence of order and prevent the co-opting of government by a group devoted to central planning. Since an emergent political order still relies on acceptance of one method over another, any outcome is the consequence of some planning. Ultimately, I think your distinction between emergence and planning is too defined, which obscures the debate in your favor. I appreciate your thoughtfulness on the matter but have to respectfully disagree.
When did I suggest that they can't share in the process?
DeleteAll I am saying is that if you take a plan for a social order that only really comes from the heads of "thinkers in their studies", like libertarianism, and you apply it to an extremely broad range of policy questions (not just constitutional questions) and suggest quite radical change the way many GMU economists have, I am going to be there to make about the same claim that Walter Lippmann is making in the quote.
If you want to continue to participate in the political process in that way, fine. I won't stop them. And I doubt they'll do more than nudge it (and in a lot of cases maybe nudge it in a good direction).
But I'm still going to make the Lippmann critique of their analysis.
And I'm still going to find it ironic that Boettke of all people is quoting this (although he is better than a lot of them at keeping focused on the rules of the game, where he is on somewhat firmer ground).
I interpreted your critique of Boettke and others on the notion that they have "the most radical blueprints for change" to suggest their having a blueprint is a contradiction of preference. The choice between spontaneous order and central planning requires a plan or "blueprint" regardless of which option one prefers. In my opinion, the goal is not to take charge of the social order but rather to divert the current process towards a political order less reliant on centralized government. I don't believe one can hope to achieve that goal without a blueprint for what that entails and why its preferable. So maybe everyone has a blueprint, in which case the Lippmann critique is always applicable. But if so, the critique seems less meaningful.
DeleteHayek supported (with Friedman) General Pinochet in the hope that he would establish a free market based society in Chile. Instead, we got thousands of people who were tortured and murdered by the dictatorship regime. Even Mises praised fascism and similar movements aiming at establishing dictatorships by writing (ironically enough, in his book Liberalism) that their intervention had saved European civilization. Instead, we got Mussolini, Hitler and WWII. It seems that libertarians are more prone to “planning” an overall political system consistent with their ideology and acting on it, regardless of the high possibility that this system can only be put into practice by an authoritarian regime with devastating consequences for individual freedoms. I’m afraid the same thing may also apply to some of their modern day followers who may very likely be tempted by the tantalizing thought that similar “experiments” can be carried out again and attempt to lend their ardent support, and even draw plans for, those who may set out to conduct them.
ReplyDelete"Hayek supported (with Friedman) General Pinochet in the hope that he would establish a free market based society in Chile. Instead, we got thousands of people who were tortured and murdered by the dictatorship regime."
ReplyDeleteThe two are not mutually exclusive.