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Continued from here.
16.2 The Invisible
Hand of Politics and the State (II)
Liberty helps create linkages (e.g. conduits of
transport open to every citizen) and related mutual dependencies in large
communities that cannot be controlled and managed by unanimous consent; hence
forms of management of publically provided benefits need to be resorted to that
are ultimately of a coercive nature (e.g. eminent domain), whose practice,
however, may be based on sufficient public trust to be widely countenanced.
To gain substantial, often even highly popular, public benefits that, however, cannot be authenticated by unanimous consent, one needs to establish – one is tempted to say: grow - resilient layers of trust among millions of people – and it is probably the most fundamental task of politics and the state to institute such trust, robust enough to instil a sense in the public that undesirable deviations from an ideal give-and-take among the various social groups average to a net benefit of worthwhile kind and size.
When there is no precise calculus to be derived from liberal assumptions for the type and size of worthwhile public benefits, while a trust-building political order can convince political agents and the community at large to embark on public policies promising such benefits, what does that mean for liberty? Well, it means that liberty is one thing and liberalism another.
To gain substantial, often even highly popular, public benefits that, however, cannot be authenticated by unanimous consent, one needs to establish – one is tempted to say: grow - resilient layers of trust among millions of people – and it is probably the most fundamental task of politics and the state to institute such trust, robust enough to instil a sense in the public that undesirable deviations from an ideal give-and-take among the various social groups average to a net benefit of worthwhile kind and size.
When there is no precise calculus to be derived from liberal assumptions for the type and size of worthwhile public benefits, while a trust-building political order can convince political agents and the community at large to embark on public policies promising such benefits, what does that mean for liberty? Well, it means that liberty is one thing and liberalism another.
Liberty is the guarantor of pluralism, an
open and fair competition among the differing views and aims held by free
individuals. Pluralism depends on all sorts of designed and evolved rituals and
other mechanisms that ensure mutual reassurance, violence-prevention
and ultimately effective trust among the participants in the political
competition of a free society.
Precisely because in a pluralistic, i.e. in a
free society, citizens are given a high degree of autonomy and thus the ability
to work out, advertise, and pursue their own ideas and plans, unanimity is
likely to be scarce in many vital ways.
A rational consensus is hard to attain on many decisive issues, so there is a need for transrational layers of public exchange and interrelationships that allow citizens to signal and practice tolerance, productive tit-for-tat, long run give-and-take.
Beyond a capacity for rational persuasion, compromise and reconciliation, in free societies political institutions and practices have evolved to produce secondary, unintended benign consequences as analogous to those of the invisible hand in the economic sphere.
A rational consensus is hard to attain on many decisive issues, so there is a need for transrational layers of public exchange and interrelationships that allow citizens to signal and practice tolerance, productive tit-for-tat, long run give-and-take.
Beyond a capacity for rational persuasion, compromise and reconciliation, in free societies political institutions and practices have evolved to produce secondary, unintended benign consequences as analogous to those of the invisible hand in the economic sphere.
17. Theory, policy,
politics
One
needs to distinguish theory, policy, and politics. Austrians tend to offer
theories rather than policies. Theory becomes policy only when the limits and
possibilities of politics are taken into account, i.e. the political conditions
of implementing the practical implications of theory. This transmission line
that converts theory into policy and policy into political reality is systematically neglected, even ignored by Austrians, entailing grave
consequences for liberalism.
Confronting theory and policy proposals with political reality yields momentous feedback into the theoretical foundations and the overall structure of policy design. Theories insulated from this kind of feedback are unlikely to make any practical impact of note; also, not being challenged by the difficulties of concrete implementation, they are prone to become scientifically deficient, sterile and academic.
Confronting theory and policy proposals with political reality yields momentous feedback into the theoretical foundations and the overall structure of policy design. Theories insulated from this kind of feedback are unlikely to make any practical impact of note; also, not being challenged by the difficulties of concrete implementation, they are prone to become scientifically deficient, sterile and academic.
17.1 Difference
between liberalism and freedom
What
is the difference between liberalism and freedom? Logically, in a perfectly
liberal world, there would be no desire or demand for social democratic (or
other rival) policies. By contrast, in a free society, there is space for policies
other than liberal policies.
In fact, in a free society there must be a plurality of competing views on policies. Why?
People are naturally unequal. No ideology can capture the views of all people, and a free society grants especially wide scope for people to develop and act on their disparate views.
In this manner, a free society becomes a laboratory in which to test competing outlooks in a controlled way, i.e. in a way in which the condition of competitive pluralism is always upheld.
In fact, in a free society there must be a plurality of competing views on policies. Why?
People are naturally unequal. No ideology can capture the views of all people, and a free society grants especially wide scope for people to develop and act on their disparate views.
In this manner, a free society becomes a laboratory in which to test competing outlooks in a controlled way, i.e. in a way in which the condition of competitive pluralism is always upheld.
There is no way by which the worthy outcomes of
political competition in a free society can be prejudged on the basis of a
certain conception of liberalism or, indeed, any other political creed.
No partisan policy is entitled to claim the position of political authority of last resort; all partisan demands must be fed into the competitive process of politics to vie for legitimate impact.
The whole point of liberty is to ensure that comprehensive political resolutions be the product of an open political competition accessible to every free citizen.
In a free society, there is no way to control the results of political competition beforehand so as to make them correspond neatly with the desires of a specific faction. This opens up a vast field of indeterminacy and unforeseeable dissent.
In fact, liberty is a machine that produces and protects these indeterminate outcomes of the political process more effectively than any other societal arrangement.
No partisan policy is entitled to claim the position of political authority of last resort; all partisan demands must be fed into the competitive process of politics to vie for legitimate impact.
The whole point of liberty is to ensure that comprehensive political resolutions be the product of an open political competition accessible to every free citizen.
In a free society, there is no way to control the results of political competition beforehand so as to make them correspond neatly with the desires of a specific faction. This opens up a vast field of indeterminacy and unforeseeable dissent.
In fact, liberty is a machine that produces and protects these indeterminate outcomes of the political process more effectively than any other societal arrangement.
17.2 Science, economy,
and free society
At
this point, we discover an interesting string of analogies that connects
science, the economy and a free society. All three represent open systems, based on
revisable conjectures and progress by trial and error.
(1) Science progresses by an unending sequel of conjectures and refutations improving our knowledge of the world in which we live.
(2) The free economy tests hypotheses as to what cost-covering goods and services consumers might like to spend their money on. The economy keeps corroborating viable hypotheses by the stamp of "profit," while registering nonviable hypotheses under the category of "loss."
(3) A free society tests hypotheses concerning ways in which we can live together in the absence of arbitrariness, in peace, and at high levels of productivity.
We test the various societal hypotheses by engaging in the political process, which would not be necessary if we were all agreed on the liberal (or some other uniform and mutual) vision and lived it in harmonious lockstep.
But not even liberals manage to achieve a degree of uniformity that would render politics redundant. The hallmark of a free society is the presence of differing and competing visions of the good society and proper conduct in a large population.
(1) Science progresses by an unending sequel of conjectures and refutations improving our knowledge of the world in which we live.
(2) The free economy tests hypotheses as to what cost-covering goods and services consumers might like to spend their money on. The economy keeps corroborating viable hypotheses by the stamp of "profit," while registering nonviable hypotheses under the category of "loss."
(3) A free society tests hypotheses concerning ways in which we can live together in the absence of arbitrariness, in peace, and at high levels of productivity.
We test the various societal hypotheses by engaging in the political process, which would not be necessary if we were all agreed on the liberal (or some other uniform and mutual) vision and lived it in harmonious lockstep.
But not even liberals manage to achieve a degree of uniformity that would render politics redundant. The hallmark of a free society is the presence of differing and competing visions of the good society and proper conduct in a large population.
18 Conclusions I and
II:
18.1 Conclusion I – Summary
A minor political force and inconsequential
policy advisor, Austrian-inspired liberalism exerts little impact on
institutional change today. Underlying liberalism’s crisis of insignificance is
a self-induced component. For liberalism’s account of freedom is
self-defeatingly incomplete, relying on a truncated theory of spontaneous order (SO1)
exclusively focussed on the self-organizing features of free markets.
Adopting SO1 as their paradigm of social order, liberals harbour a strong presumption against politics and the state. Insufficient consideration is given to the fact that social order cannot rely solely on processes of self-generating order, but also depends on action (1) seeking designed order, and (2) dealing with conflicts and social improvements that cannot be addressed by markets.
Adopting SO1 as their paradigm of social order, liberals harbour a strong presumption against politics and the state. Insufficient consideration is given to the fact that social order cannot rely solely on processes of self-generating order, but also depends on action (1) seeking designed order, and (2) dealing with conflicts and social improvements that cannot be addressed by markets.
Lacking (1) a theory of the spontaneous order of politics and the state
(SO2), (2) a typology of different kinds and levels of
spontaneous order, and (3) a theory of the delineation and interactions of
spontaneous order and man-made order[1],
liberalism misses an essential dimension of liberty – the challenges of her
indeterminacy.
By her nature, liberty gives rise to pluralistic forces, thereby diversifying the meaning of freedom, creating doctrinal and political competition even among liberals and empowering agents opposing liberal precepts. This is a normal and necessary condition of liberty, effectively ignored by liberalism.
By her nature, liberty gives rise to pluralistic forces, thereby diversifying the meaning of freedom, creating doctrinal and political competition even among liberals and empowering agents opposing liberal precepts. This is a normal and necessary condition of liberty, effectively ignored by liberalism.
With a tendency to denounce conscious design across the board,
Austrian liberalism operates consistently on too high a level of abstraction to
be able to grasp vital details impacting the conditions of freedom. In this
way, it disqualifies itself as a force to reckon with in institutional design
of a kind that impacts the real world and policymaking in general.
At the bottom of the apolitical and indeed specifically anti-democratic tendencies in Austrian-inspired liberals is the fallacious notion that markets can do the job of the political system.
At the bottom of the apolitical and indeed specifically anti-democratic tendencies in Austrian-inspired liberals is the fallacious notion that markets can do the job of the political system.
However, when it comes to his own policy
proposals, Hayek drops his reservations regarding conscious design and intervention in a spontaneous order. He is quite willing to replace grown order as
represented by central banking, the parliamentary system or the legal order
with designs of his own devising.
However, owing to a strong presumption against politics and the state, Hayek remains unconcerned with the real conditions of the processes by which theory is converted into workable policy. As a result, Austrian-inspired policy ambitions are doomed to fail, giving rise to
However, owing to a strong presumption against politics and the state, Hayek remains unconcerned with the real conditions of the processes by which theory is converted into workable policy. As a result, Austrian-inspired policy ambitions are doomed to fail, giving rise to
- a dubious “wait-and-see” strategy, whereby the good ideas of liberalism are expected to be winning sooner or later by virtue of their inherent rational attraction and plausibility,
- a trend toward scholasticism, and
- abstention from the trials of the real world.
Yet, Hayek leaves us with another, an
unfulfilled legacy – the legacy of the “positive complement” which he had
alluded to in his correspondence with Henry Simons and Walter Eucken[2].
In the intervening years, Hayek was perhaps too distracted by the upsurge of
socialist-leaning ideas and politics to spell out a positive theory of liberal politics
and the liberal state.
Under different circumstances, he may have let himself be inspired by the Founding Fathers of the United States of America, who bequeath to us an outstanding precedent for the spirited pursuit by classical liberals of an agenda of the “positive complement.”
Under different circumstances, he may have let himself be inspired by the Founding Fathers of the United States of America, who bequeath to us an outstanding precedent for the spirited pursuit by classical liberals of an agenda of the “positive complement.”
For the Founding Fathers, to search for the
“positive complement” was to
“decide the important question,
whether societies of men are really capable or not of establishing good government from reflection and choice, or whether
they are forever destined to depend for their political constitutions on
accidents and force. (Federalist 1, par. 1; emphasis added)”[3]
The unparalleled success of the Founding
Fathers’ political activism has not become the guiding light of modern Austrian-inspired
liberalism. Instead, many of its adepts live estranged from and often embittered
by a time characterised by more freedom than has been experienced in any period
before ours.
Thus, it has been true for a long time, and it
is true today: there is wind and turbulence at the social democratic end of the
liberal spectrum and on the crypto-anarchist end, while in between lies a vast
ocean in the doldrums: classical liberalism as it perhaps ought to be practiced
in the modern world.
What
then is needed to bring about a reinvigoration of liberalism?
[1] In this paper, we are chiefly concerned with aspects
of the relationship of SO1 and SO2 that suggest logical
precedence of SO2 over SO1. During discussions at the
11th PCPE Conference at the Cevro Institute in Prague on 18th April 2015,
William White (http://www.williamwhite.ca/), presently at the OECD, proposed an
extended category for the scientific treatment of spontaneous order, SOn+1,
as it might be called: the set of elements that represent different (circular,
hierarchical, interwoven, feedback-loop-type) interrelationships between SO1
and SO2 and other spontaneous orders.
[2] See footnote 4.
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