Politics (11) - Politics A Discovery Process Including Markets & Democracy and Freedom - (11) March 2013 - Literature Review of My Work on Politics and Freedom

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Continued from here.

P016 Vernon Smith on Ludwig von Mises from 03/14/2013

Vernon Smith beautifully summarises evidence supporting the fact that unconscious cognitive work is heavily involved prior to our sensation of being consciously in control of things. He is using the evidence to caution against Ludwig von Mises inordinate leaning toward rationalism. Von Mises' rationalism serves to adulate the capabilities of individual man. Putting an oddly voluntaristic slant on it, von Mises overdraws the position of man's rational faculties within the system of freedom. Give man freedom, he seems to argue, and his outstanding rational faculties will experience an explosion of performance, allowing him to figure out - intellectually, by gaining consciousness of them - the laws and practical regularities that lend free markets their remarkable power.  In fact, von Mises' exaggerated rationalism culminates in his idea of praxeology, according to which man is capable of revealing to himself by introspective contemplation of self-evident axioms and further logical deduction a complete representation of economic truths. While Hayek overemphasises spontaneous order at the expense of intelligent human design, relegating man to the status of a rule-follower as opposed to co-creator of his social and economic environment, von Mises appears to require "the natural order of things" first to be processed by the comprehending human mind before it can truly come to fruition in the service of man.

Vernon Smith seems to be a little disturbed by von Mises' rationalist overkill. While the evidence itself presented by Vernon Smith on substantial subliminal support for human action appears impeccable, the twist that he is building into his critique is nevertheless rather misdirected, in my opinion.

The fact that unconscious cognitive orientation is indispensable and ubiquitous in humans, forming the very basis on which our rational faculties are built, does not by itself already constitute a convincing argument in favour of laissez faire.

A woman who intends to travel from New York to Chicago next morning, will not be able to accomplish her goal unless any number of unconscious processes running in her brain and body empower her to make adequate plans and take the right decisions. This dependence on unconscious cognitive competences does not diminish the importance of her conscious rational cognitive work on which the purposeful conduct of human beings depends.

This is not the place to go into it more deeply, so let it suffice to note that commercial activity is an invitation to the human mind to probe, and question, rethink, and experiment, and argue, and persuade, and alter things and ... and ... By exercising his critical faculty man constantly challenges given market constellations, including the basic rules and institutional features. Markets are shot though with political, legal, (self-)regulatory and commercially strategic aspects which are subject to restructuring all the time. 

Both are wrong: Vernon Smith and Ludwig von Mises. Smith errs in that he juxtaposes spontaneous order and rational action as if they were mutually exclusive - underestimating the impact of rational man on the overall order; by contrast, von Mises gets it wrong because he overemphasises the role of rationally calculating discretionary design in the unfolding of a free society - a prejudice demonstrated when von Mises preposterously argues that man has come to benefit from comparative advantage as a result of conscious insight into the principle. 

The issue is how human purposefulness is intermeshed with the institutions of a spontaneous order. Markets are no exception to many other areas in which human experimentation takes place and ought to be allowed. The right to question, challenge and change prevalent conditions should be defended with regard to market structures no less than in the case of other fields where people's visions, values and, aims compete. 

Politics is a discovery process which engulfs markets as well.

For a case in point, see here.

Writes Vernon Smith:

Here Mises has been overtaken by recent trends in neuroscience, for he states, ‘‘Conscious or purposeful behavior is in sharp contrast to unconscious behavior, i.e. the reflexes and the involuntary responses of the body’s cells and nerves to stimuli’’ (M, p. 10).

He wants to claim that human action is consciously purposeful. But this is not a necessary condition for his system. Markets are out there doing their thing whether or not the mainspring of human action involves self-aware deliberative choice.

He vastly understates the operation of unconscious mental processes. Most of what we know we do not remember learning, nor is the learning process accessible to our conscious experience—the mind.

A normally developing child has learned a syntactically correct natural language by the age of four, without having been taught. As noted by Pinker, ‘‘Children deserve most of the credit for the language they acquire. In fact we can show that they know things they could not have been taught’’ (Pinker 1994: 40).

Even important decision problems we face are processed by the brain below conscious accessibility. This is apparent when you are struggling with a decision, or trying to solve a problem, then go to bed, and wake up having made significant progress or found the solution.

As the neuroscientist, Michael Gazzaniga, has noted with characteristically plain prose:

By the time we think we know something—(namely that) it is part of our conscious experience—the brain has already done its work. It is old news to the brain, but fresh to ‘‘us’’ (the aware mind). Systems built into the brain do their work automatically and largely outside of our conscious awareness. The brain finishes the work half a second before the information it processes reaches our consciousness. We (that is, our minds) are clueless about how all this works and gets effected. We don’t plan or articulate these

actions. We simply observe the output.

The brain begins to cover for this ‘‘done deal’’ aspect of its functioning by creating in us the illusion that the events we are experiencing are happening in real time—not before our conscious experience of deciding to do something. [Gazzaniga 1998: 63–64]

Indeed, one of the puzzles of neuroscience is why the brain fools the mind into believing it is in command of mental activity.But none of this changes the import of Mises’ argument. Markets are one of the social brain’s means of extending its capacity for information processing to other brains, and to leverage the creation of wealth beyond anything that can be comprehended by the mind. Just as most of what the brain does is inaccessible to the mind, so also is there a widespread failure of people to understand markets as self-organizing systems, coordinated by prices for cooperative achievement of gains from exchange, without anyone being in charge. The workings of the economy are as inaccessible to the awareness of its agents, business persons included, as is an agent’s awareness of his own brain functioning.

The workings of the economy are not the product, nor can they be the product of conscious reason, which must recognize its own limitations and face, in the words of Hayek,‘‘the implications of the astonishing fact, revealed by economics and biology, that order generated without design can far outstrip plans men consciously contrive’’ (Hayek 1988: 8)

The source.


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As for the below post, let me add this remark: In discussing ancient Greece, Hayek presents isonomia (some sort of rudimentary rule of law) as a precursor of democracy. Whether historically accurate or not, in his contemporary political commentary, he returns to the idea that isonomia is a basic good that democracy tends to spoil. His distrust of democracy is a staple in liberal thought. It is clearly rooted in the metaphysics of spontaneous order and the prejudice that human discretion is apt to violate natural regularities. Caught in such preconception, it does not occur to Hayek that political "markets" may be no less liable to evolutionary improvement than economic markets.

Concerning politics, Hayek's liberal presumption against human discretion trumps his predilection for the miraculous powers of spontaneous order. It is awkward that the champion of personal liberty puts more trust in human obedience to iron laws than in man's talent by judicious experimentation and design to make the world a more resourceful place for the human race.  

P017 The Life and Death of Democracy from 03/16/2013

Here I am opening up to the idea that democracy and freedom may actually be tied to one another in a mutually supporting relationship and I ask why this might be so:

Freedom and democracy form a tense relationship. Isonomia, equality before the law – that precursor and beginning of the rule of law – gives rise to a desire to further strengthen this firewall against tyrannical domination: democracy is added to it, as a means of controlling rulers and permitting a bloodless change of government.

Why is it that there seems to be a continuing affinity that ties together the rule of law, a comparatively high degree of personal and economic freedom, and democracy.

A vague suspicion: practises characteristic of the rule of law, personal and economic freedom are protected by a subset and intersecting set of rights equally requisite to maintain democracy. In order to keep democracy alive one mustn’t undermine these common rights. Though democracy may be popular because it opens up options to act in ways that can be directed against freedom, still continued effectiveness of democracy is wedded to the need to respect rights that lend a certain robustness to freedom, too.

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Continued here.