Liberalism

Can a Defense of Liberalism Be Based on Our Ignorance?

Last week in my Constitutional Economics class we discussed Hayek’s The Constitution of Liberty (1960).  My favorite chapter in that book is Chapter 2, “The Creative Powers of a Free Civilization.”  Hayek argued that “Liberty is essential in order to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realizing many of our aims.  It is because every individual knows so little, and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it. Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen.  These accidents occur in the combination of knowledge and attitudes, skills and habits, acquired by individual men and also when qualified men are confronted with the particular circumstances which they are equipped to deal with.  Our necessary ignorance of so much means that we have to deal largely with probabilities and chances.” (p. 29)

Over at Coordination Problem today I posted on Buchanan’s note “Order Defined in the Process of Its Emergence” and linked to a recent lecture by Russ Roberts on emergent order in economics.  Both of these talk about the role of discovery in the spontaneous ordering of economic activity.

In the class discussion on Monday, I suggested that Hayek — who claims to be following the Humean project of ‘using reason to whittle down the claims of Reason’ — is building a case for liberalism based on the idea of finding the appropriate framework for social interaction that enables us to live better together by both coping with our ignorance and exploiting the unique knowledge that each of us possesses throughout the system.  “Rights speak” is not invoked by Hayek, and while constitutional contract is discussed, the pure logic of social contractarianism is not what underlies his framework (though there are those curious passages about his similarities with Rawls that might suggest otherwise).  Instead, there is an argument that begins with our ignorance, and the necessity of finding rules that treat men as they really are, and yet enable them to realize the creative powers of a free civilization.

In your opinion does the argument work?

  • Mark Pennington has some interesting arguments based around this in his book ‘Robust Political Economy’. Liberal institutions are ‘robust’ because they can operate effectively despite our limited knowledge and often irrational decisions.  Its an important point, especially given the annoying criticisms from certain people who say that free markets cant work because unlike the economic models which assume rationality, people rarely act in such ways in practice. Mark shoots this argument down.

    Mark also argues against Rawls’ veil of ignorance, because it forces us to choose a binding set of rules for society… what if we get it wrong? Isn’t it better that we can conduct experiments in living and find out the best set of societal rules through experimentation than being left with a fixed system.

    Its quite an interesting perspective on such matters, although I wouldn’t count it as an a priori justification for liberal institutions.

  • I am not sure what you mean “does the argument work” but it is well in line with my own take on reality.  From my perspective the relevant question is “is it true.” Or, is this the story that most effectively explains the world around us. Right now I don’t have a better one.

    Generally speaking I do think you want to give “Why Not Tyranny” more play than most people do and I even sense here. I mean if Tyranny were the best system wouldn’t we want to know that? It would be awful to go around creating unnecessary misery because we hadn’t bothered to consider seriously the alternative.

  • Felix,

    I very much agree with you about Mark’s book.  I am the editor of the series in which he published that book, and actively sought out that project as I have been pushing for this idea of robust political economy for a few decades now, though never as effectively presenting the argument as Mark does in that work.  My colleague David Levy has also made this argument for many years — see his paper on the Athenian lot system.  This Friday at GMU we have Nassim Taleb in discussing his forthcoming book, Anti-fragility, which picks up after The Black Swan (epilogue) where he discusses “robustness”.  Taleb’s work is quite promising from a technical perspective on this, as is some of the work by complexity theorists such as Scott Page (but also see the institutional analysis by Jenna Bednar, Robust Federalism that comes from some of the intuitions and results of the complexity and diversity work).  Obviously, Gaus is also walking along these analytical lines to a large extent as well.

  • Damien S.

    “In your opinion does the argument work?”

    Work against whom, and for what purpose?  If you’re arguing for liberalism broadly understood vs. totalitarian castes/assignments/central planning, yeah kind of.  If the fight is between types of liberalism, like classical vs. welfare-state, not so much.

    “we must recognize that the advance and even the preservation of
    civilization are dependent upon a maximum of opportunity for accidents
    to happen”

    Is it really a *maximum* that’s needed?  And hasn’t the space of ‘accidents’ been assumed to be beneficial or at least neutral?  If harmful accidents are included, maximizing accident opportunity isn’t so obvious.  (Analogy: natural selection depends on mutations, but if you increase the mutation rate without bound you’ll just kill everything off.  And evolution moved beyond the competition of just randomly mutating single cells a long time ago.)

    So often libertarians sound like it’s still the 1930s and they’re still arguing against Stalin’s USSR, when the real competition is with Japan, Sweden, or mid-century America.

  • Matt, your course in Constitutional Economics sounds great. 

    ” … there is an argument that begins with our ignorance, and the necessity of finding rules that treat men as they really are, and yet enable them to realize the creative powers of a free civilization.”

    The problem with this argument is that lawyers and judges may need to be trained to be lots more flexible and philosophical than they are now. They’re already pretty good at treating “men as they really are,” but few even have a clue about helping individuals “to realize [their] creative powers.” 

    I think you’re touching on something very important that makes us question what type of educational background should be required before one can practice law. The entire law licensing and bar exam procedure probably needs to be revamped.

  • It works as an argument for what is economically (im)possible. If you support socialism because it is a more economically efficient system, the ignorance argument is devastating. If you support socialism because wages are “alienating,” then economic arguments are entirely beside the point, and the ignorance argument will just bounce right off of you.

  • michaelstrong

    Pete, 

    I’m so glad you regard that chapter as your favorite.  I would go further, and say that Hayek’s “The Creative Powers of a Free Civilization” is a sacred text for me (in a sense that would not offend dear Richard Dawkins).  Once one combines a public choice/public ignorance argument with a Hayekian creative powers argument, then one becomes automatically, in my view, more libertarian than the median voter, at a minimum (note that Pennington is a student of Jeff Friedman’s, whose “Critical Review” is ground zero of the public ignorance complement to Buchanan and Tullock’s public choice approach).

    Regarding Damien S.:  What little imagination you have!  Hayek’s argument applies not only to the “Commanding Heights” that were overthrown with the fall of communism, but just as thoroughly to, say, education and health care.  As an education entrepreneur who has created schools were students dramatically outperform the norm, I would say that there are very large Hayekian bills on the ground to be picked up IF and ONLY IF the government allows us (entrepreneurs and our customers) to pick them up.  In the case of education, government enforces a large-scale standard that obscures this fact to some extent (see “Why We Don’t Have a Silicon Valley of Education, http://www.edspresso.com/index.php/2006/05/why-we-dont-have-a-silicon-valley-of-education-michael-strong/).  But the Hayekian argument applies against any large-scale monopolistic regulatory standard – unless one is VERY confident that the only innovations would be harmful.  Presumably innovations in nuclear weapons or child abuse would be harmful in the manner that concerns Damien S., but have we really reached the boundaries of what is possible (positively) in education?  Really?

    Likewise in the developing world, as Mancur Olsen noted, there are big bills waiting to be picked up, IF and ONLY IF the governments of developing nations would allow entrepreneurs and their customers to pick them up (see the World Bank’s “Doing Business” rankings and the low ranking and massive over-regulation of most developing nations).  See http://www.freecities.org for one approach to allowing entrepreneurs to pick up the bills.

    In general, a deep Hayekian perspective based on “Creative Powers” supports Pete’s argument way more than Damien S. can conceive of – much of this is due to the fact that he is not perceiving the relevant reality with his current conceptual lenses, which seem to be defined by left-right electoral reality.  My article “Perceptual Salience and the Creative Powers of a Free Civilization” attempts to help people such as Damien see the relevant reality:

    http://www.flowidealism.org/Downloads/Perceptual-Salience.pdf

    But whether or not it succeeds with Damien, in particular, is a different story.  That said, Hayek in the “Creative Powers” does brilliantly empower us (or at least some of us) to see big bills (on behalf of bettering the human condition) lying on sidewalks all over the place, for those with eyes to see, freedom to do so, and energy to take action.

    • Damien S.

      Bills on the ground?  As you say in your first link, the US has a rather unregulated and healthy private school system, and has had since forever.  Nor is the US unique; lots of countries have private schools, including England, Japan, and Chile.  Probably most do; I just know for sure those do.  There’s been plenty of room for experimentation.  Lots of countries have entirely private and little-regulated health care too — mostly poor ones, oddly enough, but Taiwan only went to universal health care in 1995, for example.

      Nonetheless state education and health care — not to mention state water and sewer systems, a major part of public health — seem capable of performing quite well, with one of the top testing countries being an otherwise market economy that barely even allows private schools, instead trying to educate everyone, from immigrants to elites, to the same high standard: Finland.  Hardly alone in high state involvement, if unique in degree, of course.  And it’s odd how every wealthy country but the US (until recently) has opted for some form of universal heath care, while underspending and arguably outperforming the US…

      Of course, it’s easy to have a school outperform the norm if you select for students outside the norm, starting with those whose parents are involved enough to put them in a non-standard school in the first place.

      I’m reminded of space fanatics who vow that we could totally be doing tons of profitable stuff in space, if only NASA regulations and inertia weren’t in the way, ignoring the existence of two other major space agencies (more now) and 180+ countries in the world, many with lax regulations that would happily let you shoot rockets off their coast for a small bribe.  Similarly, there’s a lot of school competition and innovation in the US, and room for more outside it; if there’s a replicable design for miracle schools, there’s plenty of room to demonstrate it.

  • A further aspect of the argument from ignorance is the importance of freedom for moral discovery. Here, for instance, is George Stigler:

    “There is not and can not be agreement on the precise character of man we seek to achieve … But we are persuaded that an economic system will not help us to move in the right direction unless it grants both opportunity and responsibility to the individual: the very uncertainty of our ultimate ethical goals dictates a wide area of individual self-determination. We are not able to supply a blueprint of the ideal life, but we are persuaded that even if it were known it would be ideal only for the person who individually and knowingly and voluntarily accepted it. It is not necessary, however, to know what is best; it is enough to know what is better” (‘Five Lectures on Economic Problems,’ 1949, p.8).

  • j_m_h

    I’m not sure the argument works. I like the general approach but I do think that without some level of consideration for rights then a society that is not really liberal could (and frequently would) be the result of the process.