Libertarian arguments in favor of a free markets can be, in Jacob’s terminology, either rationalist or pluralist. Murray Rothbard, Ayn Rand, Robert Nozick, and Herbert Spencer are all probably best thought of as offering rationalist defenses. On their view, free markets are desirable because the institutional structures that constitute them conform to universal moral truths. Those truths cut across national and cultural boundaries, and are thought to place strict constraints on all institutions, both state and non-state. Local governments, universities, families, and churches all must respect libertarian rights. Those rights might be fairly minimal in their content, and thus in practice allow for a great deal of pluralism. But, on these rationalist views, pluralism isn’t doing any of the justificatory heavy lifting. It’s simply a byproduct – what’s left over after the rationalist system of rights eats its share.
Friedrich Hayek, on the other hand, is famously hostile to rationalism (see his essay “Individualism: True and False,” chapter one of this book). Hayek’s defense of the market is largely pluralist in nature. It is based on a constrained vision of the power of human reason, and the idea that a decentralized market order better respects and utilizes the local knowledge of individuals and communities uniquely hold. The resulting social order is a (largely) spontaneous one – the product of human action, but not of human design. But within that social order there will exist a great variety of institutions. Some of those institutions will mirror the liberal, decentralized character of the market as a whole. But others will not. Firms might be hierarchically organized, interest groups might be driven by a rationally-constructed theory of society, communes might dispense entirely with the institutions and private property and the price system. Within the extended order of society, there is room for a diverse array of local orders.
Does Hayek’s pluralist defense of libertarian, free-market position succeed? James Scott seems to think not, despite the great similarities between his worldview and Hayek’s own. In his Seeing Like a State, Scott set forth a powerful critique of the “high modernism” that, in his view, gave rise to the twentieth-century disasters of state socialist schemes from the Soviet Union to Tanzania. State socialism fails because its rationalist vision leaves no room for what Scott calls “métis,” or local knowledge.
But according to Scott, the hubris of high modernism is not unique to socialism. Market liberalism can be form of rationalistic high modernism, too. As Jacob summarizes Scott:
[T]he attempts to render all things commensurable in monetary terms, to divide all land into legally identical plots of property, and to eliminate customary privileges and restrictions in favor of open, uniform, simple rules are all important parts of market liberalism, and they, too, can override métis and the freedom to live as one has lived.
And, in Scott’s own words:
[A]s I make clear in examining scientific farming, industrial agriculture, and capitalist markets in general, large-scale capitalism is just as much an agency of homogenization, uniformity, grids, and heroic simplification as the state is, with the difference that, for capitalists, simplification must pay. A market necessarily reduces quality to quantity via the price mechanism and promotes standardization.
As a result, Scott claims, “global capitalism, not the nation-state, is perhaps today the key force behind planning, standardization, and homogenization.”
I know Jacob has a great deal of respect for both Hayek and Scott. And I’m also pretty sure I know whose side he comes down on in this particular debate. Indeed in a 2003 paper Levy notes intriguingly that he believes that “there is a great deal that can be said in response to Scott’s worries about the market.” But he doesn’t tell us what that great deal is.
So I’d like to use this symposium to press Jacob to say more. Given what he wrote in 2003, and given that he is, after all, writing for a blog called Bleeding Heart Libertarianism, I take it that he thinks a pluralist defense of free markets can be successfully made. But I’d like to hear him say a bit more about how that defense would go – at least in broad outline. Why is Hayek right, and Scott wrong? And how might the kind of free-market world that a pluralist argument can support differ from the sort of world envisioned by rationalists like Rothbard, Nozick, and Spencer?