Matt wrote:

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.

There’s certainly something right about the way Matt distinguishes styles of argument, and as he notes, it’s something like what I said more than ten years ago. But it’s no longer where I’d want to start in thinking about rationalism, pluralism, and markets. “Rationalism” in the sense in which I use it in the book isn’t primarily about how philosophers talk but about how political agencies act. Mill isn’t a rationalist in my sense because he reasons from “one very simple principle.” (He doesn’t, really, anyway.) He’s a rationalist in my sense because of his substantive political views: his optimism about the possibility of enlightened and enlightening action on the part of the central state, his pessimism about the potential value of tradition, minority cultural identities, associational life, and so on. My rationalists are rationalizers in the Weberian sense. Sometimes they’re devotees of one very simple principle, as in very direct applications of a congruence principle; but sometimes they’re not. And, conversely, some of those who engage in deductive philosophical reasoning from simple premises about rights end at what I consider to be a pluralist position: Nozick, or the advocate of the pure theory of freedom of association.

This matters when we start thinking about markets, Hayek, and Scott. To start to see what worries Scott about markets, we don’t want to start with rationalistic kinds of arguments about markets. We want to start with processes of social transformation: ways in which social orders are brought within the realms of capitalism, large-scale production, long-distance trade, unfettered exchange, the cash nexus, and individually-held property. This has been part of Scott’s field of study since long before Seeing Like A State and The Art of Not Being Governed: how the risk-pooling, communal “moral economy of the peasant” was forcibly disrupted and farming peasant villagers got brought into, e.g, plantation work for the production of cash crops for export. In other words, the issue isn’t primarily how markets are defended, but how market orders are made.

At this point some libertarians will object: markets aren’t made; they don’t arise from planned decisions; they happen. They arise. The answer has to be: well, sometimes. But sometimes not. And really-existing capitalism with its really-existing history– to which libertarians are happy to point when arguing about long-term growth in prosperity and productivity– has always had a lot of the other part mixed in. The wealth of nations was the object of study of political economy: rationalizing state actors very much wanted the productivity gains that could be had from capitalist markets, and they had little interest in the pluralistic desire of this or that community to stay out of it. Farming is a more productive use of land than hunting or pastoralism, so if you’re not farming the land, you don’t really own it, and it will be violently seized and reallocated to people who will do so. Large-scale industrial agriculture is more productive than little village plots, so if you are determined to stay on your plots, we’ll raise taxes on you, payable only in cash that you can only get if you become wage employees at the nearby plantation. That the libertarian says “but that’s not what we want” or “that’s not a real free market” or something like that is unresponsive. It is how markets have routinely been made. If it was at its most brutal outside of Europe, there was a great deal of disruption within Europe too: to make national markets was to break the power of guilds, provinces, chartered monopolistic corporations, and so on, and as Russell Arben Fox noted, this was itself part of the process of state rationalization that so worries the liberal pluralist.

Now, many critics of markets, from Marx through Polanyi, have long insisted that markets homogenize, dissolve old communal bonds, transform complicated social relationships into simple arm’s-length relationships, and replace meaningfully distinct goods with mere commodities, even when incorporation into the market sphere does not take place violently. The cash nexus and commodification can do the work by gradual erosion of everything else. To borrow the slogans of some friends, “markets in everything” and “markets without limits” tend to become truths over time. Maybe if early capitalist-states and capitalist-colonizers hadn’t insisted on grabbing land and laborers, traditional lands would still have been peaceably sold off to developers a generation later, and peasants would have become plantation workers by pull rather than by push. From the perspective of worries about pluralism and homogenization, the result is much the same whether it arises from people being forced into markets or from market forces.

The bourgeoisie, historically, has played a most revolutionary part.

The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors”, and has left remaining no other nexus between man and man than naked self-interest, than callous “cash payment”. It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.

The bourgeoisie has stripped of its halo every occupation hitherto honoured and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage labourers.

The bourgeoisie has torn away from the family its sentimental veil, and has reduced the family relation to a mere money relation.

The bourgeoisie has disclosed how it came to pass that the brutal display of vigour in the Middle Ages, which reactionaries so much admire, found its fitting complement in the most slothful indolence. It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades.

The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.

The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.

James Scott is no Marxist. (Neither, of course, am I.) He’s always been interested in documenting domination, and resistance to it, even where outsiders are prone to see spontaneous and natural courses of events. So I’m not sure that when he worries about the rationalizing and homogenizing effects of capitalism, he means anything like this worry about universal dissolution that could happen on its own. Certainly, in Seeing Like A State, he talks about high modernism and hubristic planning among actual capitalists– he notes convergences between the attitudes of [what Smith calls] men of system among Fordist capitalists and central planners in authoritarian states. When my fellow Scottian Russell Arben Fox discusses the erosion of urban communities in the modern economy, he noticeably talks about economic elites “who, consciously or not, consistently favor making their lived environments as amenable to those remunerative, globalizing processes as possible.” But I think Scott, and Russell, have this worry about spontaneous rationalization, about the erosion of social bonds and intermediate life due to the corrosive effects of commercial society, in the backs of their minds.

As a pluralist libertarian, though, I want to distinguish the two pretty sharply.

I do think that the connection between rationalizing states and the establishment of capitalist markets, the way that land and labor (especially outside of Europe) were violently forced into the system of production for sale and exchange, is often understated in libertarian historiography, as if none of that has anything to do with capitalism-as-we-mean-it. The consolidation of the modern state and the emergence of modern capitalism were much more closely-entangled phenomena than we sometimes like to admit. The making of markets and the making of states were often the same projects, undertaken by the same actors, using the same tools. Admitting that requires some real change in low libertarians often think about economic history. But it also allows us to say that homogenization and rationalization through the spontaneous melting into air really might be overstated.

As a pluralist, I get worried when powerful figures show up aiming to make local and customary arrangements more like productive markets. When you encounter a communal farming arrangement in a traditional village, do you think with Elinor Ostrom “ah, here’s how the local norms evolved to solve local problems and manage resources well?” Or do you think, with some of Hernando de Soto’s followers, “the World Bank should help me come in and give everyone alienable property title to all this land, with castradal maps and clear boundaries”? There is the contemporary difference between the pluralist and rationalist libertarian, between the pluralist and rationalist sense of property and exchange. Likewise the urge to go into settings that lack exchange and create it or mimic it: to engineer incentives to imitate market incentives in non-market settings, from universities to prisons. (If “neoliberal” names a real phenomenon in the world, I’m persuaded that that is a part of it: a managerial class that is so persuaded of the usefulness of incentives and exchanges that it will artificially jam them into settings where they have not arisen by spontaneous market processes; see Wendy Brown, Undoing The Demos.)

I think that in all of this I’m being a good Hayekian: Hayek understood the force of spontaneously-evolved and customary arrangements. The Hayekian account of the limits of knowledge faced by the planner combines productively with Scott’s analysis of the urge of the planner to break the world in order to make it more knowable; and there’s no reason that a Hayekian libertarian can’t understand that the breaking could be an attempt to generate productivity on the part of people who basically understand how capitalist productivity works. But Hayek himself was interestingly torn. He thought that, as inhabitants of the extended order of the great commercial society, we have to deliberately overcome a lot of inherited and evolved communal moral thinking. I think that he thought: once the small-scale and face-to-face society gets left behind, we’re faced with a choice between people trying to apply its norms through politics (and collapsing into nationalism and socialism) or people overcoming those instincts. The truth is, though, that we live in multiple orders at once, that call for different moral-psychological responses. We live in face-to-face societies and extended market orders at once. I think Hayek was one of the great pluralist theorists; but I also think that, in a crucial respect, in The Fatal Conceit he didn’t see his pluralism all the way through.

Nozick doesn’t really enter into this kind of thing, nor Rothbard. Some Chicago School economists, and some of their second- and third-generation descendants in policymaking positions in national governments or in the World Bank and IMF, do. Matt’s distinction among different kinds of philosophical defenses of markets strikes me as only loosely related; I’d rather focus attention on where and how markets get made, in political life.

*Note: this was all not in the book, for good reason. I know this is a long blog post, but it’s still a blog post; it’s not an appendix to the book that happened to be published online. The book is canon; this is Extended Universe. I think these are important problems and I’m going to keep thinking about them, but these thoughts are much more tentative than the arguments in the book or than some of my other blog-responses that amount to elaborating the book.