Another post in which I try to articulate in a slightly different way themes that I’ve been circling around on the blog for some time now. I think this one may be clearer than previous efforts with respect to how it all hangs together – but we’ll see.
Start with what I take to be a central insight (or, more neutrally, a central claim, but I take it to be an insight) of the liberal political-economic tradition. This is a bundle of ideas that can be summarised in something like the following way:
Political-economic actors tend, more often than not, to act in their own perceived self-interest. This very clearly isn’t an invariant feature of political-economic actors – people can be altruistic, people can be heroic, people are motivated by social norms and habits beyond narrow self-interest, etc. etc. Nevertheless, it is the case that people very often act in self-interested ways. This is true sufficiently often that, as a reasonable rule of thumb, political-economic institutions that rely for their success on an ongoing substantial departure from individual self-interest are unlikely to be successful. Specifically, if this (i.e. ongoing substantial departure from self-interest) is a core requirement for an institution’s success, one of two things is likely to happen: either the institution will fall apart, or the institution will be transformed (by the actors whose actions after all constitute and reproduce the institution) to bring its functioning more in line with the demands of its members’ perceived self-interest.
In the jargon of modern economics and political science, this point can be articulated as follows: successful institutions need to be broadly incentive-compatible.
This insight finds expression in different ways in the works of institution-design theory that form the foundations for, on the one hand, the discipline of economics, and, on the other hand, the tradition of liberal constitutionalist political theory.
In the tradition of (what eventually becomes) economics, the core expression of this insight is to be found in Adam Smith. As Smith famously expresses the point in ‘The Wealth of Nations’, the virtue of the market system is that a complex series of mutually beneficial trades can organise the production and distribution of goods in such a way that we can rely not on the beneficence, but on the self-interest, of other economic actors to supply us with the goods we need.
In the tradition of (what eventually becomes) political science, an influential expression of this insight is to be found in ‘The Federalist Papers’. Here the thinking about the centrality of self-interest is applied to political actors within governance structures. The problem the authors of the federalist papers are confronting is how to construct a governance system which wields sufficient power to successfully function, without succumbing to tyranny. The solution the authors propose is an extremely complex set of checks and balances on power, such that different power centres can provide checks on each other, forestalling the tendency towards despotism that is intrinsic in concentration of power given the assumption of self-interested rulers.
Now, one of the things motivating these two different efforts to grapple with the problem of incentive-compatible institution design is the idea of the centrality of individual liberty as a political value. It is, after all, relatively easy to construct incentive-compatible institutions if you don’t mind extremely high degrees of coercion within those institutions. If I instituted a tyrannical police state, then a high degree of compliance with the dictats of that police state is relatively trivially incentive compatible for its inhabitants, because being shot on sight if you transgress the dictats is a strong incentive. So the goal of liberal institution design isn’t incentive compatibility as such, but incentive compatibility given a commitment to individual liberty as a central political value.
Perhaps it’s worth registering two major categories of objection here. First is the objection from anarchism: if you want individual liberty, why are you designing institutions that exhibit concentration of power in the first place? Just abolish these institutions already. Here the counter-argument again derives from the ‘cynical’ liberal view of human nature as tending towards the self-interested: a lot of people are going to behave in self-interested ways no matter what, and in the absence of well-designed institutions that have themselves have coercive power, you’re therefore simply going to end up with a lot of coercion minus good institution design, because acting coercively, violently, oppressively, etc. is often in people’s self-interest. Obviously I’m being very telegraphic here, but that’s the basic response. In Derrida’s words, the goal is to find the “lesser violence in an economy of violence”.
The second category of objection is the objection concerning actually-existing liberalism, which is basically: look at the institutions these motherfuckers actually designed. The US founding fathers constructed their state on the back of genocide and slavery; capitalism is responsible for countless horrors; why are we taking any of this stuff seriously as providing insights into good institution design? And here my response is in turn basically: yes, but I’m interested here in the valuable dimensions of these traditions, not in their monstrous dimensions. I think we have to be able to appropriate what is good and reject what is bad in the historic traditions we inherit, because just look at our traditions: human history is a charnel house, and if we’re going to discard insights because they are associated with horrors we’re going to be left with nothing but ashes.
So, returning to the main thread of the post, I’m claiming that the expansive tradition I’m talking about has several core elements: the centrality of individual liberty as a political value; a ‘cynicism’ about ‘human nature’ such that humans are seen as reliably, though certainly not invariably, self-interested; and the idea that the way to square these two insights in practice is by constructing incentive-compatible institutions such that individual self-interest can serve broader social goals, including the protection and enhancement of individual liberty.
Ok. Now this tradition, understood in this way, is I think a recognisably liberal one – this isn’t all that liberalism amounts to, by any means, but these are recognisably liberal commitments. And as such these commitments have typically been taken to be strongly associated with the specific political institutions endorsed by the thinkers and political actors we’re talking about. Politically, this framework has frequently been taken to support constitutional government with extremely limited powers; economically this framework has frequently been taken to support laissez-faire capitalism with extremely limited government economic intervention. And this all makes sense – after all, the authors of the Federalist Papers instituted a constitutionally-limited federalist government; Adam Smith endorsed laissez faire capitalism.
In the decades and centuries since these works were written, however, very significant critiques have been articulated of these institutions from what we can broadly call ‘the left’. Obviously ‘the left’ is a very capacious concept, but it seems fair to say that within the political-economic discourse of the nineteenth and, especially, twentieth and twenty first centuries, a ‘classical liberal’ emphasis on highly constrained government and laissez faire capitalism was heavily contested by political movements that sought a greater role for government for broadly social justice reasons. Economically, this argument took the form of either social-democratic government interventions within a market economy (high levels of regulation of markets, high levels of taxation for the provision of public goods, the welfare state) or the abolition of markets altogether and the institution of planned economies. I think this is a familiar ideological contest: Hayek versus Keynes versus Lenin. Obviously framing things in this way leaves out a lot of important stuff – not least the fact that there are highly statist forms of right-wing, conservative and reactionary politics, and highly anti-statist forms of leftism – but I still think the specific debate I’m trying to pick out here is familiar enough.
How does this ideological contest relate to the quasi-philosophical premises with which I started? Recall, those premises are: first, the idea that political-economic actors are typically self-interested; second, the idea that liberty should be our central political value; third, the idea that incentive compatibility should motivate our institution design. I think it’s been common on the left to argue that fundamental problems with the liberal political-economic project can be located in these premises. For this reason, the left (though of course not only the left) has launched a multi-prong attack on those premises.
Specifically, the left has argued that:
- Analysing political economy in terms of self-interested individuals is a debased and facile approach to understanding society. This argument can I think in turn be broken down into the rejection of individualism, and the rejection of self-interest. In fact we are not isolated individuals, but formed by communities and community identities; communities of various kinds are also themselves political-economic actors. Moreover, there is abundant evidence that we are not purely self-interested actors, and – the argument often goes – building a better world in part involves a fundamental break with self-interest as the central posited motivating force of our social lives.
- Separately, the left has argued that adopting liberty as our central political value is bad, and other values (for example, equality) are at least as important.
Once you throw out these premises, then the liberal conclusion – that incentive compatibility should centrally motivate our institution design, in the service of liberty enhancement – typically also falls by the wayside.
My argument on this blog and in this post is that the left has been wrong to reject these underlying premises of liberal normative political economy. Not, of course, that there isn’t room for a high degree of analytic and methodological pluralism in political economy. For example, there’s no reason why we should restrict ourselves to the assumption of self-interest, for when there are fertile, abundantly empirically-supported research programmes in the non-self-interested dimensions of economic action. But I’m arguing that these underlying premises of ‘classical liberal’ political economy are in fact very valuable – and they provide an essential check on our institution design proposals.
I’ve made elements on this case on the blog before, and so I’m just going to recapitulate briefly here.
On liberty, my argument is that the left makes a normative mistake when it rejects liberty as a central political goal – we would be better off arguing over the substance and sense of liberty. Much of the debate that is often captured by “liberty versus equality” can equally well be captured by a debate between an emphasis on “capabilities liberty”, in something like Amartya Sen’s sense, and “negative liberty”, in something like Hayek’s sense. Framing the debate in this way, I think, makes it much harder for social justice arguments to open the door to apologism for despotism, on the grounds that liberty isn’t an important value anyway. That is to say, framing the argument this way is just normatively better in most contexts.
On self-interest, I’ve written before on the blog about why I think there’s nothing wrong with methodological individualism. Separately, I also think the assumption of self-interest should have a central role in normative political economy, for the reasons I outlined towards the start of the post. That is to say, if we take an overly ‘optimistic’ attitude to human nature, fiating away self-interest as a motive, we are likely to produce institution design proposals that cannot in practice withstand the pressure of self-interested action that all institutions must accommodate. This in turn means that non-incentive-compatible institutions are likely to either fail, or be transformed in ways that depart from their nominal goals, or be reproduced via terroristic incentive structures, or some combination of all three.
In short, I think there is a strong case for adopting this framework in normative political economy, sort of regardless of the substantive goals one aspires to achieve.
But is this framework compatible with leftist goals? Isn’t it telling that something in the space of this framework is more typically adopted by the right or – at best – by the social-democratic centre?
Well, maybe so, I guess. To some extent one just has to see. But for myself I don’t see any reason on its face why quite radically transformative institutions can’t be proposed and discussed within this analytic framework. In fact, I think there’s a good case for a stronger position: if radically transformative institutions can’t be proposed and discussed within this framework, then that’s a problem for the institutional proposals, not a problem with the framework. We need our alternative institutions to be broadly incentive-compatible, in the sense discussed above, if they are to have any reasonable chance of succeeding in practice at achieving emancipatory goals.
At any rate, this is the analytic framework I take myself to be broadly working within.
Liam Bright on liberalism
April 6, 2022
Liam Bright has a thoughtful blog post up, articulating (briefly) his critique of liberalism as an ideology. It’s well worth reading – I’ve been complaining for some time now that radical left critics of liberalism often severely underspecify their critiques, basically relying on the fact that most everyone on the radical left agrees that liberalism sucks, so it’s enough to label something ‘liberal’ and the critique is done. Liam’s post is much clearer than most about what he takes liberalism to be, and why he rejects it, and this is good!
Still, I am a liberal, and in this post I want to defend liberalism against Liam’s critiques. Specifically, I take my own politics to pretty closely align with the position articulated in the later works of the late, great Charles Mills, which Liam discusses and links to in his post. Mills’ work, I take it, both articulates a damning and far-reaching critique of ‘actually existing liberalism’ (most notably in ‘The Racial Contract’), and argues that we nevertheless should not reject liberalism as such, wholesale, but should rather aim to transform ‘actually existing liberalism’ in a more emancipatory direction. For Mills, the key to this argument is that there is not one unitary thing called ‘liberalism’. Rather, there are many elements of liberalism, which can be assembled together in many different ways to construct many different liberalisms. For example, liberalism’s schedule of rights, protections and freedoms (itself very historically variable), has, in actually-existing liberalism, typically been available only to very narrowly defined sets of social actors, picked out using politically-constituted boundaries of race, gender, class, etc., such that the bulk of humanity is excluded from the egalitarian space of rights that characterises the full liberal polity. For Mills, though, such exclusionary politics are not an intrinsic feature of liberalism as such (though, to be clear, neither are they intrinsically opposed to it) – rather, they are features of the specific forms of liberalism – racial liberalism, patriarchal liberalism, etc. – that have actually been instituted historically. The task of ‘radical liberalism’, Mills argues, is to transform the institutions of liberalism so that the full benefits of liberalism – historically enjoyed only by a minority of humanity – are extended to humanity as a whole.
The above is obviously a bit crude as a summary – there’s much more that could be said about Mills’ project – but it’ll do for now as a general overview of the position I’m defending. On to Liam’s critique of liberalism. Liam has three specific criticisms of liberalism as he understands it. I’m going to very quickly quote them, then discuss them out of order. It is of course worth reading Liam’s full post to get a more elaborated sense of his position.
First critique: “I do not believe that anything like the public reason / private sphere of activity can be made to work. I think the state has to in fact take a side on contentious issues, there is no neutral position or viable overlapping consensus or anything of the sort”
Second critique: “The notion of private property used to undergird the notions of self-governance and a private sphere… contains within itself the seeds of the destruction of the liberal order.”
Third critique: “I rather suspect that high-income-lifestyle liberalism will either always be reliant on shifting the ultra-exploitation elsewhere or shall have caused ecological collapse well before it has time to transition out of this.”
I’ll expand on each of these points a little as I go, but these are the basic arguments against liberalism of the post.
Now, these three criticisms aren’t all of the same kind. I take critiques two and three to be, as it were, counterfactual-empirical political-economic claims. That is to say, Liam is arguing that there are defining features of liberalism as a political system that have predictable political-economic consequences that are sufficiently appalling to warrant the rejection of liberalism as a whole. Critique one, by contrast, is more of a philosophical-political objection to the principles of liberalism itself. I’m going to discuss these issues in reverse order, taking the political-economic points first, then discussing the political-philosophical one. The short version, to foreshadow, is that I think Liam’s political-economic objections are really objections to capitalism, not liberalism, and that these aren’t the same thing.
So, on the first political-economic argument, Liam is arguing for something like the following bundle of claims: Liberalism’s schedule of individual rights, etc., is centrally undergirded by private property rights, in the context of a market economy; private-property-based market economies have an inescapable tendency towards the concentration of power and wealth in oligopolistic structures; oligopolistic power structures will in turn undermine emancipatory politics, including the apparently most desirable features of liberalism itself; therefore any desirable form of liberalism is self-undermining.
I think this is wrong, because it claims intrinsic or lockstep connections between features of liberal capitalism that can (and should!) in fact be disaggregated. Here I think it is important to emphasise that liberalism and capitalism are not identical phenomena, nor are either unitary. In particular, I want to emphasise what I take to be two dubious steps in this argument.
First, there is the claim that property rights are absolutely central to liberal rights in general – that upholding liberal rights without upholding individual property rights does not make sense as an ideological or institutional project. I think this is wrong – or at least not clearly right. It’s certainly true that many of the most prominent representatives of liberal political philosophy have connected individual rights in general to a model of self-ownership that builds property relations in at the foundations of their philosophical apparatus. But do we have to do this? I don’t see why. It doesn’t seem obvious that (for example) liberal checks and balances within governance structures, or the rights to privacy, or freedom of assembly, or freedom of religion, or freedom of speech, or freedom of the press, or equality before the law, etc., can only make sense in a political-economic institutional structure that is centred around private property. It seems to me that one can relatively easily imagine legal-political institutions that centrally enact some forms of collective ownership of property but that nevertheless protect the other major liberal rights and institutional structures. A case can of course be made against this (Hayek and Friedman, among others, make such a case!) but a case would have to be made.
So that’s my first claim: that Liam overstates the necessity of the connection between private property rights and other liberal rights and principles.
My second claim is that, even if we grant that private property rights within a market society are an ineradicable part of the liberal institutional package, Liam is wrong to argue that oligopolistic capture of state institutions is an inevitable consequence of private property rights. I take it to be historically clear that market capitalism has strong tendencies towards oligopoly, state capture, etc. But again it is important that we analytically disaggregate our institutions. Liberalism is not identical with capitalism; capitalism is not identical with market society; all three categories are internally varied; and it is therefore far from clear that the negative features of capitalist society that Liam criticises follow directly from the institution of private property. In fact, markets are extremely common historically – there were market societies long before there was capitalist society, or liberal society – and it seems to me to be a clear analytic mistake to attribute characteristics of capitalism to the consequences of markets in general. Moreover, market socialism – and market anarchism – are major forms of left politics, and the central claim of these traditions is that a non-capitalist market society can be constructed that does not exhibit the kinds of concentrations of power that Liam objects to. Obviously many leftists in turn object to this position, on grounds similar to Liam’s, but my own view is that these market socialist and anarchist traditions have a lot to recommend them. At any rate, I don’t believe they should hastily be counted out, so to speak.
So – I think that Liam’s argument that liberalism is inseparable from private property, which is in turn inseparable from oligopolistic market power and state capture, makes at least two very substantial argumentative leaps, which I am personally unpersuaded can be cashed out. Of course, Liam is being brief because it’s a blog post! I’m not suggesting that it’s a problem with the post that it doesn’t show its workings in this area! I’m just noting what I take to be an undermotivated set of inferences, given what I take to be reasonable background commitments.
Ok. Liam also objects to liberalism on the political-economic grounds that actually existing liberalism is characterised by core-periphery relations of exploitation and domination, and massive environmental degradation, and he is sceptical that liberalism can be disentangled from these political-economic catastrophes. Again, I want to stress that to my mind liberalism and capitalism are not the same thing. I think it would take me too far afield to try to discuss what are intrinsic versus non-intrinsic features of capitalism in this post – though I have written about the question of whether capitalism is capable of tackling climate change on the blog before. Again, I mainly just want to flag that these steps in the argument don’t strike me as clear-cut at all, and would at a minimum need quite a lot of heavy lifting to cash out.
Ok. So my claim so far has basically just been that Liam’s post moves very quickly in its political-economic claims, leaping from liberalism as a political project to negative features of capitalism as a world-system in a way that in my view elides the very many potential points of institutional disaggregation between these two sets of phenomena. That’s the political-economic side of things. I’m aware that this is all incredibly telegraphic, but moving on for now.
The other side of Liam’s argument is the more directly philosophical-political one. Here I’m going to quote Liam again at greater length. First here’s Liam’s summary of the relevant dimension of liberalism:
Here we see liberal political thought gradually emerge as a response to the civil wars in England and the wars of religion on the European continent. The diagnosis the intelligentsia of the day came up with was something along the lines of — these disastrous wars were caused by making control of the state a zero sum conflict over the ability to realise the most important goods and avoid the most disastrous evils. As such, we should reconceive the role of government to avoid its capture being so high stakes. Rather than a means of securing the good, it should exist to keep the peace between potentially fractious citizens and groups thereof. Part of doing so involves dividing up matters into those of private conscience versus those of public reason. Matters of private conscience are for the individual to freely decide and for others to respect in their wishes. Matters of public reason are those for which we need some way of deciding on social action that does not override what is for properly for the individual — initially and usually conceived, to be clear, as the propertied male head of a household. Privately we ought develop virtues of tolerance and mutual respect to enable the “live and let live” required for this to work. And publicly notions of private property and a sphere of action and protected rights that should be relatively free of state or other- imposition are developed. This goes well with notions of democracy (among the people who really count) as embodying the commitment to public reason delivering results that treated all perspectives equally, not a priori favouring one religious subset over another.
And here’s his critique:
I do not believe that anything like the public reason/private sphere of activity can be made to work. I think the state has to in fact take a side on contentious issues, there is no neutral position or viable overlapping consensus or anything of the sort… What made it seem plausible that this was a solution to the problem of the wars of religion was that in fact very substantive consensus did exist among the various dominant Christian sects, and where that agreement wasn’t there they didn’t really feel the need to respect the rights of outsiders (go back and reread Locke’s letters on toleration if you don’t believe me). Or, at least, substantive consensus existed among the restrained class of people that liberalism was willing to consider full persons worthy of consideration. Now we have expanded that class massively, as we surely must, and perhaps with broader social changes bringing more diversity, it is simply no longer tenable to seek to govern in light of a minimalist neutrality. What I think it leads to are just bad faith illusory politics where people must pretend procedural objections when really substantive objections are at stake….
I think this is a clear articulation of a common radical left critique of liberalism, and I think it’s fundamentally misguided as a matter of principle. In my view the liberal compromise Liam describes in the first quote is an extremely important and valuable political achievement, and rejecting it in favour of a society explicitly organised around a specific notion of the common good would be a political regression at best, and actively dangerous – potentially catastrophically so – at likely worst. I think we on the left need to be really, really careful when we start articulating these kinds of rejections of liberalism.
My own academic research is in political economy, not political philosophy, so I expect the following to be somewhat clumsily articulated, but let me try to take this step by step. Following Rawls, Liam summarises the liberal position as emerging from horrifying wars of religion, in which societies were torn apart and countless people killed by the effort of different religious factions to control the state, and thereby institute their vision of the common good using the levers of the monopoly of the legitimate use of force. The liberal compromise was the idea of (a quite limited degree of) religious tolerance, in which the institutions of state would permit (some measure of) pluralism of religious worship within the polity, in exchange for a degree of ‘privatisation’ of that worship – religious communities would forgo the goal of attempting to impose their own religious preferences on the entire population, in exchange for the entitlement to worship as they pleased within a delimited private sphere. Obviously (as Liam says) the degree of actual tolerance this settlement represented was limited – but still. The basic idea is that the state would permit some measure of pluralism within society, refraining from wholesale imposing the preferences of the specific ruling class of the moment on society as a whole, and that this was the route to a peaceful polity in which people and communities with different visions of the common good could nevertheless peacefully coexist.
This settlement in turn then serves as a model for a broader vision of the liberal polity, in which a major function of state institutions is to mediate between many different subcommunities’ and individuals’ vision of the good life in a way that permits diverse pursuit of different visions of the good life within the polity, without any one such vision coming to dominate any other. More broadly, the goal of the liberal polity, in this understanding, is to enable individuals to pursue their own vision of the good life as they please, without state power infringing on that pursuit of the good life, except when individuals’ pursuit of their own goals infringes on the rights of others to pursue their own lives as they in turn see fit.
Now, if you have this understanding of the role of the liberal state, then you need to constantly make a set of judgements about what categories of state action constitute protecting individual liberty, versus what categories of state action constitute infringing individual liberty, and for whom. There is the famous ‘paradox of tolerance’, whereby a tolerant state has to make a decision about whether to be tolerant toward intolerance. If a tolerant state is too tolerant towards intolerance, the argument goes, then intolerance will gain the upper hand within the state itself, thereby ultimately destroying the tolerance that the state sought to protect. Therefore, the argument goes, tolerant states must be intolerant of intolerance.
Thinking in this kind of space, there are at least two ways in which a state that narrates its function in these terms to itself could go badly wrong. On the one hand, the state may ‘tolerate intolerance’ in a way that destroys the liberalism and pluralism of the society it sought to protect. On the other hand, the state may choose to suppress ‘intolerance’ in ways that in fact suppress completely legitimate political, religious, cultural, etc. activity. There is, in other words, a constant task of making substantive political judgements about what kinds of activity are protected by the liberal state and what kinds of activity are suppressed by it, and this is itself a substantive political judgement: a substantive political judgement about what constitutes ‘formal’ freedoms.
I take it that this kind of thing is what Liam means when he says that “the state has to in fact take a side on contentious issues, there is no neutral position or viable overlapping consensus or anything of the sort”. Even if we understand the liberal state in terms of this project of a politically ‘neutral’ defence of individual rights, the determination of what counts as politically neutral is itself always and everywhere political.
Ok – I agree with this point! The boundary of the private sphere and the limits of pluralism within a liberal governance structure are political matters that are politically contested, and the institutions of ‘neutral’ liberal mediation are likewise politically constituted by actors with substantive interests struggling to shape the polity. This is all true! But I don’t think it follows at all from this point that the liberal political project is illusory or (intrinsically) bad faith. It means it’s political. But a pluralist sphere of freedom of individual or community action can be and is still constituted by means of this political process.
To return to the issue of religious tolerance, and stating the obvious: there is, of course, a massive difference between a polity in which substantive fights take place over the specific limits of liberal religious pluralism, versus a polity that is run as a theocracy. The fact that the construction of the limits of liberal pluralism is never itself apolitical or neutral does nothing to diminish the massive difference between these two categories of governance. And I think this kind of point is often dismissed or ignored by radical left critiques of ‘liberal formalism’. It’s true that no formalism or proceduralism is ever just formal or procedural. But this doesn’t mean that formal rights or mediating procedures are functionless or valueless – quite the reverse! It means that they are sites of contestation, like everything else, but they are specifically sites of contestation because of how important they are in, yes, protecting individual and community rights.
So this is my core objection to Liam’s post on liberalism. When Liam says that we should give up on the political project of liberalism, on the grounds that liberal institutions are nothing more than a bad faith facade, and instead orient to some kind of common good, I object both analytically and politically. Analytically, I think that the idea that liberal proceduralism is nothing but a bad faith facade is a mistake, for the reasons I’ve just outlined. Politically, I think that pluralism, at both an individual and a community level, is an active political desideratum. Our political goal should, in my view, be the traditional liberal one of enabling everyone to live their life as best they see fit – to flourish in their own terms, provided doing so brings no harm to others. Self-consciously constituting a polity around a shared common good is, in my view, in important ways in tension with that goal.
‘Willingness to pay’ yet again
April 1, 2022
Returning this blog to its original function of posting, in a very rough and ready way, very basic and beginner-level thoughts, I want to return to one of the most basic and beginner-level thoughts I have expressed on the blog, which is the idea that ‘willingness to pay’ for something does not adequately communicate preferences, because some people have very little money. ‘Effective demand’ does not equal ‘real demand’ because ‘effective demand’ is ‘real demand’ plus ability to pay. Moreover, if we assume (plausibly) a diminishing marginal utility of money, then a billionaire would (for example) plausibly be willing to pay substantially more for an item that they value substantially less than a low-income consumer, because the billionaire values the money in question relatively less still. These seem to me to be obviously true observations that should be uncontroversial. And yet, when I read in economics, I frequently run into analyses that seem to be fundamentally broken by these observations.
Example one: the idea (which I’ve recently been running into in Coase and Demsetz) that property rights allow individuals to compensate each other for harms by making ‘side payments’ that balance the harm associated with some specific economic activity. Putting aside the question of whether and to what extent property rights in fact serve this function even in an idealised scenario, it seems obvious that this kind of story falls over because some people simply can’t make side-payments – they don’t have enough money to do so! The ability to make side-payments correlates as much with wealth as it does with preferences, and this will very obviously have a ‘distorting’ effect on any political-economic settlement that operates in part via such side payments.
Example two: in welfare economics, the idea that a ‘consumer surplus’ can be captured by the difference between willingness to pay and actual price paid, and that such a ‘consumer surplus’ is a (mediated) measure of welfare in some sense. Of course, it isn’t, at least in any very tractable way at all, because the demand curve represents not just consumer preferences, but also consumer income. Consumers with low income have low ability to pay for goods regardless of their preferences! Consumers with high income have high ability to pay for goods regardless of their preferences! This means that the demand curve simply does not reliably track preferences! It tracks preferences plus wealth distribution. If you can’t get rid of the ‘wealth distribution’ bit of that combination (and it’s unclear how you possibly can), then treating categories like ‘consumer surplus’ as any kind of reliable guide to actual welfare is a step on the road to hell.
I don’t have anything complicated to say about any of this – I’m just once again noting these issues. If anybody has any recommendations for what to read in economics that addresses this kind of issue (not in the sense of “here are some Marxists who care about inequality” but in the sense of “here are some people incorporating these basic insights into the domains of economics that seem on their face to be so badly damaged by them”) I would be grateful for pointers!
[Editing this post after initial publication to add:]
Obviously there is a ‘political’ or ‘moral’ objection driving some of what I’m saying above, but at base there is also an analytic or scientific one. An economics that acts as if ‘willingness to pay’ expresses preferences without acknowledging that it also expresses wealth is very simply and straightforwardly an analytic failure. Yes, we’re in the space of normative economics any time we talk about efficiency, welfare, and so on, and in that sense it’s norms all the way down here – but if our normative analysis is to have legitimacy as analysis it needs to deal with this problem. In other words, we shouldn’t just be bothered by this problem morally or politically – we should also be bothered by it as social scientists.
[Edited again to add again:]
I am, to be clear, not assuming that these issues are not addressed in the vast literature of economics! On the contrary! Really I’m posting this as a way to try to push through the stuff that prompts this reaction and keep reading and working. But even so, my god.
I’m going to dive right in with this post, and maybe I’ll circle back around at some later time and talk about what I’m trying to do here in a broader sense. So: I want to talk in this blog post about two traditions in ‘New Institutional Economics’ that can both find inspiration in the work of Ronald Coase, but that can potentially point in different directions. I’ll call them the ‘transaction costs’ approach and the ‘rules of the game’ approach, acknowledging that these are ideal types and there’s often quite some overlap in practice between these subtraditions. I’m going to argue that, analytically speaking, the ‘rules of the game’ approach is more fundamental, but that it’s easy to reify ‘rules of the game’ in a way that is basically incompatible with methodological individualism, even its most benign and desirable forms. Hopefully this will all go some way towards laying an analytic foundation for later things I might want to talk about on the blog.
Very quickly and schematically, then: the transaction costs approach to institutional economics takes the transaction as the fundamental unit of analysis, and in particular focuses on the costs associated with different institutional structures within which transactions can take place. Transaction cost economists typically don’t use this language, but fundamentally it is a base/superstructure analytic framework. Economic transactions are the base; institutional superstructures are, over the long run, selected to minimise the costs of those economic transactions. As ever, there are earlier precursors (notably John R. Commons), but this subtradition can find its core inspiration in Coase’s ‘The nature of the firm’.
The second Coasean subtradition finds its inspiration in the closing paragraphs of Coase’s ‘The problem of social cost’, where Coase argues that a factor of production should be understood not as “a physical entity” but rather as “a right to perform certain (physical) actions”. This ‘reframing’ shifts economists’ attention from the exchange of physical objects involved in transactions, to the transformations of rights involved in transactions. From this perspective, a transaction just is a broadly socially-accepted transformation of the relevant parties’ rights and obligations. Moreover, if we push this perspective to its logical conclusion, even the existence of the transaction itself – even the existence of the participants in the transaction – is a result of socially-accepted rights and entitlements. In ‘The limits of liberty’ James Buchanan makes this point in the following very strong form: “[t]he delineation of property rights is, in effect, the instrument or means through which a ‘person’ is initially defined.” I would reject Buchanan’s emphasis on property rights specifically (and maybe I’ll get the opportunity to write about that disagreement with Buchanan another time) but I think this is recognisably a (narrow) articulation of a point that can be made more broadly using neo-pragmatist resources. That is to say: the individual is constituted by the social environment they inhabit, and (from a Brandomian perspective) that act of constitution can be understood in terms of attributions of entitlements and obligations.
What I’m arguing here is, in effect, that the concept of a transaction – and the costs associated with it – can be derived from a ‘rules of the game’ framework, because a transaction can be specified by making use of those rules. I’m further claiming (without much in the way of an argument) that the reverse is not the case – that the ‘rules of the game’ cannot be derived from a framework that begins with the transaction as its basic unit of analysis. I guess I need to think more about how to make that point persuasive – it seems to me like a category error to think you can derive norms from transactions – but I’m basically just going to fiat it for now. So I’m claiming that the ‘rules of the game’ subtradition within new institutional economics is effectively analytically prior to the ‘transaction costs’ subtradition.
However, that doesn’t mean (in my view) that the ‘rules of the game’ subtradition can just sit on its laurels, because the ‘rules of the game’ approach lacks some analytic resources that are potentially available to ‘transaction cost’ approaches. One of those resources is methodological individualism. Of course, if you oppose methodological individualism that’s a strength not a weakness. However, the problem with just talking about ‘rules of the game’ is that without an account of how the rules emerge out of social practice, you risk reifying the rules in a way that obscures internal social difference and dissensus. I hope to publish something properly academic at some point making this argument, with the i’s dotted and the t’s crossed, with reference to Elinor Ostrom. For now though I’m again just going to baldly state that ‘stopping’ at ‘the rules of the game’ risks reifying those rules in a way that has negative analytic consequences, and that you need to take a further step again to analytically break down the construction of those rules.
It won’t surprise anyone who actually reads this blog when I say that I think Brandom provides valuable resources here. Brandom’s theoretical apparatus (and this time I have unpacked the relevant arguments properly on the blog before) can give an account of where ‘the rules of the game’ come from that doesn’t reify those rules as a Durkheimian ‘social fact’, but rather specifies the mechanisms by which they are instituted from individual-level practices of attributing and acknowledging commitments.
My overall argument, here, then, is two-stage. First, you can use the Brandomian apparatus to give an account of the emergence of institutional rules of the game that is more methodologically individualist than most ‘rules of the game’ institutional economics. Second, ‘rules of the game’ institutional economics can in turn be used to ground transaction cost economics. So you have a relatively coherent and complex theoretical bundle here, the ‘output’ of which is the economic transaction as analytic unit. Because the transaction is the ‘output’ of this bundle, not the ‘input’, we’re not committed to anything (that I take to be) theoretically problematic in terms of the reification of transactions. But we can now start thinking about, say, microeconomics, confident that our ‘microfoundations’ are themselves grounded in a robust practice theory.
All of that was almost certainly too telegraphic to be comprehensible to anybody who isn’t already in my head. Moreover I’m well aware of some terminological and argumentative slippage and sloppiness that I believe can be cleared up in a more careful and extended articulation of the argument – but that will have to wait for another time. For now I just want to get these ideas down, even in this highly abbreviated form.
Burke on the French Revolution – 1
February 11, 2022
A few scattered comments on Burke’s reflections on the French Revolution, as usual cursorily written up before it all goes down the memory hole.
I’d say there are broadly three elements to the book:
- An argument over the principles animating the Glorious Revolution of 1688;
- A set of specific criticisms of the French Revolution (which was obviously in its early stages when Burke was writing);
- General political-philosophical remarks.
The bulk of the book is (2) – specific criticisms of the French Revolution. Some of these sound, to my ears, pretty silly, and some of them sound incisive. However, fundamentally and unfortunately I don’t know enough about the French Revolution to write about this dimension of the book in a useful way, so I’m not going to. Instead I’m going to mostly focus on (3) – general political-philosophical remarks – with a discussion at some point of (1) – what it all means for our understanding of the Glorious Revolution.
The context of Burke’s text is a debate within the UK in and around 1790 over what attitude to take to the unfolding French Revolution. Burke’s text is responding in part to a speech and pamphlet by Richard Price which praised the French Revolution as an expression of the same political ideals that motivated the Glorious Revolution. Burke’s core claim is: no, this is a bad revolution, unlike the good Glorious Revolution, which was good; here is why. Burke’s text in turn occasioned a large number of responses, including now-canonical works by Wollstonecraft, Paine, Godwin, and others. Maybe I’ll post on some of those another time.
Anyway, in the lecture/pamphlet to which Burke is responding, Price articulates three core political principles. In Price’s words:
First; The right to liberty of conscience in religious matters.
Secondly; The right to resist power when abused. And,
Thirdly; The right to chuse our own governors; to cashier them for misconduct; and to frame a government for ourselves.
Price argues that both the French Revolution and the Glorious Revolution are examples of the exercise of these principles. That is to say, in both cases, a monarch abused their power, and were cashiered for misconduct, and the people instead chose their own governors. Burke is scathing about this argument, and wants to draw a sharp line between the two revolutions. For Burke, the French Revolution is a true societal upheaval, with likely very negative consequences, while the Glorious Revolution is basically a minor tweak to existing traditions, adopted as the lesser evil option in a scenario in which those traditions were going to get trashed more seriously by the status quo, and is praiseworthy for this reason. For Burke, in other words, the French Revolution tears down existing institutions, while the Glorious Revolution modified those institutions the better to preserve them.
This argument in turn rests on Burke’s broader philosophical principles, articulated somewhat interstitially in the course of the text. Crudely put, Burke is a traditionalist. That is, Burke thinks there should be a strong presumption in favour of the virtues of traditional institutions, and only reluctant modification of those institutions. This argument is what makes Burke a philosophical conservative, and his Reflections on the Revolution in France a classic text within the conservative political tradition.
So what are Burke’s arguments for his traditionalism? Here I want to try to tease apart, or at least begin to tease apart, some of the different arguments Burke makes for this broad position, which I feel can often get mushed together a bit in discussions of ‘Burkean conservatism’. The main reason I’m reading Burke, I guess, is to try to get clearer on these different threads within conservatism. So, in no particular order, here are what I take to be some of the arguments that Burke makes for his traditionalism.
- God.
Both ‘sides’ of this debate appeal to God. Price sees God as the source of the fundamental rights that form the base of his critique of existing society. Burke, by contrast, sees our subordination to tradition as part of a larger chain of deference and obligation that has a religious dimension. As Burke puts it, in differentiating his own position from social contract theory:
Each contract of each particular state is but a clause in the great primaeval contract of eternal society, linking the lower with the higher natures, connecting the visible and invisible world, according to a fixed compact sanctioned by the inviolable oath which holds all physical and all moral natures, each in their appointed place.
Similarly, for Burke, the British people, respectful of tradition,
know or feel this great antient truth: ‘Quod illi principi et praepotenti deo qui omnem hunc mundum regit, nihil eorum quae quidem fiant in terris acceptius quam concilia et caetus hominum jure sociati quae civitates appellantur.’ [Cicero, de Republica, VI. xiii. (For to that supreme God who made the Universe, there is nothing on earth more acceptable than these gatherings and orderly societies of men, called States’ (Blakeney).]
It seems to me that for Burke, then, inherited social structures are underwritten by a religiously-warranted normative frame – that our temporal social order is connected to a larger moral order that we should respect. In other words, where Price grounds critique of tradition in God-given rights, Burke grounds respect for tradition in that tradition’s congruence with a religiously-understood moral order. Without this claim, it seems to me, Burke’s appeal to tradition would seem a bit undermotivated.
2. Unintended consequences
Burke emphasises the risks associated with what we might now call the unintended consequences of transforming a complex social system. In Burke’s words:
the real effects of moral causes are not always immediate; but that which in the first instance is prejudicial may be excellent in its remoter operation; and its excellence may arise even from the ill effects it produces in the beginning. The reverse also happens; and very plausible schemes, with very pleasing commencements, have often shameful and lamentable conclusions. In states there are often some obscure and almost latent causes, things which appear at first view of little moment, on which a very great part of its prosperity or adversity may most essentially depend. The science of government being therefore so practical in itself, and intended for such practical purposes, a matter which requires experience, and even more experience than any person can gain in his whole life, however sagacious and observing he may be, it is with infinite caution that any man ought to venture upon pulling down an edifice which has answered in any tolerable degree for ages the common purposes of society, or on building it up again, without having models and patterns of approved utility before his eyes.
In other words, if we assume that our current social order answers “in any tolerable degree” the “common purposes of society” we should hesitate to begin to unpick it, for the workings of our social order exceed in complexity our capacity to construct and reconstruct them, and though we may think we can make a better world by starting fresh, we know not what we do and what evils we may be unwittingly bringing about. Better to trust to the forces that have formed a “tolerable” social order than to the human capacity to remake it.
- Wisdom of tradition is greater than the wisdom of individuals
This is closely related to the previous point (2), but is, I feel, a bit stronger. The claim here is not just that our capacity to understand the consequences of our actions is so limited that we should be very cautious in taking far-reaching actions (a point about our ability to effect the changes we desire). The claim here is that the tradition is specifically wiser than individuals – and that this provides a positive reason, not just a negative reason, not to meddle with the status quo social order. Burke makes this point using the metaphor of individual versus general capital:
We are afraid to put men to live and trade each on his own private stock of reason; because we suspect that this stock in each man is small, and that the individuals would do better to avail themselves of the general bank and capital of nations, and of ages.
The collective and traditional judgement embedded in inherited social practices, Burke here argues, is likely to be better than the judgement of individuals. At the large-scale societal level, this is a reason not to attempt to upend society, but at an individual level it is also a reason not to deviate very far from the norms and practices we inherit in our own lives. As Burke puts this latter point, sensible ethical-political actors
think it more wise to continue the prejudice, with the reason involved, than to cast away the coat of prejudice, and to leave nothing but the naked reason; because prejudice, with its reason, has a motive to give action to that reason, and an affection which will give it permanence. Prejudice is of ready application in the emergency; it previously engages the mind in a steady course of wisdom and virtue, and does not leave the man hesitating in the moment of decision, sceptical, puzzled, and unresolved. Prejudice renders a man’s virtue his habit; and not a series of unconnected acts. Through just prejudice, his duty becomes a part of his nature.
The idea here, I think, is that “prejudice” – i.e. the inherited judgements of the social tradition one inhabits – provides a guide for action that has already been worked over by that tradition, and can be relied upon to guide action in a way that individual reason – which must be unreliably engaged afresh for every new judgement – cannot. Moreover, “prejudice” (I suppose we could make this point more palatable for left social scientists by calling it “habitus”) can shape the individual in a way that allows easy and immediate action instead of the Hamlet-like equivocations of individual reason. Given that our individual stock of reason is limited halting, and given that “prejudice” embodies the wisdom of many other besides oneself, better to rely on “prejudice” than on individual judgement.
There are therefore really two arguments in this category: first, that tradition is likely to have constructed a more normatively desirable large-scale social order than we can now using purely our own judgement; second, that because tradition embodies this kind of wisdom, it is defensible – indeed, it is a good idea – to rely on over individual reason it in making individual day-to-day decisions.
- Wisdom of the inherited property class is greater than the wisdom of the middle or lower orders
Burke’s arguments so far have focused on the superior wisdom of tradition over individual judgement. But in this point he differentiates between categories of individual judgement. Here his argument is simply that there is a lesser sort of person, and a greater sort of person – the greater sort are the wealthy, privileged and noble; the lesser sort are the grasping middle classes or, even worse, the lower orders. The greater sort simply have better judgement than the lesser sort, for Burke, and therefore if we’re going to have somebody making decisions (which we have to in any governance structure, because tradition can’t be relied upon for everything), it had better be those with wealth, power, and privilege.
Burke has several sub-arguments for this position. He believes that the traditional ruling class are practiced in rule, while those who are outside the traditional ruling class are not; therefore the traditional ruling class will simply rule better than revolutionary upstarts. In Burke’s words:
Who could flatter himself that these men, suddenly, and, as it were, by enchantment, snatched from the humblest rank of subordination, would not be intoxicated with their unprepared greatness?
Such lesser men were “formed to be instruments, not controls”, they therefore “have the qualities of men not habituated to sentiments of dignity.” Further:
the evil of a moral and almost physical inaptitude of the man to the function must be the greatest we can conceive to happen in the management of human affairs.
Still further:
The occupation of an hair-dresser, or of a working tallow-chandler, cannot be a matter of honour to any person – to say nothing of a number of other more servile employments. Such descriptions of men ought not to suffer oppression from the state; but the state suffers oppression, if such as they, either individually or collectively, are permitted to rule. In this you think you are combating prejudice, but you are at war with nature.
By contrast, inherited property somehow raises one to the status at which one is a well-suited person to rule:
The power of perpetuating our property in our families is one of the most valuable and interesting circumstances belonging to it, and that which tends the most to the perpetuation of society itself. It makes our weakness subservient to our virtue; it grafts benevolence even upon avarice. The possessors of family wealth, and of the distinction which attends hereditary possession (as most concerned in it) are the natural securities for this transmission. With us, the house of peers is formed upon this principle.
Those with inherited wealth are good rulers, those without are bad rulers – simple as that.
- Rights come from our tradition, they do not precede tradition – the latter is a nonsense
This is one of the key philosophical arguments of Burke’s book, and one of his central differences with the figures he is debating. As I discussed in point (1), about religion, many figures in (what we can telegraphically call) ‘the revolutionary Enlightenment tradition’ ground their politics in the idea that we are all, as human beings, in possession of fundamental rights that exist independent of any specific social-institutional-political milieu. Political institutions can then be assessed and rejected from the perspective of those pre-social rights, and alternative institutions can be constructed with those rights as guiding principles.
For Burke this is backwards. Rights are the product of institutions, and make no sense outside of an institutional framework. As he puts it:
You will observe, that from Magna Charta to the Declaration of Right, it has been the uniform policy of our constitution to claim and assert our liberties, as an entailed inheritance derived to us from our forefathers, and to be transmitted to our posterity; as an estate specially belonging to the people of this kingdom without any reference whatever to any other more general or prior right.
For Burke, to appeal to rights that are not institutionally or culturally inherited is to mistake real, socially-embedded and -established rights, for fantasy or imaginary rights that (impossibly) exist outside of society. Burke believes that the revolutionaries are using this spectre of imaginary pre-social rights to tear down the social institutions that establish actual rights, and are thereby undermining their own supposed goals.
Far am I from denying in theory; full as far is my heart from withholding in practice (if I were of power to give or to withhold) the real rights of men. In denying their false claims of right, I do not mean to injure those which are real, and are such as their pretended rights would totally destroy.
- We are intrinsically socially embedded creatures. Appeals to pre-social universality are in tension with the forms of belonging that foster our higher sentiments.
As Burke puts it:
To be attached to the subdivision, to love the little platoon we belong to in society, is the first principle (the germ as it were) of public affections. It is the first link in the series by which we proceed towards a love to our country and to mankind.
This is a familiar conservative argument against ‘cosmopolitanism’, arguing that sentiments of local belonging are the social foundation out of which other political sentiments must be built, and that breaking with this logical order risks also breaking the very sentiments one aspires to foster.
- Traditions can be modified and improved, but gradually, preserving what is good and modifying what needs modification.
This is Burke’s incrementalist argument against revolutionary sentiment – and also a response to a potential objection to his arguments about inherited tradition. One counterargument to Burke’s position would run something like this: if we grant that the rights we value are a product of inherited tradition, on what basis could we ever be in a position to challenge that tradition, or to improve our social institutions? A traditionalist approach to political theory would seem to make us prisoners of tradition, without the ability to reject even the most egregious or repressive elements of that tradition. Burke argues, by contrast, that preserving our traditions can incorporate the process of gradual improvement of those traditions, provided the changes are not so rapid or so complete as to, as it were, cut away the institutional branch on which we are seated. In Burke’s words:
the people of England well know, that the idea of inheritance furnishes a sure principle of conservation, and a sure principle of transmission; without at all excluding a principle of improvement. It leaves acquisition free; but it secures what it acquires… Thus, by preserving the method of nature in the conduct of the state, in what we improve we are never wholly new; in what we retain we are never wholly obsolete.
Finally…
- Breaking norms means that new rules can only be established by force – therefore a revolutionary order, to create a fresh society, will have to resort to force more than a traditional order, giving revolutionary orders a bias towards military rule.
Here Burke’s argument, I take it, is that tradition creates a set of habits and accepted norms that shape day-to-day behaviour and make our social, political and economic practices routine and therefore stable. By unsettling all these norms, a revolutionary order is unable to rely on them for social stability. When the revolutionary order wishes to establish its new institutional structure and day-to-day practices, therefore, it cannot rely on such habits. If people are motivated to accept the new rules and practices, this isn’t a problem. But if people reject the new practices, then the revolutionary order has little other than coercion to fall back on to enact its desired social change. Revolutionary orders, Burke argues, will therefore have a tendency towards repression and coercive violence. Moreover, because the state’s tools of repression and coercive violence – policing and, at a larger scale, military forces – are for this reason typically central to securing the stability of a revolutionary order, such revolutionary orders have a tendency towards military rule. And because a charismatic military leader who commands the loyalty of the troops is frequently a prerequisite of military rule in a revolutionary situation in which traditional rules cannot be relied upon, this kind of military rule in turn has a tendency towards despotism. In Burke’s words:
Every thing depends upon the army in such a government as yours; for you have industriously destroyed all the opinions, and prejudices, and, as far as in you lay, all the instincts which support government. Therefore the moment any difference arises between your national assembly and any part of the nation, you must have recourse to force. Nothing else is left to you; or rather you have left nothing else to yourselves. You see by the report of your war minister, that the distribution of the army is in a great measure made with a view of internal coercion.
Moreover:
In the weakness of one kind of authority, and in the fluctuation of all, the officers of an army will remain for some time mutinous and full of faction, until some popular general, who understands the art of conciliating the soldiery, and who possesses the true spirit of command, shall draw the eyes of all men upon himself. Armies will obey him on his personal account. There is no other way of securing military obedience in this state of things. But the moment in which that event shall happen, the person who really commands the army is your master; the master (that is little) of your king, the master of your assembly, the master of your whole republic.
Ok. So these are, I take it, some of the key elements of Burke’s argument.
I had planned to write a lot more about the way these elements hang together, and to analyse and further disaggregate the critical point five – Burke’s argument about how rights emerge out of, rather than sit outside, our political traditions. But this post is already quite long, so I think I’m going to call it a day here for now, and circle back around this material in a future post, in which I will hopefully further unpack and analyse, with a more critical eye, elements of Burke’s position.
Brandom and Freud again
January 5, 2022
Continuing my practice here of putting up somewhat preliminary reactions to Brandom’s Hegel work, so as not to lose track of the thoughts – being clear that this is hopefully all going to get worked through more carefully in the future – I want to put up a quick post about Brandom and Freud. I’ve gestured to this before on the blog I think, but I want to very quickly and superficially expand on a couple points.
So – one of the overarching themes of ‘A Spirit of Trust’ is the way in which Brandom’s Hegel takes himself to have advanced beyond Kant, by making the transition from the “meta-meta-categories” of ‘Verstand’ to those of ‘Vernunft’. Very broadly speaking, this is a shift from a synchronic to a diachronic understanding of the forms of obligation associated with the synthetic unity of apperception. For Brandom’s Hegel the Kantian synthetic unity of apperception consists in the obligation to eliminate incompatible commitments. What makes a self a self – what makes it a unity: this self rather than some other self – is that its commitments are bound together by this meta-commitment to internal consistency. I am not obliged to make my beliefs consistent with your beliefs – we may simply disagree – but I am obliged (the thinking goes) to make my beliefs consistent with themselves. When inconsistent beliefs present themselves to me (for example, by new evidence presenting itself to me via my senses, which contradicts some of my present beliefs), I need to go to work addressing this inconsistency by transforming some of my beliefs, in one way or another.
A great deal of philosophical analysis of rationality can be understood in terms of this model. Basically, we can synchronically analyse a set of beliefs, and if it is consistent then that is good, and if it is inconsistent then that is bad. This, for example, is what a lot of formal logic consists in: organising the relationship between different beliefs to clarify relations of compatibility and incompatibility, with the idea that when incompatibilities of belief are revealed this throws one’s belief system into the space of unreason, in a way that must be addressed by modifying one’s beliefs. This synchronic approach can seemingly make it easy to sort belief bundles into two piles: those that are internally consistent (good), and those that are internally inconsistent (bad).
So far so good, but if one stops here – with the synchronic picture – then one is silent about the mechanisms by which one addresses the obligation to shift from an inconsistent to a consistent set of beliefs. If one is confronted with incompatible commitments, it is not a trivial task to decide how to modify one’s commitments to address this problem of incompatibility. And of course it is not the case that every way of attempting to respond to this obligation is equally desirable. The way in which we choose to address incompatible commitments is itself a norm-governed enterprise – some ways of resolving this tension are better than others. For example, if one is confronted with incompatible commitments, it is often desirable to keep these incompatible commitments suspended together, while one tries to work through and assess the different ways in which one might possibly attempt to fulfill one’s obligation to remove this incompatibility. And this process may well take significant time and effort. While one engages in the process one might provisionally prefer one commitment over another, but it may be specifically normatively desirable not to reject one incompatible commitment in favour of another in too hasty or thoughtless a fashion. Keeping such incompatible commitments suspended together – even for very significant periods of time – might well be the most rational and reasonable thing to do.
The point here is that shifting from a synchronic to a diachronic understanding of rationality can among other things foreground this process. Instead of simply sorting belief bundles into good and bad piles, our focus is now on the ongoing – indeed, never-ending – process by which we wrestle with our own internal inconsistency.
What does this have to do with Freud? Well, Freud’s analysis of the psyche gives a central role to inconsistent or incompatible beliefs or commitments. Of course, much of the Freudian project is about attempting to lessen the inconsistency of those beliefs – unwinding the double binds, or diminishing the symptoms produced by the psyche’s attempt to reconcile the irreconcilable. In this sense Freud is a good Enlightenment rationalist, engaged in a similar project of explicitation to Brandom’s Hegel. On the other hand, Freud is clear that some level of inconsistency of commitment is “in the grain” – the smoothly untroubled psyche in which our commitments do not conflict is a fantastical goal, for Freud. It is also easy, then, to see Freud as a straight-up anti-Enlightenment irrationalist, fundamentally antithetical in his analytic framework to the work of reason associated with – for example – the kinds of formal logical analyses captured by a synchronic account of our rational normative obligations. Alternatively, one could see Freud as analysing the kinds of obstacles – the ‘deformations of reason’ – that confront us as we attempt diachronically to move towards a more rational and internally consistent set of commitments.
What I want to argue in this post is that there is another option. My claim is that because sustaining incompatible commitments is in fact a core part of a normatively desirable process for rationally addressing incompatibilities within the ‘synthetic unity of apperception’, psychological mechanisms for sustaining inconsistent commitments are a crucial, inescapable part of the machinery of reason. For this reason, we can’t a priori say that any of the Freudian categories that capture such inconsistencies of commitment involve ‘irrationality’. Once we have shaken out our inconsistent commitments, of course, we can see the moment at which inconsistent commitments are simultaneously held as an ‘irrational’ moment in the process of reason and experience. But this is not an avoidable moment in that process – it is fundamental to the process. It is part of reason itself. Moreover, because for Brandom’s Hegel the process of unfolding experience is ongoing, the bacchanalian revel of truth never truly ends, so we can never be rid of this ‘irrational’ element of reason.
Now, when Brandom himself discusses Freud he typically does so under the heading of the ‘hermeneutics of suspicion’ that is rebutted via the story of the Kammerdiener. Within this framework, the Freudian apparatus can be seen as giving a ‘debasing’ perspective on a set of practices that can also, from another perspective, be seen as norm-governed. And in a sense, that is what I am arguing in this post. We can easily (but, I am arguing, wrongly) see Freudian categories as analysing the ways in which we human creatures depart from reason, without recognising the constitutive role that such categories play in norm-governed rational thought. I want to say, though, that the understanding of the role that such categories can play within the Brandomian-Hegelian apparatus that I’m advancing in this post goes somewhat beyond Brandom’s own remarks. Brandom’s remarks tend, I think, to place Freud more firmly on the ‘debasing’ side of Hegel’s ‘small-souled’ versus ‘great-souled’ division. I’m arguing here that there is work to be done in understanding and elaborating the constitutive role that ‘living with inconsistency’ plays within our norm-governed rational obligation to achieve consistency of commitments. And this is, I think, one way (not, I think, perhaps, the only one – though obviously that is a matter for another day) in which a ‘Freud-Brandom-Hegel’ synthesis is potentially interesting and productive.
Jack Knight on bargaining and institutions
December 11, 2021
I just finished reading Jack Knight’s 1992 book ‘Institutions and social conflict’, which I really loved. I think I’ll be returning to this book a lot in the future, so this is just a preliminary first summary. Basically the book has three components: first, a very astute survey of the literature in institutional economics; second, an outline of Knight’s own theory of institutions; third, an application of Knight’s approach to a few illustrative cases. In this post I’m going to ignore the third of these, and very briefly summarise the first two.
Start with Knight’s review of the literature. (I’ve already discussed some elements of this in a previous post, but I’m going to repeat myself.) Knight distinguishes two key traditions within institutional economics.
First, there is the approach that primarily sees institutions in terms of coordination for collective benefit. This tradition in turn can be divided into analyses that see coordination as intentional – paradigmatically, contractual – and analyses that see coordination as evolved rather than planned. This latter, evolutionary, subtradition can again be subdivided into three different kinds of evolutionary account: those that emphasise “spontaneous emergence, exchange coordinated by the market, and social selection.”
Second, there is the approach that primarily sees institutions as the result of conflicts between rival interests. This is the tradition that Knight aspires to extend.
For the purposes of this very brief summary I’m going to ignore the important differences – which Knight very clearly and usefully outlines – between the different ‘cooperative’ subtraditions. The core point which animates Knight’s critique is that these traditions typically explain the creation of institutions in terms of the collective benefits the institutions generate for their members. For these traditions, institutions are the results of cooperative actions which benefit the cooperating members of the institutions. Often this account is further elaborated in terms of efficiency, or ‘Pareto optimality’. For example, the transaction costs tradition exemplified by Oliver Williamson argues that economic institutions are governance structures which are created in order to minimise transaction costs, thereby increasing economic efficiency.
Knight’s core critical point is that these kinds of explanations are fundamentally functionalist ones, which typically do not provide an adequate mechanism to explain why economic efficiency, or collective welfare, or whatever it might be, is selected for in the creation and reproduction of the institution. More specifically, such functionalist accounts tacitly transgress a methodologically individualist rational choice approach, because they explain institution formation, stability, and transformation in terms of the collective outcomes associated with the institution, rather than in terms of individual social actors’ rational maximisation of their own individual outcomes.
Knight’s alternative approach, is to explain institution formation – in classical game-theoretic, rational choice terms – as a result of individuals attempting to maximise their individual utility. More specifically, he aims to do this using bargaining theory. An economic institution may be constructed to (say) minimise transaction costs – but it may also be constructed to serve the interests of those with the power to implement and enforce the institution’s rules. Moreover, if we want to explain why an institution is structured in the way it is, Knight argues, we have a methodological obligation to route our explanation via the interests of the various actors involved in the institution’s creation and reproduction, rather than via a ‘collective interest’ that may not be embodied in any individual actor’s actual interests. In a sense, this is a project that shares many similarities with Buchanan’s ‘politics without romance’ (although there are very important differences between Knight’s and Buchanan’s projects, which maybe I’ll one day speak to in a future post!)
To make this slightly more concrete, consider the classic ‘prisoner’s dilemma’ game. As is well known, in a one-shot version of the prisoner’s dilemma, cooperation is a strictly dominated strategy, and mutual defection is the only equilibrium outcome. In an iterated version of the game, however, this is not necessarily the case. In the right conditions, mutual cooperation can be a stable equilibrium within an iterated prisoner’s dilemma, because players can adopt conditionally cooperative strategies which result in actual cooperative play. More strongly, the so-called ‘folk theorem’ shows that a very wide variety of possible outcomes are potential equilibria. If you have a correctly set up iterated game then countless payoff outcomes are in principle possible, because countless different equilibria can in principle be constructed.
Iterated game theory in this sense ‘proves too much’. If the appeal of classical game theory is meant to be that it shows what strategies rational actors are likely to adopt, then iterated game theory removes a huge amount of that apparent predictive power by showing that rational actors could in principle adopt countless different strategies. The ‘cost’ of showing how cooperation is possible within scenarios like the prisoner’s dilemma is the loss of nearly all the predictive power of the model.
Assuming we’re willing to roll with this, and are still interested in pursuing this kind of modelling approach at all, how can we narrow down what strategies we would expect our agents to actually adopt, without resorting to completely ad hoc reasoning? One way to tackle this problem is by using an evolutionary approach, pioneered by Axelrod. In his 1984 ‘the evolution of cooperation’, Axelrod ran a ‘tournament’ in which different strategies played against each other, and those strategies which received the highest payoffs overall ‘won’. This broad approach can be extended in quite complex ways. For example, in my own PhD research in the economics of science (drawing very very heavily on previous researchers!) I ran a set of evolutionary simulations of agents playing an n-player prisoner’s dilemma game within a structured graph (network), to look at the impact the graph structure could have on which strategies were selected for. There is a lot of work in this space – some of it very interesting indeed. The problem, however – or one problem – is that evolutionary analyses only make sense if you are dealing with a system that has evolutionary attributes: selection among variation, some kind of learning process for the dissemination of successful strategies, and (quite likely) the possibility of ‘mutation’ of strategies. Most objects of social scientific analysis simply do not exist within such systems, or at least not to an extent that can justify the adoption of this kind of evolutionary explanatory framework as our solution to the underdetermination of possible cooperative equilibria.
Knight takes a different approach. Knight’s argument (and here again we’re using the prisoner’s dilemma purely for illustrative purposes) is that because countless different payoffs are possible within an appropriately iterated prisoner’s dilemma, agents who are attempting to determine which strategies to adopt within the dilemma are in practice engaged in a bargaining process. That is to say, the prisoner’s dilemma can in principle provide both players with zero payoff, or whatever the maximum payoff is, or (if appropriately iterated) anywhere in between, for either player. In selecting their strategies, then, the players are in effect bargaining over the allocation of the potential surplus associated with consistently cooperative play. This is a bargaining problem. And bargaining problems are explored in their own very rich branch of classical game theory. If we adopt a bargaining theory approach to the analysis of the selection of strategies within a cooperative problem, we are therefore potentially in a position to explain why specific strategies are selected without resorting to either evolutionary models or ad hoc assumptions.
Knight calls this a ‘distributive’ approach, because its primary focus is bargaining between social actors for the distribution of the surplus associated with cooperative play. I think that Knight’s framing of this idea in terms of a distinction between ‘cooperative’ and ‘distributive’ approaches risks misleading readers. After all, players bargaining over the allocation of a cooperative game’s surplus are also bargaining over whether or not to create the surplus in the first place. I think it’s better to simply think of Knight’s approach as a ‘bargaining’ one.
But this is a semantic quibble. At base I think that Knight’s suggestion here – that the problem of the underdetermination of equilibria in iterated games can be partially resolved by seeing the selection between equilibria as a bargaining problem, to be analysed using the tools of bargaining theory – is a major contribution. I also think that Knight’s approach is correct to emphasise the importance of bargaining theory more broadly in formal political-economic modelling – hopefully I’ll speak to that more in future blog posts.
In any case, there is an irony here, concerning the connection between the dominant methodological and substantive commitments of economics as a discipline. It is common on the left to criticise mainstream economics for two apparently related failings: on the one hand, its use of rational choice, methodologically individualist approaches is seen as methodologically reactionary; on the other hand, its conclusions about the efficiency and social optimality of capitalist economic institutions is seen as apologistic. What Knight’s book does, in my view, is show that these two dimensions of the economic tradition are – at least on plausible assumptions – in fact in tension. If we take rational choice methodological individualism seriously at the level of the analysis of political-economic institutions, using the resources of bargaining theory, it is not hard to produce analysis that shows domination of the relatively powerless by the relatively powerful, highly sub-optimal outcomes in terms of economic efficiency enacted and enforced by powerful economic actors because of their distributive benefits for narrow powerful interests, and so on. In other words, Knight’s rational choice methodologically individualist approach sends us barrelling very quickly into an at least Marxist-adjacent world of domination, exploitation, inequality, etc.
I think this is all correct, and important. There is, of course, much more to say about Knight’s approach – as I say, I expect to come back to this broad framework a lot in the coming years and months. But this will do for now, I think, as a quick summary of the broad outlines of Knight’s very valuable project.
Methodological individualism
November 28, 2021
I just started reading Jon Elster’s ‘Making Sense of Marx’, which I’m very enthused by and keen to work through. As is my custom, I’m going to put up some immediate thoughts here to get them out of my head, with the caveat that these are my own associations based just on the quoted text. Specifically, I wanted to make some associations prompted by Elster’s opening discussion of methodological individualism.
Elster begins the book by articulating a defence of methodological individualism. In Elster’s words:
By this I mean the doctrine that all social phenomena – their structure and their change – are in principle explicable in ways that only involve individuals – their properties, their goals, their beliefs and their actions. Methodological individualism thus conceived is a form of reductionism. To go from social institutions and aggregate patterns of behaviour to individuals is the same kind of operation as going from cells to molecules. The rationale for reductionism can briefly be stated as follows. If the goal of science is to explain by means of laws, there is a need to reduce the time-span between explanans and explanandum – between cause and effect – as much as possible, in order to avoid spurious explanations. … In this perspective, reductionism is not an end in itself, only a concomitant of another desideratum. We should add, however, that a more detailed explanation is also an end in itself. It is not only our confidence in the explanation, but our understanding of it that is enhanced when we go from macro to micro, from longer to shorter time-lags. To explain is to provide a mechanism, to open up the black box and show the nuts and bolts, the cogs and wheels, the desires and beliefs that generate the aggregate outcomes.
As I say, I’m just going to use the rest of this post to put down my own reactions to this passage. In no particular order:
– I think Elster’s defence of ‘reductionism’ here is good. It sometimes feels like ‘reductionism’ is one of those words that is used exclusively as criticism but, as Elster says, there’s nothing intrinsically wrong with reductionist arguments at all. It depends, of course, whether something is lost – and if so what – in the reductionist explanatory project. But certain categories of explanation – explaining one category of phenomenon in terms of another category of phenomenon – are intrinsically reductionist – this is their virtue – and this goes for the social sciences just as much as for the natural sciences. I approve of this bit.
– I disagree with Elster’s characterisation of science in this passage. Elster writes (albeit in the conditional) that “the goal of science is to explain by means of laws”, but this is much too narrow an understanding of science. First, science doesn’t have to explain – it can simply describe. And second, when science does explain, it doesn’t have to do so by means of laws – there are other categories of explanation available. I think this is a common misunderstanding of the nature of science – within social science, I think it’s particularly common in more ‘mathematised’ areas – but it’s wrong and should be rejected.
– Related to both of these points, I think there is much more to be said for methodological pluralism than this passage implies. (Again, being clear that I’m talking about this passage specifically rather than Elster’s work as a whole.) Reductionist arguments of the kind that Elster discusses here can be enormously valuable – but they are not the only way in which we can approach the project of social-scientific explanation. Moreover, reductionism typically operates – as Elster says – by explaining one ‘level’ of a phenomenon in terms of another ‘level’: explaining chemical behaviour in atomic terms, or organisms in terms of cells, etc. etc. But we should not see any one of these levels of analysis as having an intrinsic explanatory priority. Which level of analysis – and what if any form of reduction – we choose to deploy for explanatory purposes depends on the task at hand. So, in social-scientific terms, it may be totally legitimate to use ‘nation states’ as your basic unit of analysis (in some IR, say), or to use ‘classes’ or ‘class fractions’ as your basic unit of analysis (in some Marxist analysis), or to use ‘firms’ as your basic unit of analysis (in some economics), or to use ‘individuals’ as your basic unit of analysis (in methodological individualism). Moreover, it can be useful and legitimate to have a sub-individual-level unit of analysis. For example, some social-scientific psychological analysis may focus on varied impulses that operate within a single individual; some sociological analysis may focus on social practices rather than the individuals that perform those practices; and so on. Indeed, I think it’s clear that ‘the individual’ can usefully be analysed as a product of social practices, psychological dispositions, etc., and therefore cannot always and everywhere be the basic unit of analysis if we want to understand those practices and dispositions and their effects. All this is just by way of saying that ‘methodological individualism’ is one analytic approach, it is a completely legitimate and often very valuable one, but there is no reason to bind ourselves to this specific analytic level to the exclusion of others.
– All that said, I agree with Elster that many of the objections to methodological individualism are misguided. In particular: to analyse large-scale phenomena in methodologically individualist terms is not to deny the existence or the importance of large-scale phenomena. Here I think the distinction between ‘strong’ and ‘weak’ accounts of emergence is useful. ‘Weak emergence’ is when micro-level phenomena produce in aggregate a macro-level phenomenon that does not necessarily share the qualitative properties of the micro-level phenomena that produce it. You just can’t do large swathes of social science without this approach in your analytic or explanatory toolkit. ‘Strong emergence’ is when (to put it ungenerously but in my view accurately) something weird and magical happens and the properties of the macro-level phenomenon cannot even in principle be reduced to or explained in terms of its micro-level components. In my view many (by no means all, but many) of the objections to methodological individualism only make sense if they are relying on some version of ‘strong emergence’ – the idea that the reductionist project of explaining the whole in terms of its component parts is somehow denying the reality of the properties of the whole. This is unscientific and bad. (Obviously we may not actually in practice be able to explain a macro-level phenomena in terms of its micro-level components – our information or analysis may be lacking – but that doesn’t and shouldn’t commit us to a concept of strong emergence.)
– I also agree with Elster that the analysis of (weakly) emergent properties of macro-level social phenomena in terms of their component parts is central to Marx’s project. As Marx puts it, the analysis of ‘Capital’ “does in fact deal with minutiae, but they are of the same order as those dealt with in microscopic anatomy.” (Like everything in Marx there are multiple competing interpretations of this passage, but this isn’t a Marxological post, so I’m just going to move on.) The analytic goal, as Elster says, is “to provide a mechanism, to open up the black box and show the nuts and bolts, the cogs and wheels, the desires and beliefs that generate the aggregate outcomes” – this is all good and correct.
– Elster is keen to emphasise that methodological individualism doesn’t commit us to the idea that the individuals in question are self-interested. This is certainly true – though I think it’s also true that there’s a common association between these two commitments.
– Elster also touches on the relationship between methodological individualism and political or ethical individualism. Once again, these two commitments don’t have to go together, but I think they often do in practice. Elster is (I think rightly) of the view that “ethical individualism” is central to Marx’s own politics: “Marx never wavered in his view that the main attraction of communism is that it will make possible the full and free realization of the individual”. But, again, this stance is only weakly related to methodological individualism.
– Finally – and this is almost entirely unrelated to the passage from Elster that I quoted – I think there is another important role that methodological individualism can play in normative political economy, beyond its frequent association with normative individualism. This is the idea, which I have discussed before on the blog, that our institution design proposals ought to be informed by a degree of ‘cynicism’ about the role that individual self-interest plays in human affairs. I have quoted before Dennis Robertson’s remarks (in ‘What does the economist economise?’) about the role of the economist:
There exists in every human breast an inevitable state of tension between the aggressive and acquisitive instincts and the instincts of benevolence and self-sacrifice. It is for the preacher, lay or clerical, to inculcate the ultimate duty of subordinating the former to the latter. It is the humbler, and often the invidious, role of the economist to help, so far as he can, in reducing the preacher’s task to manageable dimensions. It is his function to emit a warning bark if he sees courses of action being advocated or pursued which will increase unnecessarily the inevitable tension between self-interest and public duty; and to wag his tail in approval of courses of action which will tend to keep the tension low and tolerable.
That is to say: when we are considering, not just actually existing political-economic institutions, but also the alternative political-economic institutions with which we aspire to improve our collective lives, one of our central considerations should be ‘incentive compatibility’ – i.e. the degree to which those institutions can function more or less in a desirable fashion even if and when they are populated with many self-interested social actors. This is a difficult task of institution design, but as I have argued on the blog before, I think it is an important one. And this analytic dimension of normative political economy cannot really be engaged in at all – certainly not in a very rigorous or useful way – without methodological individualism.
duncanlaw.wordpress.com 