Friday, August 31, 2012

The Myth of a (Classical) Liberal or Libertarian Utopia

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In reading online articles and blogs it is common to find references to a "libertarian utopia."  These references are both supportive and derisive, distorting what I will claim is the idea of true liberalism.  Hayek is even referenced in this Freeman article bemoaning the fact that "we lack a liberal Utopia."  The problem with this phrase first became clear to me when I read the following words:
Contemporary socialists  "light" totalitarians in mindset and vocabulary  go wrong when they imagine that liberals are busily planning the perfect society, the best that is possible in the world, but of opposite sign to their own. [emphasis in original]1
The reality is that there is no liberal Utopia.  Liberalism and its modern-day progeny, libertarianism, are processes rather than destinations.  In the same sense that the scientific process leads to the discovery of laws of nature, liberalism leads to the discovery of that society that best conforms to human values.  Such a society defies planning, as planning implements the values of a small elite.  It also stifles the wide-ranging experimentation  through trial and error  that is necessary to discover the institutions and businesses that are necessary in building a society that supports human values.

Of course, one may wonder, "What are human values?"  I tend to think, as did Ludwig von Mises, that most people prefer prosperity over poverty, freedom over slavery, and life over death.  There are, and always will be, predators who prey on those who live peacefully and productively.  The latter will use freedom to create the cost-effective defenses that maximize the cost of predatory behavior, eventually discarding the unwieldy blunt instrument of the state.

What is needed then is a total commitment to the free market and its concomitant competition as discovery procedure by which society progresses.  There can be no fear of unacceptable outcomes, as outcomes will reflect human values.  Yes, in some areas of the world those outcomes might be repulsive to modern westerners, but eventual progress in those regions is not going to be accelerated by murdering, threatening, or lecturing the population.

What is most important is to embrace the idea that liberalism  the free (or freed) market  is the platform upon which progress depends.  The end state defies prior description, but we can have confidence that it will conform to human values.

*In the body of the post an unmodified reference to "liberal" is a reference to "classical liberal."
1Revel, Jean-François, Last Exit to Utopia, (2009 New York, Encounter Books), 54.
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Monday, April 30, 2012

In Defense of Karl Popper and Piecemeal Social Engineering

Karl Popper in 1990.Karl Popper in 1990. (Photo credit: Wikipedia)
Karl R. Popper was one of the most influential philosophers of science in the 20th century.  His ideas on inductivism and falsifiability transformed the philosophy of science, creating credibility when he turned his mind to the social sciences.  Over the course of his lifetime he moved from a strong commitment to social democracy to support for liberal democracy, possibly due to the influence of his longtime friend, Friedrich Hayek.

In The Open Society and Its Enemies Popper proposed something he called “piecemeal social engineering.”[1]  In this regime he suggested that governments implement small societal changes and then critically evaluate the results.  He also mentioned that private individuals and businesses were participants in this process saying:
Even a man who opens a new shop, or who reserves a ticket for the theatre, is carrying out a kind of social experiment on a small scale ;  and all our knowledge of social conditions is based on experience gained by making experiments of this kind.[2]
In the context that Popper suggested it most free market advocates would find his view of social engineering to be anathema; but if we view it critically and in the context of Popper’s more abstract ideas, specifically “evolutionary epistemology,” we can come to a different and positive conclusion.

Consider Bryan Magee’s representation of Popper’s view of problem solving in society when he says, “Because he regards living as first and foremost a process of problem-solving he wants societies which are conducive to problem-solving.”[3]  When Popper suggested that liberal democracies could legislate small changes in the societal structure, evaluate the results and either repeal or retain the changes he was arguing against utopian views and for such a society.  As such it was a significant advancement in thinking about societal changes and a sensible argument against all utopian schemes.  Unfortunately, Popper was naïve about the ability of governments, even those of liberal democracies, to evaluate the results of their actions and to learn from them.
Governments are unable to learn from their mistakes for a number of reasons:
  1. The individuals supporting a specific experiment risk citizens’ resources, not their own.
  2. In a mixed economy, government does pay market prices for the resources it consumes, but as a monopoly it forces the populace to pay arbitrary prices for the goods and services it provides.
  3. There is no signal such as profit or loss that can inform the experimenters of their success or failure.  In fact, it is widely suggested that government should undertake projects that are “desired” but that generate losses.
In addition to the inability of governments to learn, they impose their experiments on the entire populace, eliminating the possibility of parallel, competitive experiments through which more progress could be made.
As mentioned earlier, Popper did suggest that businesses could, in effect, also participate in piecemeal social engineering by implementing different business plans and offering revised or different products.  He failed to realize that what seemed to him to be a minor component was in fact the most significant and could accomplish his goal of societal evolution more effectively.
The fact is that businesses in the free market have built-in mechanisms that signal difficulties and facilitate learning:
  1. The individuals involved are risking their own or investors’ resources – resources that are freely given and are at risk in the project.  This risk factor dampens the enthusiasm for projects that appear fantastic or utopian as opposed to realistic.
  2. Businesses charge prices that must reflect customers’ values.
  3. If income minus expenses is negative that signals that the business’s inputs are not creating a value for consumers that justifies the consumption of resources.  The individuals involved must make the decision whether to continue to consume capital or abandon the project.
Businesses are naturally competitive and are generally unable to impose their plans on the population, making it possible for multiple plans to be executed simultaneously across various industries.

Thus, we can say that Popper’s idea – piecemeal experimentation with the expectation of finding problem solutions – was sensible, but his means – governments of liberal democracies – could not accomplish that end.  On the other hand, a society free of government intervention and based on profit and loss has the tools required to accomplish it.

[1] Popper, Karl R., The Open Society and Its Enemies, Volume I: The Spell of Plato, (New York: Harper & Row, 1963), 158.
[2] Ibid, 162.
[3] Magee, Bryan, Philosophy and the Real World: An Introduction to Karl Popper, (La Salle, Illinois: Open Court, 1985), 75.
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