What Do We Favor?

I have been reading Jeremy Shearmur's Hayek and After: Hayekian liberalism as a research programme (London, Routledge, 1996) and am struck by the recurring discussion about how Hayek's ideas will or will not produce the result he (Hayek) favors. The amazing thing to me is that he favors any particular results, other than the satisfaction of consumer wants. Hayek is the chief proponent of what may be called "spontaneous order" - market-generated order that appears when no central plan is imposed on the market - and one finds it difficult to reconcile that with the idea that any particular outcome may be preferred. It is this very idea of a preferred outcome, especially when uttered by an economist, that supports the interventionism that Hayek generally rejects. This inability to accept market outcomes, no matter how displeasing they might be to your sensibilities, has led to the acceptance of the state or the invention of extra-market moralities by those who could have known better.

Let Go and Let the Market About 5 years ago I wrote an essay, "Let Go and Let the Market," articulating a philosophy that relies completely on market action, with no resort to natural rights or any specific ethical system. This essay had very limited distribution, but a week ago I stumbled upon a Web site that not only had an electronic copy of my effort, but an extensive critique, Market Driven Government. There is also a link to my original document, Let Go and Let the Market. Interestingly, my critic seems to have understood my arguments quite well - something that encourages me in the sense that what I write is comprehensible. His primary argument against my view is that it does not include God - specifically a Christian God. The reality is that if people found that "Christ and His Way" supplied the moral directive that led to their greatest happiness it would become the ethical system of a free society. If not, only its imposition on an unwilling populace will make it a reality. Dr. Ashier ignores the fact that Christian Europe had endless wars and cruelty until the rise of commerce. Voltaire and others noticed that trade reduced religious passions and that Christians (of all stripes), Jews and Muslims could all meet peacefully in the marketplace. Their interest in improving their living conditions and increasing their wealth quenched their thirst for the blood the infidels with whom they dealt. One thing that I want to clarify, if someone reads the critique in order to make the decision to read my essay, is that identity chips are only a possible, and optional, method by which we might raise confidence that the person we are dealing with is who he says he is (biometrics might be a preferred method). In The Evolution of Cooperation, by Robert Axelrod, the length of expected interactions increases the chance of cooperation in the Prisoners' Dilemma game. Ensuring identity tends to expand the length of those interactions by allowing a potential consumer or producer to access an individual's history of cooperation with others.

Competition as a Discovery Procedure for Ethics

Friedrich Hayek wrote essays concerned with competition in a theoretical sense, e.g. "Competition as a Discovery Procedure," and in a pragmatic sense, e.g. "Denationalisation of Money." The first essay argues (among other things) that competition leads to discoveries of new knowledge that could not have been aimed at. The latter essay was written as a challenge to the monopolization of the monetary system and the resulting failure to create sound money by proposing the introduction of competitive currencies. It is time to challenge another monopoly of the state – that of the ethical or legal system – and suggest that competing ethical systems are the method by which we may approach an ever more sound system.

Ethical systems are generally presented as being handed down from God or derived in some way from human nature. Ayn Rand and Murray Rothbard developed systems explicitly in the latter class. Andrew
J. Galambos claimed to derive an ethical system from science, a claim that may also be lumped in with theirs, being derived from the nature of volitional beings. These claims are not intended by the claimants to be subject to test, but are presented as systems to which people must adhere, even though the systems may be based upon free market, stateless societies (Rothbard's and Galambos's systems are members of this class while Ayn Rand retains the existence of the state).

Ethical systems, where they intersect with the state, produce legal systems that are imposed upon the inhabitants within the borders of a political entity. In the time of monarchy the legal system reflected the religion of the monarch and whatever concepts of justice the monarch held. In modern democracies the legal system is a reflection of the struggle between various groups and may reflect most fundamentally the views of the religious majority. The one system that attempts to reflect evolutionary market forces is English Common Law, but even in that case the discovery process is hampered by the fact that competition between courts is limited and petitioners may not choose the legal system by which a case will be tried. A free market in judicial services would harness the engine of competition in the quest for ethical systems that are more sound and responsive to the consumers' needs.

If individuals may enter into contracts with different companies providing judicial services reflecting different ethical systems (e.g. Christian, Rothbardian, Galambosian, Islamic, etc.) to resolve their disputes, defend or recover their property, etc., one can imagine that there would be a number of problems. But would these problems be greater than the problems that exist between countries
or, in the United States, between local state jurisdictions? Certainly the execution of a judgment or transfer of an alleged criminal between jurisdictions involves some process that would evolve between justice companies. If companies do not have reciprocal agreements, due to remoteness, neglect or aversion, it is possible that disputes that cross their boundaries will not be resolved, and a loss that might be covered by insurance will be incurred.

Each company may codify its ethical system and reference it in its advertising, along with endorsements from its satisfied customers. If a company has an attractive ethical system it can be expected to attract repeat customers and grow. Superior systems will be reproduced and inferior ones will die out. Better ways of handling cases will be sought, successes added and failures dropped, advancing the system using the same method as science.

In Karl Popper's parlance, each ethical system is a theory and is subject to falsification. The falsification method is its profitability. However, it must be remembered that a falsification of an ethical system, as it is a volitional creation, is subject to its circumstances. Certainly, an ethical system that many might find reasonable today would have found few customers in the depths of the Dark Ages. People's beliefs are essential in the discussion of human action, and change over time. So, it is clear that an ethical system introduced into the market "before its time" may fail, only to be rediscovered and retried successfully later.

If the state were to end its monopolization of the justice market, various ethical systems could flourish, some succeeding (generating profits) and some failing (generating losses). Through this system of competition, inferior systems could be weeded out and superior systems discovered.

Sources

F.A. Hayek, Competition as a Discovery Procedure in The Essence of Hayek (Stanford, California: Hoover Institution Press, 1984) 254-265.

F.A. Hayek, Denationalisation of Money: The Argument Refined (London: The Institute of Economic Affairs, 1978).

Bryan Magee, Philosophy and the Real World: An Introduction to Karl Popper (La Salle, Illinois: Open Court, 1985).

Value

Value is subjective. This statement is true of all values - no exceptions. There is no absolute value, no absolute ethics, nothing that will give you the answer in all situations. Every action has risks, and you make your judgment. You choose what you think will increase what is of value to you or minimize its decrease, and act. Sometimes you win, and sometimes you lose.

Of course, many will cry that this statement supports "situational ethics." No kidding! How many times have you seen movies or read books that propose "moral dilemmas?" Were you always happy with the outcome? Did you feel uneasy? Did you wonder what you would do - what was "ethical?" If you might save a person you loved, would it be permissable to torture someone? How about if it would save ten people? A thousand?

There are some interesting answers to these questions - not answers about "right" and "wrong" but about costs and benefits. Answers that the market can help us with and which will be discussed in future posts.