Okay, so I’m fairly unabashedly a classical/market liberal ideologically. At least it’s a label I identify with most of the time. Though some of my ideas, like the notion that universal healthcare and education are indispensable in a well-functioning society, would make the folks over at the CATO Institute, who put themselves in the same category, cringe and chase me with pitchforks.
I’m not a big fan of discussions of intellectual purity. Leninists arguing over who suffers from the worst case of false consciousness are missing the point. I do, however, tend to think that it’s prohibitively difficult, if not principally impossible, to engineer society for an optimal result. As a matter of fact, I don’t think that there is such a thing as an ‘optimal result’ for everyone. There are some principles that ought to be upheld or that are worth striving for, like equality of opportunity, peaceful discourse, efficiency and personal freedom, but I think people need to figure it out their own paths to happiness, the good life, or whatever fulfils them.
To hold these kinds of ideas, you need to believe that leaving people to their own devices will also produce tolerably good results. The alternative gives us Hobbes: if people, when left to structure their own lives, make each other miserable or dead, it would be better to give someone the power to make and enforce rules. The tradeoff between security and liberty is an old one, but I usually come down on the side of liberty – strongly. Now, this belief/hope that free interaction will not lead us into perdition has some corollaries, i.e. that there are self-organizing processes in society, these provide us with enough order to get by, and they’re preferable to dictates from above. Markets are a classic example of these self-organizing institutions, and the belief that free markets are the best way to manage production and exchange. This idea has been taking some heavy criticism in the financially dour atmosphere of late.
I’ve argued elsewhere that people expect too much from economics and that this leads them to bet foolishly and misdirect their rage. A red-blooded market liberal would also say that the current crisis is not a crisis of regulation; rather, less regulation would also be fine so long as those who gamble poorly can also lose. This isn’t stupid. I think it’s defensible, but there’s perhaps a deeper problem that I’ve recently noticed, and markets might not be able to solve it efficiently (and I apologize if I’m very late in noticing it). If you think about society cybernetically, as a self-regulating system of inputs, memory, manipulation, and output, you see the potential for lots of equilibrium. It should be possible to balance interests against each other such that society produces tolerable results even if each individual is a selfish SOB. The ability to constrain devils justly is the great attraction of invisible-hand mechanisms and constitutional checks and balances.
I recently found a case where the cybernetic view paints a potentially dark view of the market. I saw a report yesterday in which a lobbyist for some GMO producing agrifirm was being interviewed about why GMO food is a good thing and research should continue. I am ambivalent about GMO: it has strong arguments for and against. Still, the guy’s argument was along the lines of “Look, we’re making what people would want if they understood the issue. If people didn’t want it, we would be banned, so leave us alone.” Tobacco companies and arms manufacturers could easily make the same argument – I know.
The lobbyist gave this interview on a documentary about lobbying. The guy was saying that his firm needed to counterbalance people’s irrational fears about GMO by buying political influence, and this is justified because the people are irrational. He’s admitting to buying market power with the argument that democracy doesn’t work otherwise because people have poor judgement. Market power isn’t always a bad thing. The reason that I can use any given machine in an internet cafe, or drive a rental car I’ve never seen before, is that a few big market players together established how an operating system, or a car’s controls, will look and work. Market power can be a boon. When the lobbyist, however, doesn’t follow demand, but circumvents the market to obtain regulatory benefits, he’s ruining the system. From a cybernetic perspective, demand is the constraint that limits the supply and vice versa; feedback from the one dials down or cranks up the other. Breaking that loop and going through government rather than price tips the system in favour of supply, maybe a cybernetic equivalent of a lag on demand or a gain on supply, causing the system to overshoot its equilibrium.
So I was wrong, the efficient market hypothesis is wrong, and market liberalism wobbles, right? Well, it’s tricky. A big company that has invested in plant, inventory and employees is going to need some predictability in the market in order to do business. One mustn’t forget that “No taxation without representation” implies a responsibility and an entitlement. If I give money to an interest group or political party, I’m also trying to stack the deck in my favour. Lobbying takes many forms, and I don’t know if any are inherently illegitimate, or if they can all be contingently illegitimate if practiced by d0uche bag5.
Nonetheless, the fact that investors can act as influence syndicates and outflank citizen-consumers is troubling. (And there’s a cybernetic side here too: the investors give themselves a competitive advantage, giving them a greater ability to extract rents, and the rents allow them to secure ever larger competitive advantages.) And the democratic problem is clear: there is no higher authority to tell me what I rightfully want. Many people who are entitled to vote scare me to death. I might talk as if they’re nuts (and who’s ruling that out?), but I am absolutely in favour of everyone who understands what voting is to have the vote. If the state has a right to determine aspects of your life, you should bloody well have a say in the state! I’ve been called ‘an intellectual Mongol’ before, and I’d call that a back-handed compliment, but a compliment nonetheless. But just because I think you’re wrong doesn’t imply that I think I deserve extra votes, which is exactly what agriman was arguing.
What happens to liberty if free markets are incompatible, even to a significant degree, with democratic governance? What’s a liberal to do?
