On a recent video episode
of mine, I talked with the brilliant anarcho-capitalist economist Dr. David
Friedman about his views on economics and the state. David Friedman believes
that everything that the state provides can be provided by the market, but he
acknowledges that such a transition would take some time to materialise, as we
gradually wean ourselves off state services and onto market-based provision.
I’m fairy sure he and I agree on virtually everything to do with the benefits
of capitalism and the inefficiencies associated with state provision, but I’m
not as confident as Dr. Friedman that his ultimate no-state model is realistic
– I think it is more complex than most anarcho-capitalists think.
In my eponymously
titled book Benevolent Libertarianism, I tried to come up with an
original term that perhaps most accurately summarises my economic and political
ethos – and it’s one that gets to the heart of the complexity better, in my
view, than the anarcho-capitalist model. Below is a rough post-it-note summary
of my views on this matter.
Good economic
principles are based on the successes of the free market - trade, innovation,
supply, demand, prices, labour, productivity and consumerism - but also in
using that framework to take it to an even higher level of personal
responsibility and benevolence towards others. That, I think, is the biggest
challenge in the modern globalised market, where the world is interconnected
and economically unbound by national, cultural or ethnic boundaries; it is to
conflate the qualities of the free market with the virtues of loving one's
neighbour as oneself, on top of charity, prodigious generosity, and helping the
poor become self-sufficient and with a greater standard of living. My economics
book attempts to factor in all the social elements, and people's other
incentives too.
Humans face a tension
between choices which serve ourselves and family, and choices which serve the
social group, and sometimes the zero-sum decisions create competing forces
between self and community. Humans are motivated by social relationship factors
even more than they are material wealth – once material wealth goes above a
certain threshold of utilitarian functions (food, drink, safety, shelter,
warmth, health etc), then material acquisition becomes bound up with the
complex social world of status and impression on others. Even status has a
significant social value for many. That is one of the blind spots of the raw
capitalists – they miss the chaotic perturbations of feedback capitalism, especially
the division and tension in the social aspirations around identity and
belonging.
Humans emerged from
the complex biological world of adaptive systems, which rely on both central
and decentralised methods of adaptation. This requires complex informational
signals that cannot always be effectively distributed bottom-up, because the
Smithian ‘invisible hand’ method of local incentives and trial & error
processing is too computationally protracted to deal with large-scale problems
that require some coordinated top-down intelligence. If Benevolent
Libertarianism is to have any influence, it must concede that the decentralised
market patterns are sometimes inadequate to the task of factoring in all the
complex social motivations that feed into status, group identity and community
cohesion.
Although I’m not at
all party political, it’s obvious from observing party politicians that the
great chasm between the left and right is that the right believe society does
best by innovation and self-determination, and the left believe in the ideals
of community and wealth distribution. It’s clear to me that one’s group
affiliation is the key driver in who one prefers, and the policies and
economics come second. In reality, a successful society is a complex blend of
community ideals and market competition, but both sides are naturally
suspicious of the other, and are unlikely to ever change, because capitalists
don’t touch base enough with people's social motivations, and the socialists
live in an idealised delusion about how the world actually works.
A centralised
democratic government, if it has one useful function, would be one that bridges
the gap between the two polarities – offering the best of innovation and self-determination,
and what the left believes in the ideals of community and wealth distribution –
but it usually fails, because almost all voters are in one camp or the other,
with few being able to balance the two.
The challenge,
therefore, is to find a way to incorporate the qualities of a kind of
socialist-individualist-libertarian triumvirate at the personal level with the
qualities of the free market and its concomitant mechanism for price theory to
efficiently balance supply and demand. Otherwise, we won't make any significant
inroads into the deep-seated prejudices, indelibly stamped cognitive
limitations and exiguity of epistemic resources available to the individual
mind.
Humans are not adroit
processing machines like computers, they are adaptive systems that are fed from
the minds of other humans, and this communication is replete with incentives
and blind spots around status, self-preservation, security, social connection,
tribal biases, and individual persona and identity. This means that humans can
subject their data to an honest enquiry to the best of their ability and still
end up reasoning poorly and getting their facts wrong.
Groupthink and
community in-group biases can be advantageous for the individual agent because
it short cuts some of the cognitive processing functions and spreads them more
thinly across the group. Just as this can be advantageous in learning how to
cook, hunt, codify ethics and tell stories, it can also mean that some of the
views we have are not subjected to enough individual scrutiny and remain
unchallenged, as we become a little more dehumanised by being embroiled in the
mistakes and cultural taints of the wider community. We are creatures who incur
both costs and benefits of distributing computational power too readily among
other minds and both costs and benefits of distributing computational power not
readily enough.
Markets contain
non-linear feedback systems, which are likely to yield chaotic market
instability that brings about stress and insecurity for humanity. The first
part of this problem is that humans are only cognisant enough to operate within
a set of values that place the individual self, the family, and other strong
ties at a primacy, which makes it harder to factor in the global effects of
their decision-making.
My big personal
problem with the state, as it has evolved in the past few hundred years, is
that I find it profoundly difficult being governed by people who are so
incompetent at the things they manage, and by people who are so self-serving,
partisan and narrow minded that they do not deserve the power they have, and
operate within a system that makes it nearly impossible for it to be radically
undermined or peacefully overthrown. This is a big philosophical and moral
problem. But the other side of the philosophical and moral problem is that most
people in most nations do not want to live in a world without the state. The
state would not exist with such prominence if the majority of individuals had
not empowered its proliferation in size and scope – but if the state’s
existence is a central part of our socio-personal psychological make up, then
the increased freedoms enjoyed from its eradication would likely encroach on
the freedoms of those who value it and deem it necessary. Of course, we could
contend that if only people just became a lot smarter and understood how
fraught the state model is, they would join the libertarians in desiring its
diminution, but the “If only things were x, then y” propositions are usually
not very robust arguments.
The thing that I
think anarcho-capitalists neglect to understand most is that, being complex
adaptive systems, humans are continually caught between the lines of an ex ante
(before the event) assessment of the world and a post facto (after the event)
projection of how things will play out - and bottom up systems do not always
contain the foresight and central intelligence to simultaneously plan for
varying eventualities and at the same time adapt fast enough as the situations
evolve. For example, things like welfare provision, disease research and virus
prevention seem to require a delicate balance between centralised and
decentralised information structures, and it is hard to imagine how pure market
initiatives could administer the foresight and central intelligence to allocate
resources efficiently and with adequate execution time to keep the institutions
up to speed with changing environments.
Centralised
intelligence also keeps in check the chaotic perturbations that emerge from
feedback loops and non-linear instabilities, and create hazards and
distortions. It’s true that politicians are hopelessly incompetent at managing
these situations, but it’s also the case that leaving all this to market
mechanisms would be an inadequate solution for the top-down complexity of the
task. Markets with too much freedom underwhelm the necessary big picture
thinking, and governments with too much power overwhelm big picture thinking –
and therefore, the optimum balance is likely to occur with a much freer market
than we have now, with a much smaller state than we have now.
I’m not even sure it’s realistically possible to get rid of the state.
Given the inevitable power law distribution of wealth, and the natural
hierarchies that emerge from differentiated power and competence and status
mongering, I suspect that even a concerted attempt to produce the
hypothetically ideal anarcho-capitalist society would soon find itself succumbing
to the formation of a structure where acquisition of authority and rule was at
the heart of the society, because it will probably always be the case that
there are a majority of humans who wish to delegate responsibility to those who
promise to govern them according to their wishes and principles. In most cases,
central planning will never have the knowledge, incentives or resources to act
on our behalf better than we can ourselves from a bottom-up standpoint; but on
the other hand, in some cases, bottom up decision making also lacks the
knowledge, incentives or resources to centrally plan and distribute resources
with the foresight and big picture thinking required to support the free market.
The upshot of all this is that a healthy combination of market and state is
highly likely to be an inevitable coaction on the journey of human progress.