Tuesday, December 15, 2009

Hayek and Spontaneous Order at Cato Unbound

following posting is in response to a series of articles discussing the nature of Friedrich von Hayek’s theory of spontaneous order at Cato Unbound. The first article is Four Problems with Spontaneous Order by Timothy Sandefur, with responses by John Hasnas, Daniel Klein, and Bruce Caldwell (the last of whom I met at a Hayek conference this past summer), and then a response to them by Sandefur. I’m going to make comments on each, in order. I am very much in disagreement with Sandefur, but I think some of the defenses of Hayek fall a bit short, which I’ll be taking up. Those who number their points, I’m numbering along with them.

Sandefur

1) The main problem that I see with Sandefur’s argument is that he doesn’t seem to know the difference between a spontaneous order and an organization. If you don’t understand this distinction, of course you think the difference is merely a matter of distance. He is mistaking lions for the savannah ecosystem in which they live. A lion is an entity with goals. An environment or ecosystem cannot have goals – any more than can a spontaneous order, which is a kind of human social ecosystem. His examples of micro- and macroevolution fails because evolution happens at the level of organisms/entities and, as already noted, a spontaneous order is more akin to an environment or ecosystem.

Now when it comes to law, one can argue that law as a whole should have never been considered a spontaneous order by Hayek precisely because it is constructed in legislation. One can nevertheless conclude that social norms of behavior are a spontaneous order. The fact that a spontaneous order can be co-opted and turned into a constructed order is no argument against the existence of spontaneous orders as distinct from constructed orders.

2) In spontaneous orders, we have naturally emerging bonds being made and broken between agents/entities. This results in maximum information flow, as occurs when we have a scale-free network. Interference in that process forces the maintenance of bonds that would have otherwise broken or the breaking or even prevention of making bonds that would have otherwise existed. The result is a rigid hierarchy. These bonds are not as concrete as Sandefur’s example.

If equality under the law is good and the increase of wealth and knowledge are good (meaning, the more rapid the increase, the better), then spontaneous orders are superior to constructed orders. This kind of equality (under the law) is necessary for the creation of a spontaneous order, which in turns increases wealth and knowledge. I suppose if one does not think that more wealth and knowledge are good. Then one would not see spontaneous orders as good, but even dictators pretend to what at least more wealth (though the consistent outcomes of attempts at constructed orders making less wealth, indeed, decreasing wealth, suggests otherwise for current defenders of such systems). A spontaneous order is therefore good because it is good for and good at producing wealth and knowledge. What people do with that wealth and knowledge is outside the realm of the spontaneous order proper, and therefore one should not criticize the spontaneous order for creating these things agents within the system misuse. One should keep one’s criticisms for the agents themselves. Thus, spontaneous orders in this sense are amoral, being ateleological.

3) Sandefur has a point when it comes to Hayek on morals, law, and legislation, but spontaneous orders can be rescued from Hayek’s own arguments of social constructivism with the recognition that humans do have instincts, including moral instincts (see Marc Hauser’s Moral Minds that lay a foundation for behavior and for judgment. More, humans have paradoxical drives that spontaneous orders can emphasize or play down, depending on the order. Sandefur also misses the point that different systems have their own internal logics and, therefore, different criteria for rational behavior. Hayek is warning against importing the rules form one spontaneous order into another just as much as he warns against arbitrary rules. More, the system should be judged by the outcome of the system, not by how some particular elements in the system are doing. This also answers his first paragraph of his response paper.

4) Sandefur does not seem to understand what really happened with his contrary examples. In the case of segregation, laws were on the books in the states to prevent social evolution. Tradition is not stagnant and unchanging, as anthropologist Victor Turner discovered. Our society, by the 1960’s, had evolved to a point where the people themselves as a whole wanted legislative change. The laws in the South were designed to prevent natural interactions from occurring, whether in the economy, socially, etc. The law changed after society did. The fact that the federal laws overturned state and local laws is no argument that the change didn’t begin as a spontaneous order, even if it did end in legislation. This kind of legislation always follows social change – it never leads it. The same is true of his other example, Lawrence v. Texas. Attitudes toward homosexuality had changed so much by then that the laws had to catch up with the prevailing morals. The presence of those who resist any such change is no argument against spontaneous order. In fact, to insist that tradition as Hayek understood it means stagnation is to ignore the fact that spontaneous orders are by definition dynamic. Tradition for Hayek is a touchstone helping keep the system stable – it is not ossification of the system (making it no longer a system). The judges’ behavior in Lawrence v. Texas was rational within the system that had evolved by the time of the decision. It would not have been considered – or considered rational – a hundred years earlier. But the evolution that led to that decision was bottom-up.

Hasnas

1) Hasnas is generally correct in his defense of the idea of spontaneous orders, but he also leaves out the issue of teleology. Organizations are teleological – they have a goal, a purpose. Spontaneous orders are non-teleological – they do not have a goal. When a leader says, “We need to pass X to create more jobs in the economy,” that leader is treating the economy as a teleological organization. Stalin’s infamous five-year plans did the same thing. On the other hand, a leader who says, “We need to pass X so companies will be more productive and make greater profits,” is not thinking of the economy as a made order, but as a spontaneous order in which there are made orders that will react in different ways to the proposed change. That may increase general employment – or it may not. But the rule change does not address the spontaneous order as such, only the elements within it and their interactions.

2) Hasnas does an excellent job refuting Sandefur’s second point, to which I have nothing more to add than what I said above in my initial response.

3 & 4) Hashas is generally correct that Hayek’s judicial and moral philosophizing has much to be desired – however, I think he does lend short shrift to the idea of spontaneous order in these realms. As I argued above, Hayek mistakenly decouples the spontaneous orders from our evolved instincts, and this includes our morals. There is room for ethics to evolve while being rooted in moral instincts. Just as much, moral reasoning evolves in such a system, making us able to critique and criticize. Still, we remain tethered to our evolved morality. We need all three: moral instincts, evolving tradition, and moral reasoning.

Klein

I think Klein gets to be a bit too cute with his idea of Hayek’s “code” – “custom” is not necessarily “liberal principle” (in fact, almost by definition, customs are not liberal in principle, but conservative in fact), “competition” is really economic competition, not freedom per se (though freedom of interaction does allow for and is a necessary foundation for true competition), and “the market” is by definition free of interference. He is correct, however, in identifying “spontaneous” with “free,” as one cannot be spontaneous without the freedom to do so.

His argument falls a bit short when he discusses what Hayek means by order. Certainly he “get it,” but he doesn’t go far enough in explaining what is meant. Critics of the market argue that the market is too “disorderly” and that the government is needed to make it “orderly.” The kind of order they mean, of course, is regular order – the kind of order found in crystals. Hayek argues for a kind of order that lies between “order” and “disorder,” one which creates patterns (of behavior in the case of spontaneous orders) that are not rigidly ordered, but not random, either. A good visual example is the self-organizing fields of rocks in Antarctica.

Caldwell

Caldwell is good to point out we need some historical context. That always helps us to understand what we are reading. However, we need to do better than “I know it when I see it.” That is what we’re trying to do at the Fund for Spontaneous Orders at the conferences and at Studies in Emergent Order.

Sandefur II

In his response, Sandefur continues in his error of thinking a corporation is a spontaneous order, which it clearly is not (nor did Hayek ever claim them to be). In fact, the core of his error in thinking is is not recognizing this difference. A spontaneous order is made up of various agents and organizations, each of which is behaving in a purposeful manner – but these interactions result in a spontaneous order with no goal or purpose. He essentially argues that, because lions are in an ecosystem, and because they interact with various other elements in an ecosystem, one cannot therefore distinguish between a lion and its ecosystem! Both may be complex adaptive systems (CAS), but they are different kinds of CAS’s. A spontaneous order is a very different kind of CAS than is an organization. The fact that both are CAS’s does not mean spontaneous orders cannot be distinguished from other CAS’s. This is essentially the logical error of “All lions are cats,” therefore “All cats are lions.” To Sandefur, house cats are really lions because both are cats.

His example of nationalized health care as appearing to not be a constructed order fails miserably because, apparently, for him, only one person can be involved in construction. There must be a goal in constructing a building, but does that mean only one (or a small group) is involved> Hardly. One could make a list as long as his of people necessary to construct a building – and a building could never arise through spontaneous order. Spontaneous orders just don’t order that way. Many people are coordinating to a common purpose to create a teleological system in nationalized health care. That makes it a constructed order. Next, it is imposed from the top-down. That “top” may be fairly large, but in the end it is a top-down construction. Just because a few bones are thrown to the hoi polloi to settle them down doesn’t mean a bottom-up process was used or in play.

His example of Wal-Mart fails because he fails to recognize that in a corporation, there is a hierarchy. There may be local centers of decision-making, but such a system is not truly decentralized, let alone scale-free. And there is not freedom of entry and exit. Those are decisions made by someone. I can’t just go open up a Wal-Mart because I decided to one day. A spontaneous order has these features; Wal-Mart does not.

In the end, Sandefur cannot even seem to understand the difference between a bottom-up social reformer who tries to persuade people and a top-down social reformer who uses the power of the state to impose his vision on everyone, whether they like it or not, whether it maps well onto human nature of not. The former is part of the spontaneous order; the latter destroys it. If Sandefur cannot understand that basic distinction, of course he cannot see the difference between spontaneous and constructed orders – nor can he tell the difference between freedom and dictatorship.
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