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Marzo-Septiembre  2018

Liberalism and Allegory: A Tragedy

CategoríaMarzo-Septiembre 2018Economía

Daniel B. Klein

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__________________________________________________________________ Daniel B . Klein Liberalism and Allegory : A Tragedy Yours for $ 1 . 89 We must look at the price system ,” wrote Friedrich Hayek ( 1945 , 86 ), as a mechanism for communicating information if we want to understand its real function .” Hayek s talk of communication enriched economic thinking . Such talk is common among market-oriented economists . In their textbook , Tyler Cowen and Alex Tabarrok write : “[ P ] rice signals and the accompanying profits and losses tell entrepreneurs what areas of the economy consumers want expanded and what areas they want contracted ( 2010 , 85 ). Such talk is both illuminating and beautiful . But the price of eggs communicates : Yours for $ 1 . 89 And nothing more ! If we are to be literal , we must mind the element of communion , or community , in communication . In its literal sense , communication is a meeting of minds . The knowledge communicated passes through us as commonly experienced ideas , images , or notions . For the entrepreneur computing her profit or loss , there really is no communication in the literal sense , no meeting of minds . Whose mind would she meet ? In no literal sense do prices and other market phenomena tell entrepreneurs what to do . We want to talk of prices as signals ,” but we must recognize that they are not signals in a literal sense . The Prudent Shipmaster and the Invisible Hand Adam Smith illuminated the marvels of markets by using simile and metaphor . He sketched an aspect of social coordination : It is the interest of the people that their daily , weekly , and monthly consumption should be proportioned as exactly as possible to the supply of the season .” The grain dealer adjusts his prices and quantities in ways that conduce to such coordination : Without intending the interest of the people , he is necessarily led , by a regard to his own interest , to treat them , even in years of scarcity , pretty much in the same manner as the prudent master of a vessel is sometimes obliged to treat his crew . When he foresees that provisions are likely to run short , he puts them upon short allowance . Though from excess of caution he should sometimes do this without any real necessity , yet all the inconveniences which his crew can thereby suffer are inconsiderable in comparison of the danger , misery , and ruin to which they might sometimes be exposed by a less provident conduct ( WN , 525 , italics added ). DANIEL B . KLEIN ( PhD , New York University ) teaches economics at George Mason University ( Virginia , USA ), where he leads the Smithian Political Economy program . He is also the JIN Chair at the Mercatus Center at GMU , and a fellow of the Ratio Institute in Stockholm , Sweden . Laissez-Faire , No . 48-49 ( Marzo-Sept 2018 ): 58-67
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__________________________________________________________________ The simile of the prudent shipmaster is a miniature of the metaphor of the being whose hand is invisible : [ The individual ] generally , indeed , neither intends to promote the public interest , nor knows how much he is promoting it . ... [ A ] nd by directing that industry in such a manner as its produce may be of the greatest value , he intends only his own gain , and he is in this , as in many other cases , led by an invisible hand to promote an end which was no part of his intention ( WN , 456 , italics added ). Sometimes a metaphor uses an animal or a spirit to represent human existence , or as a foil to human existence . The dictionary defines allegory as an expressive style that uses fictional characters and events to describe some subject by suggestive resemblances ; an extended metaphor .” The Allegory of Joy After Smith s time , thinkers fell into touting fact and logic , accuracy and precision , not allegory . It was the occasional figure who made open use of allegory , such as Edwin Cannan , an ardent Smithian and editor of The Wealth of Nations : The reasons why it pays to do the right thing to do nearly what an omniscient and omnipotent benevolent Inca would order to be done are to be looked for in the laws of value ( 1902 , 461 ; italics added ). The free-enterprise system , Cannan suggests , leads to patterns of activities somewhat like those pleasing to a benevolent being in an allegory . The allegory is that a super being let s call her Joy has super knowledge , encompassing what Knud Haakonssen ( 1981 , 79 ) distinguishes as system knowledge and contextual knowledge . Joy has system knowledge and contextual knowledge for every individual . The allegory is that Joy issues instructions , or requests , cooperatively , to each market participant spelling out the right thing to be done . Joy tells Bridget the baker that perhaps she should buy new ovens , look out for better deals in flour , and advertise her confections . Within the allegory , Joy communicates these instructions . Within the allegory there is a meeting of Joy s and Bridget s minds regarding these actions . Bridget is sensible to Joy s benevolence and ethical wisdom , and feels entrusted to advance what Joy finds beautiful . Bridget follows , not market signals , but Joy s communications , which are embraced voluntarily by Bridget from what Smith would call her sense of duty she enters , if I may say so , into the sentiments of that divine Being ( Smith , TMS , 276 ). In the allegory , those communications tell Bridget to take actions rather like those that she is led to take in the actual world , from market signals . Cannan suggests that the market conduces to socially beneficial actions much as a benevolent system of superior knowledge , communication , and cooperation would . Insights Gained by Allegory The allegorical talk of communication empowers us to formulate questions about rules and institutions , questions that prove wonderfully fruitful : ( 1 ) What arrangements generate the signals that best communicate what to do ? Such talk gets us to focus on what the relevant signals are . It gets us to focus on how well they conduce to the general interest . It helps us appreciate how com- __________________________________________________________________ 59
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__________________________________________________________________ munications adjust when practices go wrong . ( 2 ) If the signals start telling people to go in the wrong direction , will the system correct itself ? Will it tend to correct errors ? Indeed , it is allegory that gives cogency to the idea of market error or social error .” ( 3 ) Will the system tend to keep up with changes ? How readily and reliably will it communicate instructions to adjust to changes ? ( 4 ) Will it dig up new opportunity , new matters for communication ”? What are the system s tendencies to discover and adopt new opportunities for advancing the good of the whole ? ( 5 ) How do the communicative properties of the system fare when the system is laden with governmental restrictions and government-privileged big players ? The allegory of Joy communicating instructions enables one to reason in reference to the perspective of one who has superior knowledge and purposes that we go along with even while we emphasize that we mere mortals do not have such knowledge . We discuss what Joy feels about what she sees , but do not pretend to see what she sees . Moreover , we do not pretend to much feel what she feels . She feels universal benevolence . We cannot and do not . One s pursuit of wisdom and virtue is not so much the aspiration to become more like Joy , but rather to become more like those who , it seems , excel in advancing what she finds beautiful . Emulating such exemplars , we do our duty to advance universal benevolence . The Private Enterprise System as a System of Cooperation Many had suggested that the economy was a system of cooperation , including Jeremy Bentham , Thomas Hodgskin , Richard Whately , Frederic Bastiat , William Graham Sumner , Henry George , and Philip Wicksteed . We find such talk in Milton and Rose Friedman s Free to Choose . To bring the tradition down to today , let s turn again to Cowen and Tabarrok : To bring just one product to your table requires the cooperative effort of millions . Moreover , this immense cooperation is voluntary and undirected .” But Karl Marx emphasized that the system , in its immensity , was not cooperation , and condemned it for that : “[ A ] ll labour in which many individuals cooperate necessarily requires a commanding will to coordinate and unify the process . much as that of an orchestra conductor ( Marx , 1998 , 382 ). We dispute that genuine cooperation depends on a commanding will : When you and I cooperate in making lunch , we scarcely need regard anyone s will as commanding .” But cooperation does entail some sense of direction of a common enterprise , to which we mutually contribute . Hayek would seem to concur : Cooperation , like solidarity , presupposes a large measure of agreement on ends as well as on methods employed in their pursuit . It makes sense in a small group whose members share particular habits , knowledge and beliefs about possibilities ( 1988 , 19 ). It is true that the economy in all its immensity entails myriad instances of cooperation , but it also entails myriad instances of non-cooperation . It entails myriad instances of abstention , of deciding not to cooperate with certain parties . It entails myriad instances of competition __________________________________________________________________ 60
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__________________________________________________________________ and rivalry . It entails myriad instances of rather impersonal exchange that , as cooperative moments , are tiny and often ambivalent . It entails myriad instances of ethically ambiguous moments of not sharing intelligence . It entails many instances of deception and misrepresentation . It entails a lot of things , not just instances of cooperation . Above and beyond all that , here is the key point : The immensity can scarcely be said to constitute a common enterprise that the actors share a mutual sense of . Unlike genuine cooperation , the actors do not have any mutual sense of mutually advancing some shared goal or enterprise . Face it : In a literal sense , it is wrong to say that you have cooperated with the myriad people who contributed to the production of the pencil or the woolen coat . But does that mean we should surrender the useful and agreeable talk of communication and cooperation ? No , we should embrace the useful and agreeable talk . But we should recognize that it is not literal . It is allegorical . We can affirm the cooperation talk : In an allegory , individuals communicate with Joy and voluntarily follow her guidance , to produce a pleasing concatenation of activities . In the allegory , Joy is like a quarterback with whom everyone communicates . And in the allegory the members of society have common knowledge that each communes with Joy and so there is a mutual sense of advancing the coordination of a vast concatenation of their actions , just as the members of a football squad have common knowledge that each communicates with the quarterback and there is a mutual sense of advancing the coordination of a concatenation of their actions . In the allegory , there is leadership . In the allegory , there is an immense cooperation . Then , when we turn to the real-life system and we say that the immense system is a system of cooperation ,” we mean and understand that we mean that it functions somewhat like our imagined allegorical system of cooperation functions . The Tragedy of Allegophobia Adam Smith s The Theory of Moral Sentiments is a profoundly allegorical work , involving such formulations as the man within the breast ,” the impartial spectator ,” the wisdom of nature ,” and universal benevolence .” The moral and political judgments of TMS were openly aesthetic and lacking in theoretical foundations . Smith died in 1790 , and things went downhill , or even dropped off a cliff . TMS was steadily criticized . The critics recognized that TMS lacks foundations . The critics said : Science , real knowledge , calls for foundations , not allegory ; it calls for precision and accuracy , not aesthetic judgment . Not long after Smith s death the work fell into oblivion , and reemerged only beginning around 1980 , once enough people had stopped holding its non-foundationalism against it . During that long oblivion , liberalism was led principally by allegophobes . Like any phobia , allegophobia is deficient in self-awareness and self-understanding . While touting foundations and a grammar-like scientific status , liberals in fact wanted poetry , too . Not only were they poets who didn t know it , they were poets who denied it . The contrarieties made their so-called science vulnerable , even __________________________________________________________________ 61
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