* Note on terminology: I am wary of the term ‘free markets’ because freedom properly pertains to people and the use of such a morally mixed, and thus analytically clumsy, term encourages the fetishizing of markets, both positively and hostilely. For markets are rather specific collections or networks of interactions between individuals and firms with all sorts of boundary issues. To talk of a “free society” does not suffer quite the same issue since societies are made up of people, rather than specific sets of interactions, while ‘free commerce’ refers to the freedom to transact in general.Conversely, what distinguishes a lot of thinking hostile to market activity is that it seems to pay so little attention to the issues raised by Hayek. This could, of course, be simple ignorance. The solution then, would just be to encourage all such folk to read Hayek’s essay.
As a result of thinking about this post, I would like to suggest that doing so—however worthy in itself—would, in fact, have very little effect. It would have very little effect because deeper disputes are involved. Hayek’s essay is based on a framing of people’s preferences that those hostile to free commerce and open markets typically just do not share. It is also based on a framing of the primacy of social reality over moral intention that is typically also not shared. It is these very different framings that drive the failure to warm to Hayek's analysis.
The role of preferences
Early in his essay, Hayek establishes the central role of individual preferences in his analysis when he writes:
The economic problem of society is thus not merely a problem of how to allocate "given" resources—if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.Hayek is taking it for granted that people’s preferences matter and, moreover, if not equally, at least equivalently. That everyone is on the same evaluative plane.
Suppose, however, you have preferences about other people’s preferences and you believe those preference about their preferences—what we might call meta-preferences—have a trumping moral claim. To the extent of having the right to control, in effect edit, what preferences other people can act upon. Such a claim might be straight-out paternalism (editing their preferences allegedly for their own good), but need not be. Then you will be unmoved by Hayek’s analysis because you disagree quite fundamentally with his framing.
I will call such confident meta-preferences inquisitorial preferences (as in “no one expects the Spanish Inquisition”) because there is a presumption of morally trumping right to edit other people’s preferences. As I noted in a recent speech, down the ages:
When one looks at the denunciations of vulgar merchants and “immoral” commerce, again and again one sees the real complaint is that they attend to what people want, not what the critic thinks people ought to want. That they attend to what people are like, not what people allegedly ought to be like.An observation Milton Friedman had made almost 50 years ago (via):
What most people really object to when they object to a free market is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.Free commerce and inquisitorial preferences are antipathetic. And any social project that requires strong control over others involves inquisitorial preferences.
In the case of Hayek’s analysis, if you have inquisitorial preferences, then points that Hayek makes such as:
The answer to this question is closely connected with that other question which arises here, that of who is to do the planning. It is about this question that all the dispute about "economic planning" centers. This is not a dispute about whether planning is to be done or not. It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals.will lack power, because editing other people’s preferences is so much the point.
Similarly, when Hayek writes:
But a little reflection will show that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active coöperation.again, if one is concerned about people having and acting upon the “wrong” preferences, then their power to attend to attend to their immediate circumstances is not only not a strong point, it is precisely that you do not want them to do, to a greater or lesser degree.
Of course, inquisitorial preferences require a quite uneven view of people and their moral understanding. If one group is inclined to the “wrong preferences”—and you are someone who understands what “correct” preferences they ought to have—you are making a very strong claim of cognitive superiority. To you, people will not be even close to equivalent in their preferences.
Moreover, there is a strong example of a realm of non-equivalence in preferences that everyone has experience of. Family life. Parents are widely taken to have a right to edit, to control, the preferences of their children. Those who tend to be somewhat selectively suspicious of markets (in matters sexual and reproductive, for example) tend to elevate families—conceived in particular ways—as the basic building block of society. While it is a striking feature of those who embrace politics more generally hostile to markets that they often talk of how their views about how society should be as being formed in their family life, in their upbringing; that they want society to be like a family. Which sounds warm and cosy, but families are, inherently, arenas of profoundly unequal authority. Families are the classic realm where inquisitorial preferences are accepted as legitimate. To elevate family life as some wider model of society is to elevate a realm of inquisitorial preferences.
Parents have the right to inquisitorial preferences over their children because of their greater cognitive power. As children grow and expand in their cognitive power (both in their knowledge and in their ability to reason), then the right of parents to edit the preferences of their children is generally taken to decline more or less equivalently. (A presumption of respect is taken to persist, but that is not quite the same thing. Obviously, there are also some cross-cultural differences here.)
To make a claim to the right to inquisitorial preferences is to make a very strong claim of cognitive in-equivalence: to make a claim of seriously greater moral understanding and social knowledge. This is a claim of strong cognitive, particularly moral, superiority. Such a claim of superiority is surely very attractive. It is a fine thing to think of oneself as a member of such a cognitive elite. If one has a strong preference to think of oneself in such a way, then Hayek’s analysis is going to pass you by.
So, when Hayek writes:
… the shipper who earns his living from using otherwise empty or half-filled journeys of tramp-steamers, or the estate agent whose whole knowledge is almost exclusively one of temporary opportunities, or the arbitrageur who gains from local differences of commodity prices, are all performing eminently useful functions based on special knowledge of circumstances of the fleeting moment not known to others.you are likely to be unmoved on two grounds. First, such actions are likely to be serving preferences that “require” editing by those of “superior” moral understanding. Secondly, granting such actions as eminently useful activities tends to undermine any notion of cognitive superiority based on a profound level of superior knowledge.
For Hayek’s essay is not merely an essay about knowledge, it is an essay about ignorance. About what we do not know and other people do. Worse, what we cannot know and other people will. It is an essay enjoining cognitive humility. If one’s sense of identity is based on a notion of profound cognitive (particularly moral) superiority, then Hayek’s essay will not only be unpersuasive, it will be positively antipathetic to your fundamental views. It will be particularly so to your sense of identity.
An elite crowd
A sense of identity based on a sense of cognitive superiority will be more resilient if it has external support. Such as comes from the mutual support to be gained from a shared sense of belonging to a cognitively superior elite. Any such shared sensibility is a club good (since it has shared benefits that people can be excluded from). This sensibility can come from believe in a common revealed truth (a common understanding of what God wants), a common theory of the world (such as Marxism) or simply any common sense of beliefs that mark the shared status. It is a club because those who do not share the marker-beliefs are thereby excluded from the moral-cognitive elite. The sense of being a member of a moral-cognitive elite is the shared benefit, the marker-beliefs the ticket of membership.
One can get the psychic benefits of the sense of belonging to a cognitive elite while also gaining the social benefits (and reassurance) “going along with the crowd” and thereby reinforcing their sense of belonging to a cognitive elite. The dynamic is therefore mutually reinforcing. Indeed, given the shared incentives involved, an adjusted form of the “Goebbellian” principle of propaganda may operate—a proposition being repeated often enough to become accepted as simple truth.
Now, there are major problems with such an approach. If believing X “shows” one to be a member of the morally superior, then citing any evidence that X is not true becomes a moral affront, indeed an affront to one’s very sense of identity. Matt Ridley’s point that political correctness involves inferring ‘is’ from ‘ought’ speaks to this. Such an approach is not only subject to serious tendencies to informational and reputational cascades, it makes the risk of collective cognitive error much greater. For there can be no legitimate debate about X, if X itself is a marker of fundamental legitimacy and so prescribes the limits of legitimate debate. (Such as the way the phrase “the science is settled” is currently used.) Which also puts off limits any evidence that undermines X or any human experience or preferences that go against X.
Yet any elite has to be defined against a non-elite. So the existence of people who question or disagree with X is typically a positive benefit, necessary to make believing X a genuine status marker. We are all familiar with the various labels of moral and intellectual perdition: ‘reactionary’, ‘counter-revolutionary’, ‘secular humanist’, ‘liberal(sneer)’, ‘conservative(sneer)’, ‘Religious Right’, etc. Some of this is just political tribalism (“those who agree with me are good, those who disagree with me are bad”). It is when it comes attached with a presumption of fundamental illegitimacy that it moves over into status markers being used to set the limits of legitimate opinion and thus of debate.
Hayek’s essay is profoundly antipathetic to any narrow cognitive boundary-setting, for it not only enjoins cognitive humility, it also enjoins cognitive openness. Yet commitment to cognitive superiority based on marker beliefs (such as the claim of cognitive superiority in the first place) naturally turns into a commitment of cognitive closure, to cognitive gate-keeping. To beliefs as assets (pdf) to be defended. For if something is outside the boundary of legitimate debate, that then justifies excluding such views, and their adherents, from “contaminating” public discourse, journals, advisory committees, the tender minds of students, etc.
Consider some of Hayek’s more telling points, such as:
It is, perhaps, worth stressing that economic problems arise always and only in consequence of change. …These points are very powerful in why cognitive humility is appropriate, provided one thinks people’s preferences have some general authority. If, however, you do not believe that, Hayek’s points not only lose much of their power, to accept them would also tend to undermine any sense of belonging to a cognitive elite.
In a competitive industry at any rate—and such an industry alone can serve as a test—the task of keeping cost from rising requires constant struggle, absorbing a great part of the energy of the manager. …
One reason why economists are increasingly apt to forget about the constant small changes which make up the whole economic picture is probably their growing preoccupation with statistical aggregates, which show a very much greater stability than the movements of the detail.
This is, perhaps, also the point where I should briefly mention the fact that the sort of knowledge with which I have been concerned is knowledge of the kind which by its nature cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form. …
If we can agree that the economic problem of society is mainly one of rapid adaptation to changes in the particular circumstances of time and place, it would seem to follow that the ultimate decisions must be left to the people who are familiar with these circumstances, who know directly of the relevant changes and of the resources immediately available to meet them. …
Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan. …
We must look at the price system as such a mechanism for communicating information if we want to understand its real function—a function which, of course, it fulfils less perfectly as prices grow more rigid. …
Hayek speaks of the “marvel” of the price system:
I have deliberately used the word "marvel" to shock the reader out of the complacency with which we often take the working of this mechanism for granted. I am convinced that if it were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind.But that is precisely the problem. If one’s identity is set around the “marvel” of one’s own understanding, the marvel of spontaneous order is very definitely not marvellous at all. Particularly not if it allows people to express their “incorrect” preferences.
If one is engaged in the politics of salvation—saving society, saving the planet, saving people from themselves—whether secular or religious, then inquisitorial preferences are a natural part of the package. Such folk become like Adam Smith’s “Men of System”, attending to their own theories of government, and not to people and circumstances, folk who apparently:
… imagine that they can arrange the members of a great society with as much ease as a hand arranges different pieces on a chess-board. He does not consider that in the great chess-board of human society, every single piece has a principle of its own, altogether different from that which the legislature might choose to impress upon it.Of course, we can simply fail to see that people may have different motives and incentives than what we realize. But if we claim to right to edit their preferences, we are even more likely to discount their actions: both because we presume to control them and because they will have no legitimacy if they diverge from what they are supposed to be.
It is worth noting that, over the last 150 years or so, folk on the left/progressivist side of politics have believed quite different—indeed contradictory—things about whether morality is universal; the role of race, class, ethnicity, culture, state, sex, sexuality; the importance of environmental issues, the role of nature; etc. What has been persistent is the strong sense of moral certainty with which whatever accepted position at the time has been both embraced and pushed. Which suggests that what is really being sold is precisely that enduring sense of collective moral certainty. (Just as much of the fundamentalist religious impulse is a drive to defend a sense of moral certainty against the threats of modernity.) If the fundamental prism through which one views politics is a sense of moral certainty, then Hayek’s analysis—with its cognitive humility and sense of serious epistemic limits to effective social action—will be antipathetic. Particularly as its epistemic humility can easily be presented as moral cowardice or moral failure. If moral certainty—of a form that impels one to seek to order society, and thus to seek to control the actions of others—is central to one’s world view, then Hayek’s rather constraining social realism will be highly uncongenial in itself.
If one is engaged in the politics of salvation, then a sense of being a member of a cognitive elite, one with clearly greater moral and intellectual understanding is also a natural part of the package. The politics of salvation have a long history, and not a happy one. Hardly surprising, since the cause is so “obviously” so morally urgent, so morally trumping, that no dispute of its fundamental premises can be permitted. Indeed, to do so turns you into an enemy of salvation.
It is, after all, quite noticeable that the adherents of “conspicuous compassion” and “social tolerance” can be very uncompassionate, and very intolerant, towards those of the “wrong” opinions; that the adherents of “the Gospel of Love” can be quite keen on the rhetoric of hate; and that the adherents of “Allah the merciful and compassionate” can be quite merciless. But if one possesses the realm of righteousness up to the boundaries of morality, then the intensity of one’s rejection of those beyond those boundaries displays one’s commitment to righteousness by one’s damning of its enemies. Expressing cathartic hatred becomes a moral act—but not one that is a comfortable conjunction with Hayekian cognitive humility.
Parading one’s good purposes, one’s fine intentions, is a very easy way of establishing membership of a cognitive elite. For example, from not being involved in vulgar profit-seeking. Commerce, with its open pursuit of gain, provides a very easy moral foil. But if one is defining oneself as a member of a cognitive elite by one’s separation from commerce, then Hayek’s analysis is going to be very uncongenial. It is not hard to see why much of academe does not seem very willing to take Hayek’s essay’s lessons of cognitive humility, of the inevitability of ignorance, to heart. (And also why anti-business politics are so attractive to academics.)
Editing people and other projects
The grander one’s intentions, the more inquisitorial preferences, and a sense of being a member of a cognitive elite, will be a natural part of one’s outlook. The utopian urge, with its war against people-as-they-are in the name of people-as-they-ought-to-be, has this in full measure. Indeed, the utopian cause of profoundly transforming society does not merely seek to edit preferences, it seeks to edit people: to remove the “dross” to reveal the “new-made” members of the final society. With a ready-made excuse to discount people’s preferences—that they are contaminated with the dross of the past and have yet to achieve the splendour of the transformed future.
Obviously, the grand revolutionary projects of modern times—creating a classless society, a racially-pure society, a society fully acknowledging Allah’s sovereignty—are profoundly based on inquisitorial preferences and the sense, at least in the revolutionary vanguards, of being members of a cognitive elite. These are necessary parts of the enterprise, and so intimately bound up with their inherently tyrannical and murderous nature. But there are also more petite versions of the tyrannical utopian impulse. For example, the war against human sexual diversity: for what is the anathematisation of homosexuality except a form of inquisitorial preferences? But it is also a utopian war against people-as-they-are (sexually diverse) in the name people-as-they-allegedly-ought-to-be (strictly heterosexual). When the Vatican categorises the same-sex attracted as “objectively disordered” it is justifying editing their preferences by discounting so profoundly their human agency.
There are good reasons why all societies set boundaries. There are all sorts of preferences we seek to edit for good reason: preferences to kill, to steal, to molest children and so on. But there is a major difference between actions that protect human agency (the bars on killing, theft, rape etc) or which protect human interaction (bars on fraud, false pretences, etc) and those which are simply attacks on, or restrictions of, human agency—such as the anathematisation of same-sex activity or many of the restrictions on commercial acts between consenting adults. Clearly, there is nothing in Hayek’s analysis that is problematic for actions to protect human agency. There certainly are for those who wish to claim the knowing right to attack, control or restrict the agency of others.
And there are some political projects that are simply not compatible with Hayek’s analysis. The urge, for example, to achieve a strong level of material equality. Not only does that require a highly static society, and any static social order is threatened by the restless energy of commerce. But it also requires strong control on people’s actions, and the presumption of knowledge that goes with that.
Control that involves a great imbalance in power: an imbalance between those to be equalised and those doing the equalising. It is one of the great ironies of politics, that the cause of equality can be such a buttress to a sense of being a member of a cognitive elite and to give such authority to highly inquisitorial preferences. One may reasonably say that such politics make a fetish of equality, rather than actually practising it. Hayek’s message of cognitive humility, of inevitable ignorance, is highly uncongenial to such projects, to say the least.
But the fetish of equality can be used to justify highly inquisitorial preferences, and the sense of being a member of a cognitive elite, without great projects of material equality. Consider tender concern for equal treatment of people by sex, sexuality, race, ethnicity, etc: particularly in public language. That naturally involves highly inquisitorial preferences about what people say and how they say it. It also naturally buttresses a sense of being a member of a moral-cognitive elite—someone who “really” understands the issues and sensitivities.
While the sense of being a member of a moral-cognitive elite can be quite intoxicating, it is better to use, as markers for such status, beliefs that do not get in the way of the practicalities of day-to-day existence nor require the cooperation of a diverse range of other people. So, someone engaged in commerce—and who therefore require direct consent for their income—is likely to be less inclined to such games than someone who is paid by taxes, or tenured, or in some other way has an income insulated from the direct consent of a wide range of others.
It is also better, if any belief is going to be a common markers of status, if it has a certain generality, so that it can be used as such by a range of people (but not so many that they no longer mark status). Which is why religious and political issues are so useful: they provide both the necessary generality and distance from the practicalities of day-to-day life. Environmental issues are particularly so, as they are both political and (fairly clearly) a substitute for religion: providing a structure of meaning, with its own sins, good works and taboos. Saving the planet is, after all, a form of salvation.
Hayek’s analysis enjoins a certain causal humility. What its supporters would regard as social realism. Though there are perfectly legitimate debates about what can be done effectively in any instance, Hayek’s analysis is a powerful support to a somewhat limited view of what is possible in public policy. This can sit badly with a strong sense of moral urgency about the ordering of society.
And it is, given somewhat abstract and removed nature of such matters from the practicalities of day-to-day life, relatively easy to simply block contrary evidence about social action and social (and other) causation. Particularly to ignore or reframe them: for example, by reconstruing opposing positions so they are easily knocked down; insisting on malignant motives; or simply misunderstand them because they are so outside the way “everyone I know” thinks; to be unaware of contrary evidence and explanations at all for the same reason; and so on. It is amazing how much individual and collective cognitive blockage the notion “good people believe X” can generate. (As philosopher and environmentalist Martin Cohen cogently illustrates. Steven F. Hayward provides further particulars.)
Cognitive blockage that Hayek’s analysis fundamentally undermines. Inquisitorial preferences flow, implicitly or explicitly, from a sense of identity vis-à-vis others, from certain preferred way of seeing ourselves (and people like us) and them (and people like them). The cognitive humility enjoined by Hayek’s analysis is a cognitive affront to anyone with strongly inquisitorial preferences. It is even of a cognitive affront if such preferences flow from a strong sense of belonging to a moral-cognitive elite combined with a powerful sense of the trumping righteousness, of the overwhelming moral urgency, of one’s moral claims for the ordering of society. Hayek’s analysis will not reach across that divide: people have to get off that cognitive high-horse before they can fully appreciate the power of his analysis.