working paper – comments encouraged.
“It doesn’t matter if a cat is black or white, so long as it catches mice.”
“it depends in the end on what one’s definition of methodological individualism is.”
Methodological individualism provides important insights into spontaneous orders, but is inadequate to probe their reciprocal impact upon the individuals whose actions generate the system, or their mutual relationships. When spontaneous orders such as science and the market interact, the interacting emergent properties arising from different spontaneous orders, combined with systemically generated values detached from the values of those whose actions produce them lead to phenomena inaccessible to analysis by methodological individualist approaches. better studied within an ecological framework. This paper integrates Paul Lewis’s exploration of emergent qualities in complex orders with Gus diZerega’s exploration of interactions between multiple such orders, and argues such an approach enriches the number of issues open for examination as well as providing a foundation for a theory of civil society.
A scientific methodology is only as useful as the light it sheds on phenomena that interest us. Methodologies are tools for studying reality, and like any tool, incorporate an ontology, assumptions about the reality they are supposed to investigate. Based on these assumptions, scientific methodologies select what matters most in understanding something from the enormous number of phenomena in the world. In doing so, each methodology necessarily simplifies its field of study, arguing doing so enables us to focus on a question without being overwhelmed with extraneous details. Simplifications are unavoidable and even the most successful simplifications run the risk of unintentionally leaving out something important, or making misleading assumptions when employed to study new phenomena.
Methodological individualism has been a successful tool in important fields within the social sciences, especially economics. Conceptually, methodological individualism is simple: all social phenomena can ultimately be explained by individual action, without remainder. As Viktor Vanberg describes it, “the guiding principle that aggregate social phenomena can be and should be explained in terms of individual actions, their interrelations, and their – largely unintended – combined effects.” (Vanberg, 1986, p. 80; see also Caldwell, 2004, p. 413; Oliverio, 2015, p. 38; Oliverio, 2015, p. 38; Rothbard, 1962, p. 2) Methodological individualism has enabled economists to trace out the logic of independent decisions shaped by a framework of enabling rules to collectively determine prices in the market. Individuals are always the ultimate initiators of these phenomena.
Economics is often called the science of choice, and the purest version of this methodology might be “Crusoe economics,” which initially considers an isolated man alone, face-to-face with nature. His actions are all means to his ultimate ends, deriving their value from their contribution to achieving them. Many key economic concepts such as time preference and capital are introduced by analyzing Crusoe’s choices. (Rothbard, 1962, I, chaps.1 and 2.) When “Friday” arrives, this introduction of interpersonal relationships supplies “the indispensable groundwork for the entire structure of economics.” (Rothbard, 2007)
Fundamental to this model in its Rothbardian form was “man’s” isolation from the world in which he found himself, and about which he needed to learn in order to get what he wanted from it. Crusoe economics was atomistic, linear, and reductionist in any normal senses of the word. Crusoe economics assumes a cultured being with wants, and proceeds from there. More sophisticated approaches to methodological individualism, such as employed by Mancur Olson (1965), William Niskanen (1971), James Buchanan, and Gordon Tullock (1999), presented more complex images of human beings and their subjectivity, with less isolation from context. But all argue social theory ultimately must be rooted in individual choice.
Within the Austrian economic tradition, methodological individualism solved an important theoretical task: understanding how social order arose as the product of human action but not of human design. As F.A. Hayek put the matter, economics answered “the central question of all social sciences: How can the combination of fragments of knowledge existing in different minds bring about results which . . . would require a knowledge of the directing mind which no single person can possess?” (Hayek 1937 , p. 54). Methodological individualism was successful in providing an answer.
In harmony with the Austrian mainstream, during the first decades of his career, Hayek argued the social sciences differed fundamentally from the natural sciences, challenging the competing belief the sciences could ultimately be unified within the all-embracing framework of physics. Unlike the natural sciences, Hayek argued we had access to human minds, and the implications of their subjectivity for explaining action. As Paul Lewis put the point, a wink could not be understood as a blink. (Lewis, 2010, p. 279) Among human beings, knowledge was fragmentary and contextual, distributed unevenly within a society, and sometimes in error. Yet somehow society was not chaotic. There was no equivalent problem in the scientific study of physics, and related disciplines. Consequently, different methods were needed to pursue the social sciences as distinct from the natural sciences. This distinction provided the foundation for methodological individualism as the basic tool for the social sciences, a tool not needed in the natural sciences. In his “Scientism and the Study of Society,” (1942-44 ) Hayek made an important contribution to this argument.
However, Hayek’s later research went well beyond traditional economic questions, such as the market vs. central planning debate or issues in monetary and business cycle theory. Hayek’s effort to understand the social institutions needed to support a market economy led him into more open-ended explorations, changing his research focus. Increasingly, Hayek emphasized the cultural and legal environment facilitating markets rather than issues within economics more narrowly defined.
Hayek’s shift to examining this usually taken-for-granted cultural context, changed the nature of the phenomena he studied. Along the way Hayek discovered, as Bruce Caldwell puts it, “orders in many sorts of unrelated phenomena in both the natural world and in the social relations and institutions that comprise a part of that world, orders that emerge due to rule following on the part of the relevant constituent elements.” (Caldwell, 2014, p. 2)
Hayek’s biological turn
A sign of the new territory Hayek entered was his emphasizing the similarities between Darwinian and social evolutionary processes rather than the distinction between social and natural science. Caldwell emphasized the significance of this change, noting “when Hayek illustrates his claims about sciences that study complex phenomena, he chooses not economics, but the theory of evolution as his exemplar.” (Caldwell, 2004, 30) By the 1950s Hayek had begun incorporating evolutionary themes in his work, and made them central to it in the 1960 The Constitution of Liberty.
This shift was accompanied by others.
Hayek no longer discussed what he once described as the fundamental distinction between the natural and social sciences, which centered on subjectivity, or its lack. Increasingly, Hayek distinguished between what he called the relatively “simple” and “complex” sciences. Significantly, methodological individualism was unique to the social sciences, and played no role in evolutionary theory, another complex science. It was in this new context that he, introduced the term “spontaneous order” in the Constitution of Liberty. (1960, 160) It was not that the former difference did not exist, but they were not central to the research he was now doing.
The thinkers of the Scottish Enlightenment had been important in enriching Hayek’s thinking, and continued to be so, but again, with a difference. In “Individualism True and False” Hayek had described Hume and Smith as representative of “true” individualism. (Hayek, 1948) In his later work what was important about their thought was not that it was individualist, but that it was evolutionary. (1967b, p. 111, 119)
To the observation he was borrowing ideas from biology, Hayek responded “it was in fact the other way round: . . . it was from the theories of social evolution that Darwin and his contemporaries derived the suggestion for their theories.” (1960, p. 59, 1967b, p. 119) Insights developed during the Scottish Enlightenment led to the theory of evolution, as traced out by his grandfather, Erasmus Darwin’s, connection with both. (Hayek, 1967b, p. 119; Richards, 2017, pp. 74-5, 82-90) In a sense Hayek was bringing this tradition full circle back to the social sciences. Paul Lewis observes Hayek reappropriated “for economics the ideas developed by theoretical biologists like [Ludwig von] Bertalanffy.” (Lewis, 2016, p. 147)
Hayek had become a systems theorist. But what are systems in this sense?
In the 1940s the biologist Ludwig von Bertlanaffy had proposed what he called “general systems theory’ as an all-inclusive scientific outlook free from the problems plaguing the dominant reductionist projects as well as their vitalist alternatives. (Bertlanaffy, 1968) Bertlanaffy argued, the same principles of organization underlie disciplines long treated as distinct, such as physics, biology, and sociology, thereby providing a basis for their unification within a common theoretical framework. Bertlanaffy’s built his arguments around the core concepts of system, organization, emergence and hierarchy, focusing on wholes, rather than reducing phenomena to their parts.
Rather than reducing an entity to the properties of its parts, systems theory emphasized the relations between the system’s parts. From these relationships new properties emerged that had not been present in its parts and could not be reduced to them. Consequently, for understanding systemic wholes the principles structuring relationships between their parts were at least as important than the parts themselves. This was true even for very simple systems. For example, hydrogen and oxygen atoms comprise water, and the molecule’s mass is a simple addition of the mass of one oxygen and two hydrogen atoms. However, water’s traits at different temperatures cannot be understood the same way. Not only do they depend on their environment, but wetness at room temperature cannot be deduced from water’s atoms, both of which are gasses at that temperature. Nonreducible emergent qualities such as these are in fact quite common in the world.
For example, biological wholes present a puzzle to scientists seeking to reduce organisms to their constituent parts. Despite the Second Law of Thermodynamics, over time, evolution brought forth ever more complex life forms, as well as ever more complex ecologies. The Second Law states that order would always tend towards disorder, as when a glass of hot water in a cold room gradually reach a temperature common to them all. Everything tends towards a featureless equilibrium. Bertalanffy’s insight was that the Second Law held for closed systems, but not for open ones. Open systems, incorporating energy from their environment, can increase order. (Lewis, 2016, p. 131, 2015, pp. 1185, n 14)
Open systems maintain themselves far from equilibrium by incorporating energy from the outside. Joanna Macy described this process as “anti-entropic. representing a maintenance and increase of order within the overall thermodynamic tendency towards randomness and disorganization.” (Macy, 1991, p. 93) Such a system’s pattern is not a static structure, for it exists only due to the addition of energy from the outside. Even if all its individual elements are replaced, the system remains, as with a life form over time. In Bertalanffy’s words, a system exhibiting a particular structure at a particular time “is in reality a momentary cross-section through a spatio-temporal pattern.” (quoted in Macy, 1991, p. 166) Like a frame taken from a moving picture. This was an ecological perspective, a pattern maintaining itself within a larger context over time, even as its particular elements changed. Consequently, understanding such systems required understanding their environment as well. (Hammon, 2003, p. 105; Macy, 1991, p. 72)
Individual organisms, biological communities, and social systems were systems in this sense. All shared qualities of interdependence, self-regulation, adaptation to disruptions, tendencies towards equilibrium, and stable patterns. What distinguished biological and social systems from organisms was how closely their parts were coupled, but all were understandable as systems. Within such systems, qualitatively new properties emerged that were not implied in the properties of their parts. Subsequent biological research increasingly blurs this distinction, describing a continuum, not a dichotomy. (Margulis, 1998, p. 64; Schmidt, 2015) Bertlanaffy termed this kind of pattern a “spontaneous order.” (Lewis, 2016, pp. 131-2)
Bertlanaffy argued his insights about systems were potentially universal. A system’s parts are themselves systems, shaped in turn by their own parts and interactions with their environment. Each system is made up of simpler systems as well as being part of another more inclusive “higher order” system. For Bertlanaffy it was systems, not turtles, “all the way down.” Absolute wholes and parts do not exist.
Because at each more inclusive level the resulting system featured qualities not present in its parts. the result was a hierarchical model of distinct systems. For example, organisms are multi-levelled hierarchies of semi-autonomous ‘sub-wholes,’ who themselves are expressions of sub-wholes of a still lower order, and so on. This hierarchy of systems is not a top down affair, but rather emerges from the bottom up. Systems lower in the hierarchy of complexity can enter into networks within which new qualities emerge in higher level systems. Even at the most basic level, the individual cells that make up our bodies are themselves composed of what were once separate organisms, now existing symbiotically and unable to flourish outside this relationship. (Margulis, 1970)
Bertalanffy had been impressed by Warren Weaver’s distinction between three kinds of phenomena studied by modern science. For most of its history scientists had focused on two variable problems amenable to investigation in terms of linear causality. Newtonian physics was an impressive example. Then scientists began investigating what Weaver termed problems of unorganized complexity, which were amenable to statistical analysis. Now, Weaver argued, the sciences were increasingly concerned with problems of organized complexity where many interdependent variables mutually influenced one another, making exact predictions impossible. Caldwell, 2014, pp. 14-15; Hammond, 2003, p. 118)
Organized complexity proved a difficult problem for traditional causal analysis. As Macy put it, while traditional science could understand causal relationships between two things, it “had difficulty applying unidirectional causal notions to situations involving more than two variables. . .. To map multivariable complexes in terms of linear relations involved piecemeal analysis, where the forces at play are reduced to sequences of interacting pairs. [This approach] cannot map the flow of the whole interactive complex.” (Macy, 70-1) Bertlanaffy argued Weaver’s laws of organized complexity were “systems laws” for comprehending these kinds of phenomena Systems laws could shed light on multivariable interactions, organization, hierarchic order, differentiation, goal directed processes, and “negentropic” trends (where order increases, in contrast to entropy). (Bertalanffy, 1971, p. 60) Hayek agreed. His term “complex science” referred to Weaver’s concept of organized complexity.
Hayek also found his friend Bertalanffy’s work valuable. (Lewis, 2016) Hayek had already developed a theory of how neural integrations led to what he termed the “sensory order,” and he found Bertalanffy’s insights valuable. (1952b, p. ix) Bertalanffy’s concept of emergent order explained how these interconnected neurons that comprise the brain’s physical order give rise to the emergent order of the mind at a higher level of reality. Hayek’s study of the market order, and especially the larger cultural framework within which it existed, was also enriched by Bertlanaffy’s work. The market was an emergent property of the relations between people acting by certain explicit as well as tacit rules. (Hayek, 1979, pp. 158-9; 1973, p. 73, p. 362) That both the emergence of mind and of the market could be described in similar systemic terms illuminated the key concept of hierarchy for understanding systems.
Importantly for my argument to come, Hayek described inclusive systems as “wholly different . . . [from any] regularity in the behavior of the elements.” (quoted in Lewis and Lewin, p. 7) With Bertlanaffy, Hayek argued higher level systems could not be reduced to lower level systems, an insight that will prove crucial for understanding civil society, as I will explain later on.
Viewing the market process as a system emphasized different phenomena than did unpacking the logical implications of individual choice. Human agency did not disappear, but it existed within a larger context. The pattern created by people’s choices was derived from the principles governing the system, rather than arising from the choices themselves. Decisions took place in networks of mutual influence, and it was these networks, not individual decisions, that created the patterns observed. In a particular system, no matter what the choices, a common pattern emerged.
A system’s boundaries could be described as coherent patterns maintaining themselves over time. As Hayek wrote. “What we single out as wholes . . . will be determined by the consideration whether we can thus isolate recurrent patterns of coherent structures of a distinct kind . . . The coherent structures in which we are mainly interested are those in which a complex pattern has produced properties which make self-maintaining the structure showing it.” (Hayek, 1967c, p. 27)
While precise predictions are impossible within the complex sciences, “pattern predictions” could be made. Theories explaining complex phenomena could “tell us under which general conditions a pattern of this sort will form itself [enabling] us to create such conditions and to observe whether a pattern of the kind predicted will appear.” (Hayek, 1967c, p. 36) For example, in economics a pattern prediction is that increases in demand for a product will lead to a rise in its price. But it is impossible to go beyond this observation, to describe how much the increase will amount to. Nevertheless, the knowledge of such patterns “protects us from striving for incompatible aims.” (1967d, 17) For example, long-term price controls as a way of helping renters facing ever rising rents brought on by housing shortages will make the problem worse.
I believe Hayek’s acceptance of systems theory led him to abandon methodological individualism as a foundational methodology, although he incorporated its insights into a larger framework. However, major scholars of Hayek’s thought disagree.
Emergent/ complex/ institutional methodological individualism
Some scholars argue rather than abandoning methodological individualism as his foundational methodology, Hayek adopted a more sophisticated version free from the reductionism inherent in approaches such as Rothbard’s. I will explore three arguments defending Hayek’s approach as methodological individualist. Francesco Di Orio argues irreducible emergent properties, which some have argued are at odds with methodological individualism, are compatible with it. Robert Nadeau agrees with Di Orio, and argues evolutionary group selection, which some also claim is incompatible with methodological individualism, is in fact compatible with it. Finally, Peter Boettke and Virgil Henry Storr seek to fuse Austrian and Weberian insights, both rooted in methodological individualism, to address the mutual influences of the economy, polity, and society in ways pure economics could not.
Francesco Di Orio
Francesco Di Orio grants some forms of methodological individualism are inadequate as a foundation for social theory. However, what he calls “complex methodological individualism” successfully addresses these weaknesses, merging “the concept of methodological individualism with that of a self-organizing complex system.” (p. 5) Di Orio asserts Hayek advocated this approach, as did predecessors extending back to the Scottish Enlightenment.
Methodological individualism need not be reductionist. An explanation can be “bottom up” without requiring it to be able to also be reducible from the “top down.” Francesco Di Orio argues (p. 2)
The non-reductionist variant of methodological individualism argues that individuals are self-determined beings and that social order, and social phenomena more generally, must be explained as largely unintentional results of human actions – actions explainable on taking into account the meanings that individuals attach to them . . .
To be sure, social conditioning exists, but people’s interpretive skills mediate between society and human action. “Society” itself is a collective noun referring “to individuals and the systemic and irreducible properties that emerge from their existence, their beliefs, their intentions, and their interactions.” (p. 2) Social entities such as the Catholic Church cannot be reduced to the individual properties of their members, but neither do they exist independently from these individuals.
Di Orio argues complex methodological individualism does not focus on “purely personal and subjective opinions” but instead on “collective beliefs” of the “intersubjective world” and the “unintended consequences” arising from them. (p. 3) These unintended consequences are “emergent,” and so cannot be reduced to specific actions. However, individuals remain the ultimate engine of history and social dynamics. (p. 4) Importantly, Di Orio’s analysis is ultimately a linear one.
I will argue below that while “complex methodological individualism” is a clear improvement over reductionist forms, it is not complex enough.
Nadeau focuses on the later Hayek’s emphasis on group selection. Some scholars argued accepting group selection meant Hayek abandoned methodological individualism. (Vanberg, 1986) Nadeau argues otherwise.
Nadeau explains, during the course of a society’s development, certain rules come to be followed by its members. To the degree these rules facilitate cooperation, more complex kinds of social cooperation can develop, and so far, it has been the case that such societies have proven better able to survive when encountering societies with less effective rules facilitating cooperation. Nadeau argues “group selection in the Hayekian sense is the effect, never the cause, of individual behavior.” (p. 19) He continues, “groups of people are selected for their rules because the economically successful individuals get imitated by others, and form dominating communities.” (p. 19) It is here that I believe Nadeau makes a claim not able to be supported by methodological individualism.
Peter Boettke and Virgil Storr
In seeking to link Austrian economic theory more closely with Max Weber’s methodologically individualist sociology, Peter Boettke and Virgil Storr develop a richer conception of the relationships between economic phenomena, economically relevant phenomena, and economically conditioned phenomena, a complex they describe as “embeddedness.” Economically relevant phenomena, such as the lockdown we have experienced during this pandemic, impact the economy but are not themselves economic. Economically conditioned phenomena such as property rights, and values to the degree they are responses to economic incentives, are shaped by the economy,
The authors adopt Weber’s terms of economy, society, and polity for these three kinds of phenomena. They are always influencing one another, but “what distinguishes social from political and economic phenomena is only the meaning that actors attach to them and the context within which actions are attributed this meaning.” (Boettke and Storr, p. 171) These different actions take place within institutional contexts that both constrain and enable action. These three categories mutually influence one another, as “the relationship between economy, polity and society is constantly reconsidered and recast.” (p. 176) Again, their description is causally linear even if their relative degrees of influence vary from case to case. They have no existence of themselves, and individuals do the reconsidering and recasting, without remainder.
Building on a mutual appreciation of Austrian and Weber’s theories, Boettke and Storr describe several examples where Austrian analyses have provided deeper analyses than has traditionally been the case, due to their sensitivity to the constant interaction and mutual influence of the economy, polity, and society. (pp. 177-181)
To be sure, these reworkings of Austrian analysis with Weber are more insightful than the more abstract approaches traditionally associated with Austrian economics. And yet, as I hope to show, only of limited value.
Society, choice and emergence
Methodological individualism treats culture as created by individuals and has no existence separate from them. Social structures are ultimately the creations of human agency, with no remainder. As Anthony Evans writes “If only individuals choose, then the way to understand cultural concepts such as ‘society’ is through an analysis of individual action.” (Evans, p. 3. my emphasis) Evans elaborates, institutional “Routines, habits and customs are our guideposts, but of our own making since we consent to adopting them.” (Evans, p. 9.my emphasis) Robert Nadeau makes a similar point, “groups of people are selected for their rules because the economically successful individuals get imitated by others, and form dominating communities.” (Nadeau, p. 19, my emphasis) Di Orio approvingly quotes Hayek’s earlier observation that social systems are the “implications of many people holding certain views.” (Hayek, 1952, p. 25) Causality flows one way.
Peter Berger and Thomas Luckmann’s defense of methodological individualism laid out a path for its transcendence. They argued the subordination of social structure to human agency could be best grasped by considering three distinct elements in the creation and maintenance of society: “Society is a human product. Society is an objective reality. Man is a social product.” (Berger and Luckmann, p. 79)
They accepted the methodological individualist claim that society is a human creation. Agents create structures. However, they did so in a particular context.
Over time, typical forms of behavior and institutions originating in human agency would come to be experienced as social ‘facts,’ existing independently of people’s actions. These ‘facts’ are typifications rooted in a society’s culture, and often tacitly held. Alfred Schütz, a scholar closely associated with the Austrian school, NOTE whose work strongly influenced Berger and Luckmann’s analysis of socially embedded knowledge, and who also considered himself a methodological individualist, wrote “By a series of common-sense constructs [human beings] have pre-selected and pre-interpreted this world which they experience as the reality of their daily lives. It is these thought objects of theirs which determine their behavior by motivating it.” (Schütz, 1972, pp. 98-9) Their socially mediated world is treated as part of their reality, unless they find cause to question it.
One way this can happen is when a stranger, upon entering a foreign community, “becomes essentially the man who has to place in question nearly everything that seems unquestionable to members of the approached group.” (Schütz, 1970, p. 87) His own cultural biography “has been and still is the unquestioned scheme of reference for his ‘relatively natural conception of the world.’ . . . therefore, the stranger starts to interpret his new social environment in terms of his thinking as usual.” As he becomes more deeply involved within a different culture, his ready-made framework of understanding “necessarily will soon prove inadequate. . ..” (Schütz, 1970, p. 88) Such a person does not easily feel at home in his new environment.
Such relatively impersonal encounters differ from face-to-face encounters within either a familiar community or a new one. In a sense, what he takes for granted is an intellectual map, and maps are not the territory. Personal engagement encounters the territory. Even so, the enveloping “lifeworld” still provides the context within which face-to-face encounters take place. As Berger and Luckmann describe it, “while it is comparatively difficult to impose rigid patterns on face-to-face interaction, even it is patterned from the beginning if it takes place within the routines of daily life.” (Berger and Luckmann, p. 30) However, face-to-face encounters can modify and even change this pattern, for once a question of what constitutes appropriate arises, agency becomes possible. Even so, these questions still take place within a more embracing context of unquestioned beliefs.
The third element, that we are social constructs, can be best understood if we begin with children. As they develop, children incorporate these ‘facts’ into their consciousness as objectively true, to become the maps upon which they rely to make sense of the world. Consider language. Language structures our thought and how we view the world. Differences in language shape our perceptions of what seems most real about the world. While a language failing to interact effectively with the world would not long survive, the great variety of languages points to very different ways in which speakers perceive their societies and environment.
For example, compared to European languages, many Native American languages utilize relatively few nouns and many verbs.What our language describes as objects, as nouns, are often understood in many Native American languages as processes, as verbs. This difference sheds light on why these cultures experience the world differently. (Kimmerer, 2013, pp. 48-59) When Buckminster Fuller wrote I Seem to be a Verb, many modern Americans believed Fuller described a new way for them to think about themselves. (Fuller, 1970) (I Seem to be a Noun would not have been a catchy book title.) He was bringing attention to something about human experience that, for these people, was a basic feature of lived reality in general.
Along a similar line, Paul Lewis references Wittgenstein’s point that the meaning of words is established socially, where “people can scrutinize and correct one another’s use of language.” (2010b, p 10) As a result, “…the social, cultural, and linguistic prejudices we acquire through our membership of various linguistic communities are what makes such new knowledge [about human action] possible. . .” (2010b, p. 11)
Alva Noë observes “Maturation is not so much a process of self-individuation and detachment as it is one of growing comfortably into one’s environmental situation. We grow apart, but we attach to the world without. We integrate [rooting] ourselves in the practical environment.” (Noë, 2009, p. 51) Hayek emphasized “Mind is as much a product of the social environment in which it has grown up and which it has not made as something that has in turn acted upon and altered these institutions.’ (Hayek, 1973, p. 17)
Anthony Evans’ “consent” and Robert Nadeau’s “imitation” do not capture this process. When we learn our first language, neither imitation, nor choice, nor consent play a role. Learning does. We do not attach meanings, we learn meanings. “Consenting,” “attaching,” and imitating presupposes awareness of what requires consent, attaching, or imitation. It presupposes discovery. Learning is discovery. Albertina Oliverio captures this insight when she writes “Societies are collectives bound together by shared frames of thought conveyed by the institutions. An institution is a memory, information which enables all to exercise their rationality as individuals. Knowledge is established collectively, used rationally by individuals, and then shattered by the complexity of social phenomena.” (2016, p. 40)
As Hayek explained, “[M]ind can exist only as part of another independently existing distinct structure or order, although that order persists and can develop only because millions of minds constantly absorb and modify parts of it.” (1979, p. 157) What we think of as human minds can only exist because they were shaped by human societies. This description is an example of hierarchical levels in systems theory.
Someone might respond we ‘choose’ to learn, but this is a strange kind of choice. But, particularly in the case of the very young, describing that process as choice in any sense distorts the word’s meaning. Children do not choose to learn their first language. And when we imitate, choose, or are convinced, we always do so within a pre-existing context we take as our reality.
As children mature, and amass their own experiences, they sometimes see contradictions between mutually taken for granted “social truths” they have learned. Parts of their social reality become open to questioning, creating space for agency, but always within the context of a larger still taken-for-granted world. We are neither completely free nor completely determined.’
Paul Lewis describes Berger and Luckmann’s three-dimensional description of society as “a dialectical account of the relationship between people and social structures, according to which people interact with one another to produce society and that social product continuously reacts back on its producers, shaping their consciousness and actions, in an unending chain of reciprocal influences.” (Lewis, 2010a, p. 5) Their position appears to be like Di Orio’s “complex methodological individualism.”
By recognizing society as an objective reality, Berger and Luckmann took a crucial step away from ‘choosing,’ ‘consenting,’ and ‘imitating’ as explanations for culture. Even so, critics argued upon close examination their argument broke down. Lewis explains “if social institutions consist of nothing more than people’s current actions, there literally is nothing to structure and shape the current interactions through which shared meanings develop.” (Lewis, 2010a) Agency and society still remained separated. This situation might be approximated if two aliens from different planets met and had to develop a relationship. But as generational transmissions of institutions demonstrate, this is not what happens among human beings. From birth to death we are immersed within a multigenerational context shaping the environment within which we exercise our agency and which we can sometimes modify.
Berger and Luckmann’s key insight about society being objective while agency is real is preserved when society is viewed as an emergent system where each dimension is always influencing the others, rather than a linear dialectical process. The relations between agency and structure are emergent and not dialectical. We need to delve more deeply into emergence.
Lewis describes emergence as (Lewis, 2010a, p. 9)
. . . the possibility that, when certain elements or parts stand in particular relations to one another, the whole that is formed has properties (including causal powers . . .) that are not possessed by its constituent elements taken in isolation. . .. Emergent properties are structural or relational in the sense that their existence depends not only on the presence of their (‘lower-level’) constituent parts but also on those parts being organized or arranged into a particular structure that involves them standing in specific relations to one another
A key phrase here is “including causal powers.” In a forthcoming article Lewis elaborates “If the emergent properties possessed by a system include causal powers – understood as the capacity to make a difference to events in the world – then higher-level systems possess causal powers that are different from, and irreducible to, those of its parts.” (Lewis, 2019. 6)
The patterns arising in emergent processes are independent of individuals’ specific actions and of the meanings they attach to them. This is why they are unintended. Yet these emergent patterns can act back onto the individuals whose actions led to their emergence, influencing further actions, sometimes drastically. There is no ultimate cause. As systems theory emphasizes, the patterns emerge from the rule governed relationships generating the system, rather than from the specific choices made within it.
Lewis integrated these insights about systems and emergence, with Hayek’s later work.
With respect to the market, the emergent whole of agents plus institutions such as rules of contract, tort, and property rights as well as tacit foundations to relationships, such as the assumption of truth telling, generate the market order as a whole, generating a predictable pattern arising from decentralized decision-making. As he put it “rule- governed, relationally-defined social wholes that structure people’s interactions are causally efficacious, explanatorily irreducible factors in their own right and as such a key concern for social theorists.” (2010a, p. 12; 2015, p. 8)
Di Orio went part of the way, shifting from emphasizing individual choices to culturally mediated ones, which treat culture as distinct from individuals, although relying on them for their existence. What he does not seem to do is acknowledge these culturally mediated choices in turn modify the choices individuals would otherwise make, not just leading to different strategies to attain the same ends, but in modifying the ends themselves. Each causally influences the other. Consequently, human agency and social structure “are both preconditions for and a consequence of the other.” (Lewis, 2010a. p. 13) This insight facilitates integrating economics’ capacity to address questions of power and domination traditionally emphasized in political science and sociology, a matter to which I will return. (Lewis, 2008; diZerega, 2010)
Hayek’s abstract rules, and Berger’s description of how social typifications arise, merge to provide the stable background knowledge enabling people to plan their responses to price signals while being reasonably confident other people will do what is required to bring those plans to fruition. (2010a, p. 15) People’s responses to price signals are shaped by shared knowledge of how the typical occupants of particular social roles act in certain circumstances.
Central to these considerations is not only that society is in some strong sense objective, but also that much of our thinking and acting is rooted in pre-conscious abstractions or the tacit knowledge underlying skills we have acquired. Nadeau’s “imitate” hardly captures this process. When I imitate something I see you do, it is because I want to do it as well. This is not the same as learning one’s initial language. It is not even how we learn to ride a bicycle.
Focusing on emergent phenomena shifts attention from the choices made, to the resulting pattern, and the rules generating it, a pattern largely independent of the particular choices made. Culture and biology
In response, a methodological individualist might reply rationality had to begin somewhere, but once it arose it could take on a life of its own. For example, Boettke argues Hayek emphasized the co-evolution of reason and cultural traditions mainly “in the epoch when man was first emerging from his prehuman condition.” (2019, p. 190) We might even say rational individuality is an emergent product that then laid the foundation for additional complex phenomena. Human agency ultimately triumphed as an independent force as a result of evolutionary processes, thereby making methodological individualism possible.
I believe Boettke is mistaken on two grounds. First, as my example of how language’s verb and noun structures shape the world we experience demonstrates, culture remains a decisive formative influence. The development of a rational mind and culture continue to develop concurrently. Something as basic as what counts as a verb and what as a noun is culturally shaped, and it is obvious we learn to think within these different ways of perceiving.
Alva Noë writes “Scientists have tended to think that to have a mind like ours, we must be able to think and calculate and deliberate as we do. In fact, to have a mind like ours, what is needed are habits like ours. Habits and skills . . . are triggered by environmental conditions and they vanish in the absence of the appropriate environmental setting.” (Noë, p. 97, 125) Speaking a language is such a skill, and once mastered, its rules became tacit. The same holds for all learned skills and habits, and the first of them are not acquired by imitation but by discovery. Rationality in a human sense remains intimately linked with culture.
Secondly, culture almost certainly predated human beings by millions of years. To be human requires having a culture, but having a culture does not require being human. Chimpanzees, bonobos, and other apes and monkeys have cultures. So, we now know, do other mammals and birds. Culture is linked to sociality, not to humanity.
Hayek’s observation that “mind and culture developed concurrently and not successively” is well-grounded. (1976, p. 156) But rationality and culture, and therefore minds, emerged well before humans did. Human life arose from pre-human cultural beings who were rational and could plan for the future. Many examples of rational action and planning ahead have been observed among chimpanzees and bonobos. (De Waal, 2013, pp. 204-5) Chimpanzees are the most studied, and are rational in very human ways, building coalitions, rewarding allies, and building alliances with truly Machiavellian skill. (De Waal, 1982) Ambitious males even kiss babies to court the support of females. (De Waal, 2016, p. 162) When a member of one chimpanzee culture enters another group with different cultural practices, it adopts them for itself. (Hooper, 2020, p. 17) Nor were chimpanzees simple calculators of self-interest. (De Waal, 2019, pp. 98-9, 114-20)
The circle of verified rational action among birds and animals continues to enlarge. A great many species cooperate together for mutual gain. This includes complex the use of resources, tools, and sharing afterwards. (De Waal, 2016, 185-98) A strong sense of fairness exists in many animals, and for that sense to exist a sense of who is or is not one’s equal in some sense is required, along with a sense of appropriateness. (Bekoff and Pierce, 2009) In Bruce Caldwell’s words, “To the extent that humans exhibit any rationality, it is probably better viewed as the result of certain institutional arrangements than as anything else. By starting with rational agents, standard economic analysis gets things exactly backwards.” (Caldwell, 2004, p 286) The start is with sociality and its institutions, which provide minds the rich environment within which to develop.
In “The Primacy of the Abstract” Hayek argued our minds’ ability to perceive particulars is rooted in a prior capacity to discover abstractions providing the framework within which we can make sense of these particulars. Our perception of our world depends on our mind’s capacity to organize experiences into comprehensible patterns. Without this capacity we would be overwhelmed with sense data, and have no clear way to make sense of it. We are not convinced these patterns exist. The first of them precedes reasoned choice and are culturally embedded.
Referring to the work of Michael Polanyi and others, Hayek emphasized the importance of “non-articulated rules in determining action [as] mental factors which govern all our acting and thinking without being known to us. . .” (1971, p. 313) These rules generate “dispositions” and any particular act will reflect the collective interactions of many of these abstract rules. The formation of new abstractions “seems never to be the outcome of a conscious process, not something of which the mind can deliberately aim, but always a discovery of something which already guides its operation.” (1971. p. 320).
Our “dispositions” also have a physical dimension. Repeated action in accordance with a rule or way of perceiving a context leads, as Lewis observes, “to the formation of new cognitive (neural) structures and therefore to people having new dispositions to conceptualize and respond to their circumstanced in certain ways . . . social rules can become physically embodied in people . . .” (Lewis, 2012, p 375) This physical embodiment meant “social rules, and the systems to which they give rise, possess the emergent causal power to shape human agency.” (Lewis and Lewin, 2015, p.7) In philosophical terms this is called “downward causation.” The higher-level system develops emergent properties that, in turn, act causally on their component parts.
Culture is the larger context within which we choose to engage our projects. Much of cultural knowledge is tacit. Imitation always occurs within a pre-existing cultural context and always has an instrumental dimension. I imitate someone for a reason. Imitation is not a synonym for learning. I learn how to hunt or to read, and here the role of imitation is small because the particulars of any hunt or book differ from the experiences that led to my learning to hunt or read.
Some readers might think I am reducing choice to culture, replacing methodological individualism with some kind of cultural reductionism. I am not. Choice is real, but neither human choice nor human culture is foundational. Cultures and cultural organisms co-evolve, and we ourselves exist on an evolutionary continuum that long preceded us.
After WWII, Hayek, and his friend Michael Polanyi, increasingly used the term “spontaneous order” to describe social systems where more information than anyone could ever grasp was effectively coordinated to better serve the purposes of those acting within their framework of rules. The general ideas the term described had a long history, perhaps originating in the work of Alexander Humboldt and John Stuart Mill. (Bladel, 2005, p. 21) Among modern scholars Wilhelm Röpke apparently first used the term. (Bladel, 2005, p. 23)
But it was Hayek and Polanyi who ensured its widespread use, making it a key concept in their own work. Polanyi used the term, in print at least, before Hayek, adopting it in 1948 to replace his earlier “dynamic order.” (Jacobs, p. 116-8) Hayek, for his part, apparently adopted the term after Bertlanaffy employed it in 1952, because he rooted it in general systems theory. (Lewis, 2016, pp. 131-2) But given their friendship Hayek was possibly influenced by Polanyi and Polanyi was possibly influenced by its use by some Austrian economists. (Bladel, 2005). No matter who was ‘first,’ in William Butos and Thomas McQuade’s words, “after Polanyi and Hayek it did not need discovering again.” (Butos and McQuade, 2107, p. 2)
Both men also employed the related term “polycentric” to describe patterned systems where no center shaped the system as a whole. Hayek got this term from Polanyi, and both used it to describe spontaneous orders. (Polanyi, 1951. pp. 170-84; Hayek, 1960, p.160)
In their writing Hayek emphasized the market and Polanyi science. (Polanyi, 1969. 49- 72; Butos and McQuade, 2017) Both used similar additional examples to emphasize the concept’s central importance. In doing so, both combined different kinds of systems by one criteria: that unplanned order arose that could not be traced to qualities in their parts. Such orders included natural phenomena like crystals, as well as social phenomena such as science, common law, and the market. At times Hayek included anything from iron filings reacting to a magnet, to society. (1979, pp. 40, 46) Polanyi included the arts, literature, and agriculture as well.
The connecting thread for all these examples was that ordered patterns emerged without the deliberate actions of anyone by a process of mutual adjustment. But beyond this, their differences were enormous. Once a pattern emerged, some spontaneous orders were essentially static, such as crystals and iron filings. Others were highly adaptive, such as society, science and the market. Like markets, some were dependent on the rules that generated them, others, like the arts, were vastly less so. Mutual adjustment could take place along a chain of influences, by system-wide feedback, or by both together. The term was so broadly descriptive as to shed little light on understanding any particular instance.
In part, at least, this concept’s blurriness was because Polanyi and Hayek were writing when there were few terms suitable for describing complex ordered phenomena that arose independently of intention. With the subsequent appearance of additional terms focusing on different dimensions of these phenomena, such as self-organization, complex adaptive orders, and autopoiesis, today we are more fortunate. We can more easily make important distinctions within this broad class.
In this paper I will limit the term “spontaneous order” to autonomous emergent social orders structured by rules promoting mutual adjustment among people pursuing any plan of their choosing in keeping with those rules, aided by systemically generated feedback signals recognized by those participating within them. This definition focuses on what science, law, and the market share compared to most other complex adaptive systems. To these three I add democracy although it will play a small part in this paper because I want to focus on Hayek and Polanyi’s work, not my own. (diZerega, 2019a) These four have system wide feedback signals. The arts, such as literature, do not. In this perspective, spontaneous orders are a subset of emergent complex adaptive phenomena, which are themselves subsets of emergent phenomena. (diZerega, 2013, p. 9)
Some emergent social phenomena exist at the boundary between spontaneous orders in this more focused sense and other complex adaptive systems. Language resembles spontaneous orders as I define them, but its systemic feedback is comprehensibility between two speakers, with no necessary impact on the system as a whole. Grammatical rules make the emergent orders of language possible, but innovation in language, like innovation in customs, proceeds largely face-to-face rather than through systemic feedback available to all. Today, “awesome” is often used very differently from when I was young, but there were no system-wide signals that coordinated this shift. People adopted it one by one. Language, however, makes different kinds of spontaneous orders possible. The same is true for customs.
Within a spontaneous order, freedom involves respecting systemic procedural rules while individually choosing to pursue anything in harmony with them. David Hardwick (2008) and Leslie Marsh (Hardwick and Marsh, 2012) have emphasized the spontaneous orders of science and the market arise from mutual adjustment among independent equals using systemically defined feedback signals shaped by their constitutive rules as guides to their actions. The same is true for the freedom of a common law judge.
Ideally at least, in a spontaneous order community-specific rules apply to all members of the community equally. These rules are independent of particular people, and in that sense are impersonal. As judges and scientists demonstrate, “equality” refers to members of the community defined by adherence to these procedural rules.
Within communities governed by these rules, systemic feedback minimizes the knowledge participants need to act effectively within their framework. Price signals provide the feedback in markets. In science, it is a scientific claim’s standing within the scientific community. In democracies, votes provide the feedback. Acceptance of precedents and occasional widespread acceptance of innovations do the same in common law. Lewis and Lewin’s describe these signals as “knowledge surrogates.” (2015, p. 3) It requires interpretation.
The knowledge transmitted by this feedback is necessarily simpler, but broader, than that possessed by the individuals acting within them. Systemic feedback provides a means by which systemically relevant knowledge is discovered and systemically irrelevant knowledge is discarded. Adaptation takes place more quickly than when feedback proceeds party by party, as in language and custom.
If people wish success in acquiring systemic resources, the system imposes its own values on them, and eliminates these resources if values of their own get in the way of acquiring systemically defined ones. Systemic feedback strengthens a system’s values in influencing human action by rewarding systemic success or failure. For example, money is a systemic resource in markets, and if profit is sacrificed too much in seeking other values, a businessperson will soon be out of business. In spontaneous orders this shaping of the context of action is what Bertlanaffy meant by a goal directed process. (Bertlanaffy, 1971, p. 60)
These observations lead to a crucial insight. The values of those acting within a spontaneous order need not be those rewarded by the order itself. There is a distinction between the values reinforced by the rules and the values motivating individuals acting within them.
Systemic Bias and Selves in Spontaneous Orders
All spontaneous orders possess common abstract features. In a pure case, approached more or less closely in any empirical example, participants are equal in status and equally subject to whatever rules must be followed to participate. All are free to apply these rules to any project of their choosing compatible with those rules. Anything that can be pursued without violating a rule is permitted, and so, potential discoveries are open ended. In the case of economics, a society of many independent people pursuing self-chosen projects within a framework of rules common to all led Peter Boettke and Vipin Veetil to claim that “the market as such has no teleology.” (Boettke and Veetil, p. 46) Fernando Toboso elaborates that from the perspective of institutional methodological individualism, “no impersonal active entity with apparent aims, interests and driving forces of its own is included in the discourse as an explanatory variable, nor is any other impersonal systemic factor that possesses its own dynamics for which the responsibility may not, even indirectly, be attributed to any person.” (Taboso, p. 10)
For these claims to be correct, the rules must be neutral and the resulting spontaneous order not reward some cooperative values over others. Neither is the case. Procedural rules in a spontaneous order will always carry a value bias going beyond simply facilitating voluntary cooperation. Procedural rules enable people motivated by different values and ends to profitably make use of the same rules, facilitating cooperation. But to do so, the rules facilitating cooperation among strangers are necessarily simpler than the full field of values actually motivating people when they cooperate. These rules unavoidably shape the kinds of cooperation most likely to succeed in the system’s terms.
Systems in general have a kind of purposiveness. Joanna Macy writes that information does not flow through a system following a fixed pathway producing results directly, “Rather they are subject to the dynamics of the system’s internal structure. Incoming messages . . . are sorted, sifted, evaluated, and recombined before they are transmitted to effectors and translated into action. The open system . . . actively transforms” external causes. (Macy, p. 92) The result is the pattern. This insight undermines linear causal views “that similar conditions produce similar results and that different conditions will produce different results.” (Macy, p. 93)
As we shall see, compared to procedures shaping the scientific community, pure market procedures provide a poor environment for pursuing scientific knowledge. At the same time, scientific procedures provide a poor framework within which to start and manage a business. Values inherent within the rules shaping these systems generate patterns independently of the intentions and values of those acting within them. These values would be systemically enforced whether all, some, or none acting within a system shared them. When a person’s personal motives are in close harmony with a system’s value bias, they will be privileged compared to those whose personal motives are more different.
Spontaneous orders, are often described as “self-organizing.” My first book used this term. (diZerega, 2000) The word ‘self,’ is illuminating. The ‘self’ in these cases emerges from the system’s internal rules and the values they reinforce. A system’s ‘self’ is an emergent value arising from people acting in accordance with its organizational rules, and thereby producing a pattern able to shape its environment and maintain itself far from equilibrium. (Capra and Luisi, p. 145)
Compared to human beings, spontaneous orders are ‘value-thin,’ their selves are one- dimensional. But they will be selves. If two strangers meet, and manage to cooperate, their selves are in enough harmony for mutual expected benefit. Entering the framework of a spontaneous order is similar. If the person’s values are in harmony with those supported by its rules, he or she will be more likely to be successful.
We have seen that while individual agency is quite real, it exists within a social realm of taken for granted knowledge necessary for engaging in human action. As Boettke and Vittel grant, in organizations, the institutions within which we act “can be thought of as a knowledge embedded within an organization.” (p. 49) This is true not just for organizations. All custom is embedded knowledge.
from the system’s internal rules and the values they reinforce.
emergent value arising from people acting in accordance with its organizational rules, and thereby producing a pattern able to shape its environment and maintain itself far from equilibrium. (Capra and Luisi, p. 145)
A system’s ‘self’ is an
A system’s emergent pattern is not just its details in a particular place and time, but the larger pattern these specifics, and others at different times, play a role in maintaining. And that pattern is knowledge embedded in relationships shaped by rules independent of any particular relationship, and having an active causal influence on those relationships. This fits Boettke and Vittel’s model except each relationship also influences the others, and does so to some degree independently.
Systemic values in science
The best scientists are dedicated to seeking Truth. However, as a system, science never discovers Truth. We have no idea what Truth is. Science discovers the most currently reliable knowledge about its subject matter. We can never know if and when a non-confirming discovery might arise to replace even the most confidently held theory with a much different one, as Einstein’s theory of relativity did for Newtonian mechanics. Science provides us with the most reliable knowledge we can obtain at the time about the material world. (Ziman, 1978) In so doing science sometimes transforms the community’s judgement of what constitutes that knowledge. From the perspective of science, even if we actually discovered Truth, we could never be sure.
Science depends on scientists solving puzzles about the physical world. But what defines an acceptable puzzle is shaped by the prevailing state of scientific knowledge. A Newtonian universe provided different puzzles than does a relativistic one. Within physics perplexing puzzles from within Newtonian perspective disappeared within a relativistic one. At the same time, questions such as the nature of quantum embeddedness would have been regarded as implausible, even absurd, from a Newtonian perspective.
The same observation holds for schools of thought within a common discipline. Some contemporary physicists regard string theory as a potentially important insight whereas others regard it as a false lead at best. At any moment, what counts as good science depends on the community’s judgement as to whether a puzzle or announced finding is plausible as well as interesting. (Polanyi and Prosch, p. 134)
Like the rest of us, scientists’ motives can be mixed, and sometimes conflicting. All-too- human failings of pride, rigidity, professional politics, ideology, and prejudice can shape individual scientists’ motives as much or more than their personal dedication to seeking truth. There are many accounts across all scientific fields, in every discipline, of this very human shaping what actual scientists do while “doing science.” (For example, see Dreger, 2016; De Waal, 2013, pp. 98-100) But, even in the absence of such failings, scientists’ judgement always reflects their own personal perspective and judgements as to plausibility, as demonstrated by the long debate about aspects of evolutionary theory between Charles Darwin and Alfred Russel Wallace. (Richards, 2017, pp. 371-416) Even so, compared to other ways of establishing reliable knowledge, science as a system dominates personal motives.
Let us assume every scientist is personally motivated by the search for Truth. In seeking Truth, they follow the procedural rules accepted by their peers. Science would provide us with the most reliable knowledge available in its fields, and it would always be provisional.
Let us now suppose that every scientist is primarily motivated to acquire fame and profit, treating their scientific work simply as a means to these payoffs. Long-term fame and profit arise from scientists following the procedural rules shaping their discipline leading to important findings, as in the case for those motivated to seek truth. The strength of the system forces them in to subordinate their values to the demands of the system. If they cheat, fame and profit will reward those who discover their cheating.
Science would still provide us with the most reliable knowledge available in its fields, but the details would differ. There would be less work in pure theory because its payoffs are generally smaller. because there would be a greater disparity between systemic and personal values, more effort would need to be spent policing claims. However, the pattern prediction of uncovering reliable knowledge would remain.
Of course, the reality is some of both. However, science is the only system of ideas about the world that is internally self-correcting. As Frans De Waal noted, “Science is a collective enterprise with rules of engagement that allow the whole to make progress even if its parts drag their feet.” (De Waal, 2013, p. 100) Virtually every assumption with which early modern scientists began has since been abandoned, as scientific investigation has convinced scientists that other assumptions are closer to the truth. (Toulmin, pp. 109-115) The achievements of modern science emerge from the system as a whole, not its parts. There is no way to deduce systemic values from the values of those acting within it. Its achievements emerge from the rules. Systemic values in markets and common law
The same is true for markets. As spontaneous orders, markets provide prices giving us signals to what resources can be most efficiently used (in monetary terms) among competing possibilities. Systemically, prices signal a resource’s value at the time, relative to other priced means for meeting consumer demand. Personally, I can seek to make a profit because I wish to support my family. I can seek to make a profit because I want the admiration that comes from my being rich. I can seek to make a profit because the resources I acquire enable me to pursue another project of great importance to me. it doesn’t matter.
An economy of saints would generate the same market process pattern as an economy of sociopaths, so long as they followed the rules. The details of what is valued and what is produced would vary, but the role of prices and how they form would be the same. In both cases price signals need to be interpreted. A saint might interpret rising prices as a need to invest in making more of the item, to help others. The sociopath would interpret rising prices as a chance to make money. Both would create more of the item in short supply. The motivations are different and the products produced would sometimes be different, but the patterned results would be the same. For pattern predictions, individual choices and values do not matter, following the rules matters.
In the market, accumulating more money is systemic success in the market, regardless of a person’s personal values, and money’s value is purely instrumental. The systemic value given precedence in the market process is: how useful is something for a purpose other than what it is now. Market feedback integrates only something’s suitability for becoming something it isn’t, an ingredient in something else, or possession by another. These are pure instrumental values. (diZerega, 2019; 1997)
Common law seeks to discover justice, but justice cannot be defined free from context. The best alternative term for justice is fairness. Justice as fairness is apparently a standard deeply embedded within the human psyche. (Lewis and Lewin, p. 9) In fact, it is embedded even more deeply than that, for a sense of fairness is found in the other than human world as well. (De Waal, 2016, 197-8; 2013, 172-3, 323-3) But again, fairness is shaped by context. What is fair in one context might be unfair in another. What counts as fairness is always socially embedded, for it is linked to what is regarded as equal within a particular context.
Common law procedures involve determining what is just and fair in a particular context, and precedents written to explain the decision help shape the discovery process for new cases where the contexts are necessarily different, but not completely so. Harry Prosch and Polanyi observe that “regardless of the private motives that motivate a person to be . . . a judge . . . he is not a judge unless he performs according to the standard incentives of that profession.” (p. 208) Justice, not efficiency, is its standard. As such, the law cannot be reduced to economic categories without abandoning justice as a principle of discovery.
Fairness, seeking truth, determining the rules that should structure a community, and supplying people’s needs and wants are basic elements of any society, and discovering them cannot be reduced to a single standard. For example, when Polanyi was criticized as attempting to incorporate science into the market, he responded “the emphasis should be in the opposite direction. The self-co-ordination of independent scientists embodies a higher principle, a principle which is reduced to the mechanism of the market when applied to the production and distribution of material goods.” (1969, p. 69) This higher principle is exploring what is not yet known about the material world. Spontaneous orders provide emergent values unconnected to specific individual choices, can shape future individual choices, and are distinct from one another as well.
All spontaneous orders are independent forces shaping society, and as they do, transform the environment in which people live, independently of their personal values. The market is the most powerful of these orders because everyone has needs, whereas the scientific community is limited to those seeking to enlarge the sphere of reliable knowledge and common law to finding a just resolution to disputes. However, very few people would say their highest hope for their own lives, or that of their children, is to become satisfied consumers.
Answering two questions
I believe these examples enable us to answer a question Bruce Caldwell raises in Hayek’ s Challenge. Given the shortcomings of methodologically individualist models of economic action, he asks why did “simple, unrealistic models seem to allow us to make passably workable pattern predictions about a complex world”? (2004, p. 387) The answer is now clear, the models incorporated the systemic values pure market processes privileged. The predictions were as good as they were not because of their models of human action, but because their models assumed action was instrumental, describing the values the system reinforced. (For example, Boettke, 2019, p. 165; 2016, p. 52n, 13; Rothbard, 1962, p. 4)
Distinguishing between individual and systemic values also helps clarify a confusion as to what is and is not a spontaneous order. Polanyi wrote spontaneous orders were created to seek single values. Science pursues truth, law pursues justice, and the arts pursue beauty. He described these as higher, ‘spiritual” values because they can be shared and in sharing, not be used up. They are not consumed. By contrast “an automobile coming off an assembly line . . . is nothing at all unless some individual consumes it.” (Polanyi and Prosch, pp. 199) However, for Hayek, spontaneous orders have no purpose of their own, but serve as frameworks through which individuals can pursue many, and often conflicting purposes. Polanyi’s focus on science, where many scientists are personally motivated by seeking truth, and Hayek’s focus on economics, where success arises from seeking sales, helps explain their different perspectives. But they can be integrated without remainder.
Individuals could pursue particular values, and most scientists believe science is the most promising way to seek truth about the material world. But as a system science pursues reliable knowledge, which gives us the closest approximation to the truth many scientists believe we can achieve.
Similarly, a good common law judge seeks to serve justice. But common law does not guarantee justice, which has resisted detailed definition since at least Plato and Aristotle. Rather, it integrates the pursuit of justice within the existing legal and cultural framework that shapes a society.
What of the market? People in the market use price signals to pursue an extraordinary range of values. The market makes this possible by reducing all within it to price data. For all but the final goods produced, something’s utility in becoming something other than what it is. But people acting within markets are motivated by a wide variety of values. In my own business, which I ran for many years, a major value customers sought to serve was gift-giving.
Polanyi seemed to have a weak sense of systems as applied to complex phenomena and Hayek did not emphasize systemic biases and values. Hayek and Polanyi’s seemingly contradictory positions disappear when we realize they are looking at different dimensions of the same processes.
Inherent tensions between spontaneous orders
Once we distinguish between individual and systemic values, new questions arise. Given that spontaneous orders need not reflect the values of those acting within them, and their emergent properties influence one another, How do different spontaneous orders interact?
This kind of issue first became clear to me when, as a Political Scientist, I studied the media’s role in a free society. Because the media was to serve values quite different from providing profitable investment opportunities or securing private ownership, the constitution guarantees freedom of the press. (diZerega, p. 2004) Today the press responds to two self- organizing value systems: the market and democracy. To survive, the media must be economically viable, but to justify constitutional protection, it must be a watchdog and informant on public affairs. The pressures to serve one can undermine serving the other.
For example, Leslie Moonves, then executive chairman, president, and CEO of CBS defended their one-sided focus on Donald Trump during the Republican primaries: “It may not be good for America, but it’s damn good for CBS,” he said of the presidential race. “The money’s rolling in and this is fun.” He observes “I’ve never seen anything like this, and this going to be a very good year for us. Sorry. It’s a terrible thing to say. But, bring it on, Donald. Keep going.” (Bond, 2016)
When Boettke and Storr advocated integrating Weber’s models of economy, society, and polity they ignored a central dimension of his thinking. Weber did not use his ideal typical categories simply as classification devices and then look at how they interacted in the broad categories of society, polity, and economy. Rather, each of these categories is itself comprised of tension filled relationships analyzable in terms of other ideal types. A linear approach to these phenomena masks the tensions.
Reinhard Bendix noted, “Every [ideal] type . . . represents an effort to reconcile tendencies of thought and action that would be irreconcilable if each tendency were elaborated fully and with complete logical consistency.” (Bendix, 1962, p. 410) For example, in human societies authority/domination can be described in pure ideal typical terms as traditional, charismatic, or legal rational. However, due to the interplay of institutions and human motives, pure types rarely exist in actual societies, and there is always a tension and contestation as to their mutual relationships in practice. Bendix explained “a fully consistent charismatic leadership is inimical to rules and tradition, but the disciples always wish to see the leader’s extraordinary capacities preserved for everyday life.” Success undermines “the charisma they consciously mean to serve.” (Bendix, p. 296) Bendix explained Weber used ideal types “to sort out the constituent elements in each empirical constellation and to pinpoint the areas of possible tension
. . .” (Bendix, p. 410, n)
I think the oversight by those such as Boettke and Storr is due to most methodological individualists treating particular spontaneous orders independently from their context. The pattern is what mattered. Boettke and Storr treat the pattern’s details as influenced by its larger context, a step forward, but they do not ask about reciprocal influences or the impact of other complex adaptive systems on it. There is nothing preventing this approach from asking about different spontaneous orders impact on one another, but answering that question rapidly comes up against the limits of the methodology. A systems approach is better.
For example, Adam Smith observed “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices” (Smith, 2003, Book I, Chapter X). Hayek wrote the market order “is a system which imposes upon enterprise a discipline under which the managers chafe and which each endeavours to escape” (Hayek 1973, p. 62). Smith and Hayek are describing a systemic tension as it manifests within a particular spontaneous order, rather than merely the failings of some individuals. Given that the value biases of the market as a system and business organizations as systems conflict, the problem lies deeper than individual choices.
This kind of tension exists in all spontaneous orders.
Hayek also identified another such tension integral to the dominant forms of economic production. In The Constitution of Liberty Hayek wrote employed people naturally came to see society as “one great hierarchy.” (Hayek, 1960, p. 119) He suggested this was caused by the ever-growing influence of large organizations. Years later he elaborated (1976, p. 134)
One reason why in recent times we have seen a strong revival of organizational thinking and a decline in the understanding of the operation of the market order is that . . . an ever increasing part of the people spend their whole working life as members of large organizations, and are led to think wholly in terms of the requirements of the organizational form of life.
Organizations that act successfully in markets operate on opposite principles Hayek termed cosmos and taxis. Not only do they chafe at market constraints, they also shape the thinking of those within them, who constitute an increasing percentage of the population. They in turn shape the cultural context within which markets operate.
Organizations are not simply our tools. As systems, they possess emergent properties of their own, especially a tendency to redefine the reasons they were created in terms of what is good for the organization as such, just as people, upon identifying with an organization, often act differently than they would have in nonorganizational contexts. (diZerega, 2015) As Paul Lewis states more generally, “When individual elements are arranged into structures, their behavior is often different compared to when they are isolated from each other.” (2019, p. 6)
Systemically, all successful organizations in all spontaneous orders are in the same systemic situation. The order that made their success possible can also undermine or end it. Political parties seek to insulate their elected officials from electoral challenge by tilting the rules in their favor. From Main Street to Wall Street, successful businesses seek to influence legal rules and obtain political favors to strengthen their position. In science, schools of thought often seek to deny alternative perspectives positions within their departments. Methodological individualists tend to pick out this pattern in the market, isolate it from similar patterns elsewhere, and call it “crony capitalism.” But while individual intentions most definitely matter, so do the systemic incentives of organizations within spontaneous orders. (diZerega, 2015) The term “crony capitalism” misdiagnoses the problem.
We return to Paul Lewis’s discussion of society as objectively real and the product of human agency. At every step in the hierarchic systemic elaboration of the human world, and complexification of social structures, we find such structures both facilitate and constrain human agency. In addition, we find human beings can and will react creatively to both the constraints and opportunities. (Lewis, 2000, p. 259) At every level of the systems hierarchy, new properties emerge from those below. The same is true when we shift from examining the emergent properties of a single spontaneous order to their mutual impact on one another.
Transformation to a higher order system
A spontaneous order is a polycentric system. When multiple spontaneous orders interact, a new level in the hierarchy of complexity arises: a polycentric system of polycentric systems. Pattern predictions could be reliably described within a single spontaneous order, but when multiple orders interact, each of which generate different patterns, what kind of pattern would result?
Hayek observed complex structures could maintain themselves within a changing environment “by constant adaptation of their internal states to the environment. . .. brought about by their elements possessing such regularities of conduct and such capacities to follow rules, that the result of their individual actions will be to restore the order of the whole if it is disturbed by external influences.” (1979, 159) It is the pattern that is restored, not its original components. Property rights can vary in many ways and a market pattern will still emerge. The market’s pattern persisted when property rights included owning human beings, and when they ceased to do so. Science as a system discovering reliable knowledge survived when scientific contributions were freely available to other scientists, and today, when most new work has shifted from gifts to science to being appropriated as commodities serving corporate profit.
The spontaneous orders of science and the market both emerge out of the freely made cooperation of independent individuals. So does the spontaneous order of democracy. In addition, there are other complex adaptive social systems, such as language and custom. While all these patterns arise through formally voluntary interactions, they exhibit different values.
Consider this statement by Hayek about complex orders: “The ‘emergence’ of ‘new’ patterns as a result of the increase in the number of elements between which simple relations exist, means that the larger structure as a whole will possess certain general or abstract features that will recur independently of the particular values of the individual data . . .” (Hayek, 1967c. p. 26; My italics.) Individual spontaneous orders exhibit general patterns emerging out of people following simple procedural rules that generate useful feedback signals. However, when we look at the mutual influences of different spontaneous orders on one another, there are no common “simple relations” shaped by procedural rules generating standardized feedback signals, such as prices. There is no common feedback.
Here my distinction between spontaneous orders and other complex adaptive social systems becomes important. Hayek himself did not distinguish between spontaneous orders in the sense I use the term and other senses of the term. (1973, p. 47)
The spontaneous order which we call a society [will often have] a nucleus, or several nuclei, of more closely related individuals occupying a central position in a more loosely connected but more extensive order. . .. As different partial societies of this sort will often overlap and every individual may, in addition to being a member of the Great Society, be a member of numerous other spontaneous sub-orders or partial societies of this sort as well as of the various organizations existing within the comprehensive Great Society. Once we can distinguish spontaneous orders as a subset of complex adaptive systems,
we can see how, in Bertalanffy’s terms, Hayek is describing a higher order system than a spontaneous order. A polycentric system of polycentric systems will have emergent qualities that cannot be reduced to the qualities of the systems that comprise it.
One good term for this higher level is “civil society.”
Civil society is the sphere of consensual relations between non-intimates, all possessing equal legal status and freedom to engage in individual or cooperative enterprises, while respecting others’ equal freedom to do the same. All are independent equals. (Hardwick, 2008) Civil society constitutes the only sphere of social existence other than that of intimates where the full range of consensual values and virtues can be expressed without some being penalized systemically.
Civil society shares certain traits with spontaneous orders, such as equality of status and formally voluntary relationships, but these traits in themselves do not generate a system- wide discovery process. In this respect civil society is more like language as a complex emergent system than like the market or any other spontaneous order. There is no single coordination problem because there is no standard by which more effective coordination can be judged. Importantly, lack of standardized feedback means lack of even a minimal self. Civil society is biased in favor on no particular value other than the most abstract of honoring voluntary cooperation in whatever form it takes that does not injure others’ similar capacity.
Boettke and others’ claim the market is not teleological is mistaken, but at the next level in systemic hierarchy, their statement would apply. Civil society, not the market, is the optimal context for freedom.
In the sense I use the term, civil society is a relatively recent phenomenon in human life. Entrepreneurs, markets and price signals long predated civil society. Individuals deeply devoted to understanding the mature of the physical world long predated modern science. Some polities embraced political equality for their citizens over a thousand years before anything close to an inclusive civil society arose. Common law existed in societies with deeply entrenched legally enforced status inequalities.
David Hume was perhaps the most insightful early observer of its early rise. As Hume described the complex new society emerging in England: (1985, p. 271)
“The more these refined arts advance, the more sociable men become . . . They flock into cities; love to receive and communicate knowledge; to show their wit or their breeding; their taste in conversation or living, in clothes or furniture. Curiosity allures the wise; vanity the foolish; and pleasure both. Particular clubs and societies are every where formed: Both sexes meet in an easy and sociable manner; and the tempers of men, as well
as their behaviour, refine apace.”
In his time most people were still barred from such lives, but what existed was far beyond anything that previously existed.
Along with Hume, I believe Alexis deTocqueville is the other major early theorist of civil society. In Democracy in America, he meant by ‘democracy’ not a system of government, but rather a society where, to an unprecedented degree, citizens enjoyed equal legal status. Tocqueville observed (1961, p. 216)
In no country in the world has the principle of association been more successfully used, or more unsparingly applied to a multitude of different objects, than in America. Besides the permanent associations which are established by law under the name of townships, cities, and counties, a vast number of others are formed and maintained by the agency of private individuals.
That in Tocqueville’s time this description included primarily white men is irrelevant to my point. Despite its shortcomings it was a radically different society than European societies defined by legal distinctions between all classes of people. In the new U.S. all male citizens were supposed to be equal in basic rights, and many rights were shared by women. More importantly, in principle these values could be applied universally to humanity as a whole, and to an ever-greater extent this is what has happened.
Europeans of Tocqueville’s time were not used to such an equalitarian social order.
As in spontaneous orders, the dynamic relationships within civil society are not intuitively obvious. In fact, they are even harder to grasp because civil society weaves together so many such orders. As he observed, “No sooner do you set foot upon the American soil than you are stunned by a kind of tumult; a confused clamour is heard on every side; and a thousand simultaneous voices demand the immediate satisfaction of their social wants.” (Tocqueville, 1961, p. 292) But under this incessant tumult, a kind of order existed. “The appearance of disorder which prevails on the surface, leads [a European] at first to imagine that society is in a state of anarchy; nor does he perceive his mistake till he has gone deeper into the subject.” (1961, p. 90)
What is the nature of this order?
A polycentric system of polycentric systems
Equal status is not a procedural rule about how to do something. Different spontaneous order communities have different rules for doing things, but all in principle give members formally equal status. To the degree formal equal status does not exist, spontaneous orders are subordinated to organizational priorities. This can be total, as with slavery in the antebellum South, or partial, as when women had different contractual rights than men, even though in other respects they were equal as citizens.
Equal status facilitates peaceful cooperation along whatever lines, and in pursuit of whatever values people choose that are compatible with them. This includes markets, science, the arts, religion, recreation, and anything else people can do cooperatively or individually without violating others’ equal rights. Neither Hume’s nor Tocqueville’s descriptions of civil society can be described in purely economic terms.
Spontaneous orders provide essential structure to the intricate ecology of a civil society, for not only do they provide usually reliable feedback signals in their own terms, these signals provide important information to people pursuing projects that cannot be reduced to such systems, such as the arts, technology, family life, and religion, or because their motivating values are different from those shaping the systems they use. Individuals make use of prices, peer judgement, or votes for pursuing their projects, whether or not their project is successful in systemic terms. To use a static analogy, spontaneous orders provide the warp into which people weave the weft of their projects. The difference from a weaving is that here both ‘warp’ and ‘weft’ are in dynamic motion.
What prevents chaos within civil society is the system of customary, and often tacit, rules governing relations that preserve equality of status and formally voluntary relationships by facilitating trust. For example, the rule that promises are expected to be kept, even if not legally enforceable, goes well beyond supporting market economies. People are expected to usually be truthful, even without a contract. Other tacit rules can vary significantly from society to society but still be important in facilitating cooperation, such as what constitutes appropriate social distance.
Civil society provides a context within which more specialized kinds of cooperative systems can blossom in all the ways human beings are capable of attaining. (diZerega, 2014, p. 50) For example, Polanyi emphasized the arts in his initial description of spontaneous order. While they are not, at least in my sense of the term, they are processes of mutual adjustment, as are spontaneous orders. No single standard of systemic success or failure for individuals is defined within civil society. Individuals have wide latitude as to which kinds of feedback to attend to, and how much. So long as relationships are between status equals, success or failure is entirely a matter of individual judgement. Different kinds of feedback always immerse members within complex value environments within which they make decisions that seek to integrate the values of more than a single spontaneous order. Within civil society human choice always trumps any given feedback signal.
Referring to my earlier discussion of hierarchy in systems theory, civil society exhibits higher level regularities than any of the spontaneous orders which help comprise them. Members of civil society know these patterns well enough to navigate successfully whereas, as Tocqueville noted, outsiders see chaos. Civil society is the highest and most complex social system, incorporating all its subsystems while exhibiting traits possessed by none of them. (Lewis and Lewin, p. 7) As Lewis wrote elsewhere, “higher-level systems possess causal powers that are different from, and irreducible to, those of its parts.” (2019, p. 6) Mondragon is an example.
From this perspective Tocqueville’s observation about how America differed from European societies of his time takes on additional significance: (Tocqueville, p. 295)
Democratic liberty is far from accomplishing all the projects it undertakes… It frequently abandons them before they have borne their fruits; or risks them when the consequences may prove dangerous; but in the end it produces more than any absolute government, and if it does fewer things well, it does a greater number of things. Under its sway, the transactions of the public domain are not nearly so important as what is done by private exertion. . .. [It] may under favorable circumstances, beget the most amazing benefits.
There is a long-used word that capture the essence of civil society as a whole, although it is all but unknown in economics: “commonwealth.” The pattern that emerges from spontaneous orders interacting within an all-embracing social context of equal status is a commons. It embraces all the wealth that is held in common, and a strong commonwealth takes care of this wealth rather than dissipating it or allowing partial interests to take control of it. (Rowe, 2013) Much economic theory assumes the existence of a commonwealth, and then ignores it, let alone how the market interacts with it.
Catching More Mice
In Deng Xiaoping’s terms, employing methodological individualism enabled some very important mice to be caught. But now it misses most that remain. As my opening paragraph emphasized, insofar as human agency played a formative role in social systems, methodological individualism played a central role in their study. In so far as influence flowed the other way, it gave a misleading account. In spontaneous orders whose patterns were irreducible to human action, methodological individualist methods obscured important phenomena.
Each spontaneous order, with its different values, interacts with other such orders that privilege different values. Together, these systems collectively shape the environment two steps removed from being explainable by individual actions. If in a spontaneous order the order cannot be reduced to individual actions, this is even more true when different such orders with different emergent qualities interact. Those acting within such networks are motivated by individual values, the values reinforced by a spontaneous order are systemic values, and different systems privilege different and nonreducible values. The collective patterns of such interactions in turn shape the values and actions of the individuals acting within them.
This is the language of ecology. Complex adaptive systems are patterns of relationships, within each of which there are smaller patterns, and each pattern itself a part of a larger pattern and of different patterns simultaneously. There is an important economic dimension in biological ecologies, but it hardly encompasses ecology as a whole. (Heinrich, 2005) It is the same in civil society. I can be active as a consumer, a scientist, and a citizen. Both “society” and “polity” as Boettke and Storr describe them include spontaneous order processes distinct from the market. (Boettke, 2019, pp. 187-8) Science is a part of society and democracy can be a part of polity.
But while they acknowledged the existence of multiple spontaneous orders, they seem not to grasp their dynamic interrelationships. (Boettke and Storr, pp.172-6)
Boettke appears to say any analysis that includes recognition of human agency’s importance anywhere can be called methodological individualism. (Boettke, 2009, p. 176) But while this approach has genuine value examining a single spontaneous order abstracted from its environment and generational change, it has little to say about relations between many such orders and the higher-level system of civil society. In harmony with Bruce Caldwell’s quotation at this article’s heading, Paul Lewis argues we are really engaged in semantical gymnastics whenequating an approach giving “equal causal and explanatory weight to individuals and social structures as individualistic.” (2010b)
An ecological model of society as a mutual causal network of interacting relationships preserves insights about individual agency central to methodological individualism, but integrates them within a richer framework, enabling investigation of issues otherwise largely ignored.
A new theory in the physical sciences must accomplish the following to replace an existing one:
1. It must reproduce all the successes of the currently prevailing theory.
2. It must explain at least one existing observation or measurement the current theory struggles with.
3. It must make at least one new prediction that differs from the leading theory’s predictions that can be validated.
The same standard seems appropriate in the social sciences.
The position I am developing answers Caldwell’s question of why flawed theories of human action result in decent pattern predictions in the market. (2004, p. 334) That such flawed models of human action lead to good pattern predictions is evidence the models are not the causes of the patterns. The rules are.
This framework transforms traditional issues in interesting ways. The common term ‘crony capitalism,’ implies a non-crony capitalism, meaning successful capitalists virtuously refuse to manipulate the rules in their favor. Yet as a system, the capitalist order selects for CEOs who put shareholder return above other values. As a system, the capitalist order rewards enterprises that successfully manipulate the rules in their favor.
Rather than being an example of personal failings within the market, the phenomena is an example of a common pattern reinforced in all spontaneous orders. Hayek used the same kind of reasoning to explain why in state socialism “the worst get on top.” (1944, p. 134-52) This pattern is common to all spontaneous orders.
This model also predicts tensions between clashing feedback signals in different spontaneous orders. For example, science is predicated on the logic of the gift economy, where rewards come to those who make “contributions” to their field. (Hyde, 1979, pp. 77-83) The market is based on producing commodities and services for sale. We see this as making a practical difference in that scientists want their contributions to be freely available to all who are interested whereas the logic of the market wants them to be available to those who will pay for them.
For another example, economists working within a purely economic framework tend to treat categories such as land, labor, and capital as taken for granted, though their use can be powerfully impacted by institutional and customary contexts. Both theory and politics have long struggled with the tensions between equality of status and the hierarchical employee/employer relation. But when the spontaneous order of the market becomes one of several within civil society, new insights become possible. A person is never simply their role in standard economic analysis.
The democratic principle of citizenship shapes worker-managed Mondragon cooperatives in Spain. Unlike narrowly economic cooperatives, control is based on equality of membership rather than equality of ownership. To be a member is more like being a citizen in a town than an employee in an organization. No one owns Mondragon any more than citizens own their town or country. (diZerega, 2014) Decision-making resembles Tocqueville’s analysis of New England town meetings more than a corporate board room. (1961, pp. 52-99) Yet Mondragon is very successful economically. Prices remain as signals guiding decision-making, but the decisions made are by equals motivated by many values rather than service to shareholders. (As Milton Friedman argues should be the case, 2002, 119-36) The market remains, but its relationship with the rest of civil society is transformed.
Mondragon style businesses also free employees from immersion in the organizational styles of thought that worried Hayek. To exercise effective self-governance workers must look beyond the next quarter’s returns and take into consideration the situations of others than themselves. Mondragon is an example of how two different spontaneous orders create a higher order system within civil society, depending on both the market and democracy, and reducible to neither. Workplace democracy may arguably be an essential element of any viable civil society over the long run. (Ellerman, 2009)
It more strongly connects liberalism with a free society
Many defenses of methodological individualism I have read emphasize its political role in defending individual freedom rather than its scientific utility. It’s connection to classical liberalism is not accidental. Both emphasize the individual as the sole source of agency, and both perceive the social world in linear terms. This defense is flawed. An inadequate theory of a free society will be an inadequate defense of freedom, its most serious flaws hidden by treating the market as the only spontaneous order, even if sometimes recognizing common law in a supporting role.
For example, Peter Boettke observes, correctly, that “One simply cannot do political economy without addressing the institutional infrastructure within which economic activity takes place.” (Boettke, 2019, p. 168) But his one-dimensional treatment of spontaneous orders and failure to examine civil society leads him to write “Liberalism, correctly understood, is little more than the persistent and consistent applications of the principles of economics to the affairs of men….” (Boettke, 2019. p. 200) To support his position, Boettke refers to Adam Smith.
Boettke’s selective reference to Smith ignores the latter’s emphasis on the importance of sympathy, a view shared with much of the Scottish Enlightenment and subsequent liberal thought. (Smith, 1969) As Smith used the term, sympathy involved expanding one’s sense of self to include others, which is quite different from profit maximizing behavior. (diZerega, 1996)
Boettke also ignores liberalism’s founding figure, John Locke, where both private property and political and legal equality are foundational. His narrow economistic view of spontaneous orders may also explain why he ignores the liberal philosophies of America’s Founding Fathers. In short, Boettke describes a caricature of liberalism, rooted in a narrow view of free institutions and a model of individual action that is really a description of market values.
Polanyi illuminates a part of what this one-dimensional view misses: “in the free cooperation of independent scientists we shall find a highly simplified model of a free society.” (1969, p. 11) Developing Polanyi’s insights, physicist John Ziman wrote “The whole ideology of Science, the principle of a freely accepted consensus implies a society in which there is general freedom of speech and comment.” (Ziman, 1968. p.116) Scientists most definitely do not apply “the principles of economics to the affairs of men.”
Nor can Hume and Tocqueville’s descriptions of civil society be reduced to economics. A free society will generate markets, but markets do not mean the society is free. This economistic reductionism obscures the true complexity of liberal societies. The market process can work very well so long as the price system is left free to function, no matter what the limitations are on freedom of noncommercial speech. The South’s slave economy was a market economy with respect to price formation, as is China’s today. Despite the Supreme Court’s 1976 ruling in
Buckley v Valeo that money is speech, bribery can never be described as simply the better argument. Science does not and cannot advance through bribes. Markets can.
In his study of gift relationships in the modern world, Richard Titmuss writes (Titmuss, p. 224)
the gift exchange of a non-quantifiable nature has . . . important functions in complex, large-scale societies. . .. the application of scientific and technological developments in such societies, in further accelerating the spread of complexity, has increased rather than diminished the scientific as well as the social need for gift relationships.. . . modern societies now require more rather than less freedom of choice for the expression of altruism in the daily life of all social groups.
Equating ‘free markets’ with ‘freedom’ misunderstands freedom. Freedom is maximized when there are many spontaneous orders coordinating information reflecting different values so that individuals are not dominated by any one of them. As a polycentric system of polycentric systems, civil society is an endless kaleidoscope of interweaving patterns and projects. Civil society is the free society. (Novak, 2018)
As Polanyi put it, a free society accepts “a condition of society in which the public interest is known only fragmentarily and is left to be achieved as the outcome of individual initiatives aiming at fragmentary problems.” (1969, p. 71) This insight unites the values of Lockean liberalism, the Scottish Enlightenment, and the Continental liberal tradition of men like the Humboldt brothers. (diZerega, 2020) It is also compatible with Hayek’s insights regarding economics.
Paul Lewis prefers describing Hayek’s approach to the social sciences as a “transformational model of social activity and order.” (Lewis, 2020a)
I would add, “like life itself.”
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1 Laurent Dobuzinskis first asked me to what the ‘self’ in self-organizing referred in a discussion nearly 20 years ago. I have never forgotten his perceptive question, which ultimately led me to explore the systemic biases within different spontaneous orders.