Economics

Stop Using Adam Smith and F.A. Hayek to Support Your Political Ideology

The irony of faith in blind markets

Share with your friends










Submit
More share buttons
Share on Pinterest

By David Brin

Even conservatives now admit that conservatism has changed.  Take the Ronald Reagan who Republican activists idolize in abstract; in real life he raised taxes, increased regulations, signed environmental laws, and (worst of all) negotiated countless compromise give-and-take, pragmatic measures in tandem with a Congress run by the other party. As did Barry Goldwater and William F. Buckley, giants who argued with genteel courtesy and who revered both knowledge and intellect, especially science.  Even the most fervid Tea Party aficionado would avow that today’s GOP has little room for such thingsas Goldwater and Buckley themselves proclaimed, to their dismay, before they died.

In this analysis, I’d like to focus on one of the directions that conservatism has gone a-wandering.  But note first: I’ll try to do this without taking a single position that could fairly be called even slightly left-of centerby the old standards at least.

My entire critique will be from what used to be a completely conservative perspective. You’ll know this by the historical figure whom I cite above all others.

It begins provocatively, with prominent online commentator John Robb, who offers a simple and clearly-correct explanation for the gross mismanagement of the U.S. economy in the first decade of the 21st Centuryan appraisal that seems both tragically on-target and stunningly ironic. Ironic in ways I plan to elaborateand I expect you’ll not look at the hoary old “left-vs-right” axis in the same way, ever again.

For starters, Robb shows that the patron saints of modern libertarianism and conservatism including Adam Smith and Friedrich Hayek were right in their core message, proving that today’s peculiarly myopic libertarians and conservatives are wrong in theirs.

The Smithian Fundamental

In order to grasp that apparent contradiction, let’s start by asking: what did Smith and Hayek say?

No, it wasn’t “laissez-faire” or  social darwinism or extolling the virtues of greed. Though both men praised private enterprise and market initiative, they did not share today’s idolatry of personal and family wealth as the fundamental sacrament of economics. Those who most-frequently bandy Smith’s name appear never to have cracked open a page of “The Wealth of Nations” or ‘The Theory of Moral Sentiments.”

Rather, Adam Smith essentially founded our modern phase of the Western Enlightenment by anchoring a central postulateone that Pericles and Locke discussed earlier, and that others, like Hayek, later embellished. The postulate that human beings are supreme rationalizers and self-deceivers.

Moreover, across 4,000 years we’ve seen that whenever a small group of men become powerful enough to control an economy and command-allocate its resources, they will do so according to biased perceptions, in-group delusions and fatally limited knowledge. Whether they do the normal oligarchic thingcheating for self-interestor else sincerely try to “allocate for the good of all,” they will generally do it badly. As a blatant recent example, Robb cites the collapse of the Soviet Union:

The reason for this failure was that the Soviets relied on central planning.  A system of economic governance where small group of people — in the Soviet Unions case bureaucrats — had all the decision making power.  They decided what was spent and where.  Even with copious amount of information, they decided badly. Why did they decide badly?  The massive economy of a modern superstate is too complex for a small group of people to manage.  Too much data.  Too many uncertainties.  Too many moving parts.

Indeed, the transformation of modern China from a Maoist calamity to a mercantilist success story began with their abandonment of nit-picking central planning in favor of capitalist-style enterprise.  Of course, the Chinese ruling caste retained overall control, “guiding” categories of credit and investment while executing a grand mercantilist strategy, the same process that Japan accomplished masterfully, during its own rapid primary and secondary phases of export-driven economic development.

Alas, for Japan, (but as a few of us forecast in the 1980s), national development eventually hits a tertiary phase when simple-minded, predatory mercantilism breaks down. If history and human nature are any guide, the Chinese will hit the same “wall” when economic complexity surpasses the ability of any planner-elite to comprehend or manage.  For all his faultsand the many ways he’s misinterpretedFriedrich Hayek understood this well. He showed how an obsession with Guided Allocation of Resources (GAR) eventually turns skilled planners into smug blunderers.

Now this barrier can shift, as computers and sophisticated models let rulers extend their period of competence a bit longer. (It helps, apparently, that nearly all of the top Chinese leaders began their careers as engineers, responsible for actual goods, infrastructure or services, not as lawyers, politicians or “business majors.”) Still, however you look at it, there is no way that the old ruling principle of GAR that held in 99% of human societies could possibly work in a tertiary economy as intricate as the United States. As Robb continues:

The only way to manage an economy as complex as this is to allow massively parallel decision making.  A huge number of economically empowered people making small decisions, that in aggregate, are able to process more data, get better data (by being closer to the problem), and apply more brainpower to weighing alternatives than any centralized decision making group.

Now all of this may sound surprisingly well… “libertarian”… given that both Robb and I are highly critical of today’s right! But bear with us, because what’s at issue is a fundamental conflation and betrayal of the very essence of libertarian and conservative fundamentals … The ultimate irony and hypocrisy.

What Robb describes here is the central discovery, not only of Smith and Locke, but of Benjamin Franklin and the American framers… as well as Galileo and the founders of modern science.

Ever since civilization began, nearly all societies were dominated by centralized oligarchies, priesthoods or hierarchies who ruled on policy, resource-allocation and Truth for 4,000 years of general incompetence mixed with brutal oppression.

Today, by sharp contrast, all three of the Enlightenment’s great arenas — democracy, markets and science — feature a revolutionary structure that broke with the oligarchic past. The old, arrogant, top-down approach was replaced with something else. Something that great Pericles described 2,000 years earlier, during the brief Athenian Renaissance.

That something is the most creative force in the universe. The principle that propels evolution, in nature, and that brought humanity into existence. It is—Competition.

Elsewhere I’ve called the Enlightenment’s principal tool Reciprocal Accountability (RA). But it really is just another way to say “get everybody competing.” By dividing and separating power and—more importantlyempowering the majority with education, health, rights and knowledge, we enabled vast numbers of people to participate in markets, democracy and science. This has had twin effects, never seen in earlier cultures.

  1. It means everybody can find out when a person stumbles onto something cool, better or right, even if that person came from a poor background.
  2. It allows us to hold each other accountable for things that are wrong, worse or uncool, even when the bad idea comes at us from someone mighty.

Never perfectly implemented, this reciprocally competitive system nevertheless dealt far better than any predecessor with that problem of human delusion. None of us can see and correct all our own errors, past a cloud of rationalizations. But when RA is healthy, then criticism flows. And others (your opponents) will happily point out your errors, for you. What a deal! And I’m sure you’re happy to return the favor.

The result? An Enlightenment Civilization fostered by Smith, Locke, Franklin etc., but propelled by tens of millions of eager participants. Inarguably the most successful of all time, cutting through countless foolish notions that held sway for millennialike the assumption that your potential is predetermined by who your father waswhile unleashing creativity, knowledge, freedom, and positive-sum wealth to a degree that surpassed all other societies, combined.

Even the most worrisome outcomes of success, like overpopulation, wealth stratification and environmental degradation, come accompanied by good news the fact that so many of us are aware, involved, reciprocally critical, and eager to innovate better ways. 

Lip Service to Wisdom

So, what’s that irony I spoke of, earlier? How does this central principle turn around and bite today’s libertarians and conservatives, proving many of them fools?

Clearly, everything I’ve said, so far, ought to make a libertarian or conservative happy!  Indeed, my nonfiction book The Transparent Society: Will Technology Force us to Choose Between Privacy and Freedom, is all about how open information flows can empower reciprocal accountability and competition, the things that make democracy and markets and science great. (There have never been humans more inherently competitive than scientists; try talking to one, some time.)

So where’s the problem? The problem is that it’s all lip service on the right! Those who most-loudly proclaim Faith In Blind Markets (FIBM) are generally also those proclaiming idolatry of private property as a pure, platonic essence, a tenet to be clutched with religious tenacity, as it was in feudal societies. Obdurate, they refuse to see that they are conflating two very different things.

Get Evonomics in your inbox

Private propertyas Adam Smith made clearis a means for encouraging the thing he really wanted: fair and open competition.  Indeed, the propertarian reforms that Peru instituted under the guidance of Hernando de Soto, vesting the poor in the land they had always farmed, resulted in a boom that delighted both libertarians and socialists.  Safe and secure property rights are a boon… up to a point.

But anyone who actually reads Adam Smith also knows that he went on and on about that “fair and open” part! Especially how excessive disparities of wealth and income destroy competition. Unlike today’s conservatives, who grew up in a post-WWII flattened social order without major wealth-castes, Smith lived immersed in class-rooted oligarchy, of the kind that ruined markets, freedom and science across nearly 99% of human history. He knew the real enemy, first hand and denounced it in terms that he never used for mere bureaucrats.

When today’s libertarians praise the creative power of competition, then ignore the unlimited propertarianism that poisoned it across the ages, we are witnessing historical myopia and dogmatic illogic, of staggering magnitude. 

The Irony of Faith in Blind Markets

When Adam Smith gets over-simplified into a religious caricature, what you get is “faith in blind markets”or FIBMa dogma that proclaims the state should have no role in guiding economic affairs, in picking winners of losers, or interfering in the maneuvers or behavior of capitalists.  Like many caricatures, it is based on some core wisdom. As Robb points out, the failure of Leninism shows how state meddling can become addictive, excessive, meddlesome and unwise.  There is no way that 100,000 civil servants, no matter how well-educated, trained, experienced, honest and well-intentioned, can have enough information, insight or modeling clarity to replace the market’s hundreds of millions of knowing players.  Guided Allocation of Resources (GAR) has at least four millennia of failures to answer for.

But in rejecting one set of knowledge-limited meddlers100,000 civil servantslibertarians and conservatives seem bent on ignoring market manipulation by 5,000 or so aristocratic golf buddies, who appoint each other to company boards in order to vote each other titanic “compensation packages” while trading insider information and conspiring together to eliminate competition. Lords who are not subject to inherent limits, like each bureaucrat must face, or rules of disclosure or accountability. Lords who (whether it is legal or not) collude and share the same delusions.

Um… in what way is this kind of market “blind”? True, you have gelded the civil servants who Smith praised as a counter-balancing force against oligarchy.  But the 5,000 golf buddiesdespite their free market rhetoricaren’t doing FIBM at all! They reverting to GAR. To guided allocation, only in much smaller numbers, operating according to oligarchic principles of ferocious self-interest that go back at least to Nineveh.

If you want to explore this further, including how the notions of “allocation” and “faith in blind markets” get weirdly reversed, and how Smith and Hayek are betrayed by the people who tout them the most, see my article: Guided Allocation vs. Markets: An Ancient Struggle.

Hence, at last, the supreme irony.  Those who claim most-fervent dedication to the guiding principle of our Enlightenment: competition, reciprocal accountability and enterpriseour neighbors who call themselves conservative or libertarianhave been talked into conflating that principle with something entirely different. Idolatry of private wealth, sacred and limitless. A dogmatic-religious devotion that reaches its culmination in the hypnotic cantos of Ayn Rand. Or in the Norquist pledge to cut taxes on the rich under all circumstancesduring war or peace, in fat years or leanwithout limit and despite the failure of any Supply Side predictions ever, ever, ever coming true.

An idolatry that leads, inevitably to the ruination of all competition and restoration of the traditional human social order that ruled our ancestors going back to cuneiform tablets — Feudalism. 

Growing past the “left-right axis”

Let’s be clear. Every aspect of my argument, today, was from the perspective of an admirer of Adam Smith, of market enterprise, science and freedom. It has been a paean to competition. Not a single argument even referred to socialist or left-wing parts of the spectrum.  Sure, I hinted that some liberal endeavorse.g. mass education, civil rights, child nutrition and national infrastructure etc. empowered greater numbers of citizens to join the fair and open process of Smithian competition. It’s a truth we can discuss another time. But then, Adam Smith was called “the first liberal” and liberalism isn’t “lefty” anyway.

No. This indictment of today’s right was made entirely from the core postulates of the libertarian right.  Indeed, what Robb points outand that I elaborated hereis a reason for sincere libertarians and conservatives to awaken and rebel against the hijacking of their movements by an old enemy.

This is an internal matter, a cancer within libertarianism and conservatism. If there are still honest-smart men and women within those old and noble traditions, they should think carefully, observe and diagnose the illness.  They should face the contradiction. Discuss the conflation. And then do as Warren Buffett and Bill Gates and many others have done….

Choose the miracle of creative competition over an idolatry of cash.

They should stand up.

11 December 2015


Donating = Changing Economics. And Changing the World.

Evonomics is free, it’s a labor of love, and it's an expense. We spend hundreds of hours and lots of dollars each month creating, curating, and promoting content that drives the next evolution of economics. If you're like us — if you think there’s a key leverage point here for making the world a better place — please consider donating. We’ll use your donation to deliver even more game-changing content, and to spread the word about that content to influential thinkers far and wide.

MONTHLY DONATION
 $3 / month
 $7 / month
 $10 / month
 $25 / month

ONE-TIME DONATION
You can also become a one-time patron with a single donation in any amount.

If you liked this article, you'll also like these other Evonomics articles...




BE INVOLVED

We welcome you to take part in the next evolution of economics. Sign up now to be kept in the loop!

  • James Larry Deaton

    David, a very good article. And I don’t think people really need to stop using Smith or Hayek … they just need to read them first. As you point out, “Those who most-frequently bandy Smith’s name appear never to have cracked open a page of “The Wealth of Nations” or ‘The Theory of Moral Sentiments.” Similarly, those who read Hayek may be shocked to find his justification for national health insurance. As for Ayn Rand, the less said the better. True libertarians often are reviled by that rational objectivist witch.

  • Jim_Satterfield

    The blind faith held by so many in “free markets” is the same mindset as any religion that pushes blind unquestioning faith, complete with hatred of the sinners that reject their revealed truth. It’s a belief system with no facts backing it up and so far as I’ve been able to tell every human belief system like that can and will be taken to illogical extremes by some of its believers.

  • commiiiiie

    State intervention is often designed to protect the golf buddies you speak of; their club didn’t arise in a vacuum. It is their ability to cartelize which is a reflection of their political power, not the reverse. It’s not possible to prevent the accumulation of large amounts of wealth without centralized discretionary political power, but it’s possible to minimize the extent to which wealth can buy political power. This ensures at the very least that wealth can mostly be used only in positive-sum exchange.

    Now, of course, your aim is to engage with Norquists, not thoughtful libertarians. But it would be easy for them to amend their not-so-thoughtful conservatism/libertarianism to respond to your criticisms and then still end up with something you don’t like.

    • David Brin

      If thoughtful libertarians were to admit that both Smith and 6000 years suggest prioritizing the prevention of market-ruining owner-oligarchy, then we’d at least have a basis for genuine argument and negotiation. They are welcome to suggest methods other than Rooseveltean tax rates to prevent oligarchy as a failure mode. As it happens, every generation of Americans has innovated new approaches to accomplish that same end. Example: the Founders confiscated and redistributed 1/3 of the land. They also banned primogeniture, which then broke up large estates.

      Innovate away! Only note those 6000 years. Also note that the democrats, not republicans, were the great deregulators in our lifetime. They, not the GOP, banished the captured ICC and CAB. They deregulated and freed for use by everyone both GPS and the freaking Internet. Yes they impose other regulations. Some are needed. Some should obsolesce. But don’t think for a minute that the Republican Party ever, ever, ever helps engender flat-open-fair competition.

  • Hi David,

    Almost everything you say is true in a sense, and I align with much of it, and yet it to me it still missed the point.

    I am not in any way in favour of centralised control. I strong favour decentralisation, and individual freedom. And I see evolution in a different light.

    Darwin clearly demonstrated the role of competition in evolution, and that has quickly entered the popular consciousness – the whole “nature red in tooth and claw” thing. And it is only part of the picture, an odd caricature in a sense.

    Evolution has always been about the roles of both competition and cooperation.

    The more complex the entity, the more important the many roles of cooperation in its being, and competition in its getting there.

    And raw cooperation is always vulnerable to exploitation by cheating strategies, so at every new level, cooperation requires attendant strategies to prevent invasion by cheats, and at every level there will continue to be a sort of “evolutionary arms race” within levels of cooperative systems between potential cheats finding new cheating strategies that evade detection, and the cooperative system finding new strategies that bring the cheat back to cooperation. From a systems perspective, there can be no end to that process, at every level, eternal vigilance is required by those within the cooperative, both to detect new cheating strategies, and to develop effective counter-strategies that make it in the self interest of the cheat to come back within the cooperative.

    And within all of this complexity, there exists a vast array of common over simplifying assumptions at every level, that lead many to sub-optimal outcomes in terms of both understanding and incentive to action.

    Within the highest levels of commitment to life and liberty, there is an extremely difficult exercise of creating boundaries that both respect life, and empower liberty. It is extremely difficult to empower liberty without posing significant risk to life. Nothing is simple.

    One of the most profound problems that exist right now, is the dominance of market values in our society.

    To a good first order approximation, money rules.

    It seems that most of the intellectual justification for this comes from a mistaking of correlation with causation.

    Throughout history, free markets have been associated with freedom and prosperity.

    Many people have taken that association to mean that money (the market measure of value) must be at the root of this freedom and prosperity.

    It now seems clear that such a causal association was a mistake.

    It seems that the greatest prosperity coming from markets was from the distributed trust networks between traders, that allowed individuals to make reliable judgements.

    It seems that high level cheating strategies within economic thought have exploited that mistake of correlation with causation, and have managed to put monetary systems at the top of our governance systems.

    This appears to be a logical error.

    What is needed is distributed trust networks within a cooperative context. It seems to be decentralisation of control (trust in a reliable context) that most reliably delivers liberty.

    Freedom is the result of distributed trust networks within a cooperative context, not the freedom of capital.

    Capital has many tendencies to be exploitive to the cooperative, as even Adam Smith noted.

    Markets and capital were great tools in times of genuine scarcity, but they cannot work well in contexts of universal abundance.

    The social utility of markets degrades rapidly as our ability to automate production increases.

    Exchange based thinking tends to be intensely short term and self centred and tends to ignore the needs of the many levels of our cooperative existence.

    And automation is not yet at the point it can entirely automate all goods and services, and it is rapidly approaching the point that production of all essential goods and services could be fully automated (water, food, housing, healthcare, transport, communication, education, sanitation, energy, recycling). Such automation should be able to be fully distributed.

    So yeah – its complex, far more complex that most people have even the slightest inkling of.

    One of the major issues with human brains is that we form habits, and under stress our brains revert to earliest habits.

    In logic, we must all start from simple binaries.

    Thus, under stress, we all have a strong tendency to revert to the simplest binary “truth” our brain associates most strongly with that particular context. That worked well when stress came from big cats or bears or invading hordes, but doesn’t work so well in times of abstract economic and social crises.

    The evidence in logic is now clear, that provided that there is actually enough for everyone, then cooperation is always more powerful for everyone than competition.

    And we are now at the stage in our development as a species that we need to go to a level of universal cooperation, and put significant effort into developing systems that can support everyone (no exceptions) in a high standard of living, with high standards of security. The only logical alternative is not really safe for anyone.

    We all get far more by cooperating, that any can get by cheating, however unlikely that may look to most right now.

    Exponential technological development does actually have the ability to deliver that, but not in a competitive market context. Markets must (in logic and in practice) value universal abundance of anything at zero. This is why automation must break markets, and that need not be a bad thing for individuals, if, and only if, we structure the systems to distribute that automation universally and use it to empower everyone.

    Transition is going to be “interesting”.

    • David Brin

      Competition is the most creative force in the universe. We are using it to make AI. The problem is that it is violent and hugely inefficient. In nature and in primitive societies, each improvement is built upon mountains of death and pain. The Western Enlightenment found methods to get the creative benefits of competition while eliminating most of the violence, unfairness, cheating and blood. The stunning effectiveness of our competitive arenas…. markets, democracy, science, courts and sports… is beyond all reckoning. It happened because we learned to REGULATE competition, keeping the arenas flat-open-fair-creative.

      Alas, the human drive to win by cheating is built-in. The rich and mighty will always try to conspire to take more, not by fair competition but by cheating. The modern state was set up – like sports umpires – to prevent this.

      No wonder the oligarchs finance propaganda to “hate all government.”

      • Again David, I agree with all you wrote, and it still misses something essential.

        Competition is only part of the package.
        Cooperation is every bit as important, and the more complex the systems the more essential is cooperation.

        The focus on competition, without even a mention of cooperation, is “out of whack” – unreal.

        What you are calling “regulation of arenas” is far more accurately characterised as cooperation.

        Just look at the levels of cooperation present in complex systems like human beings. RNAs, proteins, RNAs and proteins to give lipids, DNA, cells and organelles, cellular specialisation to give organ, nervous systems, etc. The move into the social arena. So many cooperative levels within culture. We humans are born helpless, without the cooperation of parents and culture more widely we are dead. So many levels of cooperation within culture.
        I spend much more than 80% of my time in cooperative activities that have no financial gain, and they are all directed in a sense towards what I see as my own long term best interests, on a 50-100 year time-scale.

        We don’t all compete with each other.
        Sure there is some competition.
        Sure we all enjoy competition to a degree.
        Sure there is a competitive aspect to markets.
        And my particular company has established a reasonably stable niche, in which we supply a service at a cost that is hard for a competitor to match, give that it would take a couple of million investment to improve on our product, and it would take decades to recover that investment if you could convince our clients that your new product was better, and you could provide a better service (and that is doubtful). So most successful entities find stability in niche specialisation that largely avoids competition – one sees that at every level.

        So yes – competition is a power thing, no argument, and cooperation is at least as powerful, and in higher order systems, much more powerful, provided it has sufficient attendant strategies to effectively mitigate the risks from cheating strategies. And clearly our modern financial systems do not have such attendant strategies, as they do in fact seem to be dominated by cheating strategies at several levels.

        And you have actually addressed the issue of how individuals are supposed to generate value in an age of exponential expansion of automation. No doubt you and I could hold out much longer than most, but what about the drivers, the cleaners, the waiters, the plumbers?
        My son spent 2 years going to hundreds of job interviews before finally securing his first job, beating off 200 other applicants. He is now in reasonably high paid employment and enjoying what he does. The really scary thing is, that he is really bright, really motivated, and highly skilled, and he still had that reality.

        The market system cannot deal with full automation.
        Universal abundance drives markets to zero value.
        That is a fact.
        Oxygen in the air is the prime example.
        Arguably the single most important thing for any human, yet of zero market value due to universal abundance.
        Markets cannot deal with universal abundance.
        Markets require scarcity.
        Unemployment and poverty are necessary components of a market system.
        Automation offers us the ability to ensure every individual has all they need to do whatever they responsibly choose.

        The best three programmers I know have all stopped doing work that puts people out of work, but others are doing it, if more slowly and expensively.

        There is another way out of this mess.

        I love your work.
        I hugely respect your intellect.

        The issue is beyond competition in a sense.
        With automation reaching the point that we can now develop systems that do not require anyone to do anything to maintain them, then the whole game changes.
        Labour is no longer of value in an exponentially growing set of classes of goods and services.

        That really is game changer.

        We have a choice here.
        And that choice is really important.

        Do we choose to value life and liberty, universally?
        I say yes!
        I say that requires the development and deployment (universally) of fully automated production systems, that deliver all the essential of life and freedom to everyone. And that comes with a requirement to use those tools responsibly, with due regard for the life and liberty of everyone else. And that is going to take some education, at many levels.

        I say that now that such a thing is realistically possible in a realistic time-frame, there is both a moral imperative and a personal self interest imperative to do it.

        Sure we can use competition as part of the process, and at the highest level, it is a cooperative exercise.

        What say thee?

        • David Brin

          Sorry for the long delay. Naturally I agree that a macro layer of cooperation — and consensus determined regulation – is essential in order for competitive systems to function. Didn’t I just say that? When you lack the cooperative-regulatory structure, that keeps competition flat-open-fair and positive sum, then we all know what happens. In nature, the result is spectacular violence and zero advancement, except through the grinding process of Darwinian Evolution. But in human societies, unregulated competition is even worse. Cheaters rapidly use it to end flat-open-fair and institute feudalism — beneficial to their own genes but zero and even negative-sum.

          • jayrayspicer

            If I may be so bold, I think a key part of Ted’s position is that cooperation is as much a part of our genetic endowment as competition. Without it we would never have summited the food chain.

            Of course our genes are still thinking in terms of small groups, so cooperation has looked like an anomaly in large societies. It will be necessary for us to get back in touch with our cooperative side if our species is to continue to thrive.

          • David Brin

            As I clearly stated, many kinds of cooperation are required in order to create circumstances under which competition can be flat-open-fair-creative and positive sum. When we view competition and cooperation as opposites, w are zero-summing and falling into a trap. In ecosystems, individual animals are in ferocious competition, yet the totality of their wins and losses adds up to a working, healthy system and Disney simplified as “The Circle of Life.” But nature is stunningly inefficient at producing positive sum outcomes. So is feudalism. Our amazing positive sum outcomes arose from using cooperation to both harness and empower flat-open-fair competition.

          • Yes David.

            To the degree that we have approximated flat open and fair competition, that has certainly been a part of how we have gotten to this point.

            What I am saying is that automation has the ability to change everything, in such a way that the past is no longer a good predictor of the future.

            The role of competition is reducing.
            At each new level of cooperation, competition becomes less useful.
            So much more can be achieved by cooperation – orders of magnitude more – for everyone – all levels.

            We have the technical capacity to completely remove the need to compete for survival.
            Guaranteeing survival allows for something that has never previously existed.
            It is the game changer.

            Market competition cannot get us there, for the simple logical fact that markets require scarcity to deliver value, and cannot assign a positive value to any universal abundance. They can (and have) taken us a long way – and the next step must be outside of the competitive market framework.

            You have played eloquently with enough paradigms in your time – spend a few hours on this one, and tell me if I’m wrong!

          • David Brin

            Sorry Ted, but this displays stunning myopia and zero sum thinking. Competition and cooperation are not light-vs-dark side opposites like in some dumb movie, but synergistic methods by which decision trees work out, in nature, societies and inside human minds. Do you imagine that in a “cooperative” world there will not be decision trees? Or that different people will have different notions of which direction to go, allocating scarce resources? These people or entities will COMPETE by arguing, applying evidence, or showing results, in order to persuade their neighbors, or allocators, that their path is best. You will have that under socialism, as well as capitalism.

            Humans are inherently ambitious and competitive. You and I are competing, right now! And we all benefit from this drive, when it is regulated to stay flat-open-fair-creative.

          • Hi David

            I don’t see it that way.

            Just consider oxygen in the air.

            We don’t compete for that.

            It is just there. Vitally important to both of us, yet radically abundant, and therefore no need of competition.

            It is just so much a part of being we don’t even normally consider it.

            And yet it is there, arguably the single most valuable thing for every human being, and of zero market value.

            Now consider that we have the possibility of delivering all of the essentials of life for a human being (every human being) at a similar level of universal abundance to that of air.

            We could design and implement fully automated systems to deliver:
            1 clean water
            2 nutritional vegan food
            3 safe, comfortable shelter
            4 freedom to travel where-ever you responsibly choose
            5 recycling and sanitation systems
            6 communication systems
            7 medical care

            to every person, yet there is no economic incentive to do,because to do so would remove all economic activity related to those goods and services (and give people the option of engaging in employment or not).

            Consider that as an undergrad (finished 3rd year) biochem student in 1974 it became clear to me in logic that we would at some point be able to extend life-spans indefinitely. So the next question became, what sort of social, technical and political institutions are required to give the sort of risk profiles to actually allow people to live a very long-time.
            I have been 41 years in that enquiry, and have explored many strategic domains.

            I am not in some simple binary mode here.
            I am talking about extremely complex multidimensional strategy spaces.

            I am not suggesting that there be no competition.
            I enjoy competition as much as the next guy.
            I used to love the Dr Dobbs programming contests back in the 80s – both the shortest code and least number of machine cycles.
            I love playing golf.
            I definitely have and appreciate my competitive side.

            And, I have this side that wants to be able to live a very long time, and has spent a lot of time exploring the sorts of strategy spaces that allow that to happen.

            It is not at all stable to force people into competitive strategies for survival. No-one can live a long time in a strategy space with that as the basis.

            The basic survival space has to be strongly cooperative, and the easiest way to stabilise (as per Axelrod) that is to fully automate it.

            I know you are capable of high levels of abstraction. This requires as many levels as you’re willing to throw at it.
            I have (briefly) chased it out to twelve levels. It is almost impossible to effectively communicate even a third level abstraction.

            What I am saying, is that if we want to live a long time, then we need to change the strategic base of the systemic environment in which we live. It must have a strong cooperative base.

            What people choose to do from that starting point is entirely their choice.
            Within the constraints of universal respect for life and liberty, they can do whatever they responsibly choose -as competitive or as cooperative as they choose.

            And if one wishes to have a realistic chance of living a very long time, then the system has to have that strongly cooperative base.

            Clearly our system today does not have such a base.

            Clearly, no system based on exchange values (market values) can every deliver such a system as a result of its native set of internal incentive structures. Getting there requires a higher level choice.

            That is all I am saying.

          • Oscarthegrouch

            You sound like someone with a screw or two loose. Please, if you have the plans for a working Star Trek replicator, reveal it to the world.

          • Hi Oscar
            You do earn your “grouch” handle!

            I am not writing about the plans for a replicator directly, but rather of the systemic environments that will encourage or discourage the development of such a thing long term.

            We are a long way from a full blown replicator capability at present, and we could potentially fully automate the production and distribution of a limited range of goods and services right now.
            What I am trying to do is to get people to look at the systemic incentive structure produced by implicit assumptions that few ever consider.

            My purpose is to enable choice by creating awareness.

            It’s hard to choose what one cannot distinguish.

          • Nicholas Gruen

            The idea that there is this crisp distinction between competition and cooperation isn’t right IMO. You, Ted may be ‘competing’ with David in the argument, but why? Because you’re both engaged in a cooperative endeavour. You or David can switch and say “those are the rules” and we compete within them. But the rules are organic to the activity. No-one imposed them. They’re implied. They’re implied from the outside by the culture, but they’re implied organically in your interaction.

            These things exist in organic tension and easy distinctions between them are facile. As are the nice lather that the antagonists whip themselves into, convinced that the other person hasn’t listened to them, doesn’t understand them wilfully going on their own way. It seems that way because the distinctions are subtle, not crisp and cut and dried.

          • Hi Nicholas,
            It’s kind of like Richard Dawkins described in the few pages from page 314 of “Brief Candle in the Dark”, of his debate with Steve Gould, except at the next level of abstraction.
            I completely align with Richard, as far as he has gone, except I have gone to the next level of abstraction (and beyond), and that is almost impossible to communicate. Richard failed to communicate to Steve even at that level, how much more difficult my task.

            And there is some truth in what you said – I see that, clearly. And what I am trying to point to is something two levels of abstraction removed. And at that level, there is a very clear distinction between cooperation and competition, as there is at all levels in a sense.

            Darwinian selection is about survival.
            It need not necessarily imply any sort of direct competition, and it often does.
            Often survival can mean effectiveness at surviving some external factor that does not involve resource competition between individuals of a population.
            And often there is direct competition between members of a population for survival.
            These two different senses of the meaning of the term competition are very important, and sometimes they are not clearly distinguished.

            In the realm of Games Theory, keeping the distinction is essential, because the systemic topologies that result are very different.

            If survival is largely the result of overcoming outside of group threats, then there can be strong selective pressure for higher level in-group cooperation.

            If survival is largely the result of overcoming in group competition for limited resources then there is strong pressure against higher level cooperation.

            Being very clear about this distinction – the nature of the systemic environment and the nature of the incentives on the resulting topologies is critical.

            It seems that the relatively low rate of reproduction in humans, and the relatively common occurrence (in geological/evolutionary time) of external factors that lead to very large reductions in populations, has meant that for most of human history we have lived largely in the first sort of environment, that has favoured high levels of cooperation.

            When you look at the fact that our expansion of technological capabilities far exceeds our population growth rates, and then look at the systemic incentive structures imposed by the implicit assumptions of our major valuation paradigm in use (money and markets); then (at this second level of abstraction) the disjunct is clear.

            Markets are now rapidly approaching (if they have not already past) the point at which they deliver greater threat to individual survival than they deliver in benefits (for all the benefits that they do most certainly deliver).
            We have the technical ability to deliver a new paradigm – one with far greater security – an abundance based paradigm, of full automation of production.

            And nothing is risk free.
            It seems clear in logic that there will always be risk profiles associated with existence. Infinities are necessarily like that.

            Absolute security is a myth – that much is clear and indisputable.

            And one can push the probabilities a long way in one’s favour. And it seems clear that, provided that there are sufficient resources for all to survive and exercise reasonable freedom, that the most stable strategic set is one based in cooperation, and abundance of all the requirements of survival for all – rather than one that forces individuals to compete for survival within group.

            Automation gives us the ability to deliver that strategic environment without requiring any significant ongoing labour (other than the eternal vigilance that has always, and will likely remain, the price of liberty).

          • David Brin

            Drivel. Sorry but utter drivel. Right now you are competing with me! Doing badly but trying. Clearly you have never done science nor invention or you’d know how competitive those modes of life are… and rightfully so! ANd that is the only way we’ll “design and implement fully automated systems to deliver:1 clean water
            2 nutritional vegan food
            3 safe, comfortable shelter
            4 freedom to travel where-ever you responsibly choose
            5 recycling and sanitation systems
            6 communication systems
            7 medical care”

            Command-hierarchical systems like Leninism and Maoism didn’t just do a crappy job at all those things, they did a titanically crappy job.

            Dreamy-preaching about Kumbaya “let’s all cooperate” is ignorant of what humans are. We CAN compete far more fairly, amiably, decently, honorably and even joyfully. If you knew any scientists you’d see how it is done. But any regime that quashed that competitive drive in favor of “cooperation” would at best miss the point and probably be a tyranny.

            We MUST cooperate! But that cooperation should be general rules so that we behave decently and competition stays flat open fair and fun.

            And I am done here.

          • jayrayspicer

            Mr Brin, I agree with your article above. An oligarchy protects itself from competition, and that is a betrayal of conservative principles. I’d never really considered a level, refereed playing field to be a form of cooperation, but it makes sense.
            It’s odd, however, to think it’s the primary place that positive-sum outcomes arise, or that fair competition is the primary way in which we benefit from the power of cooperation. Positive-sum cooperation abounds in nature. Multi-celled organisms are examples of such. Hunter-gatherer groups sharing food, tribes protecting their land, herds protecting their young, the list is endless.
            Cooperation in groups allows us to achieve greater things than individuals acting alone. Competition keeps us from getting soft, both as individuals and as groups. I don’t know if cooperation and competition are opposites exactly, but they are in tension with each other. That doesn’t mean they aren’t constantly in play both within and between groups.
            Healthy competition and healthy cooperation are both worthwhile. But I find it unpersuasive that competition is the more important of the two. Cooperation lets us do big things in the first place. Competition improves efficiency. That’s good, but competition taken too far has immediate and severe consequences. It’s harder to see the immediate downside of too much cooperation.

  • J Flores

    So you are actually from the present period in history, and think its radder than any other time that you didn’t live. Surprise.

    • David Brin

      There are still places on Earth where you can live under feudalism, the method of 6000 years. Off with you. Enjoy.

  • Rick Johnson

    This could have been an interesting article if it was written by someone who knew what they were talking about. This dickhead is just have an extended wank.
    Could he at lest identify who exactly are these conservative and libertarians with this blind faith in the markets. It feels like he has set up a straw man who only exists in his own mind and then had great fun denouncing someone who doesn’t exist.
    Fairly typical of the crap that gets published in this very disappointing blog.

    • Thunder_Hole

      And…uh….your proof for the accusation and insults? And who is this “it” that feels so hard?

    • Scott

      Yet you take the time to read and comment on this “very disappointing blog.” Your rock misses you under it.

      • Rick Johnson

        My rock is fine. Sounds like you are keeping it nice and warm for me.

  • Greg Davidson

    If complexity is a true driver of economic performance as you postulate, then your analysis should be substantially affected by the many orders of magnitude improvement in the capacity of automated systems to analyze complexity in recent years. Part of Walmart’s business model was an inventory management system enabled by IT improvements in the 1990’s. As progress in information management has continued to accelerate, does your fundamental assertion about the deficiencies of central planning still hold ? (note: I am not personally arguing for a centrally planned system, but the question emerges from how you framed the argument)

    • David Brin

      I specifically addressed this in the article. Such management skills simply shift the locus of the Wall of Incompetence of central planning. The wall was shifted by modern accounting methods in the 1920s that allowed the USSR to do a lot of primary infrastructure construction by pure command. As a result some western observers saw lots of bustle and said “I have seen the future.” But it all collapsed when that steel could not be made into a refrigerator anyone wanted. The Japanese shifted the wall much farther. But there is eventually a wall.

  • Swami Cat

    Great article, David. I am a big fan of your blog.

    I agree with just about everything, especially the role of (what I call) constructive competition and the absurdity of extreme libertarian belief in the Platonic ideal of property (if property rights led to the destruction of the universe, there is still a branch of dogmatic Rothbardian libertarians who would support it on principle.)

    Where I disagree is with your conjecture that libertarians, in general, are pro- cronyism. This simply is not the case, broadly considered. They are vehemently against cartels which use coercion to restrict competition or privilege cooperation. Yes, they are aware that golfing buddies will get together and collude. Their solution to this is indeed competition — that absent coercion — the free market response to the collusion would be entrance of new competitors who would be attracted by the very profits of the cartel. The market dynamic is partially, if imperfectly, self correcting.

    I probably agree with you that the state has a valuable role in protecting these institutions, and that the state is often party to the worst abuses of cronyism. Libertarians try to solve the dilemma by excluding the state all together, Classical liberals like you, Hayek and I by limited powers, competing state entities and rule of law. Time will tell which path leads to the best results, but my guess is that we need to explore multiple competing paths and see how it plays out.

    • David Brin

      good stuff.

  • red_slider

    I’ve
    stopped using Marx, Lenin, Trotsky, Smith, George and a lot of other
    historical platforms for supporting my economic hypotheses as well (I
    don’t have or entertain any ideologies). My fundamental revision of all
    political and economic theory begins with, “Those who cannot remember
    history are condemned to repeat it; those who only remember history are
    doomed to repeat it”. Once one makes that amendment, a whole lot of
    yet-to-be-discovered possibilities suddenly emerge on one’s horizon.

    • David Brin

      The fundamental of history is the prevalence of pyramidal hierarchies of feudal lords preventing competition from those below. Anyone who ignores that universal failure mode – yet dares to cite “history” – is just cherry picking.

      • red_slider

        You don’t have to ignore the past (or its failures) to dare to go beyond it, and anything it has conceived before. The prior history of the giants of economic theory are not the alpha & omega of all future economic thought (though proponents of one or another of them often act as if they are, and with near religious fervor). You’ll note my revision to Santayana’s classic aphorism doesn’t advise against fully knowing the past, it only suggests we be very wary of thinking that perfecting the past, in one form or another, will perfect the future. It won’t.

        • David Brin

          Yes, we can move on to newer better models than the Western Enlightenment’s regulated-competitive -creative arenas. But so-far, they are the only plausible alternative to the attractor state of feudalism. Certainly the only one – other than low tech tribes – ever to last more than a generation, let alone deliver the goods so well. Do you have a cool way to get these advantages in an improved way? Great… as John Lennon wrote, we’d all love to see your plan. Write it into a novel! (I have, several times.)

          Meanwhile, the healthy and steady improvement of our arena based enlightenment is the tool we have.

          • red_slider

            Well, I’m not sure how cool. I’m not an expert in these things, so I only work up such proposals as demonstrations that thinking that is really out of the box (what I call ‘z-axis’ thought) is possible. Ideas on the odd-chance they might be useful to someone else. Perhaps this one might be of interest: https://www.facebook.com/note.php?note_id=162962670417237

            —————–
            crackpot advice: get a hammer
            big enough to crack the pot.

    • David Brin

      Those who ignore the mistakes of the future are doomed to make them.

      The greatest mistake of history was feudalism, which dominated 99% of human cultures. We have found ways to evade it for 200 years. Our enemies are those trying to bring it back. And THAT is why Adam Smith is totally relevant today.

  • Pingback: Stop Using Adam Smith and F.A. Hayek to Support...()

  • Pingback: Stop Using Adam Smith and F.A. Hayek to Support...()

  • Otto Metzger

    Good article, David. I’d just like to point out one key difference between a private elite and a public elite. The private elite has no legitimate coercive power. It matters not the number of bonuses the people at the top of a corporation give to each other, in the end, those decisions will have proven to be a bad allocation of resources if they come at the expense of their ability to meet consumer demand. In the free market the consumer is king.

    Contrast this to the political elite who derive their power not from their ability to satisfy consumer demand, but from their ability to manipulate the system through the coercive means of government. Since becoming involved in “regulating” the private sector, we’ve now also legitimized the use of these same coercive means by those individuals and corporations they were meant to reign in.

    To sum up, our problem now is that we’ve given the private elite the same advantages those in the public realm have always had over their competitors, that is, monopoly power over the legitimate means of force.

    • David Brin

      Good point. If you ever had to get a travel reimbursement from a govt agency then you’d know how strenuously accountability rules bear down upon civil servants… as they should! Because govt has such power. What’s deadly dangerous is when coercive or cheating power becomes un-accountable. Please read my book The Transparent Society: Will Technology Make Us Choose Between Privacy and Freedom?

  • Pingback: Evonomics – Stop Using Adam Smith and F.A. Hayek to Support Your Political Ideology | Ted Howard NZ's Blog()

  • Greg Davidson

    Here’s another challenge to one of your basic premises (I do agree with your concern that private sector manipulation of markets can cause harm just as centralized control can, but I believe that the evidence does not fully support your claims about the effect of centralized regulation).

    Let’s take a look at the last 65 years of American economic history. For about 25 of those years, there was a significantly higher degree of government regulation of the economy. From 1950-~1975 government strongly regulated transportation, telecommunications, banking, and international trade. Government determined routes and set rates for shipping, trains, trucking, and commercial air traffic, etc. Media ownership was strongly regulated, television stations needed to prove they were operating in the public interest, and if they took a political position they needed to provide equal time for an opposing viewpoint. Banks had strong enforcement of Glass-Steagall, and different financial institutions had their specific roles and government auditors to verify. Domestic employment was a specific consideration in tariff policy.

    I believe that a fair restatement of your hypothesis is that a higher level of central planning and regulation should result in worse economic outcomes. As a consequence, we should expect to see significantly better economic outcomes from 1980-2015 than seen from 1950-1975 (you can throw the transition years of 1976-1980 in either period and they won’t change the analysis). Guided allocation of resources should produce worse outcomes. Unfortunately, the data runs contrary to your hypothesis. Not only was average annual GDP growth higher when the US economy was more heavily regulated, but the benefits from that growth were also more broadly distributed. Now, I recognize that there are many other factors operating on the US economy other than the degree of regulation. But I will also argue that a comparison between the US during two eras of differing levels of regulation is at least as valid as a comparison between the United States and the Soviet Union. And you will need to provide some thorough and well-documented counter-arguments to explain away decades of GDP growth data that are inconsistent with your hypothesis.

    • David Brin

      Mr Davidson I suggest you actually read missives on which you intend to comment, rather than skimming them.

      • Greg Davidson

        I read your piece, I was trying to be succinct with one part I disagreed with. I think I understand your strategy to argue against today’s conservative economic policies by using languange and references from that cultural milieu. I agree that too often conservatives argue for what they refer to as capitalism while using examples of wealth creation not from ownership and deployment of assets but instead from creative and innovative labor. And you make a legitimate critique that a small group of economic oligarchs is subject to some of the same weaknesses as a small group of political oligarchs. Often competition can play a darwinian role in rewarding better approaches (or in penalizing worse ones). That’s your thesis, and I believe it is valid (as long as you accept the modifier “often” as opposed to invariably*)

        But in adopting a style designed to appeal to conservative readers, you are taking as a given some assertions that are questionable. It’s plausible that less government regulation and more competition will produce better economic impacts – but if this were true, we would expect to see a differentially better level of economic growth in a period with less government involvement as compared to a period with more government involvement. The trouble is that US economic history since 1950 is not consistent with that thesis. It is possible that the thesis is still correct, but in order to make that determination we would need a compelling empirical case of other factors having such a disproportionate impact that the overall GDP data skews the wrong way.

        * there are counter-examples such as agricultural production in Haiti vs. the Dominican Republic which indicate that that private ownership can avoid a level of competition that promotes a tragedy of the commons situation that makes all worse off)

        • David Brin

          No sir. You did not read the essay because your attempted paraphrasing is inaccurate to a degree that (in places) I would deem diametrically opposite to my points. While I appreciate that linguistically you give the appearance of attempting to paraphrase — the sign of an adult in argument — alas, you only give the appearance.

  • Albeniz

    Good post!
    At the end you write: “They should stand up” … and do what?
    Usually that exhortation is followed by the words ‘and fight’. The problem is that the elite are not going to give up without a fight and the ballot box is no remedy in many countries, where politicians all feed from the same trough.
    Can there be fundamental change without a violent revolution?
    I doubt it.

    • David Brin

      We are in phase 8 of the American Civil War. A majority of these phases ended without (much) violence, with the forward-looking (blue/union/scientific) side of America prevailing and insisting we move ahead. I firmly believe this phase can be similarly resolved, if we assertively hunt down the 10% of the GOP coalition that consists of intelligent and decent people, snared in hypnosis by savanarolas like Fox News. Aggressively confronting them with the vast disparity in actual facts (See: http://davidbrin.blogspot.com/2014/06/so-do-outcomes-matter-more-than-rhetoric.html ) and the insane right’s war on science can peel away just enough for that coalition to fail.

      We need to all become proselytes. For an optimistic, can-do future.

      • Oscarthegrouch

        I am one of those 10%-ers you’re referring to. If you want to have any hope of the US remaining blue/union/scientific, the left may want to make common cause with the GOP immigration hawks so that the nation remains nominally Western. Not getting swarmed by high-birthrate third-world peasants is kind of a sine qua non if you would bring your goals to fruition.

        • David Brin

          I applaud your willingness to at least contemplate negotiation, which is now officially forbidden on the American right (The “Hastert Rule” – look it up and look up Dennis Hastert.) But alas, you seem to clasp several misapprehensions.

          1. You speak of ‘the left’ as if there were such a thing as a matter of major substance. A natural mistake, since “the right” exists in the US as the most tightly disciplined political movement in 100 years. Don’t let the GOP debates fool you. Except for Trump, they all march to the tune of a fellow named Roger Ailes. In contrast, most democrats simply aren’t “leftists” at all. The loony left does exist! But it controls a few hundred university soft studies departments and Chicago and Berkeley

          2. You seem to be under an impression that rightists are better at keeping illegal immigration under control. In this impression you aren’t alone. But it is drooling-jibbering nonsense. If you truly are interested in seeing the truth that BOTH democrats and republicans do not want folks to realize, see:

          http://davidbrin.blogspot.com/2014/07/the-immigration-fury-one-of-many.html

          Finally, while I dislike your nativist prejudiced sentiments, I admit that there is an underlying truth. The leftists are wrong to believe in “goulash” instead of a melting pot. We need for immigrants to be truly American in the sense of accepting our core values of tolerance, diversity and getting along. And, yes, English. This means we have a right to be a bit picky and a right to limit immigration to rates we can safely absorb. People of goodwill could argue about where to place these bordelines…

          but not till you understand how you’ve been lied-to. And believe me… you do NOT know it till you’ve read:

          http://davidbrin.blogspot.com/2014/07/the-immigration-fury-one-of-many.html

  • Pingback: Google()

  • David Whitlock

    The only way that local and parallel control of the economy can actually “work” is when there is accurate signaling.

    Costs and Prices are the only things that markets can “signal”. If those costs and prices are not “accurate”, then a market cannot function.

    Top-down control doesn’t work because the top-down control hierarchy doesn’t have the bandwidth to exert the control that is necessary.

    Bottom-up control can only work when the prices received actually exceed the costs and allow for some profit for the intermediary to survive and grow on.

    When there are unpriced costs (costs that are not reflected in the price), then whoever bears those costs can only fail. Cost of CO2 in the atmosphere isn’t reflected in the price of fossil fuels. The “cost” is being born by “everyone” (i.e. by no one), and we are on tract for the Earth to be made uninhabitable because of the AGW.

    The only sustainable price, is one that reflects the cost of the good or service. The only sustainable good or service is one that can recover in its price, the actual cost of production. There can be transient deviations from this, but long term there cannot be. This is the “invisible hand of the market”. All goods and services that are unable to recover their cost of production disappear.

    The “cost” of an educated workforce includes the “cost” of educating children. If you are unwilling to pay the cost of educating children, then you really don’t want an educated population. If you are unwilling to pay for water pollution controls, then you really don’t want clean water.

    If you are unwilling to pay living wages, then you really don’t want workers to have lives. No rational person would tolerate non-living wages. Someone has to pay so that the worker can continue to live. If it isn’t the employer, then the employer is receiving a subsidy; is actually unable to sustainably produce the goods and services being sold, and should go out of business.

  • Donald Meinshausen

    The more regulated an industry the more likely that oligopoly and crony capitalism is created. I also believe as Rand Paul said that every cent of government subsidies to the rich must be abolished before one cent of aid to the poor is cut

  • Nicholas Gruen

    I’ve offered some thoughts on this post in my own post here. I’ll reproduce it below.

    David Brin offers a usefully concise means for distinguishing liberalism from what liberalism became within just a few years from Adam Smith’s death – the worship of private property or as Brin puts it “today’s idolatry of personal and family wealth as the fundamental sacrament of economics”. He contrasts that with “the Enlightenment’s principal tool Reciprocal Accountability. But it really is just another way to say ‘get everybody competing'”.

    I don’t think ‘get everyone competing’ is quite right, but what sparked this post was Brin’s generalisation of this idea, his assertion that this ‘decentralise and compete’ formula isn’t just descriptive of the way markets have evolved. It’s also descriptive of their correlative in Western modernisation – government. And it’s also descriptive of another transformational system – science.

    Ever since civilization began, nearly all societies were dominated by centralized oligarchies, priesthoods or hierarchies who ruled on policy, resource-allocation and Truth for 4,000 years of general incompetence mixed with brutal oppression.

    Today, by sharp contrast, all three of the Enlightenment’s great arenasdemocracy, markets and science — feature a revolutionary structure that broke with the oligarchic past. The old, arrogant, top-down approach was replaced with something else. Something that great Pericles described 2,000 years earlier, during the brief Athenian Renaissance.

    I have several related responses beyond agreeing with Brin’s suggestion that this way of seeing the world it’s a big deal. It is indeed thrilling once you ‘get’ the way in which systems can work, and can indeed work much better, once they’re no longer directed. This was the big message of Smith, that markets provided order without design and provided the stimulus for Darwin’s ideas (via Thomas Malthus). As former Coalition leader John Hewson put it as soon as you get it “suddenly you realise that a lot of what you’d thought was wrong.”

    It’s this sense of ‘aha’ that, I think lies behind a lot of the instinct that economic policy makers have to make ‘markets’ of things, because they’ve seen the power, indeed the beauty, of decentralised decision making when it works well – and the comparative dumbness of so much decision making by centralised bureaucracies. (As the Chief Economist and Chief Scientist of Google said to us when we went to visit them to discuss Kaggle with them, “In Google we spend a lot of time wondering why, if crowds can be so wise, committees can be so dumb”.)

    Still, the instinct that it’s only markets that can do this is an exercise in intellectual impatience I think. And I also think that Brin’s reduction of it all to ‘competition’ is likewise too impatient. Take the separation of powers. This limits the power of any officer or branch of government and that’s well and good. And at the limits of their power, different parts and arms of government ‘compete’ in some sense. They certainly test each other’s limits. But they also co-operate. Local, state and federal governments, departments of state all cooperate with each other. They may not do so very effectively in all sorts of ways, they may serve their own interests too intently, but they are supposed to cooperate in many respects and in many respects they do.

    Likewise in science, there’s competition, but it’s within an ethos of norms which consciously make calls on the greater good. So much so that, in a favourite quote of mine John Dewey associates science with cooperation, and indeed that with democracy:

    No scientific inquirer can keep what he finds to himself or turn it to merely private account without losing his scientific standing. Everything discovered belongs to the community of workers. Every new idea and theory has to be submitted to this community for confirmation and test. There is an expanding community of cooperative effort and of truth. . . . [T]hese traits are now limited to small groups . . . . But the[ir] existence reveals a possibility of the present. . . . The general adoption of the scientific attitude in human affairs would mean nothing less than a revolutionary change in morals, religion, politics and industry.

    So in many areas, a precondition of an open, decentralised order operating well is that, while it creates the prospect of competition (which except in well functioning markets will generally impose costs as well as benefits), it also has resources representing collective interests – through norms and/or coercion to keep competition stable and within the bounds that make it productive rather than harmful to the collective interest.

    This leads me to my third point on Brin’s piece. The future lies in finding ways of expanding this realm of decentralised decision making. And it won’t always be competition that we appeal to. Indeed I’d say that our experience on this journey so far is that the prime value we appeal to is cooperation not competition. The establishment of the Toyota production system devolved decision making on many things down from the managers and engineers. And it’s ethos wasn’t competition, but the intrinsic motivation of people operating in teams given all sorts of support from sophisticated statistical control information to ten times as much training as their American counterparts to master and then improve a range of tasks which it was their collective responsibility to optimise.

    Our experience of the internet is showing us something similar. As Eric S. Raymond stresses, open source code is typically better than proprietary code because it embodies the efforts of free individuals doing something for its own, rather than the boss’s sake. Of course it’s also true that such people, although they may valorise collaboration, may nevertheless be motivated by ‘glory’, by the esteem of their fellows. And that esteem is to some extent, but only some extent, a competitive thing. Esteem is often positional, and so if people seek it, by definition they compete with others with similar aims. But the ‘market’ for open source coding is not especially competitive. It’s decentralised.

    Elsewhere firms have tried to improvise some embrace of these ideas. Intrinsic motivation is something that managers understand (even if government policy makers economics textbooks writers rarely do). And something like Google, 3M’s and Atlassian’s “20 percent time” seeks to dilute the command and control of those at the top and suffuse the organisation with greater capacity for open, decentralised decision making. You can also argue, as I’ve done, that in some ways, we need to find our way back to older craft based approaches to work.

    And there’s another crucial way in which we need to pursue decentralised decision making, though we probably know even less of the theory and the practice of it than we do of decentralising decisions within organisations. This is in the area of social services and the rebuilding of social capital where we need to tap into the knowledge of people on the ground and of their communities as for instance with this program. But there are difficulties, because we’re giving stuff away – not selling it. So we have the classic public good problem of valuation. How do we know how much something is wanted if it’s not paid for, how do we tap into the knowledge of those the programs are trying to help, how do we put them in charge and yet ration the program to a level that’s acceptable from the perspective of economics and democratic accountability? We can work up local solutions to these problems, but it’s difficult to do what markets like, which is to roll out solutions at scale.

  • tommy laughter

    You point out what’s wrong ( like many on the left ). However, the wealthy will not go softly into the night and they have politicians who gladly take their money to protect them and Boards of Directors who share in the wealth trough…. “Meddling” by the government regulators from time to time, to shake the wealthy oligarchy up so as to result in larger distribution of wealth to the general public, is ABSOLUTELY necessary….

    What the Right either doesn’t understand or wishes to ignore, is the wealthy oligarchy cannot sustain the American economy. Additionally, as history has shown, sooner or later, the majority gets tired of eating cake, causing what the oligarchy detest,….. UNCERTAINTY….until the markets are either flat (in the early stages -now) or the regulators step in and with certainty squash the oligarchy continuing hope of more which will re-establish a better balance of wealth…..

    So unless there is a new T. Roosevelt, another Great Depression, or worst an uprising, those of you who can talk about “the problem”

    • XKeyscore

      the wealthy will not go softly into the night

      Interstellar…

    • Tom Cottone

      More ignorance from the Left

  • Locke Wiggin

    The market manipulation you cite and any ability to vote themselves compensation packages is not a function of the free market. It is a function of government interference in the market which reduces competition through regulation. That massive “private” wealth you cite, is often a result of largess gained through such government regulation. those 5000 market “manipulators” are only able to do so because of that government interference, reducing any competition they might have for market share.

    • Tiago Lucas

      Of course. No replies for your comment.
      It’s incredible his manipulative use of the numbers: 100.000 bureaucrats vs 5000 CEOs.
      1) The arguments for market are arguments for freedom to entry, this number (5000) is ludicrous.
      2) The incentives that reign on each group are completely different: the bureaucrats are controlled by the state bureaucracy and the CEOs by how it better attend the interest of their shareholders and these by how the company is valueated by the consumers, an ever increasing number of participants.
      Just another shit Evonomics article.

  • tommy laughter

    To utilize Smith or any other economist which the current state of economies is frightfully ignoring the markets of today.

    Competition is a wonderful thing, IF and only IF it is truly a level playing field. Which of course it is not today.

    When you “own” the regulators of excess, it’s actually a free for all by the monied oligarchy.

    NBA players against a high school team is a competition, but not “competitive”. And even less “competitive” if you take the whistles away from the “referees”.

    Only two instruments can adjust our current competition: 1) A strong political leader or “movement” which the majority supports to demand change; or 2) the majority gets tired of “eating the proverbial cake” which can lead of course to political chaos (revolution).

    Without non-corrupted referees, monopolies, graft and oligarchies will rein. Only when enough understand10% of the population cannot sustain an economy, will thing change and balance return…..

  • Hannes Radke

    Thank you for making me violently nod in agreement. I like the unapologetic style of your articles. Putting things into a systemic perspective. All across the comment sections of the internet you find all to many individualistic, no atomistic, mindsets. Systemic thinking and the fruits of it are as rare as gold out there, and equally valuable.

  • Valkyrie_Ice

    Funny really. I’ve been making these points for years. http://valkyrieice.blogspot.com/2010/07/on-government.html

    to quote:

    Let me see if I can reduce this down to bullet points

    The government is a naturally occurring emergent behavior of pack/herd mentality. It enables collective resource sharing, division of labor, efficient allocation of shared resources to the individuals, and in general provides for the Five Basic NEEDS of Food, Shelter, Medical care, Education, and Security.

    The market is a product of reproductive behavior that drives pack/herds to create Status pecking orders. These pecking orders self stratify, creating High status and low status members. Pack instinct demands “privilege” for high status, and enforces “obedience” on low status.

    Both of these drives make us form societies, but their effects are radically different

    Co-operation is a Positive Sum Game. It promotes creation of excess resources that then promote species growth

    Competition is a Zero Sum Game. It promotes the mating success of “superior genetic material” which then promotes species improvement.

    Government is thus a Survival instinct. It creates all Growth through providing the 5 needs of all organisms.

    The Market is thus a Reproductive instinct. It creates NO growth, but encourages the development of IMPROVEMENTS.

    Government provides STABILITY

    Market provides INNOVATION

    But the Status game also creates SERIOUS DRAWBACKS. Most of the problems of humanity are actually DUE to these drawbacks caused by the reproductive instincts. Status seeking behavior leads to diversion of collective resources into personal “status hoards” We call this diversion, “CORRUPTION” “ABUSE” “OPPRESSION” etc.

    Every problem that most people try to stick on “The Government” is actually caused by INDIVIDUALS within Government that are DIVERTING SHARED RESOURCES INTO PERSONAL STATUS SEEKING EFFORTS.

    We NEED both instincts, the co-operative and the competitive. The real problem is the subversion of co-operative “power” to promote personal competitive goals. This occurs because in many cases those who divert or misuse co-operative power to further personal agendas escape all accountability for their actions. Too many people confuse the collective for individuals who are directing those collectives, and end up absolving these individuals for their behavior by shifting the blame to a imaginary entity.

  • CynicalPeace

    Hi David,

    Great article. However, lumping Hayek with Smith seems disingenuous. Practically all of Smith is describing how the emerging economy works from a few assumptions: Humans must truck, barter, and sell, humans want to look good for others, humans are naturally parsimonious, etc. He didn’t say much in the way of policy prescriptions other than being against the Poor Laws and government debt. He was wrong in some areas and right in others, but really did the best he could with the info he had. Hayek on the other hand was deliberately obfuscating the facts of the economy to achieve philosophical and political ends. In his reaction against technocratic Keynesianism in his later years, he deliberately overlooked the successes of countercyclical policy to conclude that laissez faire was the only way to go. By dedicating himself to a philosophical dogma, he is truly the ancestor of the modern right today- they just took Hayek to its logical conclusion.

    Obviously, this is from a left perspective. But to me, that’s what’s needed here, for the right, by virtue of being conservative, is dedicated to dogmatism whereas the left merely yearns for improvement by virtue of the facts.

    So yes, we should eschew the left-right spectrum for another: science and superstition. Smith belongs to the former, Hayek to the latter.

  • David Conell

    This is 5000 words of straw-man argument, what non-sense

  • bobg

    I came to this article by way of 3quarksdaily. I like it. Politically, I define myself as a libertarian/anarchist. What my Libertarian brothers need to do, in addition to reading Smith and Hayek, is to hold their noses and read Engels’ “History of Family, Private Property and State”. We then need a roundtable discussion regarding real property. I don’t know the answer to the dilemma, but someone else at the table might.

  • Tom Cottone

    As usual, Brin proves he is either completely ignorant of history or deliberately dishonest. His opening paragraph sets the tone for falsehoods. Reagan did not “raise taxes”. He drastically cut them, then at the very end had a very slight increase. However, even with the slight increase at the end, the taxes were still FAR lower than previously. He did not “increase regulation”. As with taxes, OVER ALL he reduced regulation in the economy (where it mattered).

    As with most Leftists, he confuses free markets with Corporatism. His comment about 5000 golf buddies reveals a deep seated ignorance of how the free market works. Those type of cabals always fail unless supported by government regulation. The only way those golf buddies can succeed is if they can get government to enact regulations to protect them from competition. Rockefeller entered into two cartel attempts with Standard Oil and both were failures in short order. Latter he even said that those attempts were bad ideas. Next will come the monopoly canard, but again, a true monopoly is only possible through government regulation. The only way a company can become a price giver is through regulations that prevent others from entering the market.

    Brin should stick to Astrophysics because he is clueless about Economics or Political Science.