Hayek and dry stone walls

Tory David Willetts (apparently 'Shadow Secretary of State for Innovation, Universities and Skills') is to make a speech tonight at the LSE - the Oakeshott lecture indeed - espousing the virtues of reciprocity, community and altruism. He is proposing that institutions be designed to support this sort of thing. The dry stone wall metaphor comes in because, as the Times quotes:

A dry-stone wall, like the one David Willetts pointed out to David Cameron, does not have any glue or cement holding it together. It holds together because of the way it has been designed. Similarly, the aim of Tories is not to pour social glue on civil society through public policy, and armies of new laws, nor is to enunciate some new abstract principle of justice that might be at variance with human nature. It is to help society find different kinds of equilibrium.

Willetts was on radio 4 this morning enthusiastically recounting how game theory, evolutionary economics and neuro-biology are giving scientific weight to his argument: as the lecture website says, he uses 'latest research from these disciplines [or at least popularisers of...] to explain what Government can and cannot do to influence our behaviour.' The evolved co-operative behaviour of vampire bats cropped up: they share collected blood with those who weren't so successful. This is straight from Tim Harford's latest, 'the Logic of Life', which Tyler Cowen has been discussing a great deal. (Note Cowen's article on the current wave of economics popularisers.) Harford himself has been all over the place promoting the book; I've heard him mentioning the vampire bat example.

This is fascinating, in a sort of car-crash-watching way. Its instructive to watch the impact of Harford's book on what the Times claims is the Tory's leading intellectual, though this is not to take away from the fact that Willetts has been writing and thinking about this stuff for many years. (The Times article notes Blair was a big fan.) It's also telling to see old arguments recast - 'new improved formula with added science!' Another example of this, from Tyler Cowen's recent review of 'the Mind of the Market':

Have you ever wondered how people develop trust and live together peacefully? Michael Shermer's new book uses psychology and evolution to examine the root of these human achievements. He notes that the original environment in which people evolved, namely the small groups in hunter-gatherer societies, helped people develop altruism and cooperative behavior. At the same time, our biological heritage drives human discontent. Our evolution on the East African plains did not equip us to cope emotionally with the large-scale and often impersonal nature of a modern market society. Small tribal groups are used to sharing, not to extremes of wealth. That is why envy is rife. In other words, he says, you may feel that modern capitalism is unfair if you apply the outmoded moral code of the tribe. Shermer believes we nonetheless should look to the market as the dominant mode of organizing social affairs.

This is, pretty much verbatim, what Hayek had been arguing since the 30s. I keep on going on about this point, but... Hayek's argument is roughly:

  • the Great Society (i.e. the liberal economy and its moral structures; extremely great, as denoted by the capital G and S) evolved over a hundred generations, outpacing human evolution
  • No-one can understand the whole of this evolved society - we are cognitively incapable of doing so. Here, Hayek is entirely Burkean: 'by a process which men did not understand, their activities have produced an order much more extensive and comprehensive than anything they could have comprehended, but on the functioning of which they have become utterly dependent.' (He might have added, following Dicey, 'much as bees construct a honeycomb.')
  • human evolution means we're born socialists: we have an atavistic tendency toward solidarity and altruism. In the Great Society, these are like maladaptive organs, and they must be surgically removed through the socialisation process.
  • Thus, people espousing ideas of 'social justice' are dangerous: they fail to understand that any attempt to use abstract morality - 'constructive rationalism' - to intervene in the evolved extended order can only lead to ruin. (Example: getting worked up about sweatshop labour. As Krugman says, 'the lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through.')

Now, there are two ways this could go. First: Hayek and other Austrian school qualitative economists are in the process of being vindicated by science. The similarity between 'the Mind and the Market' and Hayek's views are to be expected - two scientific thinkers converging on the same results. Or second: people are selectively using modelling findings to support existing political positions (probably subconsciously.)

Bear in mind the following: one, scientific and economic findings undoubtedly do have implications for society and economics. But, two, political and economic life is murky enough that we can expect personal expectations and political outlook to affect how it manifests. A demarcation line may exist between science and political opinion, but that line is probably less important than who gets funding and who promotes a set of ideas - more on that below.

Just blithely denying that research findings may narrow the scope of possible political action is not a strategy: it's putting a bag over your head. Equally, poncing about in the garb of science in the hope that your theory / discipline will appear grown-up is infantile (though, sadly, true of political studies, economics, sociology and geography. Economics was jealous of physics and political studies was jealous of economics - same as today, everyone has an inferiority complex when they look at physicists.)

This line of argument would actually seem to support Hayek, who did believe - as a good Burkean - in cautious, incremental change ('evolutionary rationalism'). Such caution should guard against the worst errors of politically-coloured scientific research. Indeed, caution is a chief feature of scientific research (though I'm not sure I'd say that about economics.) But there's a problem when your theories have some dodgy assumptions built right into the foundations. The root of this problem, I think, is nicely summarised in a review of Hayek's 'fatal conceit':

Hayek makes frequent claims about what can or cannot be known to us. How does he know these limitations while we do not? Ironically, one is reminded of Marx, who single-handedly hauled his own thought above the superstructure while everyone else's thought remained intrinsically incapable of this glorious transcendence.

Both Hayek and Marx, then, are prophets: individuals uniquely gifted by fate to catch a revelatory glimpse of the pillars of reality and to come back with it burned on their retinas for life, able to share the news with us mortals. Which is, of course, bobbins. If Hayek claims we're cognitively incapable of grasping the whole, that includes him. What I conclude from this is the following: Hayek - and others who make the 'dangerous interference in a system you mortals cannot understand' case - have some good arguments. They then tragically spend the rest of their careers attempting to demonstrate why it means their prejudices about the way society should be run are, in fact, irrefutable truth. Hayek, for example, does what Fukuyama did: the Great Society is it. We've arrived. Hazzah. Despite the fact that (he claims) it's an evolved system, he can tell us with all surety this is where it stops, save some tinkering about the edges. As arguments go, it's just plain weird.

So, I propose we can take Hayek's case (made better in some ways by Scott) for the notion of cautious intervention and apply it in ways that would have made Hayek's skin crawl. Mmm.. what happens if we democratise this workplace? (Hayek: likes freedom in the economy, fine with dictatorship in the factory.) Didn't work? Oh. Why not? Was it intrinsically wrong, or - as with auctioning of airwaves - did we make a design error in the policy? And what about field-trials of labour laws built into the WTO? Let's just see if the sweatshop supporters are 100% right. Cautiously, to be sure - but that's OK, because there are plenty of EPZs to do pilots in.

One other point, coming back to the 'demarcation problem' between science and 'the other stuff'. Crooked Timber linked to this 1948 US anti-communism cartoon. (Entertaining not least for its belief that people could still make a success of themselves by making things in their shed...) But it reminded me of a good, simple and terribly left-wing point: hegemony, powerknowledge. It was just such ideas that Sokal hated, prompting him to write his spoof. In his mea culpa, Sokal quoted Alan Ryan:

The minority view was always that power could be undermined by truth ... Once you read Foucault as saying that truth is simply an effect of power, you've had it. ... But American departments of literature, history and sociology contain large numbers of self-described leftists who have confused radical doubts about objectivity with political radicalism, and are in a mess.

But let's imagine a model. (This is one I've had in my head for ages and might even do, just to see if pretty graphs get the point across any better, though it'll only be another type of metaphor.) A bunch of agents with a spread of wealth and power and a set of ideas. Randomise how those ideas protect, promote or damage wealth or power and define how they're exchanged, grow and die. Some will benefit the poorest, some the richest (in some way to be defined; there's about a million ways of doing this so I won't go into that now!) Wealth also allows you to buy access to information networks between the agents. Over time, which set of ideas are likely to become prominent?

Note in that particular world I've said nothing about the objective truth of the ideas. For the purposes of the model it doesn't matter: indeed, one could build in an x% propensity for any agent to worry about making sure of the objective veracity of any idea they adopt and check its effect (remembering it's only a game!) The point is, the distribution of a set of ideas would depend on a) wealth, b) the structure of the communication networks between agents and c) how the change in prevalence of ideas increased or decreased certain groups' wealth, and therefore their ability to promote their preferred ideas.

I'm perhaps obviously thinking of the sprawling miasma of 'liberty-promoting' groups, of which the film-makers above were one. Its also an obvious point about money, power and propaganda. Hayek has done very well for himself, ideas-wise, and I'd go out on a limb and say this in in part because his ideas just happen to mean obscenely rich people have a philosophy that allows them to remain so with impunity. (Note to self: relatively speaking I'm obscenely rich, so does that argument stand?)

There may be relatively simple solutions. Though Obama may be about to renege on the promise, his and McCain's commitment to equal state funding for their (possible) presidential contest demonstrates that, in the US at least, some people are aware of the damage money can do to fairness. Perhaps the same should apply to thinktanks - and let's use mechanism design's simplest principle. You can raise the funds, you can cut the cake, but an opposing group gets to choose which slice to have. Gosh, people would lose all incentive to donate or raise funds... how awful.

(Cheers to Sue for telling me about the Radio 4 programme that prompted this rant, and to radio 4's 'listen again'. Public service broadcasting is awesome.)