The Fragility and Robustness of Modernity

I am persuaded that the concepts of fragility and robustness of political-economic-social systems are more productive than the concept of efficiency.  Markets are amazingly robust as evidenced by their self-correcting capacity.  Socialism, on the other hand, is extremely fragile and any deviation from ideal conditions leads quickly to acute problems. Pete Leeson and I discuss the relative robustness and fragility of liberalism and socialism in our paper in Journal of Markets & Morality.

However, market societies are fragile in their own way.  One of Hayek's most challenging propositions is that our evolutionary past has 'hard-wired' us for norms appropriate for small group settings, while modernity and the extended order of the 'Great Society' requires us to adopt norms and morality appropriate for anonymous interactions.  In sorting out the implications of these tensions between the intimate order of our tribal past and the extended order of social cooperation under the division of labor it is vital to get an accurate picture of Hayek's theory of cultural evolution and spontaneous order.  I published a paper in the journal Cultural Dynamics in 1990 attempting to do that.

The bottom line is that while we don't need to understand in order to experience that benefits of a spontaneous order, we may very much need to understand deeply the principle of spontaneous order in order to sustain the extended order of the 'Great Society'.  Thus, the number #1 role of the economist in society, as James Buchanan often told us in his classes, was to teach citizens the principle of spontaneous order.  See, e.g., Buchanan's essay "Economics as Public Science," in Foundations of Research in Economics edited by Steve Medema and Warren Samuels.

Anyway, a very challenging paper on the fragility of modernity that can be found in Gerard Radnitzky's essay "Science as a Particular Mode of Thinking and the Taming of the State".

Thanks for Rafe Champion for the pointer.

Comments

[johnt]

First visit and you have an interesting site. Your pst about hard wiring and interaction within small groups gives food for much thought. The adaptation to "Great Society" politics and economics is thankfully not complete and hopefully never will be. Hard wiring I think will always exist as a counter balance to the siren song of collectivism and cynical policies. Thanks for the illuminating perspectives.

[Colin Danby]

Thanks for making a highly clarifying paper available! Just to argue one or two points:

64-65: The local-knowledge point is vital and in accord with Smith. Without getting bogged down in Smithian exegesis, though, “produce a social order” at the top of page 65 seems to oversimplify. Smith appears, especially in ToMS, to assume an fundamentally feudal social order (e.g. his discussion of rank) and a stoic ontology that also grounds critical elements of the social order he explores. As I read Smith, economic liberty meliorates aspects of that feudal order, and allows people to achieve a morally better grade of stoicism, but it hardly *produces* social order.

65: How vulnerable is Menger to logical critiques of functionalism e.g. by Giddens?

66: How vulnerable is this to alternative histories of money? One might suggest that contemporary money is not so much a modular, discrete institution as one facet of a larger credit system, and the development of existing credit systems shows complex state-business interactions. One could even suggest an Austrian approach to the development of state institutions, much though I tremble to suggest that e.g. Braudel’s argument about the the beneficial results of the British development of national debt. Such an argument would hardly rule out non-state innovation.

66: Is “better their condition” really an analytical contribution, or just a tag added on to whatever people do? And does this assume that originary actors are individual and not, say, familial as in kin- and community-based merchanting and finance?

66: What exactly does “anchored deep in the human mind" mean?

70: I’m in huge sympathy with the interpretive turn outlined on earlier pages and have learned a lot from writings by you and others along these lines. But surely it’s logically possible to recognize the rich and creative results of interactions drawing on specific cultivated knowledges and reflection without attributing social order as a whole to such interaction.

71-73: I clearly need to read Steele and Vanberg, and am only slightly surprised to find myself in agreement with Buchanan. Kirzner’s dichotomy seems absolutely right, and I like the way he strips away the tendency to sentimentalize the results of decentralized interaction as optimal or right. But I don’t see how this line of criticism *rests* on Pareto optimality! I can see how someone might invoke Pareto optimality in order to protect a certain policy position against this critique, but the critique itself it seems to me goes to very basic questions of social ontology and the generation and maintenance and nature of social order. And if that is the question, there are large social science literatures that might be engaged. Weber, Durkheim, Levi-Strauss, Bourdieu, and Foucault, just to start the list, offer a range of competing approaches.

Apologies for taking so much space.