Cafe Hayek: Orders and Organizations

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February 26, 2008

Orders and Organizations

Don Boudreaux

What's the single biggest way that collectivists misunderstand or misinterpret free-market liberals (such as Russ and myself)? The answer, I bet, is the failure to understand that opposition by free-market liberals to government action does not mean that we free-market liberals oppose all of the goals of the well-meaning proponents of government action.

More generally, it seems difficult for some people to grasp the fact that society and government are not identical -- or, more precisely, to grasp the fact that civil society can and does often thrive outside of government influence and, indeed, very often (I would say most often) in spite of such influence.

A friend of mine who is a thoughtful and very intelligent man of the left asked me by e-mail -- in response to this post at the Cafe --

But don't libertarians, or at least some of them, see themselves as part of a movement? I admit that I've always thought that was something of a paradox. But maybe even libertarians can't free themselves from human nature, so much of which evolved, as you point out, when humans, and our ancestors, hunted and gathered in packs. But, for that matter, isn't much productive economic activity carried out collectively by corporate groups?

Good questions. Here's my response:

There is a libertarian intellectual movement, of course. And I admit that I feel deep gratification whenever I reflect that in some small way I work within a tradition enriched, and more or less consciously embraced, by people such as Adam Smith, Frederic Bastiat, Mencken, Hayek, Milton Friedman, Jim Buchanan, and Vernon [Smith].

There is also a libertarian political movement, but it is notoriously undisciplined. (I've gone to a total of two Libertarian-party gatherings. The first was in 1979 in New Orleans -- dull. The second was in 1980 in NYC. At this latter event, the Libertarians decided very ostentatiously to support the Man-Boy Love Association. I thought this a bit much.)

I suppose that it is somewhat ironic that the classical-liberal and libertarian movement (perhaps a better word is "tradition") does prominently deny the myth that there's salvation in the political collective. More specifically, this tradition denies three myths that many people still doggedly believe: (1) that useful social and economic orders only result from of a conscious plan and effort -- or can invariably be improved by such conscious planning and effort; (2) that the nation is economically and morally special - that each of us has a special connection (and should have a special connection) with each and every one of our fellow citizens that we don't have with citizens of other countries; and (3) that personal pursuit of material gain is suspect or, at least, contemptible -- that it's always better to aim for "higher" purposes -- to sacrifice ourselves for others or for some cause that is "larger" than the individual.

About your point regarding private firms: it's true that nearly all private, productive economic activity takes place in organizations consisting of some, often very many, people. It's true also that people often feel loyalty to the organizations they work for or or are otherwise closely associated with. But the motivating force of such organizations in a market economy isn't chiefly these small-scale collective purposes (any one of which is often at odds with the collective purpose of some other organization). The motivating force is individual profit. And, importantly, people are usually aware of this fact, and so they're not duped into sacrificing themselves for others. Gains from trade, rather than commitment to a nebulous higher cause, is the chief motive.

One of the important influences on my thinking about this broad topic is a 1962 essay by Hayek called "Two Kinds of Order." If you ever run across this essay, I do recommend it.

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Comments

It's worth adding Don that the very ability of the smaller organizations that exist within the Great Society to do what they do is very much dependent on the existence of the spontaneous order of the market. As Peter Lewin pointed out a few years back, the collective planning of the firm requires a budget. Budgets require prices. And prices are most reliable when they are truly part of the spontaneous order of the market.

Even the voluntary collectives of civil society function best within the context of a market that produces the wealth necessary to provide people with the time and resources to devote to them.

Or in my own work: the family is one of the best examples we have of a Hayekian "organization" and, despite the strawman created by Jenny Morse, I see no libertarian argument for turning families into complete spontaneous orders (what she calls "the laissez-faire family"). And families have been at their most human when the market has produced the wealth and time for people to devote to really caring for family members. That is, when the market replaced the family's economic functions with psychological ones.

Posted by: Steven Horwitz | Feb 26, 2008 4:02:12 PM

Libertarians act like radicals to make the rest of us seem like moderates. In this way, they move us forward.

Posted by: jorod | Feb 26, 2008 4:14:12 PM

A common misconception I often come across is that 'individualism' somehow equals 'lonerism'.

Not at all. Individualism is about voluntary cooperation. That's what the market is. People helping each other. And that is decidedly what modern liberalism is not.

Modern liberalism is about conscription.

Come November some slight plurality will be celebrating their victory in gaining the power to impose their ideals upon everyone else. That's not a valid purpose of government but that is what it has become. That is the lie of democracy.

Posted by: Marcus | Feb 26, 2008 4:31:43 PM

In fact, we might say one of the things we expect from government is to refrain from obstructing this type of organization.

Bastiat:
Liberty is the mother, not the daughter, of order.

Posted by: Sam Grove | Feb 26, 2008 4:35:07 PM

I like socializing as much as the next guy, but I don't like socialists who want to stick their grubby hands in my wallet.

Posted by: FreedomLover | Feb 26, 2008 5:03:35 PM

Good point, FL, and the reason we don't like it is because it is anti-social behavior.

Posted by: Randy | Feb 26, 2008 5:08:08 PM

opposition by free-market liberals to government action does not mean that we free-market liberals oppose all of the goals of the well-meaning proponents of government action.

What I hear when I read this is "we support government action inconsistenly."

For example, "coercion is fine when it ensures a person's right to property, but not when it ensures a person's right to healthcare." My problem with this is that I fail to see any principled difference between the former and the latter.

Posted by: prestable | Feb 26, 2008 5:35:03 PM

Which of the goals of the well-meaning proponents of government action do you share? Do they know that you share them?

Posted by: Dale Emery | Feb 26, 2008 5:35:37 PM

And libertarians (a minority, mind you) don't want to impose their ideals of individualism upon everyone else?

Posted by: prestable | Feb 26, 2008 5:37:36 PM

No, prestable, we don't want to impose individualism on others. If a bunch of people want to set up programs for social security, or medicare, or public education, or whatever, fine, do it. Just leave me out of it. Is that so hard to understand?

Posted by: Randy | Feb 26, 2008 5:45:18 PM

Marcus,

Please explain exactly what we SHOULD do in November. If we didn't vote then what? How do you want to set up the government? Bring back the King? Let Bernanke make the rules? What exactly do people like you want? You don't like majority rule? Then what minority rule?

Don't you understand that basically to me you seem to be claiming you know exactly how the government should be set up and that it should be the way you want it regardless of what other people want.

No one is imposing this democracy on you. You are free to move to the next country over where they do everything just as you like. But here we do democracy or as best we can we fight for more democracy against the tides of the plutocrats. And we do it with the understanding that indeed liberty will never be completely protected for the individual but it will be maximized as it has in no other place or time in history.

The idea that you can have complete liberty and live in a stable society that won't be overtaken by the thugs from with-in or the raiders from the outside is the delusion and the never to be ended frustration of the liberal believer.

Posted by: muirgeo | Feb 26, 2008 5:47:09 PM

prestable,

You are hearing incorrectly. He did not say he supports some or any government action. He said he does not oppose some of the GOALS of people who promote government action. In fact, I imagine they share most of the same goals. Decreasing poverty, increasing literacy, increasing access to health care while bringing down its cost, etc. They differ on the best means to achieve these goals.

Also, no, they do not want to impose their ideals of individualism on everyone else. They only want to be free from the imposition and conscription of others. If others want to get together that's perfectly fine. Surely there is a fundamental difference there?

Your complaint is like saying peace activists want to use force on others, just like warlords.

Posted by: Cliff | Feb 26, 2008 5:47:25 PM

And libertarians (a minority, mind you) don't want to impose their ideals of individualism upon everyone else?

Nope.

You're free to associate with whoever you please. Go join a commune if you like.

Posted by: Marcus | Feb 26, 2008 5:47:30 PM

Muirgeo,

"What exactly do people like you want?"

We want people like you to get a freakin' life - and leave us the hell out of it.

Posted by: Randy | Feb 26, 2008 5:50:05 PM

Cliff, Good analogy.

Posted by: Randy | Feb 26, 2008 5:51:52 PM

prestable writes: What I hear when I read this is "we support government action inconsistenly."

prestable, I think the key contrast is between goals and methods. As a libertarian, I do not oppose all of the goals of the well-meaning proponents of government action, such as maximizing health. What I oppose is the method they so often propose to achieve those goals, which amounts to one or another violation of rights.

prestable writes: My problem with this is that I fail to see any principled difference between the former and the latter.

prestable, here is a principled difference: if it is wrong (evil) for an individual to do it, then it is wrong for a government to do it, because a government is composed of individuals. For example, it is not wrong for an individual to use violent force (or coercion) to defend himself from a mugger. This is called "self defense". In contrast, it is wrong for an individual to use violent force to rob another individual in order to pay for the first individual's medical bills.

If one person has struck another person violently, a valid defense is that he was defending himself against the other person. In contrast, an invalid defense is that he was trying to take the other person's wallet in order to pay for his own medical bills.

We easily recognize the clear moral difference between self defense (a valid defense if you struck someone) and paying one's medical bills (an invalid defense if you struck someone). Thus, we easily recognize this distinction between when it is, and is not, okay to use coercive force.

Posted by: Constant | Feb 26, 2008 5:57:53 PM

muirgeo,

You are confusing issues.

Liberatarians are not opposed to government or the rule of law. Rather, we see individuals as the sovereign. That's what self-rule means. Each individual is his own ruler.

Nor are we opposed to electing public officials to carry out public functions as are well defined by the contract through which sovereign individuals authorized the power of government.

But that is not what democracy is. Democracy is rule of the majority (or largest plurality). Democracy is the conscription of individuals to the whims of the slight plurality.

Posted by: Marcus | Feb 26, 2008 6:11:24 PM

Constant,

"...if it is wrong... for an individual to do it, then it is wrong for a government to do it..."

That's good. I'm sure the progressives here might like to toss out some possible exceptions, but I can't think of any.

Posted by: Randy | Feb 26, 2008 6:29:21 PM

Marcus said: Liberatarians are not opposed to government or the rule of law. Rather, we see individuals as the sovereign. That's what self-rule means. Each individual is his own ruler.

I've been waiting for months for a real-life example where this is put into practice. Just because you can dream it doesn't mean it's workable.

Posted by: Plac Ebo | Feb 26, 2008 6:46:54 PM

Your complaint is like saying peace activists want to use force on others, just like warlords.

Quite a few "peace activists" (and environmentalists, God save us all) are just as happy imposing their will upon you as any warlord.

Posted by: Bob Smith | Feb 26, 2008 7:22:05 PM

prestable, I think the best way to think of classical liberalism versus modern liberalism is this:

In a classical liberal society, modern liberals are free to be modern liberals. They can practice socialism, Marxism, or any -ism they wish, provided they do so peacefully.

In a modern liberal environment, classical liberals are maced, tased, shot, and/or thrown in small barred rooms for years of their lives.

Negative rights are basis for the positive rights which modern liberals so value, and property rights are the basis for all negative rights. They are needed for a very simple reason: rivalrous goods cannot be used by any number of people at the same time, some system must be used to determine who may make use of what property.

Posted by: Grant | Feb 26, 2008 7:22:19 PM

Plac Ebo, most all of society is an example of self-rule, but the Internet might be the most obvious example. Self-rule doesn't mean one cannot choose a ruler, it just means that rulers are not forced upon them. The Internet is 'run' by voluntary, open-source groups working to create better standards, protocols, etc. No one (with the exception of a little government involvement, I believe mostly with domain names) forces anyone else to adopt any standard or follow any group; its all done voluntarily.

Posted by: Grant | Feb 26, 2008 7:34:29 PM

For example, "coercion is fine when it ensures a person's right to property, but not when it ensures a person's right to healthcare." My problem with this is that I fail to see any principled difference between the former and the latter. - Prestable

This is one of the greatest achievements of totalitarians, convincing so many that any attempt to resist oppression, is itself, a form of oppression. Thus, have managed to depict those who fight for liberty, for freedom from oppression, as being no different from the totalitarians themselves.

It is argued: if oppression is wrong, and any attempt to prevent oppression, is itself, oppression. Then it is impossible to avoid opression, and impossible to avoid doing wrong. Therefore, either, avoidance of oppression is futile, or is not immoral (since moral behaviour must also be possible behaviour i.e. people cannot be held responsible for the unavoidable).

Posted by: Lee Kelly | Feb 26, 2008 7:43:10 PM

Constant, that was an excellent way to draw the distinction for prestable. Well done.

I would only add the corollary of the "democratic fallacy," i.e., that just because the mob says it's OK doesn't make it so in the moral sense.

Posted by: M. Hodak | Feb 26, 2008 8:38:36 PM

Plac Ebo,

This may come as a surprise to you but, assuming you're American, you're living at such a place now. To be sure, the Federal government was a confederacy of states but most of the states took on a similar style of governance so it should suffice as a real world example.

I think your real question is how do we prevent self-appointed moralists such as modern day liberals or right-wing Christians from hijacking the institutions of government for their own purposes? As clearly that is what has happened here.

That, is a good question. I admit, it is problematic. The answer is that it requires people to value their liberty enough to safeguard it.

Posted by: Marcus | Feb 26, 2008 8:49:47 PM

Yes muirgeo it's all a tad confusing isn't it?

Posted by: Gil | Feb 26, 2008 9:03:27 PM

Grant, I was thinking more along the lines of an entire society, not an activity within that society. Also, I'm sure you realize that the internet did not begin without much government involvement. However, back to my request, do you have an example of any prosperous society that meets the libertarian ideal?

Posted by: Plac Ebo | Feb 26, 2008 9:06:16 PM

Marcus, are you calling the current United States a libertarian country? If so, that is contrary to most of the contributors to this site.

Posted by: Plac Ebo | Feb 26, 2008 9:08:52 PM

The United States is a Libertarian country to the extent that many of us would be in jail if it were not. Sad that there are so few who understand that, and that so many are completely attuned to the belief that "Individualism means Tyranny".

http://news.yahoo.com/s/csm/20080205/cm_csm/ygoldberg

Posted by: Randy | Feb 26, 2008 10:07:02 PM

Plac Ebo,

Right, the initial R&D into packet-switched networks and the like was from DARPA, but I don't think that is very relevant to the current state of things. There were also some European companies developing similar technology to TCP/IP, but I don't remember if they were government-financed or not.

I'm not aware of any society in entirety that meets any ideal at all. I would say that most all of people's daily lives, in work and play, meets the libertarian ideal. Only in modern politics and (more rarely) crime is it strayed from significantly.

Posted by: Grant | Feb 26, 2008 10:10:44 PM

We can argue all kinds of things, but in discussions of markets and governments, libertarians oppose socialism, government management of the economy and government provision of any good or service declared as a right by those same socialists.
In this vein, I suggest that muirgeo is a democratic socialist.

Democratic socialists propose that humans are free as long as they get to participate in collective management via the vote no matter whether they are on the winning side or the losing side. So if 51% of the voters vote for socialized medicine, then the 49% of voters who do not want socialized medicine better get used to it.

In a free market, as libertarians call it, if that 51% want to participate in socialized medicine, then they can organize and contribute to the pot from which their medical benefits will be paid as required, but they may not force the 49% to contribute to their fund. Even if they want the government to administer it, then the same rule would apply.

Of course, the socialist, operating on mercantilist assumptions, will eventually claim when there are problems with their socialized system, that it is because of something that the 49% are doing or not doing. Nothing less than 100% participation will satisfy the socialist.

Posted by: Sam Grove | Feb 26, 2008 10:34:50 PM

The United States is a Libertarian country to the extent that many of us would be in jail if it were not.

The U.S. has the highest incarceration rate on Earth, five times the rate of England and twelve times the rate of Norway. Norway's per capita GDP is higher.

Posted by: Martin Brock | Feb 26, 2008 11:00:30 PM

The U.S. has the highest incarceration rate on Earth, five times the rate of England and twelve times the rate of Norway. Norway's per capita GDP is higher.

I think this is largely because the police force, an otherwise legitimate function of government, has been hijacked by self-appointed moralists to wage a 'war' on drugs.

Posted by: Marcus | Feb 26, 2008 11:16:39 PM

"Norway's per capita GDP is higher."

Once again, a brilliant analysis.

I don't know why we keep having posts that compare 2 totally different groups, and draw conclusions that don't take into account the differences. First it was Muirgeo and his Icelandic median income ignorance now it is Martin - hero to the verbose posters.

Why would anyone compare the United States with a homogeneous nation that has 1/80th the population? While we are at it, let's compare China to Seychelles to prove that the Seychelles education system is better.

Posted by: Python | Feb 27, 2008 12:58:29 AM

Norway's big advantage is its oil. Prior to their discovery of oil, its per capita GDP was a lot different.

The "War on Drugs" might as well be named "War on the Poor" or "War on Blacks". I can't fathom how destructive it is.

Posted by: Grant | Feb 27, 2008 1:11:38 AM

there is one libertarian presidential candidate who wants to end the war on drugs, but he is too libertarian for the beltway types.

People like Russ, like collective governmental action when it comes to money and banking system. They worship monopolistic cartel like Federal Reserve and their ability to manipulate and fix interest rates and money supply.

Posted by: Neocon Spin Master | Feb 27, 2008 2:43:56 AM

Mr Boudreaux,

In your entry you mention an essay by Hayek called "Two Kinds of Order". After reading your blog, I have looked for it in the Internet without luck (the only one mentioned by that name is by Michael Polanyi); could you post links to the essay you mention (or to where we can get a copy of it), please?

Posted by: Frederick Davies | Feb 27, 2008 3:15:38 AM

I still disagree in principle. I don't see why rights to property can be called any more legitimate as an inherent right than rights to healthcare. When you say it is wrong for an individual to enforce his right to healthcare but not to enforce his right to property, you're begging the question. In effect, you're saying, "since A is wrong and B is not, A is wrong and B is not."

That's why I don't accept libertarianism as you describe it: it rests on an inconsistent moral basis. It assumes the very thing it is arguing: that some rights are "right" (e.g. to property) and should be enforced with coercion, but others are "wrong" (e.g. to healthcare) and should not. In other words, why is it immoral to kill someone to enforce your right to property but not to enforce your right to healthcare? Yes, one is a negative right and the other is a positive one, but so what? There's no principled difference in why negative rights should be protected over positive ones, since both equally require coercion.

That's why I'm a Milton Friedman-style libertarian/utilitarian. Markets are the best system because they maximize social welfare--not because their process is somehow inherently moral, a proposition that cannot be justified.

Posted by: prestable | Feb 27, 2008 4:50:26 AM

I don't know why we keep having posts that compare 2 totally different groups, and draw conclusions that don't take into account the differences. First it was Muirgeo and his Icelandic median income ignorance now it is Martin - hero to the verbose posters.

Rubbish. I haven't drawn any conclusion from the comparison. How's that for brevity?

Why would anyone compare the United States with a homogeneous nation that has 1/80th the population? While we are at it, let's compare China to Seychelles to prove that the Seychelles education system is better.

Why would anyone change the subject from the world's highest incarceration rate to this irrelevant straw man?

To avoid the issue. Now, that's a conclusion.

Posted by: Martin Brock | Feb 27, 2008 5:28:03 AM

I think this is largely because the police force, an otherwise legitimate function of government, has been hijacked by self-appointed moralists to wage a 'war' on drugs.

The drug war has a lot to do with it. The incarceration rate has quadrupled since 1980, and the U.S. didn't become more violent in this time. It became less violent and likely would have become less violent regardless of the increased incarceration for demographic reasons.

Posted by: Martin Brock | Feb 27, 2008 5:32:24 AM

prestable (& others), do you really not see the difference between aggressive violence & defensive violence?

Do you see no moral distinction between a rapist & his victim fighting him off?

Posted by: Hans Luftner | Feb 27, 2008 7:14:41 AM

Martin,

"The U.S. has the highest incarceration rate on Earth..."

This is not inconsistant with my point. I said that we are libertarian to the extent that many of us are not in jail. Indeed, many are already in jail as a direct result of the belief that "individualism means tyranny". And as that belief grows, many more will be imprisoned, and many more enslaved or conscripted.

Posted by: Randy | Feb 27, 2008 7:21:59 AM

Hans Luftner,

No, I don't think they do see the difference. More precisely, they cannot allow themselves to see the difference when applied to actions of the state, because to acknowledge such a difference would destroy the rationalization by which they defend the actions of the state - from which they profit.

Posted by: Randy | Feb 27, 2008 7:27:36 AM

I said that we are libertarian to the extent that many of us are not in jail.

And I said that, by this standard, the U.S. is among the least libertarian nations on Earth, not the most libertarian. Yet nominally, in common usage, the U.S. is among the most "libertarian". Why is that?

Posted by: Martin Brock | Feb 27, 2008 7:31:10 AM

Prestable,

"There's no principled difference in why negative rights should be protected over positive ones, since both equally require coercion."

Fair enough. But there are consequences. A failure to protect negative rights forces people to turn elsewhere for protection, and the application of positive rights is a de-facto failure to protect negative rights. You don't protect a boat by drilling holes below the water line. Savvy?

Posted by: Randy | Feb 27, 2008 7:35:57 AM

Martin,

I'm not making comparisons. I don't think that the US is particularly libertarian and I think that it is becoming less so with every passing year. I also think that those who believe that liberty is a consequence of facism are making a huge mistake.

Posted by: Randy | Feb 27, 2008 7:41:20 AM

Do you see no moral distinction between a rapist & his victim fighting him off?

I see the conflation of this scenario with what we more commonly call "property". Rape was a crime in the Soviet Union as much it was in the United States in the twentieth century, so the distinction is simply irrelevant. It has nothing to do with the particular coercion you and prestable are discussing, because you're avoiding his point.

In nature, when you fight me off of some parcel of land you claim, you aren't defending the damsel in distress. You're defending your access to her from competitors.

Posted by: Martin Brock | Feb 27, 2008 7:41:59 AM

Philosophy is devoid of meaning. Consequences are not. It means nothing to believe that there is no such thing as property, but applying such a belief has consequences, and the larger the application the larger the consequences.

Posted by: Randy | Feb 27, 2008 8:02:58 AM

Marcus, are you calling the current United States a libertarian country? If so, that is contrary to most of the contributors to this site.

My first paragraph wasn't clear. I meant that you're living where it has been tried.

Posted by: Marcus | Feb 27, 2008 8:10:47 AM

Marcus, are you calling the current United States a libertarian country? If so, that is contrary to most of the contributors to this site.

My first paragraph wasn't clear. I meant that you're living where it has been tried.

Posted by: Marcus | Feb 27, 2008 8:10:48 AM