“We must look at the price system,” wrote Friedrich
Hayek, “as . . . a mechanism for communicating information if we want to
understand its real function.” Hayek’s talk of communication was a great
advance in economic thinking. Talk of communication is common among
market-oriented economists. In their textbook Tyler Cowen and Alexander
Tabarrok write: “[P]rice signals and the accompanying profits and losses tell
entrepreneurs what areas of the economy consumers want expanded and what areas
they want contracted.” Such talk is both illuminating and beautiful.
But the price of eggs communicates, in a literal
sense, nothing more than: Yours for $1.89. If we are to be literal, we must
mind the element of communion, or community, in communication. Literally,
communication is a meeting of minds. The knowledge communicated passes
through us as commonly experienced ideas, images, or notions.
For the entrepreneur computing her profit or loss, there really is no communication in the literal sense, no meeting of minds—whose mind would she meet? In no literal sense do prices and other market phenomena tell entrepreneurs what to do. We want to talk of prices as “signals,” but we must recognize that they are not literally signals.
In discussing market forces in The Wealth of
Nations, Adam Smith illuminated their marvels by using simile and metaphor.
He sketched an aspect of social coordination: “It is the interest of the people
that their daily, weekly, and monthly consumption should be proportioned as
exactly as possible to the supply of the season.” The grain dealer adjusts his
prices and quantities in ways that conduce to such coordination:
"Without intending the interest of the people, he is necessarily led, by a regard to his own interest, to treat them, even in years of scarcity, pretty much in the same manner as the prudent master of a vessel is sometimes obliged to treat his crew. When he foresees that provisions are likely to run short, he puts them upon short allowance. Though from excess of caution he should sometimes do this without any real necessity, yet all the inconveniences which his crew can thereby suffer are inconsiderable in comparison of the danger, misery, and ruin to which they might sometimes be exposed by a less provident conduct."
The simile of the prudent shipmaster is a miniature of
the metaphor of the being whose hand is invisible:
“[The individual] generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. . . . [A]nd by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”
When a simile or metaphor is made elaborate, it may
become allegory. The dictionary defines allegory as “an
expressive style that uses fictional characters and events to describe some
subject by suggestive resemblances; an extended metaphor.”
The Allegory of Joy
After Smith’s time thinkers abandoned allegory for
logic, accuracy, and precision. Edwin Cannan—an ardent Smithian and editor of The
Wealth of Nations—broke with this trend. He wrote in 1902: “The reasons why
it pays to do the right thing—to do nearly what an omniscient and
omnipotent benevolent Inca would order to be done—are to be looked for in
the laws of value.” The free-enterprise system, Cannan suggests, leads to
patterns of activities somewhat like those that would please a benevolent being
in an allegory.
The allegory in Cannan’s remark is that the
allegorical being—let’s call her Joy—has super knowledge, encompassing what
intellectual historian Knud Haakonssen distinguishes as system knowledge and
contextual knowledge. Joy has such knowledge for every individual. The
allegory, to continue, is that Joy issues instructions, or requests, to each
market participant spelling out “the right thing” to be done.
Joy tells Bridget the baker that perhaps she should
buy new ovens, look out for better deals in flour, and advertise her
confections. Within the allegory Joy communicates these instructions. Within
the allegory there is a meeting of Joy’s and Bridget’s minds regarding these
actions. Bridget is sensible to Joy’s benevolence and ethical wisdom and feels
entrusted to advance what Joy finds beautiful. Instead of market signals she
follows Joy’s communications, which are embraced voluntarily by Bridget from
what Smith would call her sense of duty. She “enters, if I may say so, into the
sentiments of that divine Being,” Smith writes in The Theory of Moral
Sentiments. Those communications tell her to take actions rather like the
actions that the market signals lead her to take in the actual world. Cannan
suggests that the market conduces to socially beneficial actions much as a
benevolent system of superior knowledge, communication, and cooperation would.
The allegorical talk of communication brings us to
fruitful questions about rules and institutions. What arrangements generate the
“signals” that best “communicate” what to do? Such talk gets us to focus on
what the relevant signals are. It gets us to focus on how well they conduce to
the general interest. It helps us appreciate how “communications” adjust when
practices go wrong. If the signals start “telling” people to go in the wrong
direction, will the system correct itself? Will it tend to correct errors? Will
it tend to keep up with changes? Also, will it dig up new opportunity, new
matters for “communication”? The allegory of Joy communicating instructions is
useful because it enables one to reason with reference to the perspective of
one who has superior knowledge and purposes that we go along with—even while we
emphasize that we mere mortals do not have such knowledge. We discuss what Joy
feels about what she sees but do not pretend to see what she sees.
Cooperation
Long before Hayek started talking about the market as
a system of communication, many authors—including Thomas Hodgskin, Richard
Whately, Frédéric Bastiat, Henry George, and Philip Wicksteed—suggested that
the economy was a system of cooperation. And we also find such talk in Milton
and Rose Friedman’s landmark book, Free to Choose. To bring the
tradition down to today, let’s again turn to Cowen and Tabarrok: “To bring just
one product to your table requires the cooperative effort of millions.
Moreover, this immense cooperation is voluntary and undirected.”
But Karl Marx emphasized that the system, in the
whole, was not cooperation—and condemned it for that: “[A]ll labour in which
many individuals cooperate necessarily requires a commanding will to coordinate
and unify the process . . . much as that of an orchestra conductor.”
Hayek would seem to concur: “Cooperation, like
solidarity, presupposes a large measure of agreement on ends as well as on
methods employed in their pursuit. It makes sense in a small group whose
members share particular habits, knowledge and beliefs about possibilities.”
It is true that the economy entails myriad instances of
cooperation, but it also entails myriad instances of noncooperation. It entails
myriad instances of competition and rivalry. It entails myriad instances of
rather impersonal exchange that, as cooperative moments, usually are only tiny
and often ambivalent. It also entails myriad instances of deception and
misrepresentation. It entails a lot of things, not just instances of
cooperation. We should face the fact that it is wrong to say that you have
cooperated, in a literal sense, with the myriad people who contributed to the
production of your pencil or woolen coat.
We can affirm the cooperation talk, but to do so we
invoke allegory: In an allegory individuals communicate with
Joy and voluntarily follow her guidance to produce a concatenation of
activities that scores well. In the allegory Joy is like a
quarterback with whom everyone communicates. And in the allegory the
members of society know that each member communes with Joy. There is a mutual
sense of advancing the coordination of a vast concatenation of their actions,
just as the members of a football squad have a mutual sense of advancing the
coordination of a concatenation of their actions. In the allegory there
is an “immense cooperation.”
It is good to declare the allegory. By unfolding
it we come to many interesting questions and insights. But if we deny
allegory, we either cut off that inquiry or we edge into it only tentatively
and confusedly, not really recognizing and admitting what we do.
Another benefit of declaring allegory is that we make
it clear to skeptical listeners that the basis for our communication and
cooperation talk is not literal. We must be prepared to declare allegory if we
want to handle their challenges to our talk of communication and cooperation.
The allegorical being Joy, in her universal
benevolence, represents an idea of the social. If we deny allegory we play into
the hands of those who paint us as unattuned to the social. So another benefit
of declaring allegory is that it helps ensure that we are so attuned, and it
makes our tunefulness plain to others.
Declaring the place of allegory and an ethic of
universal benevolence does not put us on a slippery slope to statism. Cannan
makes the being an Inca to ensure that his readers do not start looking around
for a benevolent, omniscient, omnipotent being. Making the allegory explicit
makes it clear it is a fiction. There is no being telling Bridget to replace
her ovens. And to the extent that moral norms exist within living society, they
do not make a social organism. If Joy were a god, she would not have any powers
over the individual except perhaps that of conveying her approbation or
disapprobation, sensed within one’s own breast. The more the allegory is spelled
out—in particular, as Joy having super knowledge and capabilities of direct
personal communication—the less it seems to correspond to any external being or
institution, and perhaps least of all government. The coercive nature and
overwhelming power of government, in fact, make it especially incapable of
candid, confident communication. The more we make the allegory explicit, the
more we make it innocuous.
If we deny allegory we relinquish it to others,
notably those who are inclined to take it in illiberal directions. Liberals
should counter illiberal allegory, not with denials of allegory, but with
liberal allegory.
Finally, perhaps allegory can help to answer, in an
enlightened way, the yearning for meaning and connection—perhaps by affording
spiritual comfort in the part one plays in the “immense cooperation,” in the
contributions one makes to universal benevolence, and also perhaps by teaching
one where not to look for such meaning and connection.
In The Theory of Moral Sentiments Adam
Smith developed a remarkable allegory of a universal impartial spectator who,
like my figure Joy, is super-knowing and universally benevolent. We never get
to the impartial spectator, but we do our best in, as Haakonssen puts it, “the
search for a common standpoint”—recognizing that it may be only the search
“that is common, not necessarily the standpoint.”
In the generations following Smith’s death in 1790,
influential figures criticized The Theory of Moral Sentiments for
its use of allegory. The work was cast aside and fell into an oblivion lasting
some 150 years. There was little regard for allegory in classical economics,
neoclassical economics, and the economics of Ludwig von Mises and Murray
Rothbard. Liberalism turned away from allegory. And then the world turned away
from liberalism.
Is it possible that things went wrong in spurning
allegory?
Yogi Berra once said: “If you don’t know where you are
going, you could end up somewhere else.”
No comments:
Post a Comment