Unmade, Amoral Orders Composed of Made, Moral Orders? A Response to John Hasnas

1.

I want to thank Professor Hasnas for so eloquently describing my crucial point: Hayek’s critique of economic or political planning falls short because he “den[ies] any independent grounding for ethics outside of the process of social evolution and… attempt[s] to make purely formal and essentially vacuous values such as generality and consistency do substantive normative work.” Precisely. Hayek’s observations about spontaneous order are useful and important, particularly to counteract some people’s hasty assumption that economic or legal design requires a designer. But that observation must be, so to speak, part of this complete breakfast. Spontaneity itself is not enough; Hayek’s observations must be supplemented by a philosophically rigorous account of justice and human values. But, of course, once we appeal to such values, and use them as “an Archimedean fixed point on which to stand to criticize any of the rules of a spontaneously evolving legal order as unjust and to call for the reform of those rules,” what we are doing is rational constructivism. And Hayek’s descriptive account begins to fall apart when he tries to incorporate this into the process of spontaneous order. He can do so only by diluting the distinctions between spontaneous and constructed orders in such a way that it depends entirely on the observer’s point of view; then it means nothing and everything, and provides no foundation for a normative critique of rational constructivism.

I think a far more useful distinction than Hayek’s is offered by Randy Barnett, who, building on Hayek’s work in The Structure of Liberty, distinguishes between “centralized” and “decentralized” orders, and bases that distinction on the use of coercion. Hayek did not use this criterion, and I think for two reasons. First, because his definition of coercion was notoriously feeble, and second, because although he insisted on a principled, even “dogmatic” opposition to the use of coercion, such a principle is not “immanent” — it derives, not from the imperatives of spontaneous order itself, but from the kind of abstract rationalism that Hayek goes to such lengths to criticize. But Hayek gives no real reason for embracing non-coercion[1]; in his system it hangs arbitrarily, like a skyhook, from nothing.

2.

Where I differ from Prof. Hasnas is that I continue to believe that Hayek has given insufficient ground for distinguishing a constructed from a spontaneous order. Indeed, the basic problem is that Hayek incorporates constructed orders into his definition of spontaneous orders, resulting in a sort of logical nesting doll or fun-house mirror in which any action can qualify as constructed or spontaneous depending on how one frames the issue.

Constructed orders, writes Hasnas, “have a designated final decision maker; spontaneous orders do not.” At first this looks like a good dividing line, but on closer inspection it really isn’t. Consider: Hasnas is not contending that only those orders with a single decision maker — say, the CEO at a corporation — qualify as constructed orders. Surely an order where final decisions are made by a committee are constructed. And, really, the final decisions aren’t made by the CEO, since he only exercises the authority conferred by the board of directors. Of course, the board of directors isn’t really the final decision maker either. The final, final decision is made by the shareholders who elect the board — they are the ones who “authorize” the board to authorize the CEO to decide how the firm will act. And yet… the shareholders themselves also aren’t really the final decision maker, since the makeup of the shareholding population is determined by the purchase and sale of stock, the real final decision is made by the stock market in response to the company’s sales figures. So the “final decider” that makes the corporation a “constructed order” is really… millions of consumers?

But we can just as easily reverse the equation. The actions of the corporate officers are really just part of the spontaneous order. The board of directors or the CEO, after all, act only in response to the information that comes to them from individual transactions (stock prices, the cost of raw materials and capital goods, and so forth); all they do is to make single decisions based on local information — in this sense, the decisions they make are only individual components of the spontaneous market process in exactly the same way that my decision to buy a coffee at Starbucks is only a single transaction based on my local information. In both cases, there’s a final decision maker — and yet in both cases, that decision maker is only making a single decision based on local information and preferences. All decisions are really just tiny drops in the sea of spontaneous order. So, once again, we find that the distinction between spontaneous and constructed order does not depend on anything that takes place within the scope of our observation — it depends only on how broadly we draw the circle of our observation. All transactions are simultaneously “spontaneous” and “constructed.”

This is not just a parlor game to play at particularly nerdy libertarian Christmas parties. The point is that terms like “decision maker,” “authorized,” and “decision” are not clear criteria. Who is the “final decision maker” in implementing a national health care plan? Such a plan must pass by two separate houses of Congress after months of negotiation by hundreds or thousands of participants; it must be signed by the president after consultation with teams of advisors and lobbyists; and, probably, it will be tested in the Supreme Court after review by teams of lawyers and lower court judges. The individuals who comprise these branches of government do not act for themselves; they rely on the advice of countless others, and respond to constituencies with significant political influence. None of them makes the “final” decision, and even then their decision is subject to change by voters. All of these officials are “authorized” to act (if at all) by millions of voters. None of these is a “designated final decision maker.” So a centralized government-controlled health care system isn’t a constructed order. But that hardly seems right.

Hasnas continues: “A single firm or state may consist of many independently functioning parts, but there is always some person or group of persons authorized to decide how the firm or state will act as a collective entity.” This is actually not true, as we have seen — even dictatorships have multiple heads of power who exercise authority on behalf of others who have power to limit them. (Dictators can be overthrown, after all.) But aside from this, Prof. Hasnas is unable to avoid the problem that by drawing the circle as broadly or narrowly as we wish, we can define the exact same action or entity as a constructed or spontaneous.

Consider Wal-Mart, the subject of a very interesting EconTalk podcast some months ago. Although Wal-Mart has a central decision making agency and a CEO, the company leaves many important decisions entirely to the discretion of store managers. This includes not only hiring and promotion decisions, but even decisions about discounts and sales. How do we apply the label “constructed” or “spontaneous” here? In one sense, it’s a constructed order — Wal-Mart’s internal “hands-off” policy was intentionally created by corporate staff who are authorized to change it tomorrow if they choose. And yet, in another sense, Wal-Mart doesn’t act “as a collective entity”: there is no central decision-maker.

This point is critical in one sense: Wal-Mart’s policy of leaving hiring and promotion decisions to local managers is the subject of an ongoing class-action discrimination lawsuit — the largest class-action lawsuit in American history. One of the central questions in the case is whether Wal-Mart’s hands-off approach qualifies as a corporate “policy” or not. (You can read my brief in that case here.)

More important to my point is that Hayek explicitly contemplates spontaneous order as including — indeed, depending on — constructed orders. In his essay “Kinds of Order in Society,” Hayek wrestled with some of the problems I’ve been talking about, and concluded that spontaneous order is the kind of order that arises between constructed orders interacting amongst themselves. This is sensible: all human action is intentional at some level, and the spontaneous order of the overall market is populated by the “constructed” orders that are the conscious and deliberate transactions between particular individuals. But if this is the case, it’s very easy to rationalize any particular act of rational constructivism by simply taking a broader view of the overall order. If one institution appears to be a planned, constructed order on up-close examination, just take three steps back and suddenly it’s just a part of an overall spontaneous order and therefore not only legitimate on Hayek’s criteria, but actually praiseworthy — just the kind of social experimentation that progress depends on.

So spontaneous order seems rather like the rather hapless God in the Bette Midler song “From a Distance.” In that song, God is “watching us from a distance,” and, indeed, from such a distance that the Earth looks just dandy:

From a distance, there is harmony

And it echoes through the land….

From a distance we all have enough

And no one is in need,

And there are no guns, no bombs, and no disease,

No hungry mouths to feed.

From a distance we are instruments

Marching in a common band…

In other words, if you take a broad enough view, even the worst conflicts and misery look like nothing more than the necessary ingredients in the whole complex spontaneous order. But a God who is so far away as to not see guns, bombs, disease, and hunger, seems rather negligent. In the same way, if we take such a broad view of the miseries of the world, we run the risk of falling into just the sort of Panglossian attitude that shrugs at humanity’s worst injustices.

Taking this perspective, a libertarian who objects to, say, the implementation of a statewide government-organized and government-run health care plan would be advised to stop, and instead look upon it from a distance. It’s just a single state running a single experiment in the overall flux of the national or world-wide market for medical services — such experiments are not only perfectly acceptable by Hayekian standards, but actually crucial ingredients in social evolution! “The existence of individuals and groups simultaneously observing partially different rules provides the opportunity for the selection of more effective ones.” And yet on the other hand, any attempt to free the health care market is also an experiment in the overall spontaneous order. Dr. Pangloss’s philosophy is not just morally vacuous, it’s also paralyzing: it can no more advise us whether to act or not to act than the concept of evolution can tell any particular lion to eat any particular antelope.

3.

The fuzziness of the boundary dividing constructed and spontaneous orders throws into confusion any argument that spontaneous orders have better consequences than constructed ones. Prof. Hasnas writes,

the rules of just order — purpose-independent, neutral, universally applicable rules — evolved through customary/common law processes while almost all the rules designed to exploit or oppress others originated in legislation.

I would strongly disagree with this. To take only the limited example of race relations in the United States, one finds that rules designed to exploit or oppress minorities usually did not begin in legislation but were codified in legislation only after a long and dreadful life as social prejudices. No law created slavery; indeed, slavery seems like one of the more obvious examples of a spontaneous order. No central authority was ever responsible for implementing it or deciding how it should operate as a collective whole. The abolitionists, by contrast, were nothing if not rational constructivists. They wanted to radically redesign society on the basis of their preconceived notions of justice. And, in fact, the arguments that John Calhoun, George Fitzhugh, and others of the “positive good” school of slavery employed against abolitionists were based on anti-rationalism and a defense of “undesigned rules and conventions whose significance and importance we largely do not understand.” They argued that abolitionists were ignorant of the complicated details of the “southern way of life”; that freeing the slaves would impose tremendous unforeseeable costs; that the heart had reasons the head could not understand — indeed, that liberty led to social problems that could “not have been foreseen and pointed out by any process of a priori reasoning.” This was, Fitzhugh argued, “but another proof of the fallibility of human sagacity and foresight when attempting to foretell the operation of new institutions.”

The conflict between the supposedly “artificial” contractarian perspective of liberal rationalism and the static, hierarchical, “organic” perspective of conservative anti-rationalism has reverberated in politics since at least the French Revolution — from the debate between Paine and Burke to the zivilisation-kultur dichotomy of pre-war Germany. In the end, I believe there is far more blood on the hands of the latter. Centralized planning has certainly racked up a horrible human cost. But what I call the “romance of gradualism,” along with the mystique of loyalty, and the appeals to caste, race and supernaturalism that are all part of the anti-rationalist tradition have had and are still having far more wicked consequences. Hayek is right to be skeptical of reformers, and to be fair he acknowledged that the spontaneous origin of an order is no guarantee that the resulting order is just. But his reaction against rationalism goes much too far toward being reactionary, and his vague preference for viewing things “from a distance” and obeying rules whose significance we cannot understand casts a superficial aura of benevolence over historical scenes that, on closer inspection, are often brutal, cruel, and hideous. Thank God for nineteenth century rational constructivists who overthrew the complex spontaneous orders of slavery![2]

Prof. Hasnas also believes spontaneous orders are preferable because they are more quickly amended if they go wrong: rules that “are regarded as unsatisfactory by any significant portion of the population, such as those that privilege the interests of some groups over others or otherwise work harsh or unfair results, stimulate increased conflict,” and this “gives rise to increased litigation, which in turn increases the opportunity to try different rules.” There are three problems with this.

First, it hastily assumes that conflict will give rise to increased litigation. But unjust rules usually game the system precisely to prevent such challenges — such as the rule in nineteenth century California that barred the Chinese from access to the courts. That rule was not produced by legislation, but by common law courts acting exactly as Hayek prescribes: patching holes in existing rules with refinements inferred from existing rules that will preserve the existing order, receive general assent, and render the system more internally consistent.

Second, Prof. Hasnas is simply saying that because bad rules will lead to bad results, people will try to implement new rules. Obviously that’s so, but saying “well, it’ll all work out in the end” does nothing to help those who are suffering here and now. Injustice will end eventually, but only if we take the steps necessary to end it. And just as with the architect in my earlier example of the college sidewalks, any time a person takes a step to end an injustice, the Hayekian will accuse him of “rational constructivism.” Hayek tried to resolve this problem by incorporating reform into his picture of spontaneous order, but this does not work. People will “try different rules” only by constructing them. To describe their doing so as an example of spontaneous order is to commit the fallacy of petitio principii. But, of course, that fallacy is unavoidable given the logical fun-house mirror Hayek has given us. The question at issue is whether spontaneous orders are preferable to constructed ones, but Hayek holds that spontaneous orders are and necessarily must be composed of constructed orders. Pointing to the fact that rational constructivism can sometimes cure the injustices resulting from spontaneous order, and then calling such constructed reform part of the spontaneous process, is simply to beg the question.

Third, we return to the point where we began: the spontaneity of an order is not sufficient to guide us in making policy choices, either pro or con. We see this because Prof. Hasnas is forced immediately to employ normative language that finds no grounding in Hayek’s own arguments: he refers to rules that produce “harsh” or “unfair results,” and talks about a “significant” portion of the population. I agree that such normative criteria must enter the picture at some point, but they certainly do not originate in spontaneity qua spontaneity. Those values come from elsewhere, and it is they that give us the ground for judging the results of — and reforming — the spontaneous order. Indeed, these values are doing all of the real work in Hayek’s account of social reform. Without accounting for them in some way, they simply hang in the air like a lifeline, to rescue us whenever Hayek’s impersonal social forces create something that makes us uncomfortable. When we tug on that lifeline, we find that the other end is attached to rational constructivism. Prof. Hasnas began by referring to “purpose-independent” rules, but within the same paragraph began looking at the consequences of the rules to judge whether such rules are “harsh” or “unfair,” so that we might try different ones. This is rational constructivism, and if we incorporate it into the picture of spontaneous order, all we’re really doing is stepping back and looking at the “picture as a whole.” Yes, “from a distance,” it’s all a spontaneous order.

—–

Notes

[1] Actually, in The Constitution of Liberty, Hayek tells us that the reason coercion is bad is because it “prevents a person from using his mental powers to the full and consequently making the greatest contribution that he is capable of to the community.” This unpalatably collectivist justification for liberty directly contradicts the presumption of liberty that underlies classical liberalism. It also leaves unanswered the disturbing question: in whose judgment? If service to the community is the source and justification of individual liberty, then liberty is really only a privilege given to us by society, and revocable whenever it fails to serve that end.

[2] Anti-rationalists often point to the French Revolution as the prototypical example of rational constructivism gone haywire. There’s no debating that the French Revolution was in many ways a disaster. But there are two points that must be kept in mind. First, a Hayekian really has no logical basis for attacking the French Revolution, since it was presumably just a spontaneous attempt to reform rules that had proven themselves prone to cause conflict. Take a look at the Revolution “as a whole” and it’s not a case of rational constructivism. Second, when assessing the French Revolution’s cruelties, we must keep in mind how awful the situation was prior to it. As Mark Twain wrote,

There were two “Reigns of Terror,” if we would but remember it and consider it; the one wrought murder in hot passion, the other in heartless cold blood; the one lasted mere months, the other had lasted a thousand years; the one inflicted death upon ten thousand persons, the other upon a hundred millions; but our shudders are all for the “horrors” of the minor Terror, the momentary Terror, so to speak; whereas, what is the horror of swift death by the axe, compared with lifelong death from hunger, cold, insult, cruelty, and heart-break? What is swift death by lightning compared with death by slow fire at the stake? A city cemetery could contain the coffins filled by that brief Terror which we have all been so diligently taught to shiver at and mourn over; but all France could hardly contain the coffins filled by that older and real Terror — that unspeakably bitter and awful Terror which none of us has been taught to see in its vastness or pity as it deserves.

Also from This Issue

Lead Essay

  • Four Problems with Spontaneous Order by Timothy Sandefur

    In his lead essay, lawyer and legal theorist Timothy Sandefur proposes that Friedrich Hayek’s understanding of law and justice is flawed: Spontaneous order may be a descriptively accurate concept, but it has little or no effective normative content. Depending on how one chooses to focus, those who wish to reform a spontaneous order are either constructive rationalists – thus, outside the order, and presumptively bad – or they are manifestations of the spontaneous order itself, which changes over time. He suggests that the Hayekian approach to legal reform is simply “be careful,” and that this is not terribly helpful advice.

Response Essays

  • Four Solutions to Sandefur’s Problems by John Hasnas

    In his response essay, John Hasnas offers solutions to Sandefur’s problems. He suggests that genuine spontaneous orders can be recognized as having no final decision makers, and hence as recognizing a multitude of individual choices. Constructed orders have a final decision maker, and do not respect individual choice. The normative benefits of a spontaneous order are therefore clear: It offers a greater scope for peaceful cooperation, while tending to reduce coercion incrementally. Still, Hasnas admits, spontaneous orders will always be “riddled with injustice,” in part owing to our own limited knowledge and virtue. He suggests that one key missing insight helps rescue much of Hayekian legal thought: the notion that laws, too, respond to market forces.

  • Liberty between the Lines in a Modernist Age by Daniel B. Klein

    Daniel Klein argues that much of the fuzziness in Hayek’s writing was strategic – designed to bring lapsed liberals back into the fold, or to appeal to people who would never accept an unvarnished liberalism. Still, Klein finds great value in Hayek’s work. He argues that, while out of fashion at the time, Hayek’s own willingness to be indeterminate, and to embrace indeterminateness, was both consistent with the Smithian understanding of the social order – and predictive of some of the best work being done today in economics and in other social sciences.

  • Making Sense of Hayek on Spontaneous Order by Bruce Caldwell

    Bruce Caldwell proposes two solutions to Sandefur’s problems. The first is to acknowledge that Hayek was a rule utilitarian, albeit one who recognized that the rules we have inherited are the products of a spontaneous order. The second is to claim that Hayek wasn’t proposing any normative conclusions at all – he was simply making observations in a value-neutral way, as might befit a member of the Austrian School, which was deeply influenced by Max Weber’s ideal of a value-neutral social science. Both approaches have their strengths and weaknesses, Caldwell admits, yet in the end he cannot accept Sandefur’s claim that there is no meaningful distinction between spontaneous and designed orders. Although the difference can be difficult to put into words, we know them when we see them.

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