The editor of Cato Unbound has asked for a “summing up.”
In my opinion, Bryan Caplan has his finger on the most important, and neglected, issue in political theory. But he has misconstrued what is revealed by his own data, and has therefore concluded that the problem he’s analyzing is democracy.
His data, like a wealth of data compiled by political scientists, demonstrates not “irrationality,” but ignorance: in this case, ignorance of economics. But simple, ubiquitous, politically disastrous human ignorance doesn’t constitute an argument against democracy unless the alternative is rule by elites. And despite my request for one, Caplan has provided no reason to think that ignorance will not afflict elites as well as the mass public.
Some of the best-educated people I know are among the most economically illiterate. And from the perspective of any given school of economics (or any other discipline), even the consensus of “experts” in that field may be woefully ignorant. Moreover, since political psychology has shown that the better informed someone is, the more dogmatic he tends to be, the ignorance so often displayed by “experts” is particularly incorrigible and thus very dangerous, unless the experts in question happen to be dogmatists of the truth—which, in any given case, is unlikely.
The problem, then, is not democracy, but any system of government in which political decision makers are expected to master the complexities of modern civilization—which human brains were not equipped to grasp. It’s not democratic decision making, but political decision making of any kind, that will tend to be an exercise in “stumbling in the dark” (as Ludwig von Mises characterized what economic decision making would look like under communism).
The answer, then, may be to maximize the “rule” of markets.
Markets place far lower cognitive demands on people than do attempts to regulate markets. The key to markets’ epistemic advantage is that consumers can migrate from one product to another based on the feedback they get from consuming the products. This process of experimentation doesn’t require particularly well-informed or logical theorizing on the consumers’ part.
If I don’t like ice cream Brand A, I don’t need to have a theory about why it tastes bad. I just need to be able to try Brand B. But if the government tries to improve on Brand A, the political decision maker—whether the voter or an “expert” legislator or bureaucrat—has to have the right theory about how to make the best ice cream. This is too much to ask of any given human being. Markets throw fallible entrepreneurs’ different theories of what makes for the best products open to a process of competition in which the consumers is king—but in which consumers don’t have to be knowledgeable or logical kings in order to rule well.
However, consumers still need to have some information (namely, about which brand pleases them), and some logical abilities (so they can judge whether their displeasure with Brand A was caused by the product itself or by some other circumstance). Those are pretty easy requirements for consumers to fulfill, but a greater difficulty is that as private decisions get less repeatable than are purchases of ice cream (for example, when people choose which career to embark upon, how much to save for retirement, or which house to buy), the advantage of experimentation will diminish, because there will be fewer opportunities to experiment. Also, there may be systematic psychological biases, such as those discovered by “behavioral economics” (which is really psychology applied to economic decisions), that to some degree nullify the advantage of experimentation.
I state these qualifications because, too often, arguments for markets are made dogmatically, and I don’t want that to happen to the ignorance-based argument. That said, the ignorance-based argument seems to be very strong—and precisely because of the point that Caplan gets wrong.
Despite the fact that individuals make many terrible mistakes in their private decisions, there’s no group of decision-making “experts” whom we could trust to improve on these mistakes. Rule by psychologist-kings would be no more desirable than rule by economist-kings. So as long as we have reason to think that in their private decision making, people’s reliance on the feedback from their decisions will be less cognitively taxing than political decision making tends to be, then I think we have a supremely realistic case for libertarianism.
 Presented more fully in my “The Epistemology and Politics of Ignorance,” Critical Review vol. 17, nos. 1-2.