Some Replies on Markets, Languages, and Law

I have been struck by both the quality and breadth of the responses to my essay and, it’s clear, to the argument in Seeing Like a State that lies behind it. In some cases, I am somewhat at a loss to reply inasmuch as I am not an economist, not a well-read libertarian, not a political philosopher, and not a specialist on intellectual property and freedom.

Given these handicaps, let me try to bundle together a few repetitive themes and at least try to clarify my position and, in some cases, to think through possibilities I had not addressed or envisaged in my essay or in the book.

Standardization and Power

I take the point that markets are inherently standardizing. I also take the point that knowledge is lost in the process and that there may be (even massive) gains in wealth and emancipation. As I point out in Seeing Like a State, the “invention” of the standardized French citoyen bearing equal rights in place of the medieval estates was surely a great emancipation though, as I also point out, it also made possible, for the first time, the conscription for Napoleon’s total war.

One might say that the commodity form of large-scale trade and capitalism is the locus classicus of standardization: the standard bushel of wheat or maize, the ingot of pig iron, the bolt of linen. More broadly, I would endorse Polanyi’s argument that the factors of production so central to classical economics, land and labor, are the “commodity names” for nature/the environment on the one hand and human life on the other. They enter classical economics only in their standardized form of “acres” “factory hands,” and so forth.

What would seem important to a libertarian, and not just a libertarian, is the way in which this standardization comes about and, in particular, the degree to which it is a coercive process. Judgments about coerciveness are, with some exceptions, not “either-or” questions but matters of degree. Let me take three examples along the spectrum: state-designated and created ethnicity, common law, and language.

In the case of state-designated ethnicity, the process is generally highly coercive: an official designation is made (even if it is originally a voluntary self-description) and then it is frozen and, depending on the circumstances, the “ethnic” is then treated according to the regulations governing that category. Thus, when the Dutch arrived in Batavia, on the island of Java, they discerned a group whom they called the “Chinese.” The people in question do not describe themselves in this way. Their affiliations were fluid, and their customs bled imperceptibly into the range of cultures around them. Nevertheless, the Dutch, in their Linnaean mania, erected a Chinese zone, codified what they take to be its customary law, set up courts and schools and police exclusively for the Chinese, and appointed customary Chinese headmen. Lo and behold, after 60 years or so of being funneled into ethnic traffic patterns, a once largely fictitious category became a lived identity. It was essentially a coercive, albeit slow-motion process of state-created ethnic-fabrication that, at the end of the day, appears as an embraced identity. Juridical racial hierarchies, as a group-creation process — as found historically in South Africa and the United States — operate essentially this way.

The standardization of common law seems to me to be an intermediate case. It seems more open to innovation and adjustment from county magistrates, practice, and custom, although, over time, as precedents and decisions accumulate, it becomes largely a received codification for subsequent generations, a codification open to adjustment only at the margin. And, of course, the source of innovation is largely confined to elites (even if local) and not the tenants and laborers, let alone the proletariat.

Language, it seems to me, is perhaps the best example, and one to which Hayek himself referred, of a relatively un-coercive standardization. The grammarians, the Academies, and the literati may aspire to control language use but are generally unable to do so. The spoken language especially remains open to all sorts of innovations which, if found expressive or useful, “go viral” and become part of the repertoire of speakers. Language is not, of course, anything like a pure democracy but for something so standardized it is a pretty good model of open-source software that all speakers may use and contribute to. Libertarians, and not just libertarians, might aim for institutions that were more like languages and less like markets.

Which Brings Me to Markets

I begin in an odd location: banditry and coercion — the plunderers Brad DeLong refers to. I am more familiar with water-borne banditry, that is, with the early Malay States which were essentially piratical enterprises. As I see it, they began vying with other small bands of pirates to make themselves master of a choke point on a navigable river or strait in order to control the trade. Once one band had established its supremacy (ignoring the internal politics within the band) it would plunder the trade. The leaders understood, or soon came to understand, that if they did not limit their plunder they risked seeing the trade circumvent them by taking another route or, if there was none, drying up altogether. The heads of the petty Malay statelets therefore quickly became a protection racket, exacting a toll from the passing trade and defending their monopoly profits and merchants from competitors. They might even encourage trade by competitive exactions and treating all merchants even-handedly. The early maritime state, in its elementary forms, looks very much like this toll collecting state. The typical pattern of early state expansion was for a very successful chiefly state of this kind to absorb its smaller neighbors, appointing their chiefs, in effect as governors in return for occasional tribute. Why not; were they not already collecting taxes and governing the area, like a rudimentary state? The subsidiary chiefs themselves then became the subject of a toll-collecting protection racket with the threat that if they failed to deliver tribute, they would be driven out by their state-making patrons.

I want to make the argument that, with the key exceptions that capitalist enterprises actually produce goods and services and often fail to establish effective monopolies, much of their behavior is comparable. Although they may arise in a competitive setting –but let us never forget that the great aristocratic landed fortunes of England were made by office-holding not trade — capitalist firms are constantly striving through collusion, lobbying, legal maneuvering, and violence to establish monopoly positions. They strive mightily to transform uncertain and often small profits into rents guaranteed by force, law or influence at the enforcement stage (i.e. corruption).

For pirates, narco-statelets, and early capitalism (e.g. Rockefeller) the currency convertible to rents was force, either the buying of police protection or paramilitary forces operating often with the complicity of the state. In more mature democracies, such brute force has been replaced by the influence on the media, on legislation, on regulatory agencies, on courts, and on elected officials made possible by the accumulation of well nigh permanent disparities in wealth and purchased expertise. This is what Antonio Gramsci pointed to in his analysis of hegemony and why universal suffrage did not bring about the revolution by peaceful means in Italy.

Where this disparity in financial wherewithal is great, it accomplishes the same alchemy as successful piracy: it turns a competitive market of price-takers into an oligopoly of price-givers who, one might say, purchase their secure rent-seeking opportunities by their enormous advantages as purchasers of the policies they require. Yes, they quarrel among themselves (even Lenin saw that) and their advantages can be temporarily nullified by economic crisis or war. But the tendency toward the accumulation of these strategic, positional resources by wealth and property holders in mature democracies seems undeniable.

The market in such circumstances is, to be sure, as Hayek observed, still a form of tacit coordination that could not conceivably be achieved by imperative coordination. But the positional advantage of some players is so overwhelming and entrenched that the deck is stacked against the vast majority of economic actors and citizens. As a colleague of mine is fond of saying, the political system is run for the benefit of the top 15% of income earners (OK, let’s even say 20%) and the trick of conservative consolidation is to use some of the resources of this elite 20% to make certain that the next thirty percent of the income earners fear the bottom 50% more than they envy or resent the top 20%. Judging from public policy since at least the Reagan era, this political hegemony is secure and its influence on legislation is further buttressed by massive lobbying at the regulatory stage.

Were I a libertarian, I think I would find it hard to defend a market so skewed by large and seemingly permanent structural inequality. It makes a sham of the ideal of free, voluntary contracts when the playing field is so unequal. To take an extreme example, someone in India who decides to sell a kidney or a child to a wealthy family in order to buy food is, in the strictest sense, making a voluntary choice. But who would not deplore the structural inequalities that made such desperate choices necessary?

The Hayekian case for the petty bourgeoisie, in competitive markets, is a strong one; it looks more like the case of language as sketched above. I am not a Hayek scholar but would ask those who are what he has to say about cases where disparities in power and influence turn choice and mutual coordination into something more akin to “an offer on can’t refuse.”

Digital Media and Enclosure

In the case Timothy Lee discusses, of media and the digital revolution, I wonder if the concept of “enclosure” might not serve us well as a metaphor. The original enclosures in England were brought about by legal acts of Parliament (a body of substantial landholders, of course), then enforced on the ground by the police power and magistrates of the state. Are the large players in the media world not also identifying novel property rights and then, by dint of their grip on the legislative process and legal muscle, enclosing them so they yield reliable rents protected by law? As I understand it, this process has nothing to do with efficiency, let alone democracy. In addition to their political hegemony, the deep pockets of the large players (Microsoft, Amazon, Google) are such that they can simply buy out any upstart that might even remotely threaten their position. This pattern I gather is so understood that many startups are devised precisely to make themselves attractive to such a buyout.

Legibility Is Morally Neutral

Let me close with two points on which I am often misunderstood. I am not a defender of local knowledge and practice across the board. Such local practices may and often do include forms of oppression and unfreedom. It depends; or as Brad DeLong says, “sometimes.” Second, legibility is a capacity and, as such, is not morally worthy or unworthy in and of itself. It depends on the purpose for which it is used.

Also from this issue

Lead Essay

  • In his lead essay, James C. Scott reviews some of the key concepts from his seminal book Seeing Like a State. For a state to exercise its power across a large population, it must simplify, codify, and and regularize local practices. This process of flattening, or of making local practice “legible,” is not without costs. In the past, states have quite literally missed the forest — with many different valuable products, including food, shelter, medicines, and clothing — for the trees, or timber, that they contain. And that is not the least of states’ errors in this regard; even in the twentieth century, high modern building practices and management techniques have neglected local variation and local knowledge, often to the detriment of state and non-state actors alike. These faults are regular, predictable, and worthy of further study. Provocatively, Scott closes his essay with a warning: Large actors in a market will often find themselves seeing like a state, too.

Response Essays

  • Donald J. Boudreaux considers the upside of widely legible information. While local knowledge and local resistance strategies may be lost, the ability of entrepreneurs to collaborate with one another over long distances expands. Ideas translate more easily and can more easily encounter other ideas, leading to innovation. Although some libertarians may find it uncomfortable, the rise of the modern state with its standardization procedures may have sped the process along, helping the Industrial Revolution to take place. Boudreaux cites the Social Security number as a threatening-but-useful example of state-based legibility co-opted for commercial purposes.

  • Timothy B. Lee notes that many aspects of information technology policy are deeply implicated in the process of “seeing like a state.” Despite their rhetoric of private property, patents, copyrights, and other forms of intellectual property can act largely as transfers of wealth from ordinary people (be they peasants or consumers of digital media) to those who are most closely aligned to the state. This is a deeply illiberal result and one that libertarians should be especially wary of.

  • Brad DeLong sees both strengths and weaknesses in the state’s ability to survey civil society. With the help of an extended example from late Roman times, he argues that states can offer no protection against local disorder when they cannot see the localities and peoples they propose to protect.

    Yet a legible civil society is also prey to the state’s own “fits of ideological terror, or even clumsy thumb-fingeredness,” he argues, suggesting that legibility may be orthogonal to liberty. Ultimately, a state that fosters a robust civil society, while contenting itself with simply watching its growth, may be best of all, even if it is unlikely.