Free Markets and Social Cooperation

I noticed Bleeding Heart Libertarianism has a new tag line: Free Markets and Social Justice As I previously posted, I’m not exactly down with the BHL paradigm. “Social Justice” is fraught with problems. This can be simply illustrated if we replace it with the technically more precise term, “Collective Preference.” Suddenly, a tagline of “Free Markets and Collective Preference” loses much of it’s normative moral appeal. It’s disjointed. You may as well be saying “Free Markets and Algebra III.”

Fernando Teson’s post, “Philosophy and Politics,” makes the case for libertarianism qua utilitarianism, largely based on the assumption that politics is reducible to an empirical problem. However, I would urge caution regarding this approach, particularly with respect to the extent Utilitarianism associates normative abstractions with “justice.” We have to ask ourselves (1) what exactly are we measuring and (2) how do we measure it? Are we measuring pleasure(Bentham), Happiness(Mill), Ideals(Moore) or preferences(Arrow)? In classical economics, utility was treated as a cardinal measurement, and utilitarianism was a max-min problem vis a vis an individual utility summation.

In marginalist neoclassical theory, cardinal utility was superseded by an ordinal measurement. Ordinal utility merely ranks utility preferences. Of course, “Maximal utility” makes no sense in terms of preference ranking, and it was replaced by “Pareto optimum,” which is not a “number,” but rather a “system state,” one characterized by a condition where participant preferences are in an equilibrium. That is, a condition where there are no further exchanges that can make i better off without making j worse off. Any link between Pareto Efficiency(the new “marginalist” measurement of utilitarianism) and “Justice” seemed tenuous at best.

von Neumann/Morgenstern Game Theory re-introduced “cardinal utility” as an expected utility measurement, or “payoffs,” of agent strategic decisions under uncertainty–Games. Game Theory essentially introduces the notion of a “rules-based utilitarianism,” dividing games into “cooperative” and “non-cooperative” games. The Pareto measurement is retained, but it now measures the efficiency/inefficiency of strategic or bargaining outcomes. In the game theory framework, utilitarianism becomes viewed more as a type of “coordination problem.”

Deriving Justice From Coordination

I would contend that Modern Liberal Justice essentially treats “Justice” as a type of coordination problem under uncertainty. This “uncertainty” is typically treated as “originalist position” characterized by a “veil of ignorance.” In the literature, there are two types of “veils,” the “thick” version and the “thin” one. Rawls’ version represents the “thick version,” meaning agent impartiality in the “originalist position” is achieved by agent ignorance of institutions, institutional context, other agent’s prefernces and abilities, and the agent’s own identity. This state of “impartiality” is supposed to lead to impartial agents to maximize “the worst outcome(the minimum position),” the “maximin” rule.

In the “thin” version, typified by John Harsanyi, the impartial agent has complete knowledge sans on it’s own identity. This leads to bargaining solution where an impartial agents will maximize aggregate utility across all agents.

“Social Choice” is a discipline born from Arrow’s formulation of his “impossibility theorem,” which demonstrated the problem of aggregating a set of agent preference orderings into a “Social Welfare Function.” The “impartial agent” formulation was a methodology to circumvent the “Arrow Impossibility.” However, the “thick version” of agent impartiality,” that is, “Rawls’ version,” was more about “rule universalism” than a Social Welfare Function. The “thin version” is less about “rule universalism” and more about a Social Welfare Function grounded in utilitarianism, the older “summation” version.

It should be mentioned that there is another variant of “Social Choice,” represented by Amartya Sen, that rejects the “veil of ignorance” approach. Sen is less concerned with normative constructs of “agent impartiality” and more concerned about mechanisms of “social unity” to achieve interpersonal utility comparisons. Along the way, Sen constructs his “liberal paradox,” which, contrary to popular belief, is only a paradox for Rawls’ “rule universalism.”

Empirical Failure of Modern Liberal Justice

The cultural war and the National Security State present significant problems for modern liberal justice theory. The cultural war directly challenges the Rawlsian “difference principle”(e.g., the unequal distribution of goods from a prison industrial complex most certainly does not benefit the worst-off members of society) while generally contravening the assumptions of interpersonal utility comparisons that underlie social choice theories. The problem here is that individuals do not normally regard other’s utility as having equal weight to their own. “Originalist positions,” “Pareto indifference,” “impartial moral observers” are simply normative constructs to resolve a coordination problem regarding a utilitarian grounding of moral rules and/or collective preferences; but these constructs have no basis in empirical reality.

The National Security State nullifies Rawls in the same way that the cultural war does. However, for Social Choice, perhaps the NSS is an example of an institutional arrangement that can produce a utilitarian grounding for group/collective preference. Of course, given the insider/outside status of such an arrangement, it is deeply non-egalitarian. And the idea of associating “distributive justice” with such an arrangement is an example of why one should give pause before attaching “justice” to normative abstractions.

In modern liberal justice theory, the utilitarian basis for collective preference ends up being “Nationalism,” not “Free Markets.” This is one reason why I would eschew associating libertarianism with the “distributive justice” of MLJT.

Libertarianism and Justice

I define libertarianism to be both a political theory and a social theory. As a political theory it denies any binding authority of the so-called “social contract.” The methodology of this critique is primarily class theory. In terms of social theory, however, it is laissez faire social contractarianism. What is meant by this? Well, we start with Hobbes. Libertarianism denies that the “Hobbesian State of Nature” requires a normative social contractarian resolution. Instead, self-preservation, rooted in “I won’t harm/kill you if you don’t harm/kill me”, can serve as a commutative basis for “contracting away” the Hobbesian State of Nature. Arbitration in contractual disputes leads to the evolution of a type of “common law.” From this springs “civil society.”

Laissez faire is often mis-represented as a normative abstraction. But it’s actually not. Indeed, it’s the only non-normative foundation for liberty that emerged from liberalism. In French Political Economy, “Leave Us Alone” referred to “No Special Economic Privileges.” But in the radical French Liberal tradition, “Laissez Faire” would also come to represent the idea of the complete supplantation of political economy by a civil society of commutative justice.

Today, American libertarianism often struggles with loaded terms like “Free Market,” often resorting to using alternative terms like “Freed Market.” The problem here is that “Laissez Faire” did not accurately translate over. It has a much richer context than simply “market.” The rich context is civil society. In the rich context, “Leave us Alone” makes no sense because a commutative justice civil society can only emerge from interaction.

In the American libertarian tradition, it was Benjamin Tucker who took “laissez faire” to it’s logical conclusion: that is, a contractarian theory of morals. For this, Tucker relied on Max Stirner’s Egoism. For Tucker, “distributive justice,” as a political problem was not “What About the Poor.” Rather, it was “What about the Rich,” in particular, the trusts. The problem was one of radical “seizure,” or radical distribution. The only function of politics was to breed an “anarchist remnant” to politically execute this redistribution.

Of course, there would be no “anarchist remnant.” The “remnant,” as such, would become associated with conservativism. The 2nd american libertarian movement would spring from this “conservative remnant,” and, in doing so, would unfortunately re-associate laissez faire with normative abtractions of justice. It is really only the likes of Gauthier, De Jasay, and Narveson who would much later bring moral contractarianism back to the fore(of course,derived from game theory, and not Stirner Egoism).

2 thoughts on “Free Markets and Social Cooperation

  1. Thanks for writing this up. I really like how you tie together the different developments in political philosophy and social theory.

    Before reading this, I had not understood the intellectual context for Rawl’s “veil of ignorance”, and why it was so popular with philosophers. Based on my limited reading of his work in college (some sympathetic summaries, and part of one of his books), I had come away with the impression that this was some sort of crypto-Christian soul-theory, but I knew that philosophers viewed their work as secular. Now that I’m a bit older and have a better understanding of how professional philosophers develop their ideas, the veil makes perfect sense as a “normative construct to resolve a coordination problem regarding a utilitarian grounding of moral rules and/or collective preferences”.

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