Max Borders

Heroes: Kaufmann, Meet Hayek

Stuart Kaufmann is one of my intellectual heroes. So is Friedrich Hayek. You'd think by this article, Stuart Kaufmann had never read Hayek.

The path to maximum prosperity will depend on finding ways to build economic systems in which new niches will generate spontaneously and abundantly. Such an approach to economics is indeed radical. It is based on the emergent behavior of systems rather than on the reductive study of them. It defies conventional mathematical treatments because it is not prestatable and is nonalgorithmic. Not surprisingly, most economists have so far resisted these ideas. Yet there can be little doubt that learning to apply these lessons from biology to technology will usher in a remarkable era of innovation and growth.

I've always wondered why complexity scientists can be a bit squishy when it comes to economics and politics. Most lean left (read: hierarchical, top-down) and don't generally cross-pollinate their ideas across disciplines, much less apply said ideas as a template to other domains. But a dose of Human Action (Mises) or Law, Legislation and Liberty (Hayek) I suspect would supply an antidote to too much pro-government fetishism. Or simply a transfer of concepts to economics, as Kaufmann seems to be exploring. 

It's not clear, from the SciAm article cited above that Stuart Kaufmann is a Hayekian. Here he seems to be talking about organizations, rather than whole economies (although by "control," he may be satisfied with the application of rules):

We do not yet know what makes some systems more adaptable than others, but research on complexity has yielded some clues. Some of my own work on physical systems called spin glasses suggests that the level of central control over subsidiary parts of a system is an important consideration. Too much control freezes the system into limited configurations; too little causes it to wander aimlessly. Only systems that hover on the border between order and chaos exhibit the needed general stability and capacity to explore the universe of possible solutions to challenges.

But in both examples of that rather coyly academic prose above, one can see flashes of a man who understands that centralized control and design cannot spin out the iterative wonders of the market. Macroeconomic wizardry is so much mathematical masturbation in the face of continuously cascading chains of spontaneous self-organization. These excerpts suggest a mind who would be comfortable with Austrian economics. Just as Hayek was influenced by biology and cybernetics, Kaufmann might find much to savor in Hayek (and the Institutional Economics of Douglass North.)

If you have time, dear reader, here is Kaufmann presenting his ideas on the nature of innovation in the economic sphere. He blends it fairly well with the insights of biology. Enjoy.

I Wanna Be - Anarchy - But I Cannot

Anarchy is philosophically tempting. For me, it’s also psychologically appealing. I, like other libertarians, have a deep anti-authoritarian streak. But anarchism finds theoretical and practical dead-ends rather quickly. We are, whether we like it or not, trapped by the need for a limited leviathan (small L), at best a minarchist state. I’ll explain why later. But first: why the post?

I ran across this from Hit-n-Run and Reason.tv. It’s an interview with anarchist philosopher Crispin Sartwell who says basically that he’s an anarchist because a) there is no moral justification for state power, b) that state power doesn’t arise from the consent of the governed (there is neither an opt-in or opt-out clause); and c) and he dismisses contractarian theory with all the brevity of a YouTube video.

Again, I really, really want to be an-arch-chy. I even named my first born, Sid. But intellectually, I haven’t found my way there yet. Here’s why:

 

1. The metaethical problem. There are no such things as rights, just like there is, metaphysically speaking, no such things as ethics. To see why I don’t believe in rights or objective morality, visit this for a lengthy discussion. (I’ve been pissing off my fellow libertarians for years with this philosophical conundrum, so in the interests of intellectual honesty, I'll continue to do so. In short, don’t see how rights are things that exist, much less grow on trees.) In any case, Sartwell and other anarchists have to find independent justification for how people have rights that confer duties on people or the state. Contractarianism offers some non-metaphysically spooky hope for liberty, but Sartwell has dismissed that out-of-hand.
   
2. The ethical problem (if there were ethics).  Suppose there were such entities as rights. Shall we go with the Kantian, the Utilitarian or other conceptions?
3. The institutional rules problem. So, I gather most anarchists would agree that we cannot expect that rights as rules – however contrived – simply to evolve without reference to some independent standard or principle of non-harm. Again, this runs afoul of 1, above. But suffers from problems of enforcement, too. The Sartwells and other anarchists are going to claim that we can enter into contracts with protective associations. But what if I can’t afford said association, or they refuse me? Am I thus right-less? Also, it is plausible that disputes among protective associations can be resolved through arbitration or through systemic/ruleset mergers. In the former case, I must agree ex ante to forfeit my “rights” even if I don’t agree with the outcome of the arbitration (for example, under one protective umbrella it’s legal to make sexytime with a fifteen-year-old, but not in the other). In the latter case, I have at minimum a proto-government – one that shares rulesets, but may govern a smaller jurisdiction than the US, say. In any case, disparate and plural rulesets don’t lend themselves to the “rightness” of rights—i.e. the universality of justice. And if rights aren’t universal, then they certainly don’t have the moral weight that someone like Sartwell would like to justify non-intervention.

 

4. The how-do-we-get there problem. Presumably, getting to a stateless state would require a form of mutual consent of all for all—a form of virtuous collusion that is as difficult to maintain as an industrial cartel can maintain high prices without defecting. The whole problem of defection by those who would harm or subjugate us cannot be helped by ethical appeals. It’s the interests of the stronger. And such strength must be met with an equal and opposite force. That’s the Hobbesian Dilemma and why we have to look to some form of social contract (hypothetical or tacit agreement a la Gauthier, Buchanan, et al) or internal checks on power to limit government while it serves as a singular protective apparatus, adjudicative body and macro-decision-maker -- as in the case of national defense (which is, by the way, a public good).

 

Perhaps we can contrive some sort of ultimate right-of-exit. The only one I know of right now is the “leave the country” right of exit. But how we would opt-out of our lumbering and imperfect state is not clear. Though I could be convinced. I’m still looking for the Sartwells, Stringhams, Powells and Bensons to convince me. I kinda want to be convinced. But both pragmatic and theoretical difficulties quell my idealism.

Public Choice Needs Guy Kawasaki

As David Henderson writes here, "Even a basic understanding of public choice would make [Krugman] question his views about how effective government can be in achieving good things."

Krugman is not alone, of course. Most people think government is staffed by angels who are put there to fix all the worlds problems. "Politics without Romance" needs a Guy Kawasaki. 

(Update: Guy Kawasaki is following me on Twitter, along with 40K other people. Now that's evangelism.)

This I Believe 2 : Neither God Nor Government

The following is Part 2 of my Aunt Jean's "This I Believe" Series. Part One is here.

I worship neither God nor Government. Though one is favored more by those on the right and the other by those on the left, both are contrivances of man. Many people have a need to believe there in something bigger than they are—some benevolent, all-powerful force that can solve the biggest problems, or at least help them feel that someone is in control. A few of us out here think Jesus is not at the wheel and that no politician can “fix” the economy, for example, any more than a mechanic can fix an ecosystem.

But I do believe in people. 

I believe in individual entrepreneurship—you know, in the woman who sees how to solve a problem in a new, interesting and less expensive way (then gets others to collaborate with her to solve said problem for others). She’s an innovator. A change-maker. A creator of value. An earner of an honest profit.

I believe in community—the closer to home, the better. When people apply local knowledge to local problems, they’re using a power that distant bureaucrats, elites or authorities do not possess (applied to problems those self-same authorities cannot solve). Real community means abandoning the notion that someone out there should be in charge, dispensing orders as fast as unearned largess. Real community is about emergent leadership, where someone close points the way after collaboration and interaction among peers. It’s what Tocqueville saw, except we need it now on steroids. Its prime virtues are voluntarism, toleration and initiative.

I believe in personal responsibility—which is to say self-reliance, first. The more we rely on supernatural entities or state interference to solve our problems, the more we are displacing the onus of responsibility for individual action onto others. I say displace, because the responsibility to act does not go away magically because we ignore it. It often falls onto others. Whether we’re talking about a 24-year-old trust-fund kid shielded by his parents from the consequences of his actions, or someone subsidized by the state to live at subsistence, personal responsibility is not something we can afford to trade for either economic security or equality. As Milton Friedman said: “any society who puts equality before freedom will end up with neither.”

I believe in compassion—neither of which should ever be confused with the low-cost measure of going out and voting for a political candidate full of promises of programs. Love and compassion are emotions that compel us to care and then to act, whether within our family or in our community. Voting in more compulsion by the state is but a cheap replacement for actually having to care and act. Such a replacement has deleterious consequences, the first of which is a loss of what it truly means to have compassion. The second of which is personal responsibility, the last of which is community. While there are strong, effective communities within churches and well-meaning people in state offices, we must never confuse human action with the will of God. Never confuse state power with charity. Never confuse government coercion with community.

Visual Data are Powerful & Ambiguous

Here's another in my Art of Persuasion series over at The Next Right (crossposting)...

Consider this graph of Iraqi civilian casualties since the start of the war to the present:

What does it mean? Data are powerful, but must be framed. Now is the time to frame this before the party in power does. 

Here's another one:

If you don't frame this, someone else will. 

Remember that War?

There has been an eerie silence about the Iraq War, both from the MSM, antiwar groups, and even those, like me, who supported the war even in the toughest times. Hell, everybody is being quiet. Perhaps too quiet.

According a number of sources, dramatic improvements have been taking place, and - while no one can say definitively whether it was "worth it" (much less blurt out any "mission accomplished" language) - there is much to consider, particularly going forward. As I write here in an open letter to our new President, we must:

First, establish private property rights. It is absolutely essential that Iraqi law ensure that individual titles to property are available to every person holding land or resources currently in the murky form of unwritten public memory. Liberty and property was a requisite of Anglo-Saxon law, of the American Founders and has been the foundation of all other prosperous countries around the world, since. As Peruvian economist Hernando de Soto says: "[I]nformals who occupy the lands have reached working agreements amongst themselves. If you go and try to expropriate from these people and send in troops to do so, your soldiers will come back in boxes. There is no way to touch these entrepreneurs. They get together and defend their private property with guns. All this indicates that there already is among them a de-facto norm of private property."

Legal institutions make these "informals" formal. And formal property rights mean land is definable, defensible and divestible—that the difference between mine and thine should never again have to come into conflict. In econ-speak it means lowering "transaction costs." Though in the language of the layman it means establishing the foundations of commerce. Ordinary people can suddenly be legitimate entrepreneurs, get a loan, build a business and generally enjoy the fruits of prosperity. Of course, prosperous countries are considerably less bellicose than those in what Thomas P.M. Barnett calls "The Gap".

Second, Iraqi's need political freedoms like speech and suffrage. Already, the population is learning that argument, spin and political zigzag are preferable to violent aggression. Such is not to argue that security is likely to be established without force. It is rather to urge that political speech is the bedrock of civilization. Under such an order, ideas flourish. Some ideas will die. Others will take hold. But at least every idea has an opportunity to be heard, even if that hearing is over a game of chess with a Sunni neighbor. And that's all any society can ask for.

Finally, the institutions of justice must be in place. Is it simple matter for any two parties to resolve a conflict via an impartial arbiter? Are the courts free of corruption? Is the legal system robust enough quickly and easily to recognize a small company under its protective auspices? And is the federalism of Iraq strong enough to sustain the local institutions that will continue to check the powers of Baghdad into the future? The institutions of justice are the interstitial tissue of any society, but they can so quickly be forgotten by global bureaucrats who believe dropping food, cash and technical assistants from airplanes is the solution to all the problems of the world.

Many are speculating about why the MSM is so silent about the gains in Iraq. It could be simply that if it ain't bleeding, it ain't leading. But I think it probably has to do with a subconscious desire not to give that epsilon demi-moron W any credit for any goddamn thing. (And probably also to help Obama's chances at winning the White House). Indeed, the positive war reports should well pick up sometime into Obama's presidency, notwithstanding the fact that the turnaround started in late 2006/early 2007. This will allow the New Administration to lay claim to the reduction in violence, as well as to take credit for the emergence of a more prosperous and secure Iraq. National security-types will then be able to forgive Obama for saying the war was a mistake. (You heard it here first: date stamped and everything). 

Let me say that this is not intended as an I-told-you-so piece. Rather it is a call for a continuing, sober conversation about Iraq -- even though we've all grown tired of the war. It has been and may still be a long, grueling adventure on which a lot of blood and treasure has been sacrificed. And Lord knows I hate that our government is dropping that kind of largesse on anything. But "peace through strength" as applied to Iraq may yet be vindicated by history. The US, projecting power in Iraq and elsewhere, could very well offer the region a kind of institutional reboot that will create a lasting peace. If it does, we may have to put aside arguments about the war's original justification and consider the final outcome. Heck, if lasting peace and stability is achieved, I really don't care who takes credit for it.

This I Believe: Meaning as Self-Creation

My Aunt Jean is a sentimentalist. She finds creative ways to tug at those family ties, to divine emotions that draw us all closer. She compiles old videos. Makes photo albums. Tells stories of my grandparents with all their foibles. (This keeps them alive beyond death, somehow, if but in the hazy Technicolor of memory).

This Christmas she bought us the NPR book This I Believe, in which famous people communicate their deepest values in short essays. Jean asked us all to write our own essays, which she will compile for the Holiday next year. It’s a good idea and I’m happy to participate (but it might as well be blog fodder, too).

This first installment will be “Meaning as Self-Creation.”

*   *   *

I am an atheist. But for me, the universe isn’t empty without God. It is full of wonder. From the mysterious motion of quarks, to the strange behavior of those carbon-based lifeforms I’ve gotten to know over the years, the universe offers plenty. So where in this whirr of space-dust and self-organization can an atheist find meaning? If no larger-than-life Being has any plan for me, how can I not fall into despair? And if the world is but a grand algorithm determined only by the regularities of nature, why do I even bother?

Because life, I believe, is self-creation. I’ve got this lump of clay (It’s no blank slate to be sure: I have my father’s tendency towards excess, my mother’s analytical nature, the passionate iconoclasm of both; DNA scraps from all my forebears and a million of years of evolutionary forces to reckon with). But as clay of a certain consistency has unique properties, I am still malleable. I think, therefore I become.

I start with a vision of myself. Though subject to versions and revisions, you might say this vision is the man I want to be, shaped by the kind of experiences I hope to have. It is, in part, the pursuit of happiness. Part a disembodied model of my ambition. Part the husband and a father I aspire to be. Part the member of a community. And it is one who, like my embodied self, is also hungry for experiences: spiritual, intellectual and sensate. I move toward that ideal self like an asymptote. All the while I crave novelty. And because I never become that imagined being, my life amounts to a continuous series of self-creation acts. I am like an artist on a journey—shaping himself as he goes. I realize I’ll never become that ideal self. But I’ll still be shaping and molding until the clay hardens, cracks and finally turns to the red dust that settles along the ground beneath rows of Piedmont tobacco. And though I resist, ultimately that’s okay.

To the man who expects to be lead by a Creator to purposes beyond his own design, all this my sound a little nihilistic, if not a little selfish. Perhaps. But this continuous unfolding is neither lonely nor entirely self-serving. I acknowledge my interconnection with those around me. I value the happiness of my friends and family, respect the differences between us, and relish the places of genuine overlap. I try to borrow from the ancient virtues—courage, excellence and moderation (lapsing from time to time on the latter). But when it comes right down to it, my ethics are an internal latticework, not an external list handed down to me by elites with claims to high-up rungs of a golden ladder to Heaven. My moral compass is that which points me in the direction of the man I want to be—a man with friends who love and trust him, a man who is respected by his peers, a man who fights for what he believes in, a man who creates value in the world. And with said value I hope I can afford to purchase the admiration of my son, the love of my wife and the friendship of equals. What more can a man ask for? (Except, one day, to fall as red clay dust along the ground beneath rows of tobacco.)

Smith/Darwin, Society & Snowflakes

In the comments of this post, Steve Horwitz writes:

Darwin borrowed the whole notion of competition and evolution FROM social scientists such as the Scottish Enlightenment thinkers (Hume, Smith, Ferguson et. al.). He was reading Stewart's biography of Smith on one of the Beagle's voyages. Evolutionary biology might more properly be called "Natural Smithism" than any social system being called "social darwinist."

This tracks with my research, too:

Some say Darwin borrowed from Adam Smith when he formulated the theory of evolution. As the late naturalist Stephen Jay Gould writes, “the theory of natural selection is a creative transfer to biology of Adam Smith’s basic argument for a rational economy: the balance and order of nature does not arise from a higher, external (divine) control, or from the existence of laws operating directly upon the whole, but from struggle among individuals for their own benefits.”

The intimate intellectual connection between Smith and Darwin should be enough to make the contemporary leftist uncomfortable. Good. (And I would caution anyone against conflating the logic of the Darwinian algorithm as applied to human socio-economic interaction with Spencerian social darwinism.) But Horwitz goes on to share this post, which evokes an aesthetic share by those with Austrian/Atheist sensibilities.

Here’s a particularly lovely passage:

When I see that snowflake, it engages my reverence for the beauty of the undesigned order of the natural world. Look at the symmetry and detail of that snowflake, and then consider that is the product of undesigned natural processes. I find it an object of awe that natural processes can produce a thing of such detail, complexity and beauty. It is said that only God can make a snowflake. Well for those who understand the science, or who are atheists, we know that you don't need God to do so. But even to an atheist like myself, the spontaneous order of nature can (and should!) generate the same awe, reverence, and wonder that the contemplation of God generates in those who believe. Unfortunately, whenever my wonder at the beauty of nature is engaged, it is with a tinge of frustration.The frustration I feel is that so many smart and caring people seem unable to see and appreciate the identical processes of undesigned order in the social world. "Social snowflakes" are all around us, yet precious few seem to be able to understand and appreciate them to the degree we do the snowflakes found in nature. And too many people think that these "social snowflakes" require a "Creator."

That snowflake produces in me the same aesthetic-emotional reaction I have when I begin to think about Leonard Read's "I, Pencil," or when I ponder the intricate, detailed, complex, and beautiful processes by which Chilean grapes appear in my grocery store in rural New York in the middle of winter. The pencil and the grapes are "social snowflakes": they look simple, but when we hold them still and examine them with the analogous level of detail as that photo produces in the snowflake, they turn out to be the products of extraordinarily complex and intricate social processes that were designed by no one. My aesthetic reaction of awe and wonder is a response to what Pete Boettke, in a perfect turn of phrase, recently referred to as "the mystery of the mundane." What is more mundane than a snowflake? And yet what, it turns out, is more beautiful and complex than a snowflake? And in the way their mundane surface appearances hide processes of production whose awesome complexity was the product of human action but not human design, and should equally be a source of aesthetic and intellectual contemplation, the pencil and grapes are indeed "social snowflakes."

And the product of social ecosystems. That such complex, intricate and beautiful states of affairs as natural ecosystems can emerge from something as simple as molecular chirality (or “handedness”) should appeal to our natural aesthetic (see the work of Stuart Kaufmann). I welcome those, like Horwitz, who would extend such reverence to the emergent orders of humanity, a humanity whose interactions are an extension of nature, not at odds with it.

(The question of whether human social interaction is more Lamarckian than Darwinian is an interesting one, but one I’ll leave for another post.)

Krugmania: It's a Condition

Steve Horwitz fisks Paul Krugman here on the Great Depression and other instances of Krugmania. Most economists, though they respect the trade theory stuff that won Special K the Nobel, wonder what happened since. (Most economists I know think Krugman is off his rocker.) Lefties love him because he gives them an aura of economic legitimacy that only, say, a Galbraith Jr. might. Otherwise, forget it. Very few economists agree with Krugman. And in the age of "consensus" a la global warming, we must take seriously the fact that he is a tiny minority still clinging to the kind of Keynesian silliness and redistributive fancies that lengthened the Great Depression by a decade (even as super math-oriented macroeconomists are abundant in the ivory towers). As I have written elsewhere (here and here) Krugman is a purveyor of economic "intelligent design."

Why does Paul Krugman believe so much of the decidedly un-economic stuff he hocks in the Grey Lady? Probably because incentives matter. He gets to be the darling of a left-chic, economically illiterate salon culture that needs a "real" economist to confer legimacy on their views. Alas, Krugman is pretty much an anomoly - an intellectual throwback - and one that is guided not by intellectual honesty, but by money and adoration from champagne socialists around the world.

Keynesian "Intelligent Design"

Here's an excerpt from an paper that I've written for an academic conference on Spontaneous Order. I think it is particularly relevant in this age of bailouts:

"Hence, the “intelligent design” problem. We should find it ironic that so many intellectuals who scoff at advocates of ID as response to evolution find the central Darwinian insights so difficult to apply in economic matters. At the risk of getting ahead of ourselves, those who are right about evolution unwittingly borrow from the errors of Intelligent Design (ID). ID is the hypothesis that some Cosmic Tweaker is needed in the interstices where evolution-based explanations are purportedly incomplete—whether due to gaps in the fossil record, or to the nascence of genetics. A species of the “God of the Gaps” fallacy, ID gets a hard time from academics who point out that, upon further reflection, natural selection (and sexual selection) no more needs a Designer to fill gaps or set things in motion than evolution has an ideal end-point up-to-which the Designer will work, then call it a day. Crudely put, life on earth is what it is. It may be beautiful, mysterious, diverse, and plural, but it is not an artifact of any intelligence at all. Rather life on earth is the complex outcome of nature’s stuff plus nature’s regularities blending, meshing and transforming in a startling array that is unknowable by a single human mind.

Arguments made by interventionists, progressives and pump-priming politicians take on a number of parallels. “Market failures,” like explanatory gaps, should be fixed by government bureaucrats and regulators, they believe. But at least the Creationist’s Designer is omniscient. Interventionists forget that governments, too, are human organizations subject to systemic failure; never mind the personal failure, cognitive limitations and venality of those who comprise a bureaucracy. Indeed, the most serious conceit of the interventionist is that even the most intelligent, well-intentioned bureaucrat has the knowledge, wherewithal, and perspicacity to design an economy and anticipate all of the distortions and unintended consequences that, inevitably, will follow. Again, government is analogous to God – except, in the case of an economy, the Intelligent Designer is not omniscient. Even if a bureaucrat is responsible for regulating only some small aspect of an economy, he almost always suffers under the delusion that the industry he is responsible for designing in His image is something meant to be – or is capable of being – designed. And that is the problem. No central organizer can possibly reckon with the complex networks and incentive systems that cascade through the extended order on a continuous basis. The Government of the Gaps is as naïve to the Austrian economist as the ad hoc Intelligent Designer is to the enthusiast of Darwin."