Thursday, June 10, 2010

Liberty and Unity

The Freeman has an excellent post on its web site concerning "Competition and Cooperation." The basic argument is that through competition, we actually achieve cooperation as an extended society. This might sound counter-intuitive; normally we think of competition and cooperation as opposites. But the beauty of the free market is that it allows our competition with one another on a micro level to result in cooperation on a macro level.

This can be summarized as follows. The problem of economics is to figure out how to distribute goods and services to everyone in a society. That's a pretty huge problem on the face of it. With so many people living in our society, who can possibly figure out how to distribute needed goods and services to everyone? So we break down the problem by localizing it. Let each individual decide for himself what he will give in exchange for the goods and services he desires. The enormous problem of how to distribute goods and services to everyone is broken down into millions of much, much smaller problems. This brilliant move is what makes our complex economy possible.

Breaking the problem down in this way, of course, leads to competition. I can't just sell goods for any price I want. I have to adjust according to demand and competing supply. Likewise, I can't just buy goods and services for any price I want. I have to adjust according to supply and competing demand. This is a simple consequence of the fact that resources are finite. But through the competition that ensues we actually become part of an enormous cooperative entity that solves one of the world's most difficult problems--how to distribute resources in a society.

I've compared this before to the brain. As astonishing as this might sound, the individual neurons in your brain do not cooperate with each other according to a single plan! Instead, they each individually act out of something like "self-interest." But the result is human thought, as well as the many other activities of the brain. This wouldn't be possible without a complex network of neurons all acting in a decentralized manner.

How, then, can we truly be one society? If each of us busies himself with his own interests, how can we have unity with others? I am not speaking, of course, of the people we know and interact with face to face. There is nothing about free markets that would prevent people from cooperating with people they know personally. Otherwise it would be difficult to have a family business!

I'm speaking about people we don't know--which, in this world, will always be the vast majority of people. How are we united to them? Well, let's go back to the brain again. Each neuron acts out of "self-interest." Yet because they are interconnected with one another, their collective interactions constitute the miracle of human thought.

So it is, I think, with human beings. The free market shouldn't be treated as a concession to human self-centeredness, as in, "Well, we really ought to all work together, but since that will never happen, we should try the free market, instead." Rather, the free market is the best way for us to cooperate as a society. The market's purpose is to bring us together in a way that would simply not be possible if we tried anything else.

Let me pause to make a rather abstract point. It seems to me that the question of how to distribute goods and services to a society is not merely difficult; it is on a different level altogether. I would categorize this problem as a "higher order" problem. This was the point I was trying to make earlier in "Decentralized Learning." In the brain, logical reasoning is a higher order problem than an individual neuron can solve. It is only when neurons cooperate in that decentralized way that they, as a collective, can solve this higher order problem. In the same way, economics is a higher order problem than an individual human being (or think tank, or government agency) can solve. It is only through that abstract form of cooperation known as the free market that we can solve this higher order problem.

Just as neurons in the brain are connected in an organic way (literally), the free market works precisely when we are connected to one another on a fundamental level. As the folks who write at the Freeman will tell you, the market cannot exist without the rule of law. If people lack basic respect for human life and dignity, then of course the market will fail.

But where I would probably depart from the libertarian philosophy is that I see no reason to make individual liberty the highest political ideal. I don't think the goal of society is merely to ensure each of its members can be left alone in peace. What if we were to say instead that the goal of society is to connect each of its members to one another in an organic way? This ought to safeguard against two pitfalls. On the one hand, it frees us from massive centralized authority, which invariably grows more and more tyrannical; on the other hand, it opens us to the possibility of genuine connectedness and unity with other human beings.

In terms of economics, it seems the market would work even better if we were all happy to be involved in it. Imagine a society in which people were actually excited about the idea of solving the problem of distribution through individualized market activity. Imagine if people had some sort of implicit faith that by acting in a rational way to safeguard their own well-being, they were also contributing to the aid of a greater whole, namely the society to which they were connected. I think this is already true of Americans to some limited extent. But I think people tend to caricature this kind of faith as materialistic, shallow, and selfish. It need not be any of these things. The idea that we are working together through a localized, individualized economic system is as beautiful as it is useful.

We humans need ideas to help unify us into a society. Often the free market is seen as something that works against that unity, and for that reason other ideologies have come up to compete against it. But I believe the free market is the best economic ideology, precisely because it allows us to achieve the kind of extended unity that is necessary to build a modern society.

Often you will hear the free market defended on the grounds that it is not ideology; it is just "facts." This is not my reasoning, nor do I think this reasoning is the kind we need. My grounds for supporting the free market have nothing to do with markets being "the natural state of things," or some such idea. On the contrary, I would argue that we should actively seek to create free markets. Free markets are the goal. They are not simply what happens whenever you just let everything run on its own. What happens when you let everything run on its own is that wicked people do whatever they please. That is not freedom; it is tyranny and lawlessness.

I think many people are wondering these days what basic set of ideas will give us unity as a free society. The principles of economic liberty should be included in that set of ideas, in a way that inspires people to greater appreciation of our economic system. I find the idea of an extended society working together in a decentralized way quite beautiful, even mysterious. How can it be that my tiny little decisions about what to eat and what to wear affect people all over the country and even all over the world? Yet that is how far our unity with one another extends, and it is all because of the gift of economic freedom.

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