In a recent post I pointed out that Habermas’s theory of communicative ethics and deliberative democracy fails to recognise a fundamental point highlighted by Hayek – that much of the knowledge central to the process of social communication cannot be put into words. In this post I focus on a related error in the Habermasian mindset. Namely, the claim that market processes are inherently ‘alienating’ and ‘anti-social’.
Writing under the spell of Marx, Habermas claims that far from being a liberating force the extension of markets represents a ‘colonisation of the life world’ by the medium of money. Instead of being regulated by face to face interactions, in a market economy, relations between people are dominated by impersonal economic forces (such as prices) that atomise individuals from their society and which encourage an ethos of self-preservation rather than commitment to the common good. The implication of this critique is that wherever possible we should replace markets with institutional structures that reproduce a sense of face to face interaction and which allow people to transcend self-interest. The assumption here is that the ideal of a deliberative democracy modelled on something akin to the civic republicanism of ancient Greece would facilitate the desired social transformation.
In making these claims, however, Habermas and his minions appear oblivious to the fact that once the scope of the relevant community exceeds the scale of say a small village, it becomes impossible for people to be directly aware of the needs and interests of ‘their society’. If a community is to become more complex and advanced then the inter-relations between its members are far too vast to be surveyed by a deliberative forum that can discern which decisions the common good requires. To suggest that deliberators can somehow overcome this complexity is to be guilty of the ‘synoptic delusion’. As Hayek noted on so many occasions, the value of the market price system is precisely that it facilitates a complex process of coordination between many different individuals and communities who are necessarily ignorant of each others detailed circumstances. Though ‘impersonal’, the fluctuating price signals generated in markets communicate in simplified form the changing availability of goods and opportunities. These signals, while ‘imperfect’, enable people at the micro-scale to adapt their behaviour (by changing jobs, moving house, substituting more for less expensive inputs etc.), without knowing very much about the ‘circumstances of time and place’ affecting the decisions of distant and unknown others.
It cannot be emphasised enough in this context that the case for markets does not depend on assumptions about human greed. Irrespective of whether people are seeking to procure goods for narrowly selfish ends, or whether they are acting on behalf of a charitable or altruistic cause, market prices are necessary to facilitate adjustments to changes in supply and demand, the availability of substitutes and all manner of context specific factors that are too complex to be surveyed by a deliberative forum. Neither can this problem be solved by developments in computer technology. For one thing the use of computers is hardly any less ‘impersonal’ than the market. More important, however, the more computer technology develops the more complex are the range of decisions and the quality of the inputs into market prices that can be generated by each of the decentralised elements that constitute the community. No matter how sophisticated technology becomes the complexity of the social system at the meta-level will continue to be higher than the deliberative capacities of its constituent elements.
Seen through this Hayekian lens the ‘alienating’ market forces that Habermasians and other leftists have long lamented should not be thought of as ‘colonising the life world’. Rather, they should be seen as extending the range of human cooperation far wider than would otherwise be possible. To put the argument differently, the market economy though far from ‘perfect’ is probably the most socialising force in human history. It is somewhat ironic that those who rail most against trade and the supposed alienation that markets bring – the various ‘anti-globalists’ and ‘deep-greens’ who agitate for ‘simplicity’ and ‘self-sufficiency’, would lead us into a form of isolationism that would vastly reduce the scope of human cooperation. What could possibly be more anti-social than that?