Hayek versus Habermas: Round 2

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?

8 thoughts on “Hayek versus Habermas: Round 2

  1. I think that interpretation of the term ‘alienation’ is perhaps a little narrow here.

    Yes, of course capitalism allows for the development of very complicated societies. In the case of global capitalism, for instance, the entire world works as a team to produce in a very efficient way. All Habermas is saying (as far as I understand) is that those relationships are entirely economic; the two parties involved only experience ‘each other’ insofar as they experience what it is that they produce or consume. While arguably the measure of a man IS what he consumes/produces, the person on the other side of the transaction is only experiencing one single facet of their existence. If production/consumption of that product stops, that relationship stops.

    For instance, if an American owns a Japanese car built in Canada using Indian steel and Brazilian rubber, this does not necessarily indicate that these five countries have any sort of relationship outside of the production and consumption of that car. These peoples are interacting with one another, but only to get what it is they want. According to Kant (and lots of other people; most religious types, for instance) it is immoral to treat other humans as a means to and ends — they are an ends in and unto themselves. Of course, you might not believe that to be a very useful philosophy (I don’t, necessarily — it makes people dysfunctional), but even so there is no denying that this sort of interaction is ‘dehumanizing’. The person on the other end of the transaction has been reduced to a single product

    Coming back to the example of the car, the producers in Brazil, Canada, India, and Japan are represented to the American consumer only by his car — ever hear the way some (unionized) American autoworkers talk about Japanese vehicles? Or even better, how most Americans talk about Chinese-manufactured products, as though it were somehow the Chinese workers who were to blame for America’s preference of price over quality (if it’s even true that China produces lower quality goods). Yet this product is the only interaction that the consumer has had with the guys from Japan, Brazil, Canada, India (in theory); other than that, he has no idea who they are, what their lives are like, and why they do the things they do.

    Habermas’ philosophy here is merely a ‘critique’ — again, as far as I understand — of capitalism in that it pointed out a change in the psychology of market participants (dehumanization of the Other). Even just being aware of this tendency helps one to oversome its potential effects (stereotyping and racism). Capitalism is a wonderful operating system, but it has the potential to ‘glitch’ sometimes. I think that’s all Habermas was saying (not necessarily that we should return to classical Greece or all join the Amish).

  2. Brendan, thanks for the comment and I take the point. I think though that it actually emphasises how limited, dare I say banal the Habermasian view (not yours) is. ‘Alienation’ in the Habermasian sense is inevitable in any complex society because it is literally impossible for people to be aware of the circumstances affecting others. Either we can have a complex society where non-alienating relationships are confined to those of whom we have some direct personal acquaintance, but where we also have more distant impersonal relations with many other agents. Or, we must settle for a ‘simple’ world in which the only relations we have are those with whom we can be directly aware – which would, to put it mildly, be a somewhat narrow existence. What I would reject is the notion that there is some ‘third way’ alternative. Deliberativce democracy doesn’t help. Discussing the interests and circumstances of Chinese workers in the abstract isn’t going to make Americans or Brits losing jobs to Chinese competition feel any better about it.

    I would also question the idea that money relations are more likely to encourage disrepect for ‘alien’ cultures. Though people losing jobs in the way you mention could have this effect, I also think the fact that markets are driven by money makes people more likely to ‘reach out’ to people in other cultures -simply because they offer a better deal than say home producers. Though initially such contacts may be driven by the money motive, these contacts may then alert people to the aspects of other cultures that are worthy of respect. This was a point originally made by David Hume and JS Mill – that trade is as much a process of cultural interchange as one of economic exchange. Thanks again. Mark

  3. Don’t you think that Habermas already accepts that complex societies require capitalist infrastructure? I’ve just never read anything where he proposes we go back to some less alienated and more isolated environment. If he wrote that then I definitely disagree with that agenda, but not with his observation.

    Also, Hume and Mill are writing from within a very different context than Habermas. As his buddies Adorno and Horkheimer pointed out (haha, hey, don’t shudder when I mention their names), trade in industrial-capitalist societies will actually tend to homogenize culture because more ‘general’ preferences are always the more profitable ones to satisfy. This may change in the near future as a result of more decentralized modes of production (such as 3D printing), but during the ‘heyday of Habermas’ what was being traded was certainly not very distinct cultural expressions. The Chinese do not export, for example, a whole lot of very traditionally ‘Chinese’ goods to the United States or Britain. These tend to be ‘American’ and ‘British’ goods — it’s what the market’s demanding.

    In Mill and Hume’s day intercultural trade was based to a large extent on the very fact that the product was foreign (tea, coffee, china, etc. were so very exotic!); profitable returns on ‘native products’ being produced abroad would have been difficult to obtain — it was harder to get from A to B; It took longer; the road was less secure, etc. Besides, the competitive advantage of, say, France over Britain in terms of labour costs would have been minuscule — everyone everywhere was poor and desperate. So the only real trade going on then was for things that could not be produced at home. These products ARE, in fact, much more representative of the producer’s culture.

    But I think Habermas is talking about something quite different. These days nearly everyone can produce tea, coffee, china, cars…but not everyone is as good at it. He recognizes this fact, as well as the fact that people tend to be selfish and bitter when confronted with scarcity (of jobs, for example), which can in turn lead to scapegoating and even violence. Remember, Habermas and the rest of the Frankfurt School are writing in the post World War II era, and they just saw Hitler take advantage of the Germans’ economic ‘frustration’ (mostly with ridiculous inflation) and direct it at several different scapegoats. More than anything Habermas warns us what the consequences of ignorance are, and that we shouldn’t allow our alienation from foreign producers/consumers — a side-effect of complex markets — drive us to blaming them for the market’s booms and busts. In fact, I don’t think he’s really even talking about the same thing as Hayek at all. How many of those ‘anti-globalists’ and ‘deep-greens’ do you think actually read or understood Habermas, seeing as they’re protesting ‘the system’ in the first place? They obviously aren’t into actually learning about the target of their protest before acting…which is kinda what Habermas writes about to begin with…hmmm…

  4. Brendan,you are right that the Habermas of today doesn’t want to abadon capitalist infrastructure – though that wasn’t the case when he originally developed the theory of communicative action back in his neo-Marxist days. He is a social democrat not an isolationist – though people influenced by him in the green movement, for example, most definitely are. I think it is instructive that in Between Facts and Norms he concedes that modern society is too complex to be managed on a face-face deliberative basis and that deliberation should be confined to the central ‘steering mechanisms’ of the economy – which is code for the welfare state and Keynesian style macro management. This is tantamount to a recognition that it is the market which facilitates an extended form or rationality in conditions where face to face communication isn’t possible. Whereas he sees this as regrettable, I prefer to see it as positive that we can form of social communication which extends the scope of our reason beyond the realm of verbal discourse.

  5. While I agree it’s important to point out the role of the market in the discovery and conveyance of inarticulate knowledge, I don’t think that it is a strong basis for a critique of Habermas. Habermas already acknowledges (1) that the lifeworld can only be addressed in a piecemeal fashion, so that even at the lifeworld level there is a sense of the limits of explicit communication, and (2) that the subsystems of state and market, due to their complexity, escape communicative reason, and that is precisely their blessing and their danger.

    I personally think that his colonization thesis is a much stronger point of contention, so I welcome this more recent post.

  6. HI Mark. I just finished reading your book and found it to be one of the best in its class. The synthesis and defense of classical liberals ideas is fantastic. My question/comment is, I hope, only slightly off topic. Regarding the inability of planners/regulators to achieve a “synoptic” view of society, is this contradicted in any way by Hayek’s view of the “pattern predictions” (praxeology) economists make when they argue e.g. that price controls lead to shortages/surpluses, etc. Thanks.

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