Tuesday, 3 May 2016

Capitalism versus the Philosophers


Philosopher Stephen Hicks discusses how philosophers confront, or avoid, the issue of economic freedom.
    Stephen Hicks is a Canadian-American philosopher who teaches at Rockford University, Illinois, where he also directs the Center for Ethics and Entrepreneurship.
    Hicks is the author of Explaining Postmodernism: Skepticism and Socialism from Rousseau to Foucault, which argues that postmodernism is best understood as a rhetorical strategy of far-left intellectuals and academics in response to the failure of socialism and communism.
    French intellectual entrepreneur Grégoire Canlorbe sat down with Professor Hicks to talk.

* * * *

Grégoire Canlorbe: Following a certain interpretation of Marxian economics, postmodern intellectuals sometimes criticise “free-market doctrine” for relying on the law of supply and demand, which they claim is grossly unrealistic. How would you reply?

Stephen Hicks: Remember that the “law” of supply and demand is an aggregate of many individuals’ judgments and actions. It’s important not to reify it into some sort of Platonic or Hegelian abstract force that operates of generic necessity. The best way to model free markets is from the bottom up, by starting with real human beings, each of whom has individualised values, knowledge, and options.

Hicks01I agree with those who criticize the methodology of some versions of free-market economics that utilise only idealised and abstract models of markets in which everyone is perfectly rational and has instant access to all information. But I disagree with the standard postmodernist move of taking the failure of such idealised models to mean that only messy chaos and crisis rule the world. In philosopher’s labels, Nietzsche is not the only alternative to Plato.

Grégoire Canlorbe: Was Ayn Rand fundamentally in continuity or in a break with the classical liberal tradition — and authors such as David Hume, Adam Smith, or Jean-Baptiste Say?

Stephen Hicks: Rand’s distinctive thesis on political economy is her insistence that the best defense of liberalism is philosophical — that is, that it turns on getting the metaphysics, the epistemology, and especially the ethics right. Wrong views in ethics and epistemology undercut the case for a free society. And on those issues, her views frequently conflict with those of Smith, especially in moral psychology, and they consistently conflict with those of Hume, especially in epistemology.

Interestingly, Rand has less in common philosophically with the liberals of the Scottish Enlightenment, like Hume and Smith, and more in common with the liberals of the English Enlightenment, such as Locke and Mill. But even more forcefully than one finds in Locke and Mill, Rand’s liberalism is based on a rational egoism, and that is distinctive in the tradition of classical liberalism.

Grégoire Canlorbe: It is not uncommon to hear postmodernist scholars say that modern capitalism, with its impersonal marketplace, leads to a disenchantment and an impoverishment of human relations, contrasting with all the magic, moral, and sentimental resonance of “reciprocal gifts” among hunter-gatherer societies. What is your opinion on this commonly held view?

Stephen Hicks: Postmodernists share that sentiment with many conservatives, feudalists, and tribalists.

Of course, a huge amount of the elimination of magical and sentimentalist thinking has occurred due to modern science and engineering, which have arisen in symbiotic relation with modern liberal economics.

The significance of free market capitalism [in this context] is that it gives people a wider range of possible exchanges. One is still free to ritualise one’s shopping experience — as many people do, for example, by going to the local farmers market on Saturday mornings, where they socialise and sample and barter face-to-face and enjoy the particularities of one’s local people and their customs. And one is free to utilise an efficient and impersonal chain store. It’s your choice. But having that choice is empowering for two reasons.

If the wider range of options that free markets make possible are in fact efficient, then they save time and money. One can invest that time and money in other values that are to you more significant. Suppose the impersonal supermarket saves you an hour’s time and $30, and you use that time and money to experience a musical concert. Then your life is more enriched, not less.

It’s also empowering because if you choose instead the localised and personalised market, then it becomes more significant because you chose it. You didn’t just happen to be born into it or be conditioned to it by the happenstance of your upbringing.

I’ve long had a suspicion that the discomfort the critics have with classical liberalism is really a deep discomfort with the full responsibility for your life that liberalism requires. Tribal, feudal, and collectivised societies make your choices for you — sometimes by explicit conditioning and restrictions, and sometimes simply by not being able to generate the range of possibilities that liberal societies can.

Grégoire Canlorbe: According to French philosopher Michel Foucault, the rise of economic freedom after the 18th century coincides with the deployment of new techniques of control operating at local level through prisons, factories, schools, and hospitals. Economic policy, then, is the product of a new practice of power, present at all levels of society, whose aim is to “rationalise the problems posed to [society] by phenomena characteristic of a set of living beings forming a population: health, hygiene, birthrate, life expectancy, race.”
Hicks2    How would you sum up the main strengths and weaknesses of Foucault’s analysis?

Stephen Hicks: There’s a libertarian streak in Foucault that sometimes appeals to me, and of course he’s right that the rise of centralized and controlling bureaucracy is one feature of the modern world. I think Foucault can often be good psychologically and insightful philosophically, but ultimately he’s weak as a historian.

As a start on this huge topic, I’ll just say two things here. One is that the modern era is characterized by at least three types of social philosophy. The great debate between free-market liberalism and socialism highlights two of the three types. The third type is bureaucratic centralisation, and that social philosophy cuts across the free-market/socialist debate.

The idea that society can be organized centrally with concentrated power used in all of the ways that Foucault diagnoses — that paradigm of technocratic efficiency is often committed to neutrally and can then be applied in either market or governmental contexts. One can envision and find examples of private factories, corporations, and government bureaucracies applying those techniques.

So the question of both history and philosophy is whether the hegemonic-controlling-power model best fits with the theory and practice of modern free-market capitalism or with the theory and practice of modern collectivism-socialism.

Hicks3The other point I’ll make quickly is that Foucault consistently embraces a Nietzschean understanding of power as fixed and zero-sum. In that model, power may be constantly evolving, but it is also constantly agonistic and antagonistic. Hence the consistent undercurrent of cynicism in any Foucauldian discussion of power.

That contrasts to those understandings of power that recognize some forms of it — cognitive, economic, personal-relational, for example — as potentially generative and increasing, resulting in a net growth.

Grégoire Canlorbe: Finally, Professor Hicks, I’m wondering if you’d like to respond to something Christian Grey, the young business magnate in E.L. James’s bestselling Fifty Shades of Grey, has to say on the subject of economic power:

Business is all about people … and I’m very good at judging people. I know how they tick, what makes them flourish, what doesn’t, what inspires them, and how to incentivise them.… I have a natural gut instinct that can spot and nurture a good solid idea and good people.… I don’t subscribe to luck or chance. The harder I work the more luck I seem to have. It really is all about having the right people on your team and directing their energies accordingly. I think it was Harvey Firestone who said the growth and development of people is the highest calling of leadership.

Stephen Hicks: I’m charmed that a character in an erotic novel can be such an articulate spokesman for entrepreneurism.


  • “What economics can teach philosophers is that other human beings need neither be a burden nor a threat, neither a hell nor a horror but a blessing.
        “This is the greatest lesson economics can teach: that in a society making peaceful cooperation possible we each gain from the existence of others.
        “What a great story to tell!”
    CUE CARD ECONOMICS: Economic Harmonies, and The Miracle of Breakfast – NOT PC
    • “Gitlin [says the reviewer] is surefooted in identifying the problem. The left, he argues, took a wrong turn when it abandoned knowledge as its guiding light on the grounds that knowledge, as argued by theorists like Michael Foucault and Edward Said, was merely a masked form of power...”
      How postmodermism gutted the left – NOT PC
    • “So how does something as intellectually lame as Keynesian apparatus get traction? Why were Keynes’s nonsensical nostrums accepted so readily in the mid-twentieth century by neoclassical economists when they’d been thoroughly exploded decades before by British classical economists?
          The answer given by Austroclassical economist George Reisman is: ‘intellectual decay.’ Not just in those (like Hayek and the ineffectual Pigou) who attempted to answer Keynes in the 1930s, or later on post-war when the Keynesian technocrats took control of the academies and their centres of economic ‘planning’ -- because the decay had started several generations earlier.”
      Greece, Keynes & intellectual decay: What made it possible? – NOT PC
    • “I remember as a kid growing up with liberal members of my family. I could tell even as a small child that I would grow up and probably not agree with them on many things. However their general advocacy for legitimate tolerance and a generally peaceniky disposition appealed to me on a basic level. Indeed these folks informed my political evolution in a large way and it is these relationships (with lefty family and friends) which gave me many of the the insights I needed to come to my small government philosophy.
          “Sadly this breed of lefty has been overwhelmed by what I consider a small minded and potentially dangerous political animal, the ‘progressive’.”
      A Very Important Distinction: The Trouble Isn’t Liberals. It’s Progressives. – Nick Sorrentino, NOT PC
    • “’What is missing in … Africa …  is “exchange and specialisation and the division of labour [that enables people to] get wealthy by figuring out ways to create products and services that have value to other people.’…
          “He’s certainly right that you can’t start from the top down, or by reversing cause and effect. And any prosperity at all is difficult when you have governments continually plundering both their people and each other, which describes so much of the African continent.
          “But it’s not true to say that people getting wealthy by creating products and services that have value to other people are totally absent. One inspiring story is Africa’s Export Trading Group, the winner of the 2013 African Agribusiness of the Year, and a company strongly focussed on growth from the bottom up. Tagline: ‘Linking Africa’s smallholder farmers to global consumers’…”
      How do you create lasting prosperity? – NOT PC
    • “The other day one of this blog’s regular trolls expressed amazement that I’d linked to a post on poverty in good faith. Surely, reasoned the troll, the only reason a blog promoting ‘capitalist acts’ would link to the story of a woman living in poverty would be to point and laugh.
          “The troll doesn’t get it.
          “Because it is capitalist acts that are lifting people out of poverty all the time. And that’s one of the things this blog was created to celebrate.
          “Consider this: capitalism inherited millennia of poverty, and (despite battling statism all the way) delivered two centuries of prosperity unimaginable  at any other time in history. That’s a great thing.”
      On poverty – NOT PC
    • “Capitalism and entrepreneurship make the difference in the world. Whether a country is rich or poor depends on both. The evidence is all around us, and the explanations are a click away.”
      When Trade is Not Enough – Jeffrey Tucker, NOT PC
    • .

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