Tuesday, July 31, 2007

Complexity, Economics, and Libertarianism

Jim, a member of a Humanist email list I'm on, made an interesting post recently mentioning emergent complexity in economics (he gave this Wikipedia link). Jim seems to be an economic libertarian and sited this as a support to his position. I am a big enthusiast of complexity theory and the work of the Santa Fe Institute for many reasons. As such, his mention peaked my interest, but I think there is something important to note, at least insofar as my position is concerned.

I don't think complexity necessarily justifies libertarian economic philosophy on the grand scheme of things.

To be sure, it certainly suggests we allow economies to function naturally as much as possible. Taoism, in many respects, contains realizations which are ancient precursors to many notions found in complexity science. Naturally, we similarly find a connection between its observations of the world and prescriptions on 'how we should be'. For example, Chuang-Tzu warns of over-intrusive government, saying it is a sign of intolerance of people's natural proclivities and inclinations (On Intolerance), and encourages corruption and oppression (Horses Hooves).

All of these notions point to the same realization, which is that free market economies will tend to operate as a self-organizing complex system with an organic structure (or 'Li', as the Taoists might say) with all of the advantages of growth and adaptability thereof. Government intrusion, then, hampers the free operation and efficiency of that system.

Yes, economics will self regulate as a system. For example, wages will rise and fall because of the supply of certain professionals and the demand for them. Over time, if the wages get too high, too many people will choose that as their profession and supply will exceed demand. Employers will recognize they can get away with paying less because they'll have plenty of desperate people in need of a job. As wages get too low, employers will find that no one wants to work in that profession and will therefore need to raise their rates. The system corrects itself in a beautiful organic process!

But before we kneel at the altar of the economic complex system, we need to take a step back and look at the bigger picture.

First, we must realize that this economic organism is not 'us' individually. Nor is it 'us' in terms of it being humanity. It is not even 'us' in terms of it being our society. It is an independent system in its own right, that yields conditions we suffer or enjoy.

As such, it is not an end unto itself, but rather a means to an end - that end being to provide an ethically sound environment in which people can live well.

As a system, while the economy will indeed correct itself, in the process its variable flow into highs and lows that have little respect of 'what is right' or 'what is humane'. One might think that we drive these variables by our likes and dislikes, thus 'humaneness' and 'rightness' is inherent in the system because those are things we like. However, this simply isn't the case in practice. In reality, wages will often rise above what is excessive and harmful for individual lives and society (which includes more than the economy, but also our social networks, morale, etc). More importantly, wages will sometimes fall well below what is a humane level of compensation for the work done, leaving desperate people with no realistic alternative. The same is the case for all of the economic variables throughout the entire economy. Most of the time it works, but occasionally it veers without concern into environmental conditions which are inherently inhumane and ethically unacceptable.

People who marvel at that intricate and amazing complex system that is our economy, tend to focus all of their thoughts and attention on how best to make it run more smoothly and efficiently. They look at 'averages' and 'trends' and 'indexes' as indicators of whether or not things are 'going well'. Little concern is given for the individuals getting tossed about on the fringes of those overall curves.

Unconscious and as well intentioned as it may be, this is worship of the 'economic organism' at the expense of people, the expense of ethics, and the expense of basic human compassion.

We must instead keep the larger view in mind: that the economy is here to serve human beings as one element in the grand mix of our larger concerns as good people - and we are not here to serve the needs of the economy. When we do, we realize that, yes, we want a smooth running economy that yields good fruits for us. But, we also recognize there are certain conditions and situations that are morally unacceptable, regardless of the indexes, averages, trends, or long term self correcting mechanisms. When that happens we must, as a people (i.e. government) step in and say "no".

Will that hamper the efficiency and health of the economic organism? Yes it will - and that's ok. Some things are worth the price of apples being higher or the growth of new businesses being lower this quarter.

Unlike what Libertarians will tell us, this sort of judicious ethical intrusion in certain areas while being appreciative of the need of an economy to evolve freely, will not necessarily lead to all-controlling socialism, communism, or bureaucratic oppression. We must simply judge these things ethically as we go, considering those factors as well. Tough decisions? Yes. But to simply say that all eyes should remain on the economic organism and trust that individuals will get their just rewards for their obedient worship of that entity, is a harmful notion in my view, that misses major concerns about our humanity.

It is also good to note Wu Wei, a philosophy specifically designed for skillfully working in and with complex systems. If we use 'skillful means' in our decisions, we see that there is almost a 1-to-1 correlation between money spent on education or on jails. Low wages lead to desperation, which leads to crime, which leads to money spent fighting crime and jails. Thus, the 'interconnectedness of all things' means that we pay either way - it's just a question of how smart we are about it.

Some may be too consumed with judgments about 'what others deserve' and 'who should get what' to look at things as a dynamic system without preconception. That individual therefore puts himself in the very role he would forbid the state, as being inhumane and oppressive.

Therefore, we are benefited in subtle ways by being ethical first. The maxim is maintained: there is never a distinction between what is virtuous and what is wise. Any notion to the contrary is an indication that we are suffering from a delusion about either wisdom or virtue.


Blogger cxx_guy said...

I would agree that it is important to be ethical first. That is why I am a libertarian in all matters, including economic matters. Why? Because as you point out, market wages have nothing to do with whether I believe that people "deserve" a living wage. Wage rates exist, as a result of complex dynamics that I cannot control, even if I had the Tasmanian Devil of government at my beck and call. If one is not getting paid enough doing what he is doing, that is a message that he should go do something else. Of course, we need to limit government, so it does not prevent a better job from being available for him to do.

There is no reason that we should forbid a teenager taking a job because he could not raise a family of four on it. That would be insane. More questionable is whether we should forbid a person with a family of four from taking such a job. I would say not. I doubt that he is taking the job despite better alternatives. I see no reason to forbid him his best alternative, even if I would like to see him have a better one.

If one is concerned about a shortage of good paying jobs, there is one moral solution to the problem: go into business, and create some peacefully. Don't use government to try to cheat the market and make somebody else pay for it, because a) it is immoral to impose your values on others by force, and b) it won't work.

12:11 PM  
Blogger DT Strain said...

Hi cxx_guy, thanks for the comments.

There are a lot of things a desperate person will do when offered a drop of what he needs to survive. I'm reminded of the homeless people some have decided to pay to beat one another up, but history provides ample example of mass numbers of people caught in inescapable inhumane conditions at the hands of market forces - conditions where they couldn't realistically 'go do something else'.

Many of the notions you propose work much of the time in fairly well off societies, which is why hands-off is most often best in most sectors. But I think, in a world where companies compute how many people they're willing to let die from a product based on the money lost in lawsuits, the libertarian idea that no regulation of *any* sort from the government can work, seems a fantasy of people who don't like paying taxes or are hacked at the latest unpleasant encounter with a police officer or post office.

If one follows such notions to their logical conclusions, they'll find they lead to anything but a humane or decent society. Furthermore, the libertarian economic arguments I've seen as to why that *wouldn't* happen seem to lack credibility or realism.

Perhaps if we had some actual examples in history of a completely unregulated market economy where people weren't dieing in the streets it might be helpful to the economic libertarian position.

Thanks :)

1:34 PM  
Anonymous HolyRomanEmperor said...

You said: "Perhaps if we had some actual examples in history of a completely unregulated market economy where people weren't dieing in the streets it might be helpful to the economic libertarian position."

Do you have any examples of ANY COUNTRY anywhere in the world or in history where this wasn't happening (socialised or otherwise). Unfortunately, people dieing in the streets is nothing new OR unique to free market economies. I don't think you can blame capitalism for this, as it's been the "way of things" for all of human history, and continues to this day even in very socialised countries (France, Sweden, Canada, etc.)

I'm not saying "well, that's just the way it is" and walking away from it. I think it's good to try to help those less fortunate. I just question your basic assumption that government is the only way to do this. There are plenty of charities and so forth you can participate in to achive this. The nice thing about a charity is that they can't decide one day that you SHOULD be giving them money and just come take it from you. The government can.

The bad thing about giving power to the government is that it WILL get abused. Once again, name me any country anywhere, EVER, that has not had government corruption. How long before the home construction lobby convinces the government that all people should have a house (which you may think seems reasonable). Once that is passed though, how long would it be before the auto industry is able to buy enough politicians to have it decided that cars (transportation) are a "human right", how long until the movie industry can say entertainment is a human right, etc.

This isn't paranoid fantasy. This type of garbage happens all the time in our government, and pretty much every government that has ever existed. You hear stories all the time (and we've talked about them before) where laws get passed based on some politicians brother-in-law owning a company that stands to profit from the new law, etc. The best way limit this is to limit the power of government.

On a political science note (as you and I have discussed before), there is a trade off with ANY government. Basically, the more power you give them, the more capable they are of doing good AND bad. If you have an emperor with absolute authority, prosperity will be abundant if he is a good and just and wise emperor, but misery and strife will be prevelant if he is a greedy, coniving jerk.

So the question is this: do you TRUST the government enough to always be/do "good" that you are willing to invest them with the power they would need to do the good things you want? I don't.

I personally think the better alternative is to limit the governments authority, and still strive toward the "good" ends (like helping the poor) through voluntary means.

There's a LOT more I could say on this subject, but I'll cut it off here for now.

9:49 AM  
Blogger DT Strain said...

Hail Emperor, thanks for the comment :)

Actually, while huge populations are bound to have individuals of all sorts, I don't think we could reasonably say of any of the industrialized major nations that 'people are dieing in the street'. Therefore, I list those as current examples (I only wish the U.S. was not as poor as it is at this).

Please remember that I am of the more conservative position (closer to the status quo), debating against a proposed position that does not currently exist. It is the pure libertarian position that is the radical 'experimentalist' position. Therefore, doomsday scenarios are not the best way to critique the position that is closer to the status quo (actually between the status quo and libertarianism). It's better to point to unfortunate current examples for that, while those arguing against the radical proposed system of libertarianism (like myself) would be more likely to employ the doomsday scenario of 'what if'. Of course, since the exact manner and degree of government involvement that currently exists is not what I would advocate, it is easy to find those real-life unfortunate examples of government involvement.

The reason we do not see medieval-style 'dieing in the streets' is precisely because we currently have government acting to provide some assistance to people at the bottom. Libertarians argue that, without government meddling and taxation, we would have more free cash and be more likely to contribute to voluntary charities that would take care of things. This notion seems fantastical to me - the reasons are many and relate to a general impression of how the world works and has worked, so are not easy to go into here.

True, there will be corruption from time to time in government programs. There will also be corruption in corporations and in the private charities we would be giving to in the libertarian scenario.

Libertarians have it half right. Power corrupts and governments have corruption. But money is power, and any large-scale human institution with such power suffers all the same corruptions and potential to de facto rule over our world. In a democracy, elections can change things. In a mega-corporate monopoly overshadowing the power and influence of any government (the inevitable end-game of libertarianism), there is no such recourse in any practical or realistic sense.

Having said that, I'd agree that limiting the power of government is imperative. I think having a program that gives people on death's door minimal food, medical care, and shelter (and not houses, cars, and movies) is a good limit. Since there would have to be brakes applied *somewhere* on the spectrum of government power, your fourth paragraph is of the 'slippery slope' logical fallacy, unless you mean to argue that government shouldn't exist at all.

Otherwise if I had my way, on the whole, I would remove much government interference in the free market that currently exists. I am in favor of as little government interference in the free market as possible (and vice versa), a believer in true competitive capitalism (as opposed to corporatism) which absolutely requires at least some government involvement.

It is worth noting that I have spent the last few years writing about nontheism and have received very little argument. None of it has been of the degree that I get from the libertarians when I critique their position or advocate - not socialism or even something more socialistic than the current situation - but merely anything less than than "anarchy with a military".

7:05 PM  

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