Reader’s Forum on Norman Barry’s “The Tradition of Spontaneous Order”

1. James M. Buchanan, "Order Defined in the Process of its Emergence"*

*A note stimulated by reading Norman Barry, "The Tradition of Spontaneous Order," Literature of Liberty, V (Summer 1982), 7-58.

Norman Barry states, at one point in his essay, that the patterns of spontaneous order "appear to be a product of some omniscient designing mind" (p. 8). Almost everyone who has tried to explain the central principle of elementary economics has, at one time or another, made some similar statement. In making such statements, however, even the proponents-advocates of spontaneous order may have, inadvertently, "given the game away," and, at the same time, made their didactic task more difficult.

I want to argue that the "order" of the market emerges only from the process of voluntary exchange among the participating individuals. The "order" is, itself, defined as the outcome of the process that generates it. The "it," the allocation-distribution result, does not, and cannot, exist independently of the trading process. Absent this process, there is and can be no "order."

What, then, does Barry mean (and others who make similar statements), when the order generated by market interaction is made comparable to that order which might emerge from an omniscient, designing single mind? If pushed on this question, economists would say that if the designer could somehow know the utility functions of all participants, along with the constraints, such a mind could, by fiat, duplicate precisely the results that would emerge from the process of market adjustment. By implication, individuals are presumed to carry around with them fully determined utility functions, and, in the market, they act always to maximize utilities subject to the constraints they confront. As I have noted elsewhere, however, in this presumed setting, there is no genuine choice behavior on the part of anyone. In this model of market process, the relative efficiency of institutional arrangements allowing for spontaneous adjustment stems solely from the informational aspects.

This emphasis is misleading. Individuals do not act so as to maximize utilities described in independently existing functions. They confront genuine choices, and the sequence of decisions taken may be conceptualized, ex post (after the choices), in terms of "as if" functions that are maximized. But these "as if" functions are, themselves, generated in the choosing process, not separately from such process. If viewed in this perspective, there is no means by which even the most idealized omniscient designer could duplicate the results of voluntary interchange. The potential participants do not know until they enter the process what their own choices will be. From this it follows that it is logically impossible for an omniscient designer to know, unless, of course, we are to preclude individual freedom of will.

The point I seek to make in this note is at the same time simple and subtle. It reduces to the distinction between end-state and process criteria, between consequentialist and nonconsequentialist, teleological and deontological principles. Although they may not agree with my argument, philosophers should recognize and understand the distinction more readily than economists. In economics, even among many of those who remain strong advocates of market and market-like organization, the "efficiency" that such market arrangements produce is independently conceptualized. Market arrangements then become "means," which may or may not be relatively best. Until and unless this teleological element is fully exorcised from basic economic theory, economists are likely to remain confused and their discourse confusing.

James M. Buchanan
Center for the Study of Public Choice
George Mason University (after 1983)

2. Mario J. Rizzo, "Spontaneous Orders: Deterministic or Nondeterministic?"

[I]f there is nothing unforeseen, no invention or creation in the universe, time is useless. ... For time is here deprived of efficacy, and if it does nothing, it is nothing. Henri Bergson[1]

There are two forms of spontaneous order theories which I wish to distinguish in this brief note: those that relate to the origin of an aggregate structure and those that involve the function of the structure.[2] The common element present in all theories of the first type is the claim that some overall social patterns or institutions are caused by a myriad of decentralized actions that do not aim at their establishment. Theories of the second type, however, disregard the origin of the pattern and seek, instead, to explain why it continues in existence. These functional theories recompose the structure in terms of the purposes it serves for the individual. Presumably, these will explain why the individual actions that give rise to the aggregate structure will themselves endure and hence why their product endures.

The claim I shall make is simply this: theories of spontaneous order, whether of the first (origin) or second (function) variety, cannot be deterministic if they are to explain economic or social processes over time.

Suppose, for example, we were to adopt the position that the causal link between decentralized actions and social structures or orders is deterministic. Then, on this assumption, certain initial conditions (actions 1...n) in conjunction with a theoretical law would yield with logical necessity the structure we want to explain. This rigid link between initial conditions and result is radical mechanism.[3] Such explanations cannot tell the story of how orders can arise in the course of time. Instead, they can only provide a logical or static recomposition of an already-arisen order. For if the connection between cause and effect is deterministic then time literally adds nothing. Thus the aggregate structure should have already existed from day one but it did not. By the principle of causality, then, time must add something. This something is the future decisions and choices of the many acting individuals. Since these decisions cannot be predicted by those who will make them,[4] we cannot model the individuals as foreseeing the emergent order. Hence genuine uncertainty or "surprise" must be part of any methodological individualistic story of the origin of social institutions.

Spontaneous order theories of the functionalist variety sometimes claim that the function which an institution serves provides a logically sufficient explanation of why it continues to exist. This claim is just the inversion of radical mechanism or, simply, radical finalism.[5] Instead of temporally antecedent events rigidly determining current institutions, we postulate that future functions determine (or explain) them. Since individuals act on the basis of their anticipations, it is only the future (anticipated) functions of institutions that could possibly be relevant. Such functionalist theories cannot, however, be evolutionary in the true sense.[6] This is because the complete set of sufficient conditions that maintain an order are created in the evolutionary process itself.[7] Time must add something. In this case, what it adds is a change in individual knowledge and the anticipation of a possibly better way of achieving one's purposes. Thus, "order [is] defined in the process of its emergence."[8] In retrospect, when the complete set of causes is known (at least in principle) we might find it useful to construct a model of evolutionary process as aiming at some determinate function. Nevertheless, this model is only a heuristic delusion and may well lead us astray if we are not extremely careful. Ex ante (in advance), any truly evolutionary process is itself a part of the ultimate outcome.

The general conclusion that can be drawn from these arguments is that theories of spontaneous order (and, a fortiori, of equilibrium) must be pattern explanations.[9] The conjunction of statements about initial actions and a law explains the overall pattern or class of existing institutions rather than any specific institution. Similarly, functional theories can rationalize the class of possible structures that will serve a particular function rather than 'postdict' the optimal structure. As John von Neumann and Oskar Morgenstern have said, "[T]he complete answer to any specific problem consists not in finding a solution, but in determining the set of all solutions."[10]

Notes

This note was stimulated by Norman Barry's thought-provoking article, "The Tradition of Spontaneous Order," Literature of Liberty, 5 (Summer, 1982): 7-58. I am indebted to the Scaife and Earhart Foundations for support of my research and to Mr. Bruce Majors (Graduate Department of Philosophy, Catholic University of America) for able research assistance. Elaboration of some of the themes in this note will appear in G. P. O'Driscoll, Jr. and M. J. Rizzo, The Economics of Time and Ignorance (Oxford: Basil Blackwell, forthcoming in 1983).

[1] Henri Bergson, Creative Evolution, Arthur Mitchell (trans.), New York: Henry Holt and Company, 1911, p. 39.

[2] Edna Ullmann-Margalit, "Invisible Hand Explanations," Synthese 39 (1978), pp. 282-286.

[3] Henri Bergson, Creative Evolution, p. 37.

[4] Frederic Schick, "Self-Knowledge, Uncertainty and Choice," British Journal for the Philosophy of Science 30: 235-252.

[5] Henri Bergson, Creative Evolution, p. 39.

[6] Here the evolutionary theory is used to explain the maintenance rather than the origin of an order. Thus, an evolutionary principle like "survival of the fittest" presumably can explain the maintenance of certain eating customs.

[7] Henri Bergson, Creative Evolution, p. 28.

[8] James M. Buchanan, "Order Defined in the Process of its Emergence" Literature of Liberty [this issue].

[9] F. A. Hayek, "Degrees of Explanation," Studies in Philosophy, Politics and Economics, Chicago: University of Chicago Press, 1967.

[10] John von Neumann and Oskar Morgenstern, Theory of Games and Economic Behavior, Princeton: Princeton University Press, 1947, p. 44.

Mario J. Rizzo
Department of Economics
New York University

3. Israel M. Kirzner, "Spontaneous Order - A Complex Idea"

Norman Barry's richly erudite essay on the "tradition of spontaneous order" could, I believe, have provided even more valuable historical insight with the help of a simple yet highly significant distinction (somehow not articulated in the essay). Barry sees the idea of spontaneous order as consisting in the view "that most of those things of general benefit in a social system are the product of spontaneous forces that are beyond the direct control of man." What is not made clear in Barry's paper, however, is the circumstance that this idea is itself made up of two quite distinct and separate ideas - each of which is, in a way, entitled to its own (admittedly not entirely separate) history.

Consider the position of critics of the idea of spontaneous order. Such critics may deny the validity of the idea on either (or both) of two quite distinct sets of grounds. (So that the affirmation of the idea of spontaneous order presumes the refutation of both grounds.) First, critics may argue that, in the absence of the "direct control of man," social phenomena emerge in entirely haphazard, unsystematic fashion. For example, it may be held that the results produced by a free market exhibit no orderliness whatsoever, benign or otherwise. Second, it may be argued that, although analysis of decentralized, non-controlled, freely interacting systems may indeed demonstrate the spontaneous emergence of regularities, these regularities must, nonetheless, be judged as carrying implications for society that are the opposite of benign. Conversely, therefore, to uphold the idea of spontaneous order means to uphold two ideas: (1) the idea that permitting spontaneous social forces to work themselves out results in systematic, rather than in random or chaotic results; (2) the idea that the normative character of these systematic results can hardly be judged as other than socially beneficial. Clearly this second idea could have little scope without acknowledgement of the first. But, on the other hand, acceptance of the first idea carries with it, of itself, no commitment to the second.

Ludwig von Mises, in fact, saw the great contribution of the classical economists in a manner not depending on the second idea at all. This contribution consisted, Mises wrote, in the demonstration that "there prevails" in the course of social events, "a regularity of phenomena to which man must adjust his actions if he wishes to succeed." (Human Action, 1949, p. 2.) What separated the great classical economists from their predecessors was that the latter (because they "were fully convinced that there was in the course of social events no such regularity and invariance of phenomena as had already been found in the operation of human reasoning and in the sequence of natural phenomena") believed "that man could organize society as he wished." This discovery of the inherent regularities that emerge spontaneously from free society interaction represented the major scientific breakthrough in the history of social understanding. To be sure many of the exponents of this discovery recognized, in addition, the benign character of these regularities. But many (one thinks perhaps of Marx, Pigou, Keynes) have questioned the social desirability of at least some aspects of these accepted regularities. Thus the ranks of those skeptical of the idea of spontaneous economic order have been swelled, in the past, not only by historicist or institutionalist critics of the possibility of economic theory as such, but also by economic theorists who have claimed, correctly or otherwise, to perceive theory as showing the systematic emergence of social immoralities or social inefficiencies.

In tracing the history of the idea of spontaneous order, therefore, it would appear of value to trace through the development of each of these two separable components of the complex idea of spontaneous order. Precisely because the separate components have often appeared together in integrated form, it would be useful to trace the separable traditions from which they have emerged over the centuries.

It will be noticed that Barry does take pains (pp. 11-12) to distinguish two distinct senses of "spontaneous order." One refers to "a complex aggregate structure which is formed out of the uncoerced action of individuals." The second refers to "the evolutionary growth of laws and customs through a ...'survival of the fittest' process" (with this second kind of undesigned process quite possibly producing dead-ends the escape from which might be held to call for massive centralized control). Barry's distinction certainly presupposes the possibility, at least, of articulating the distinction offered in this note. Our argument here, however, is that Barry's superb historical survey could have offered an even richer yield if it were presented with explicit attention to the historical antecedents of this latter distinction itself.

Israel M. Kirzner
New York University

4. Karen I. Vaughn, "On 'The Tradition of Spontaneous Order'"

Norman Barry (Literature of Liberty 5, Summer 1982) has hinted at a crucial problem in Hayek's evolutionary theory of spontaneous orders. Hayek claims that "all progress must be based on tradition," but, Barry points out, this would seem to lead to a conclusion uncomfortable for libertarian ideology:

The difficulty with Hayek's analysis is that social evolution does not necessarily culminate in the classical liberalism that he so clearly favors: there are many non-liberal institutions which have indeed survived ... . Yet if we are intellectually tied to tradition, and if our 'reason' is too fragile an instrument to recommend satisfactory alternatives, how are we to evaluate critically that statist and anti-individualist order of society which seems to have as much claim to be a product of evolution as any other structure? (p. 46)

How indeed?

The difficulty with the way Barry puts the question is that it seems to misconstrue the purpose of theories of social evolution. Even if we agree with Hayek that cultures evolve as the unintended and largely unconscious consequences of human action, that carries with it no necessary implication about how one should morally evaluate a society or a social practice. A scientific theory about how societies do in fact evolve cannot be taken as a basis for ethical judgment without some very carefully thought-out intervening steps. Furthermore, to say that "all progress must be based on tradition" is not also to say that we cannot imagine or work toward whatever idea of progress we adopt. Indeed, it may only be possible to effect social change by starting from a firm basis in tradition, but that says nothing about the moral worth of tradition from which we start.

The hidden premise in Hayek's work, and the source of Barry's criticism, is the idea that evolution somehow must progress toward "the good." Yet if evolution is a process in which the fittest survive, what are we to make of the fact that some very unpleasant societies have survived? Hayek's way out of that trap is to implicitly limit evolution toward "the good" to that which evolves spontaneously as humans search to discover rules of just behavior rather than to design them, while bad change is the product of "constructivist rationalism." Thus Hayek gives us a way of judging different societies, but he does not give us a scientific explanation of why spontaneous orders often seem to lose out in the evolutionary struggle to more constructed societies. To reply, as some of my colleagues do, that constructivist change can only win via use of force really begs the question. Force is as much a means to achieve ends at the disposal of human beings as is persuasion and exchange. A theory of cultural evolution must be able to explain the change that has in fact occurred apart from any judgments about good or bad change. Hence the question remains: why do some cultures thrive and prosper while others wither and die? Even more to the point, is there a natural selection process at work for human culture analogous to the natural selection process hypothesized for the biological world?

Hayek does want to incorporate a theory of natural selection into his evolutionary theory. For Hayek, cultures are successful because they evolve in a way that economizes on the amount of articulated knowledge necessary for an individual to function in that society. Those cultures survive which incorporate in their customs and rules of behavior practices which unbeknownst to individuals in that culture are important to their survival. While that seems a useful starting place for a theory of natural selection among cultures, we still have no theory about how cultural practices arise, and what kinds are "naturally selected." Answers to both questions are crucial to the development of a full theory of cultural evolution. They are also crucial if we want to have any chance of changing the less than satisfactory society in which we live today.

This is not the place to attempt to develop a theory of natural selection in cultural evolution. Instead I would like to raise some questions that such a theory would have to address to be complete.

First of all, how do cultural practices and institutions originate? While we can agree with Hayek that spontaneous orders arise from the unintended consequences of human action, one imagines that the originating actions must have been intentional in some sense. Humans act because they believe their actions have consequences. What is the relationship between intended outcomes and unintended consequences? To what extent are the expected results of various actions realized, and what differentiates intentional acts that fulfill expectations from those that do not? Are there no institutions that are the product of conscious design? In other words, what is the role of human intentions in the establishment of rules, customs, institutions, and political organizations?

Second, and equally important, if there is a natural selection process in cultural evolution, what is it that gets selected? In biological evolution, success is defined as survival of a trait in the gene pool or survival of a particular species. By what criterion are successful cultures selected? Some might argue that success of a culture is demonstrated by numbers of individuals surviving in a society - a population count. But then, what demographic characteristics describe a "larger" population? Would a population with a large number of births and high infant mortality be considered more successful than one with fewer births and more children surviving to adulthood? Both kinds of societies exist today. Which is more successful? Or would a large, relatively young population with a short life span for any one individual be considered more successful than a smaller population where individuals live longer productive lives?

Consider another possible criterion for describing a successful society: the ability of a society to command resources. This seems to be the implicit criterion used by economists when they speak of successful societies. If this is truly what "nature" selects for among cultures, then small wealthy cultures should always be observed to win out over potentially larger but poorer cultures. But then why do poor cultures coexist with wealthy ones, and why do poorer cultures sometimes survive (and even defeat) very wealthy ones? Success at commanding material resources might be a viable criterion to use as a basis for a theory of natural selection, but if so, the full implications of the theory have yet to be worked out.

Part of the problem with both these suggested criteria of natural selection is that the level of analysis is wrong. We fall into the habit of thinking of societies and political units rising and falling, winning and losing, when it would be a great deal more fruitful to think of specific ideas or specific practices as the substance of cultures and cultural change. In other words, a good theory, I believe, would disaggregate the societies into the various ideas and practices of which they are composed and view the ideas and practices as the units that "nature" selects. This is not inconsistent with Hayek's work; he refers to human imitation as the transmission mechanism for cultural evolution in the same sense that genes are the transmission mechanism for biological evolution. What humans imitate are ideas and actions, and in so far as specific actions can be explained as ideas put into practice, it is ideas that arise, get imitated, and either survive in the 'idea pool' or get discarded.

If we are willing to think of ideas as the units of cultural evolution, a whole host of interesting possibilities present themselves.

For instance, how do new ideas and combinations of ideas arise, and why do some ideas appeal to individuals enough to be "imitated" or believed while others do not? Are there different criteria that individuals apply for selecting among ideas? If we start from the premise that individuals choose (in some sense) the ideas they believe, one can then take the next step of assuming they choose ideas to fulfill purposes. But what criteria do individuals apply to choose among competing ideas? The criteria may vary depending on the nature of the idea. For example, technical ideas that explain how to do something to achieve a specific end are "selected" if they actually work. They are subject to a reality test that allows people to weed out useless ideas rather quickly, and hence one would expect to observe progress in technical knowledge. Moral ideas have a less obvious purpose and a very nebulous reality test; there is no easy way to discover whether they "work" or not. Hence, progress in moral knowledge might be as difficult to define as it is to observe. In either case, however, the "natural selection" process is a process of human selection among humanly inspired ideas. And the survival of the fittest becomes a survival of ideas that human beings believe are the fittest for their purposes.

On a more aggregated level, groups of individuals or societies have as a unifying force a common set of ideas, an ideology, that is a composite of many smaller sets of ideas that may or may not be consistent with each other. Survival of the group may depend on adherence to some of those ideas but not others, but since they are all accepted by the group as a bundle, there may be no way that individuals can determine which are crucial; the valuable traditions are bundled with the irrelevant. This is consistent with Hayek's view of the value of tradition. By developing a theory of cultural evolution based on the idea as the cultural analogue of the gene in biology, however, we might be able to develop a theory to help us "unbundle" the ideas inherent in a tradition in a way that will make progress toward the libertarian ideal possible.

A theory of spontaneous order is a first step, but only a first step, to understanding the process of cultural change.

Karen I. Vaughn
George Mason University

5. Roland Vaubel, "Comment on 'The Tradition of Spontaneous Order'"

Norman Barry's essay is extremely valuable in at least three respects:

it describes the evolution of thought about spontaneous orders;
it contrasts various versions of rationalist and anti-rationalist libertarianism; and
it subjects Hayek's theory to a number of revealing checks for consistency.

In my comments, I shall focus on the second and third of these aspects. In particular, I shall criticize and supplement the answers Barry gives to the following two questions: What is the role of reason in Hayek's theory of the evolution of legal order? And: What is Hayek's normative criterion in evaluating a legal order?

According to Barry, Hayek's "extreme anti-rationalism" (p. 46) . . . "is so distrustful of reason that it instructs us to submit blindly to a flow of events over which we can have little control" (p. 52). It is easy to find passages in Hayek's writings, especially in his later ones, which, taken by themselves, seem to support this interpretation. However, they have to be seen in the context. Remember, for example, what Hayek wrote, after his devastating attack on rationalist constructivism, in The Constitution of Liberty:

The reader will probably wonder by now what role there remains to be played by reason in the ordering of social affairs ... We have certainly not meant to imply ... that reason has no important positive task. Reason undoubtedly is man's most precious possession. Our argument is intended to show merely that it is not all powerful ... What we have attempted is a defense of reason against its abuse by those who do not understand the conditions of its effective functioning and continuous growth ... What we must learn to understand is ... that all our efforts to improve things must operate within a working whole which we cannot entirely control ... None of these conclusions are arguments against the use of reason, but only arguments against such uses as require any exclusive and coercive powers of government. (pp. 69-70)

Hayek is not generally distrustful of reason but he is not explicit about the positive role which reason can play in the evolution and improvement of the legal order. We are mainly told what reason cannot do and must not try to do, and that reason is not a sufficient or necessary condition for progress to occur. But Hayek does not deny that reason affects the evolution of social orders:

Our issue may now be pointed by asking whether ... human civilization is the product of human reason, or whether... we should regard human reason as the product of civilization. . . . Nobody will deny that the two phenomena constantly interact. ("Kinds of Rationalism," in: Studies in Philosophy, Politics and Economics, p. 186)

After all, human reasoning is nothing but the application of learnt rules to new circumstances and in new combinations.

For Hayek, the distinguishing characteristic of a spontaneous order is not that each or most of its rules have never deliberately been adopted but that it is the result of a gradual and decentralized evolution:

While the rules on which a spontaneous order rests may also be of spontaneous origin, this need not always be the case ... It is possible that an order which would still have to be described as spontaneous rests on rules which are entirely the result of deliberate design. (Law, Legislation and Liberty, Vol. 1, pp.45-46)

Even more, Hayek calls for deliberate attempts to improve our rules of just conduct:

Their gradual perfection will require the deliberate efforts of judges (or others learned in the law) who will improve the existing system by laying down new rules. Indeed, law as we know it could never have fully developed without such efforts of judges, or even the occasional intervention of a legislator to extricate it from the dead ends into which the gradual evolution may lead it, or to deal with altogether new problems. (Law, Legislation and Liberty, Vol. 1, p. 100)

Hayek certainly does not "instruct us to submit blindly to (the) flow of events" as Barry suggests. But the reason for Barry's misunderstanding is a general difficulty in interpreting Hayek: he is not careful to qualify his statements in the immediate context. Hayek is a writer on the offensive who rarely guards against misunderstanding and potential charges of inconsistency. He trusts that the reader will give him the benefit of the doubt and interpret separate statements of his as mutual qualifications rather than as contradictions.

Barry raises the important question whether the same process of spontaneous evolution can be thought to apply to economic processes under a system of legal rules and to the development of the legal rules themselves. I would answer that individual behavior and customary or contractual arrangements in production and exchange can be viewed as a private decentralized affair; however, an enforceable legal order is a collective or public good. Since Hayek tends to neglect this distinction, it seems reasonable to assume that he envisages the same type of evolutionary process for both economic practices and legal rules: a process that is driven by the interaction of human reason and random events and guided by imitation and procreation of the successful. Human reason proposes, the survival test disposes. Since legal rules cannot be tried by an individual on his own, they must at first be tested in voluntary small-group experiments:

Voluntary rules ... allow for gradual and experimental change. The existence of individuals and groups simultaneously observing partially different rules provides the opportunity for the selection of the more effective ones. (The Constitution of Liberty, p. 63)

What we wish to stress ... is ... the importance of the existence of numerous voluntary associations, not only for the particular purposes of those who share some common interest, but even for public purposes in the true sense. (Law, Legislation and Liberty, Vol. 2, p. 151)

We therefore arrive at an implicitly contractarian explanation of the legal order [1]: not constructivistic or holistic contractarianism à la Rousseau but evolutionary or piecemeal contractarianism.

In contrast, Hayek's ultimate normative criterion for evaluating a legal order is not contractarian (this distinguishes him from James M. Buchanan, for example). Nor is it true that Hayek regards the results of evolutionary, undesigned processes as necessarily good (as Barry seems to believe; pp. 12, 45-46). For Hayek, evolutionary and decentralized procedure is expressly not a sufficient but "merely" one necessary condition of progress (Law, Legislation and Liberty, Vol. 3, p. 168). Another necessary condition is that the chances of anyone selected at random are maximized:

Since rules of just conduct can affect only the chances of success of the efforts of men, the aim in altering or developing them should be to improve as much as possible the chances of anyone selected at random. (Law, Legislation and Liberty, Vol. 2, pp. 129-30)

Indeed, this maximization criterion seems to be a logically sufficient normative criterion which delegates the evolutionary (as well as any contractarian) principle to the status of auxiliary test, an operational indicator.

Hayek's maximization criterion is a probabilistic version of rule utilitarianism. It allows for the existence of risk (as did Bentham) and the need for rules (as did John Stuart Mill). Curiously enough, Hayek rejects utilitarianism at large in his more recent writings. In the mid-sixties, he had still called David Hume's moral philosophy a "legitimate form" of utilitarianism ("Kinds of Rationalism" in Studies in Philosophy, p. 88). Like any brand of consequentialist ethics, probabilistic rule utilitarianism requires the use of human reason - even if it is of the non-constructivistic type.

Notes

[1]For a reconciliation of Hayek's theory of evolution and James M. Buchanan's contractarian approach see the impressive analysis of Victor Vanberg, Liberaler Evolutionismus oder Vertragstheoretischer Konstitutionlismus. Tübingen: Walter Eucken Institut (Vorträge und Aufsätze, Nr. 80) J.C.B. Mohr, 1981, ISBN 3-16-344411-3.

Roland Vaubel
Institut für Weltwirtschaft
University of Kiel

6. Jeremy Shearmur, "Norman Barry: The Tradition of Spontaneous Order"

Norman Barry's bibliographical essay, "The Tradition of Spontaneous Order" was both erudite and stimulating, and it will be an important source for all who work in this area in the future. In reading it, however, I was struck by certain obvious (but inevitable) gaps - most notable among which were Burke, and Savigny and the German historical school. It also provoked a few reactions, some of which I describe, briefly, below.

1. Interventionism and the Breakdown of Spontaneous Order in Smith and in Hayek

1.1 Smith, Virtue and Commercial Society

Barry quoted Adam Smith on the fatal dissolution that awaits every state and constitution whatever,'[1] but he made no more of it than to say that 'the explanation of spontaneous order in the noneconomic sphere may slip unintentionally into a kind of determinism.' But the 'fatal dissolution' theme in fact goes with the concern about the 'inadequacies' of a commercial system, and the misgivings about its impact on civic virtue, that Barry discusses in connection with both Ferguson and Smith. It is all, I think, most plausibly understood as the tail-end of the 'civic humanist' tradition, stemming from the works of Polybius and Machiavelli, and then influential in the work of many other figures in the history of political thought.[2]

The civic humanist tradition included the theme of the cyclical development of constitutional orders, and of each 'good' constitutional form in time becoming corrupt, and declining into its corresponding 'bad' form; but where there is a possibility that this corruption, and thus the decline, might be halted through the actions of a 'statesman.' This theme, it seems to me, is both echoed and transformed not only in Smith and Ferguson's depictions of the disadvantages of commercial society, but also in the interventionism that Smith produces in response,[3] much of which may, I think, be seen as an attempt to safeguard virtue in the face of the corrupting influences of commercial society.

1.2 Hayek and the Self-Destruction of a Free Society

Barry rightly emphasizes Hayek's concern about the breakdown of a cosmos under the impact of interventionism. What is not, perhaps, adequately stressed is the way in which a free society could, on Hayek's account, be expected to break down of its own accord.[4] For Hayek, following Mandeville and Hume, emphasizes that a free society depends, crucially, for its functioning, on arrangements (including both the market itself and the legal order appropriate to it) some features of which will strike the individual members of that society as unfair or undesirable. If they could understand how these mechanisms function, Hayek thinks, they would see that all is for the best. But Hayek, here following the Scottish Historical School, takes a realistically skeptical view about the role of human reason in society. In Hayek's view, the individual's compliance with these institutions was earlier achieved through the influence of custom and uncritically accepted religious belief. But the power of these has, Hayek thinks, been weakened by the development of the market order itself - which, indeed, could be described as having created the social preconditions for the possible practice of Hayek's false individualism.

Hayek believes that, for a free society to flourish - or even for it to continue in existence - individuals must take up an attitude of 'humility'[5] toward the various social forces and processes which they do not understand, but which play a positive role in a free society. But how, on Hayek's account, is it possible for them to know which are the forces etc. before which they should be humble? Hayek certainly does not advocate a general attitude of the passive acceptance of existing arrangements, and, in some areas, he is all in favor of innovation and change. But how is the individual member of society supposed to tell which elements of his heritage are to be conserved and which overthrown? Here, Hayek seems to oscillate between a view which plays up the role of ideas in society and the possibility of a rational understanding of how society functions (at least for the 'intellectual'), and a view which emphasizes the role of the customary, the traditional and the tacit. It is difficult to see how any resolution of this problem can be offered within the compass of Hayek's work, and I think that it is a more general problem for libertarianism, too.

2. Methodology vs. Political Economy in Hayek

In his discussion on Hayek on 'The Free Exchange System,' Barry mentions the way in which "in the work of G.L.S. Shackle and Ludwig Lachmann ... the spontaneous emergence of order may only be a chance phenomenon;" and he suggests that "In Hayek's early work on the theory of market process ... The assumption was that a catallaxy was leading towards equilibrium rather than being moved away by endogenous factors."[6]

These ideas are crucial to Hayek's work - for just consider to what extent, in his political writings, he rests his case on claims about what the market order will deliver. Barry tells us that "there are certain identifiable causal factors at work which bring about this equilibrating tendency, namely competition and entrepreneurship."[7] But do they actually do the trick, and can one show that a market order will do what Hayek requires of it on the basis of his views about the methodological foundations of economics? This seems to me very much an open question, and one that it is a matter of some urgency for the friends of liberty to answer.

3. Menger vs. Hayek on Spontaneous Order

Barry has, importantly, drawn attention to Menger as a theorist of spontaneous order (as well as of methodology and economics), and he has also pointed to the distinctive character of Menger's views here.[8] Menger, one might say, stands between Savigny and the radical individualist. He appreciates the historical school's emphasis on the undesigned character of law, but he thinks little of their theoretical explanations of it, and, while dismissing the 'pragmatism' of the radical individualists,[9] he demands that our heritage from the past be submitted to critical scrutiny.

In describing these views, Barry takes pains to contrast them with those of Hayek. But is this correct? For while, certainly, in some of Hayek's writings he seems to speak as if the deliverances of various 'evolutionary' processes should simply be uncritically accepted, this can be matched by passages in which he demands that inherited legal institutions should be rationally appraised to see if they do, indeed, comply with the requirements of a (classical) liberal order. As these latter ideas are found notably in some of Hayek's earlier writings, it might be tempting to suggest that there is a development in Hayek's views here. But the two themes occur sufficiently often in writings of the same period, or even in the same works, for it to be unavoidable, I think, for us to admit that Hayek emphasizes both rational criticism and evolutionary themes at once. And his plans for radical constitutional reform - emphasized in some of his most recent writings - rule out the possibility that, in his later work, reason becomes collapsed into 'evolutionary' social developments.[10]

It would seem to me, rather, that we must accept that both of these themes are there (at least in parallel - as was also the case in Menger [11]), and I would suggest that, despite their differences on many other points, our best hope of an overall interpretation might be to follow up Hayek's references to Popper's critical rationalism, which does offer us a promise that traditionalism and the demand for rational critical scrutiny may be combined. [12]

Notes

[1] Barry, p. 28, citing Smith's Lectures on Jurisprudence; note that this theme of the decline of all constitutions is found also in the work of Hutcheson.

[2] Cp., on all this, J.G.A. Pocock, The Machiavellian Moment, and, for some discussion of its relation to Smith, D. Winch, Adam Smith's Politics.

[3] See, on this, Jacob Viner's classic 'Adam Smith and Laissez-Faire,' and, for some brief discussion of the interpretation hinted at in this section, my pamphlet, Adam Smith's Second Thoughts, Adam Smith Club, London, 1982.

[4] Cp. my 'Abstract Institutions in an Open Society,' in Wittgenstein, The Vienna Circle and Critical Rationalism, ed. H. Berghel & Others, Hölder-Pichler-Tempsky, Vienna, 1979, pp. 349-54.

[5] See Hayek, 'Individualism True and False,' in Individualism and Economic Order, p. 32.

[6] Barry, p. 37.

[7] Barry, p. 37.

[8] See, for further references and discussion, and a fuller defence of the views advanced in this section, my 'The Austrian Connection: Carl Menger and the Thought of F.A. von Hayek,' in B. Smith and W. Grassl (eds.), Austrian Philosophy and Austrian Politics, Philosophia Verlag, Munich, forthcoming.

[9] In which respect he is very close to Hayek's dismissal of 'false' individualism.

[10] Compare here, however, the contrasting claim made in E.F. Miller's most interesting 'The Cognitive Basis of Hayek's Political Thought' in R.L. Cunningham (ed.), Liberty and the Rule of Law.

[11] Note the way in which the ideas in the text of the Untersuchungen and in Appendix VII are, at least prima facie, in contrast with one another.

[12] In this connection, one should look at Popper's 'Towards a Rational Theory of Tradition' in his Conjectures and Refutations, and its parallels with his ideas about 'background knowledge,' and the priority of 'dogmatism' over 'criticism' from a genetic point of view, as brought out in Popper's autobiography Uended Quest, rather than the more radical Open Society.

Jeremy Shearmur
Dept. of Government
University of Manchester, England

7. David Gordon, "Comments on 'The Tradition of Spontaneous Order'"

Norman Barry's article "The Tradition of Spontaneous Order" (Literature of Liberty, Summer, 1982) seems to me a most perceptive analysis: it is easily the best survey of its topic which has appeared.

There are, however, one or two points at which I should be inclined to portray matters differently from Barry. Before presenting these, however, I should emphasize that these do not detract from my admiration of Barry's essay.

First, if a spontaneous order is defined as one that is not planned by a single mind but, rather one that emerges from the coordinated actions of the actors in a social system, it is not evident why only individuals can form such an order. Suppose, contrary to methodological individualism, that there are emergent laws for societies composed of more than a few individuals, which cannot in principle be reduced to the actions (planned or unplanned) of the individuals who compose that society. Why would the existence of such laws preclude the existence of spontaneous orders derived from individual actions in just the manner Barry sets out? I am not sure whether my last remark involves any difference of opinion with Barry. He says, "It is a major contention of the theory of spontaneous order that the aggregate structure it investigates are the outcomes of the actions of individuals," (pp. 8-9). This does not claim that the spontaneous order tradition rejects all social laws not conforming to the requirements of methodological individualism: it is only that spontaneous orders must be reducible to individuals' actions. Without criticizing methodological individualism, I would question whether the truth of spontaneous order theories rests on the truth of that methodology.

Another point, raised by Barry's excellent discussion of Carl Menger, is whether the results which have arisen from a spontaneous order can also come about as the result of consciously planned action. Menger, whose explanation of the origin of money is a paradigm case of spontaneous order held, according to Barry, that money need not arise by the spontaneous process he described: "Against the rationalist explanation [that money arose by specific agreement] Menger argues that, although money can and has come about in this way, the institution can be accounted for by natural processes." (p. 32) There is an interesting contrast here with Ludwig von Mises who in The Theory of Money and Credit and Human Action maintains that money must arise by a spontaneous process. Also, Hayek wants to say not only that production can be coordinated spontaneously by the market but that a centrally directed economy is incapable of such coordination.

The question then arises, does one want to make it a requirement of a spontaneous order theory that the order which has arisen spontaneously could not have done so otherwise? If one does, in what sense of "could not"? Must it be logically impossible? And, if one does not impose such a requirement, must one at least hold that a particular result is much more likely to have emerged spontaneously than otherwise?

Raising this question involves no dissent from Barry's analysis. But at one point he does seem to me to be in error. He distinguishes two sorts of explanations of social structure that involve no reference to conscious design. "One version shows how institutions and practices can emerge in a causal-genetic manner while the other shows how they in fact survive." (p. 11) As an example of what he has in mind, Barry contrasts a market system, governed by the price mechanism, with the evolution of a legal system, in which "it is not obviously the case that there is an equivalent mechanism to produce that legal and political order which is required for the co-ordination of individual order." (p. 11)

I fail to see why Barry thinks that evolutionary model doesn't provide a mechanism for the emergence of spontaneous order. In the example of the evolution of legal systems, the argument is that societies with legal systems which succeed in coordinating individual actions will, other things being equal, have a greater chance at survival than societies without such systems. Granted that some societies have better coordinated legal systems than others at the start; differential survival explains why the systems present in these societies will spread.

The mechanism here seems quite analogous to the price system, in which firms which fail to produce what the consumers demand (or at least do so to a lesser extent than others) tend to fall by the wayside. The emergence of a market order where one does not exist, is also a process that takes time.

Perhaps Barry's argument, though, is that for the case of the legal system, one hasn't been given explanation of the way in which the legal system that eventually triumphs has arisen. (Just as in biological evolution the mechanism of natural selection doesn't explain the emergence of genetic variance.) This is perfectly true, but, once more, how is this case different for the price system? The process of market coordination does not explain the original pricing and output decisions of the firms in an economy. It explains, rather, why firms which have made the "right" decisions supplant those which have not.

Barry is of course right that the legal system that emerges through "survival of the fittest" may not be conducive to classical liberalism (or at least one needs some argument to show that there must be such a correspondence. One possibility is that since market economies tend to survive better than non-market societies, which cannot coordinate the knowledge in society, a legal system conducive to market order will have a significant evolutionary advantage.) But this does not show that there isn't a mechanism for the emergence of a legal order (I'm not clear whether Barry intends to deny this in his discussion on pp. 11-12).

Finally, Barry successfully avoids a frequent error about the relation of spontaneous orders to ethics. He says, "There is, of course, implicit in all the writers in this tradition the notion of an ethical payoff: that is, we are likely to enjoy beneficial consequences by cultivating spontaneous mechanisms and by treating the claims of an unaided reason with some skepticism." (p. 11) The argument, in other words, is that spontaneous orders lead to better results: it isn't that a spontaneous order is, as such, ethically superior to planned order.

This may seem obvious, yet I have heard it argued that if the minimal state of Robert Nozick's Anarchy, State, and Utopia arose through a non-spontaneous process (e.g., people agreeing to cut down an existing state) its moral validity would be placed in question. It isn't at any rate obvious why a conscious agreement is morally inferior to a spontaneous order. It might be said that with a spontaneous order, at least one knows that the actions of the constituent individuals haven't been coerced. But this is wrong: why can't coerced actions be the subject of invisible-hand explanations? And agreements, on the other side, can be entirely voluntary. Barry evidently disagrees with the first part of this, as he apparently (p. 11) makes it a requirement of a spontaneous order that it operate on uncoerced actions. But he gives no reason for this.

In conclusion, Professor Barry is to be congratulated for his outstanding article. To readers of his previous works, the excellence of the present essay will come as no surprise.

David Gordon
Los Angeles