Tuesday, June 1, 2010

Pessimism and Anti-State Politics

My comments for today's panel at CPSA:

My project is to try to flesh out a neo-Marxian politics using resources from institutional and new institutional economics. I begin from the hypothesis that human beings are evil. I try to be a little deflationary about this; when I say we are evil, I do not mean that we are malicious – though we can be – but only that we are not very good cooperators. This is because we are, at least potentially, a) prudentially rational agents, b) who act independently of one another, but c) who are dependent on one another for realizing our desired outcomes. In other words, we face the persistent threat of coordination problems.

This specter of coordination problems does not always arrive Рcollective action happens Рbut it is a real enough threat that we cannot, in principle, rule out the possibility of prudentially rational opportunism (free-riding, defection, rent-seeking, moral hazard, etc.) in our considerations of institutional design. The threat amounts to a divergence between the common good and the good achievable by the independent actions of prudentially rational agents. Any approach to collective action that does not take this threat into account in the structure and working rules it proposes for institutions seems, by that very fact, to convict itself of criminal naivet̩ by entrusting the entire existence of the proposed institutions to the care of good fortune alone. My essay tests various approaches to collective action by this criterion of naivet̩.


Taking evil for granted allows me summarily to dismiss or bracket the spontaneous order theories offered up by admirers of market exchange from Smith to Hayek and beyond. These theories maintain either a) that collective action is pernicious, since the common good can only ever be the outcome of independent actions undertaken by prudentially rational agents, or else b) that collective action is impossible, since every conceivable institution is analyzable into the aggregate outcome of independent actions undertaken by prudentially rational agents. Both versions entail the denial of my hypothesis within the sphere of transactions governed by spontaneous order. The presence of spontaneous order within a domain means there is, for that domain, no problem of human evil, since coordination problems are either a) produced by the encroachment upon this domain of spontaneous order by some external principle (e.g., coercion) or else b) impossible. For my purpose here, I can be agnostic about the scope – either actual or proper – of spontaneous order, at least up to a point. There may be a great deal, there may be none at all; I insist only that spontaneous order does not govern the whole of the human condition. Even if the market is or should be very large, there are at least some transactions that cannot be included in it. Whatever transactions take place outside the market are within the domain of institutional order, where coordination is a problem, and evil must be taken seriously.

My next question is: can we conceive of this domain of institutional order as consisting, in whole or in part, of the state? I think not. Despite its self-proclaimed pessimism, from Hobbes to Schmitt, state theory is, it seems to me, thoroughly and optimistically moralistic, in the precise sense that the state presupposes dutiful, and hence non-opportunistic subjects. The lynch-pin of my argument here is Hobbes’ own wonderfully incisive question from Behemoth: “If men know not their duty, what is there that can force them to obey the laws? An army, you will say. But what shall force the army?” The subject’s recognition of the state as sovereign means nothing other than this: the subject alienates his or her prudential judgment to the state, pre-committing him- or herself to override the counsel of prudential rationality whenever this conflicts with the laws or decrees handed down from the sovereign. This pre-commitment is the consent to be governed that in fact grounds and makes possible the sovereign’s power of the sword, since, as the Hobbes makes clear, this “de facto” power is nothing other than the army’s own de jure consent to be governed. Consequently, the state can be no part of the institutional domain of human life for the simple reason that, being unable to rule out the possibility of prudentially rational opportunism, we cannot make the transition from the state of nature to the civil state. The only institutions available to us, on my hypothesis, are what Hobbes refers to as “irregular systems” or “leagues,” held together by nothing more than prudential rationality itself.

The question is: given how bad we are at cooperating, how are such purely prudential institutions possible?

In order to talk about institutional arrangements divorced from both the spontaneous order of the market and the moral order of the state I avail myself of the theory of the firm as it has developed from Coase through the new institutional economics of Williamson and Ostrom. The theory of the firm originated in the twin realizations that a) conducting a transaction on the market has costs, and that b) sometimes accessing the market costs more than it is worth. Once transaction costs – the time and effort it takes to enter the market – are figured into the equation, hierarchy, personal relationships, and long-term contracts – the prudential order of the firm – might be more efficient than a series of competitive market transactions. This framework might explain how a set of merely prudential institutions would arise and persist outside the sphere of the market.

However, I think there are two problems with the theory of the firm (as it is articulated by Coase and Williamson, at least).

First, both Coase and Williamson carry over to the analysis of the firm the marginal utility framework of perfectly competitive markets. This allows both to say that firms are not only more efficient than the market transactions they replace, but efficient tout court; wherever any transaction can be most cheaply carried out, that is just where it will be carried out. This just-so story is completely unwarranted, I think. Some of the very transaction costs that motivate the move to firms in the first place constitute opaque barriers to any judgment that all transactions are being carried out just where they should be. There is no reason to suppose that prudential institutions are, in any given case, better homes for the transactions they encompass than the market or other possible or actual institutions.

Second, even – indeed, especially – if firms are supposed to be efficient institutions, the threat of coordination problems would seem to militate against prudentially rational agents being able to provide themselves with such institutions, since they would constitute public goods susceptible to all the problems of supply familiar to students of collective action dilemmas. This reinforces the conclusion that existing institutions are unlikely to be efficient. The very fact that an institution exists indicates that it is probably not a rationally efficient institution.

Such institutions – organized by non-obligatory directive authority – do exist. Hence, the state of nature is not the war of all against all. Moreover, even if we have good reason to doubt they are efficient, these institutions do frequently exhibit a stability that could only signify some degree of support from opportunistic calculation. What we lack, as Elinor Ostrom has pointed out, is a “theory that would identify the mechanisms by which a group of individuals could organize themselves” into such irregular associations.

However, I do not think this lack of a theory is a problem – except, maybe, for theoreticians. Implementing the right institution for a given situation does not depend in any way on applying a theory of institutions. Indeed, I think that any such theory would have the same structure, and be inadmissible on the same grounds, as the Hobbesian theory of the state. It would, it seems to me, look something like Rawls’ original essay on “Justice as Fairness” and would comprise a principle or set of principles according to which the working rules of institutions would be formulated as rules binding for members, or meta-rules governing the proposal and emendation of institutional rules. But this framework of meta-rules or principles asks members of an institution always to interact with the prudential rules of their institution via the principles of institutions, and never to subordinate these principles to the prudential considerations motivating the particular institutional rules. This is exactly Hobbes’ move. It makes institutional membership contingent on deferring one’s prudential judgment to the principles of institutions, thereby rendering the institution a moral rather than a prudential order. This appeal from prudential to moral rationality is ruled out by my hypothesis. Therefore, I think any normative theory of institutions will, when it comes to proposing and refining institutional rules, run aground on the threat posed by prudentially rational opportunism. Only actual practices of institution formation and reform can look this human evil in the eye.

6 comments:

anotherpanacea said...

I think this is very good. Bravo for taking up institutional economics, even if briefly.

There are two places where I had to reread several times to make sure I was following (the paragraph on spontaneous order and the final paragraph) but I think I do follow and agree.

On the final point: why should we believe that our acceptance of non-obligatory directives are either prudential or moral? It seems that they might be neither, an impulse that drives us to respect authority and seek in-group solidarity. (Unless you would call that moral.)

Actually, perhaps I don't quite understand your final paragraph.... I do find myself wanting the theory of group cohesion Ostrom identifies in order to ground both further theorizing about institutional design AND plans for radical action. For instance, I take Arendt to be using something like this organizational analysis in her civic republican rejections of certain activist and revolutionary projects. If she's wrong (which she may well be) it'll be because she misapprehends the mechanisms of affiliation and inter-institutional relation. (For instance, her claims about the perniciousness of politicizing transfer payments.) That suggests that the Ostrom theory is still very much desirable.

Will Roberts said...

Josh, I don't think our acceptance of non-obligatory directives is moral -- by non-obligatory I mean precisely non-moral. I think such acceptance is prudential, even if frequently foolish or short-sighted or deluded, in the sense that it is within the realm of prudential rationality, where we relate means to ends and try to make our way as best we can given our concerns.

As for the role of theory, my moderator asked basically the same question, and I said that I think political theory should be much more partisan, engaged, and locally-historically informed. Implicit in this is that I don't think it should be neo-Kantian.

anotherpanacea said...

Re: our acceptance of non-obligatory directives, I guess I'm think of something that's *neither* moral *nor* prudential. Call it pre-prudential: human beings, like other primates, group together and play status and dominance games by nature. (I'd call at least the latter fact immoral, but it's a background fact that establishes the prudential calculus without itself being prudential.)

As for theory, well... I can understand your rejection of neo-Kantian political philosophy, but I don't think the empirically-grounded theory Ostrom is looking for falls under the same rubric. More to the point, it seems like we need some theory so we know which side to choose when we're being partisan and engaged.

Will Roberts said...

You're right about the existence of a pre-prudential sphere of community and authority (thought I don't think there's anything immoral about it -- amoral, though). I just don't think we can take any refuge in pre-prudential sociality, since one of the things language allows us to do is negate any community, however 'natural'. (I'm following Paolo Virno here.)

As for theory, there are two issues here. First, Ostrom tries to elaborate a theory of institutional formation only in the sense of outlining prudential maxims that, on the basis of her empirical studies, seem to go hand-in-hand with successful self-organization among people exploiting a common-property resource. I'm all for that sort of thing.

Second, I'm less worried about knowing how to pick sides than about proceeding intelligently once we have picked sides. I want my enemies to be prudent, too.

anotherpanacea said...

I don't know Virno's work, but it seems pretty clear that while we can negate any particular community, we can't negate those communities for all their members nor negate affiliation or deference as such. I'm not sure, but you seem to be suggesting this in your rejection of picking sides "knowingly": factions aren't volitional. Too often, sides pick us. I think that inability to fully control our affiliations and deferences leads to tremendous injustice, but in a way that doesn't quite live up to the 'ought entails can' of ordinary practical reason.

Second, what you're calling Ostrom's prudential maxims strike me as precisely the needed theory. For instance, one of the requirements of common property regimes is apparently shared authority to shame interlopers, which only functions in communities small enough to eliminate anonymity. That's a pretty big theoretical restriction when you're talking global justice!

If you're rejecting Ostrom's empirical institutional work as a theory because it depends on comparative analysis and doesn't proceed from axioms through valid deduction to conclusions the way some form of rational expectations model does, I think you're holding theory up to an impossible standard.

Will Roberts said...

I'm not rejecting Ostrom's work -- I'm endorsing it and wanting more like it! It's not normative theory, though, and can't be made into normative theory, or ground a normative theory, or anything of that sort. And I'm fine with that, too!

I don't think sides pick us "too often," and I don't see how our "inability to fully control our affiliations and deferences leads to tremendous injustice." What do you mean? My concern is with those who would simply valorize our "natural" affiliations and communities and old them up as a bulwark against the market or whatever. No spontaneous "community of the heart" is immune to prudential opportunism, so caring for those close to us is no substitute for good institutions.

And, finally, I'm not talking about global justice. Indeed, I don't know how to talk about global justice -- the very phrase sounds like gobbledygook, or like corporate lingo. Global justice: the "excellence in best practices" of political philosophy!