TMA 02 - 8/4/98J.P.BIRCHALL PO194869
Set out and assess what the writers of the New Right contribute to our understanding of contemporary liberal democracy.
A problem for democracy is organising participation in essential co-operative activities when citizens have different beliefs. This problem becomes acute when valuable economies of scale of the nation state involve massive complexity. The liberal democratic tradition of delegating decisions to elected representatives can disenfranchise minorities as became apparent during the uprisings of 1968. Furthermore the incapacity of the state to efficiently organise the collective activities of citizens was a factor culminating in the revolutions of 1989.
Until the mid 1960’s representative liberal democracies and efficient hierarchical bureaucracies gave the nation state some credibilitywhich was enhanced by Keynes’ theory of macro management of large complex economies.
But the crises of 1968 and 1989 posed a dilemma, was the state anillegitimate vehicle for democracy or was it incapable of coping with complexity? The New Right with ideas which had been rumbling for centuries suggested the state was both illegitimate and incapable.
Illegitimate because majority decisions could be just as tyrannical as authoritarianism if minorities were oppressed.
Incapable because the state does not have the necessary knowledge to act on behalf of its citizens and cannot secure the compliance of a sceptical population.
The New Right hadsome success in demolishing the theory and practice of socialism but made little progress in establishing markets as a credible alternative.
Contemporary liberal democracy,with its reliance on the nation state, was in crisis in the 1980’s.
The main contribution of the New Right to our understanding of contemporary liberal democracy was to expose socialism as both undemocratic and ineffective. Socialism was defined as - using the state as an instrument for the organisation and control of society (1). The socialist ‘vision’ of a free and equal society with opportunities for the under privileged was not attacked;every one concurs with ‘motherhood’,. The quarrel was with the use of the state to achieve the objective.
The arguments of the New Right were twofold.
Firstly, with unconstrained democratic government 51% can vote themselvesprivilegesand charge the cost to the 49%. As Thompson suggests -
‘If parties are going to attract voters, they will increase government expenditure and offer, as an incentive, a more generous provision of public goods than is optimal. Voters discount the cost,everyone hoping that others will pay.’ (2).
Tyranny reappeared in sheep’s clothing as ‘majoritarianism’. Majorities could be just as oppressive as Bishops, Princes or Generals, the socialist state was not democratic, majority rule must be constrained by law.
Secondly, organisation and control by command cannot work because the state has neither the detailed knowledge to instruct nor the means of ensuring instructions are followed. Thompson again -
‘The ability of the Government to enforce its objectives is undermined by its relative lack of knowledge and by adverse incentive structures.’ (2).
State intervention must be minimised and the market extended and deepened.
John Stuart Mill’s liberal democratic ideas posed similar questions. Firstly, where is the boundary between individual freedom and harm to others and secondly, where is the line drawn between state and society?
The New Right’s criticism of what ‘is’ in terms of failure of the state was far more persuasive than their proposal for what ‘ought’ to be.
If markets were a viable alternative to command in ameliorating intractable problems of participation and co-ordination, the way forward was succinctly summarised by Thompson -
‘Define property rights and develop competitive markets so that previously public or merit goods and externalities were ‘internalised’ and supplied exclusively as private goods.’ (2).
However these proposals were controversial and Held’s criticisms encapsulate the problem -
‘The idea that modern society could approximate to a world where producers and consumers meet on an equal basis seems unrealistic when massive asymmetries of power and resources are not only systematically reproduced by the market economy but buttressed by liberal democratic governments themselves …. this neglects the distorting nature of economic power in relation to democracy. Leaving the market to solve fundamental problems of resource generation and allocation misses entirely the deep roots of many economic and political difficulties.’ (3).
These reiterate the Marxist criticisms of liberal democracy.
Held adds a further pertinent criticism -
‘Hayek removes certain critical issues from politics, to treat them as if they were not a proper subject for political action. This attempt to eradicate a range of questions from democratic consideration would drastically restrict the sphere of democratic control.’ (3).
Here Held is confusing politics with democracy (1). Removing critical issues from politics is exactly what Hayek was proposing! He was following the lead of the American Constitution where, in the interests of democracy, the Bill of Rights excludes politics from all but agreed delegated government tasks –
‘the enumeration of certain rights shall not be construed to deny others retained by the people.’ (4).
The New Right failed to confront these two widely held and highly plausible criticisms which Held articulated - the capacity to participate in markets is restricted by exploitation of economic power and hard collective decisions must be organised and cannot be ignored.
The defence was weak - markets don’t get it right, they simply provide an better solution than the alternative of state intervention.
However the defence of markets is not easy because of the counter intuitive nature evolution and self organisation! We are imprisoned by our beliefs.
The problem concerns the plausibility of ‘conspiracy by design’ and the incredibility of progressing through the ‘cock ups of evolution’. Rational man plans improvements but evolution tests alternatives most of which are failures!
Both Hayek and Nozick recognised the relevance of evolution but they failed to put together a coherent exposition in the context of democracy.
Hayek -
‘Extended order of human interaction comes into existence through a process of variation, winnowing and shifting, far surpassing our vision or our capacity to design.’ (5).
Similarly Nozick postulates the need for an evolutionary process –
‘It is enormously unlikely that, even if there were an ideal society, it could be arrived at in an a priori fashion. A filtering process is appropriate where designers have limited knowledge, involving a variable method of generating new candidates and the quality of members remaining after previous filtering operations improves.’ (6).
The first issue that the New Right failed to confront was the exploitative power of capital.
The difficulty is the counterintuitive nature of capital as part of anevolutionary process. The value of capital depends on profitable investments which require widespread co-operation for success.
This weeks Sunday Times quotes David Landes and exposes the mercantilist fallacy of capital –
‘All that silver and gold! But easy wealth is bad for you. Spain boasted that it did not have to make things; it could buy them. So it grew poor, and it was those countries that made things that ended up with the treasure!’ (7).
SimilarlyPeter Mathiasand many others –
‘The mercantilist thesis is irrational, the accumulation of capital is a plot against the interests of the market.’ (8).
Making things with profitable processes involves creative innovation and less tangible human and social capital. Unlike financial capital, access to human and social capital is not owned and cannot be controlled.
Profitable processes will always be unevenly distributed because no one can determine in advance which people or cultures will come up with the good ideas.
Good ideas will always attract financial capital because of the irresistible opportunity to share in the profits.
The final nail in the mercantilist coffin is that it is in the interests of owners of capital to spread participation as widely as possible because the benefits of scale, synergy, specialisation, science, investment, imitation and innovation all increase with greater participation and co-operation.
The second issue the New Right failed to confront was self organisation.
The difficulty, again, is the counterintuitive nature of self organisation. The state is unnecessary for the co-ordination of democracy.
Ongoing research at the Santa Fe Institute, stresses self organisation builds evolution and extended order - ‘local activity generates global order’ (9).
Democracy seldom needs state involvement, the evidence can be seen by everybody in everyday activities in the myriad co-operative organisations of society – families, neighbourhoods, clubs, clans, companies, partnerships, associations, societies, churches, charities, unions, co-operatives, trusts, interest groups, networks … Self organised self control by the citizens without the state.
Held again –
‘Institutions of direct democracy or self management cannot simply replace the state; for, as Weber predicted, they leave a co-ordination vacuum readily filled by bureaucracy.’ (3).
But there is no co-ordination vacuum. Evolutiondemonstrates how this ‘co-ordination vacuum’ is always filled by self organising co-operative groups.
Any objective assessment of New Right’s contribution acknowledges a powerful critique of socialism but a failure to meet head on the criticisms of markets.
Markets remain deeply distrusted and unfair, few appreciate the fundamental driving forces of evolutionary progress. Random differences, self organisation, inherited success and differential survival are necessary parts of the process. The ‘unfair’inequalities, winners and losers are the fuel of evolution, where ‘fairness’is decided not by Bishops, Princes, Generals or majorities but by each and everyone of us in our daily choices as autonomous agents.
Above all the New Right failed to justify the morality of markets. Thompson spells it out–
‘A non political means of assigning incomes needs to be established as a social norm. Perhaps not unexpectedly, it is the market system itself which is seen to offer the most attractive extra political system, in as much as the market assigns incomes in an acceptable manner (because no majority of voters can be found to overthrow it) and it remains a stable system (in that it does not fall apart of its own volition).’ (2).
Belief in the evolutionary role of capital in markets and self organisation without command are both counter intuitive.Darwin was well aware of the implausible nature of the problem, ‘It is an awful stretcher to believe a peacock’s tail was so formed, but it was …’.
And as Schumpeter emphasised -
‘the essential point to grasp is that, in dealing with capitalism, we are dealing with an evolutionary process …’(10).
If not, the only alternative is design by command with the uncomfortable questions about the source of knowledge and the process of compliance.
Acceptance of markets depends on a belief that they are fair and capable of self organisation. This in turn depends on the evolutionary imperative that any system which systematically exploits the majority of its citizens will not deliver co-operative behaviour which is essential for all modern industrial societies to survive. Such a system would be evolutionarily unstable and would simply not survive.
The New Right’s references to evolution are a confusing false analogy without a normative basis of what democracy ought to be and its underpinning morality.
The normative position is now being developed outside of politics suggesting the basis of democracy should be the result of actively speeding up evolution. Evaluating a diversity of ideas about society against alternatives. Those ideas with the greatest survival value will become dominant. Survival value is not decided by philosopher Kings but by the rigors of reality.
Furthermore the moral justification for this is that survival value depends on the widest possible participation because of the process benefits of co-operation.
The global evidence that the state itself generates inequality and economic exploitation through command is accumulating as disenfranchised and disillusioned people turn away from the state to democratic markets and self organisation in a diversity of citizens associations.
A non political means of allocating resources is being established as self organised markets,trading in human and social capital, are equalising it around the globe. The politics of the New Right has not articulated this position.
Stephen Hawking has got much closer to reality and a normative statement about democracy –
‘Some individuals are better able than others to draw the right conclusions about the world around them and act accordingly. These individuals will be more likely to survive and reproduce and so their pattern of behaviour and thought will become dominant.’ (11).
(1)The Pocket Oxford Dictionary (1969), Oxford University Press.
(2)Grahame Thompson (1997) - D245 Unit 9 & Unit 16, Open University.
(3)David Held (1996) – Models of Democracy, Polity Press.
(4)The Constitution of The United States of America (1791) - 9th Amendment.
(5)Friedrich Hayek (1988) - The Fatal Conceit, Routledge.
(6)Robert Nozick (1974) - Anarchy, State & Utopia, Basic Books.
(7)David Landes (1998) -The Wealth and Poverty of Nations, Little Brown.
(8)Peter Mathias (1969) -The First Industrial Nation, an economic history of Britain 1700-1914, Methuen & Co.
(9)Roger Lewin (1993) -Complexity, Macmillan.
(10)Joseph Schumpeter (1943) -Capitalism, Socialism and Democracy, George Allen & Unwin.
(11)Stephen Hawking (1988) - A Brief History Of Time, Space Time Publications.
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