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 January, 2005 |
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An Interview With Charles Lindblom
Employing executive privilege, I'll ask the first question. Taking advantage of today's news, John Kerry's pick for VP, John Edwards is a foe of NAFTA while Kerry voted for it. Obviously Kerry's position will hold, but how do you think they might reconcile that difference to benefit both the ticket and our future in the North Atlantic community? Participant I've been thinking over the
years of a "market-driven economic system" as sort of an ideal,
or model, as if it were the foundation of only good things. More recently,
I've been impressed with the extent to which advertising (some of it nearly
fraudulent) manipulates market demand. I'm interested in your opinions
about the purity of market demand as the controlling factor in "market
systems in our political economy". I doubt Kerry and Edwards will achieve any productive reconciliation, and their differences on NAFTA will continue to sound their note of discord. Of course both will rely on imprecision and ambiguity to hide the embarrassment of their differences, as is common in politics, though I sometimes wonder if Kerry will even notice it, so out of touch he often seems, his smile replacing thoughtful engagement. More consequential is an opportunity
they will let pass by. Market system free trade as a general policy over
the long run is almost invulnerable--for reasons as old as Adam Smith,
never effectively dismissed (and grist for our mill, if anyone wants to
probe in that direction). On the other hand, it is brutal, destroying
whole industries and occupations, and livelihood in the process of adjustment
to ever changing demands and technologies, all the more so when the market
system is now more global than national. Many transitional protective
moves or special efforts like NAFTA will be badly designed and executed.
The big, great, mammoth, and largely unsolved problem is how to get the
riches of free trade with a reduction of the transitional hardships, such
as those represented by the death of an industry. Kerry, with his interest
in free trade, and Edwards with his appreciation of the transition costs
of endless market adjustments and of the crudities of many of our attempts
to cope with them, could together begin to give us some ideas and leadership,
because between the two of them they see the whole problem and, I am fairly
sure, are in conflict because so far each are attending to only half the
problem. What an opportunity for the U. S, the North Atlantic Community,
and the world! What are the chances they will seize it? Almost zero; greater,
however, than chances that the Republicans will seize it. How do we protect journalism,
and the other professions--health, education, science, writing, psychology,
etc.--from falling victim to and becoming collaborators with the most
exploitative activities of the market system? Aren't we lost if we don't?
My experience as government official is that there is no stronger opponent to genuine marketplace free private enterprise competition than the business community. Most government licensing and regulation has come about at the request of business, not over its opposition ("get the government off our backs"). I, by contrast, rather like it as a way of serving "the public interest" (to borrow my old FCC's vacuous pole star phrase)--when and where it has survived the efforts of business to kill it off. (So far as I can tell our local grocery stores compete on price, offer a staggering array of food (and chemical) choices, fairly good service (one advertises, and for the most part provides, "a smile in every aisle"), and run on relatively narrow profit margins.) (Of course, that only speaks to the "public interest" of consumers, not the stores' underpaid and otherwise abused workers, the bankrupt farmers who get less for the grain in the cereal box than the box maker got for the box, nor the young children contracting cancer while picking coffee beans at pennies a day.) If "the business of America is business" it doesn't bother me that business people are running the businesses. What does bother me is the extent to which the business community wants to run everything else: the selection of our public officials (Nader's assertion that both Democrats and Republicans represent their corporate funders is the modern-day version of Boss Tweed's comment: "I don't care who does the electing just so long as I do the nominating"), universities and K-12 school boards, hospital boards, church and foundation trustees--indeed most charitable organizations. But what bothers (or intrigues) me most of all (as at long last I come to my question) are the issues surrounding the blending of public money and private profit. (Locally this takes the form of what has been called "The Pork Forest": $50 million in federal money to build a rain forest in Coralville, Iowa--a national recreational destination familiar to you all, I'm sure. Anyone interested in finding out more about this bizarre undertaking will find dozens of articles and analyses at http://www.nicholasjohnson.org/politics/IaChild.) This is, for the most part, not a problem of constitutional or statutory law. Within very wide limits elected officials can legally give public money to private businesses. Nor is it a political problem. The ultimate solution (assuming no conflicts of interest or overt corruption), if the public objects enough, is to vote those officials out of office. But this still leaves the economic question. Most independent economists I've talked to say that, at least insofar as public economic benefit is concerned, the examples of a meaningful public payback (from, say, the stadiums built with public money to profit the billionaires in the business of selling tickets and obtaining TV revenues from people watching millionaires play games) are few and far between. What say you? Charles Lindblom Charles Lindblom Participant I have just started a curious but plainly written book called Free Market Environmentalism (Anderson and Leal) which seems interesting in terms of making the case. I can't say how it turns out yet. For the overall conservative perspective, the must-read, must-answer book is Peter Huber, Hard Green: Saving the Environment from the Environmentalists, a Conservative Manifesto, and New York: Basic Books, 1999. Huber holds an engineering degree from MIT and a law degree from Harvard; he has clerked for Ruth Bader Ginsberg and Sandra Day O’Connor; he taught advanced statistics at Harvard and has written texts on liability, etc. Huber is clearly conservative and bright as hell, and has written a book that criticizes modern environmental thought in both its underlying attitudes and its scientific claims. The text is quick, funny, informed and relentless. It’s difficult to read, but I saw things in it I've never seen before, like why conservation will never work. You've got to read it. (Have I already urged you to do so?) And, of course, from the environmental standpoint, the most damning evidence against unwarranted embrace of government controls is the extraordinary deterioration of the US National Parks in the last century. Talk about species loss! They are all in a terrible mess. But then it was JK Galbraith who pointed out the difference between the tidiness of people's front lawns and the decay of parks and shared spaces. From which he concluded, make more spaces public. That's good thinking, Ken! And finally—and to me, most fundamentally—a little-heeded trend. The purely intellectual currents of our time are running away from central social control in many spheres of thought. Just as in 1905 Einsteinian relativity led to Cubism and eventually changed the world, so today the ideas of neural networks, agent-based programming, bottom-up control and market-based programming are changing the intellectual underpinnings of thought more widely. It isn't only that the USSR was a disaster, politically, socially, and certainly environmentally. It's also that people are studying the behavior of ants and termites and drawing conclusions that were unthinkable 30 years ago. Interestingly, Clinton got this. I don't know if he ever articulated it, but he clearly saw where the wonkish trends were going, and he behaved accordingly. Not so the current Dumbo, who institutes a medical drug policy that basically outlines (but of course does not detail) what Teddy Kennedy would have approved of in 1970. Geniuses at work! These days, I conclude that the only people who retain faith in central control are university professors who can issue course requirements for their captive juvenile students and get them to respond. But the artifice of their situation is lost on the professors. The real world is less controllable but they wouldn't know that. As for the competence of government, if they are issuing visas for dead terrorists, they are probably not suited to handle complex situations like managing environments. Can we identify major government programs that work? Do you know a good book on what government is good for? (I am serious.) I just came back from England, where a major scandal was averted. A report that a woman with cervical cancer had to wait 20 months for preliminary evaluation (not treatment) was found to be wrong. It was only 20 weeks she had to wait. Hey! Not bad. It's only six months. But personally, I am no longer interested in socialized medicine. I think we need socialized law. We need to be able to sue freely, and we need to cap lawyers' fees, and increase their liability. I think the ability to sue is a fundamental right. Don't you? Think of it. Subsidized litigation! Why has no one proposed this before? Love the political scene these days. The stench just gets worse and worse. It really is the era best suited to Michael Moore, the bastard son of Leni Reifenstal and Rodney Dangerfield. Did you read Hitchens on him? I can't bring myself to see the movie since I loathed the last one so much I couldn't finish it. And I hated the one before, too. But this is what passes for thought these days. Anyway, faced with our current politics, I never thought Ralph Nader would sound so appealing! But then I don't suppose I will be the darling of the conservatives that you make me out to be if I were to vote for Nader, would I? Participant I think insufficiently attentive readers dismissed The Great Transformation as Marx warmed over for no better reason that, like Marx, Polanyi undertook a highly synoptic critical view of the market system. But Polanyi's specific theses ranged a great distance from Marx's. You will have noted, despite your current "What if anything is government good for?" that Polanyi, rejecting the idea of a self-regulating market, gave government key roles in its regulation, and not trivial or even only peripheral roles at that--especially to cope with the market's having turned labor into a commodity, a market accomplishment he viewed as immoral, insane, and in the long run inconsistent with stable social organization. I suspect that he would say that his core argument for the market system is the one that I suspect is yours too. Yours is not systematically stated (no matter) but is unmistakable in your reference to ants, networks, and termites. Millions of people still assume that social coordination is impossible without a coordinator. At one level or more, the coordinator is the state; at other levels it is a parent, a committee chairman, boss or foreman. Thus at any level, social organization, cooperation and coordination imply a central mind, authority, or body. What we are slowly coming to is an appreciation that coordination, cooperation and organization do not always--and sometimes only rarely--require a centralist. They can be and indeed probably are most often achieved by mutual adjustments among the very parties to be organized or coordinated, as when members of a basketball team coordinate themselves in a game largely without central instruction or as when millenniums ago people developed languages in each of their many societies not through central authority but mutual adjustments. Not centrality but mutual adjustment is the emerging story of our future. So far, the greatest arena of mutual adjustment is the market system, and that it is a system of mutual adjustment is in Polanyi's mind (certainly his brother's, mine, and probably yours) its greatest merit. To that I add that the world, including its best thinkers, has not yet sufficiently opened up the discussion of how mutual adjustment in politics and other areas can be made far more use of. (I go on too long. But later I’ll comment further, Michael.) On your question, Dick, asking for clarification, I spoke crudely. ADVOCACY of--that is, the case for--market system free trade as a general policy for the long run is invulnerable. Participant It occurs to me that his thesis may fit into the larger picture that Ed and Michael are describing of self-governing systems. The main ideas of organization theory, over the last half century at least, have emphasized such democratic ideas, and every management training program is devoted lowering decision-making levels, etc. And yet if you check the actual structure and behavior of organizations you cannot help but see the persistence of hierarchy. Two of WBSI's favorite faculty members, Mary Douglas and Elliott Jaques, have argued, almost alone it sometimes seems, for the efficacy of hierarchy, indeed its essentiality. Ed, do you have a thought about
this? How might the market system ultimately affect the existence of hierarchy?
And would weakening hierarchy possibly be quite detrimental to human progress,
at least in the minds of Douglas and Jaques? Perhaps hierarchy and the
market system can coexist? Certainly the unchecked market system yields
increasingly centralized monopolistic power, does it not? But when leaders
give authority to their underlings, they don't lose it themselves. It's
like information in that regard. You give it away, but still have it.
Maybe under the ideal designs, bottom up management, networking, become
stronger under powerful leadership. The coexistence of opposites. It seems
to be true that strong membership is tied not to weak leadership, but
to strong leadership. I seem to remember a widely quoted business executive (or perhaps professor) who said, "The objective of business leadership is to obtain an unfair advantage over the competition." Possibly misquoted, of course, but the idea is accurate. Their behavior is rational, is it not? Ed: "No corporate money permitted for grass-roots campaigning, electoral campaigning, or programs of public education or propaganda. Corporate executives to remain free to say, publish, and broadcast whatever they wish, but they have to pay out of their own pockets rather than out of corporate funds." I'm with you on that! When PACs were invented, I was the only executive in my company to object to them in principle. Wish I could say, in retrospect, that I stood absolutely firm in refusing to contribute when directed to do so. Michael: I surely wish I were a fast reader! Ed (referring to Polanyi): "especially to cope with the market's having turned labor into a commodity, a market accomplishment he viewed as immoral, insane, and in the long run inconsistent with the social organization." In 1943 my beloved late brother-in-law was manager of the Employers' Council of San Francisco. He was representing his constituency in a labor dispute over truckers' wages-- presumably the Teamsters, though I don't remember that detail. Anyway, I asked him if all truckers ought to receive the same wage, just as all sacks of flour ought to cost the same. He said, "Absolutely!" I never forgave him for that one small opinion. Ed: "What we are slowly coming to is an appreciation that coordination, cooperation, and organization do not always and sometimes only rarely require a centralist. They can be--and indeed probably are most often in fact achieved--by mutual adjustments among the very parties to be organized or coordinated." For a moment there, I thought it was Harlan speaking. Enough already. This is a great discussion! Participant From my book, Nobody in Charge (2002), here's one example of how I used it (p. 23). It may or may not have been just what you meant: > Wisdom about uncentralized
systems. . . starts with a simple observation: most of what each of us
does from day to day does not happen because someone told us to do it.
You have already used your
concept of "mutual adjustment" in responding to Michael Crichton's
interesting comment. I agree with you that "Not centrality but mutual
adjustment is the emerging story of our future." But I may have carried
this idea too far, or at least too fast. To ask you about that will require
me to quote myself again (Next comment). My question: Am I stretching "mutual adjustment" so far that it breaks? Participant Meanwhile slogging through Free Market Environmentalism. It's tough going in sunny Hawaii, and I don't know enough to be able to assess some of the arguments, but when the text goes into case histories, such as a discussion of the differences between state and federal forest services in terms of their efficiency, goals, and so on (state and federal both sell timber on lands they manage, but state makes money at it and federal loses money), it is fairly difficult not to take the authors' point, that incentives in a political structure may lead to perverse outcomes. Also fascinating stuff such as why bison migrating out of Yellowstone during winter should be seen as a form of pollution...I love a new concept. But these guys have a very sly wit, as when they define politics as "the art of diffusing costs and concentrating benefits." I had to read that one five times. . . Participant I am always reminded of Randy Newman's song "Political Science." Do you recall it? No one likes us-I don't know
why We give them money-but are
they grateful? (And the date? 1972!) Charles Lindblom Charles Lindblom Would I like to diminish hierarchy and its unilateral pattern of authority? Yes, in many families. Yes, in many classrooms. Yes, in the government of China and in the Communist Party of China. And yes, in many places in American government--for example, within congressional committees. And I question the common reliance on hierarchy instead of redesigned mutual adjustment when we appoint a drug czar, an energy czar, or a homeland security czar. For that matter, I'd favor breaking up many of the largest corporations, thus reducing the role of managerial hierarchy in the coordination of their existing parts and increasing the role of market mutual adjustment. By the term mutual adjustment I have been meaning not merely decentralization that alters relations among subordinates but leaves a central authority in place but instead interchanges without a central authority at all. Is Harlan right in finding rules to be essential in all forms of mutual adjustment (or mutual engagement)? Clearly market mutual adjustment depends heavily on rules (for example, of property and contract as well as many informal rules of fair play). I'd be willing to agree that rules are often—perhaps usually, perhaps now always—required. There exists in the world a loose moral code subscribed to by millions and guiding their conduct. I think the code was created by rule-less mutual adjustment. Similarly, one of the great achievements of human problem solving and decision making was creating a common language for each of many groups of people. I don't see that rules played a role in that creation, though rules were created by the creation. And just how far market mutual adjustment depends on rules I don't know: possibly less than we think. Charles Lindblom And aside from playing innumerable
necessary roles (admittedly some unnecessary) like constructing railroads
across the US and educating each new generation, governments are necessary
for curbing other governments. (To say that that function would not be
necessary if there were no governments is not an adequate reply.) Participant I remember Harlan very well. He had a great and immediate influence on me when I met him back in . . . uh-oh . . . a long time ago . . . before I developed Alzheimer's. And you are not seducing me into joining this conference. I am having a nice vacation in Hawaii and will not spend all my time on the computer. BTW, I think Ed's comments on government programs perhaps misunderstood mine. Clearly defense, law enforcement, public health, and regulation of things like markets and commerce are necessary government functions and they are done with reasonable success by advanced governments around the world. I was referring to programs, like managing national parks or forests, or national health care, or public education. It seems to me we have less confidence with these larger social or environmental programs that government can manage effectively, or at least, that the US government can do so. I am differentiating here between regulating (setting rules and enforcing them) which governments can do, and managing complex systems, which I suspect they can't do, because of the flexibility and non-rule-based judgments that must be executed more rapidly than is easy for bureaucracies. I notice that government gives us the school principal sending the kid home for wearing a Guns n' Roses t-shirt because the school has a zero-tolerance policy for guns. And a school system pales in comparison to a national park or wilderness area as a complex system to be managed. Participant Can we draw from our knowledge
of human evolution in the natural world under the assumption that what
worked in that environment will work roughly the same in the market environment
or are there significant operating differences? And, when looking at the
two ‘environments’ what method of analysis do we use to explore
their interaction? What better formula for doing this than a market system, and so that is how we go about creating our new society. Of course, such changes--they will turn out to be deep cultural changes--will come gradually, and only slowly--but inevitably--they will finally come to persons for whom group norms were, in the old society, strongest--the professions. I think some such story as
that tells us what is now happening to the professions. And I imagine
nothing can stop it. Possibly collective efforts in the professions to
restore collective standards might do the trick, but I see neither moves
in that direction nor any encouraging incentives for such moves. If this
story is of any value, it tells us that the commercialization of the professions
in just one more step in the cultural revolution brought on by the market
system and that it cannot be stopped or reversed except by profound (and
unplanned, I would think) cultural change. Charles Lindblom And then we turn around and declare the superior efficiency of private enterprise. The multiple and conflicting objectives of public enterprises for the most part have to be pursued somehow somewhere in the economy: most of them need somebody's attention. Privatization is one method of sorting out conflicting objectives, permitting the enterprise to slough off some functions. But then we ordinarily need new institutions or arrangements to attend to them, and that means new costs and complications. Our choice between government projects and private enterprises is very difficult if it is to be done well. Participant Today many kinds of growth
are harmful to our environment. Do not these new conditions require a
substitute for the current market system and its goals? Charles Lindblom So we have in all market systems (and in all other systems as well) a continuing problem of stepping up some lines of growth and dampening others. For working with some success on that problem, incremental adjustments of the market system (as well as supplementary systems like, say, social security) are, I think, our best bet--and there is lots of room for that kind of market-altering reform. I wouldn't look for a substitute for the market but great improvements in it. One of the most elementary reasons for improving rather than eliminating the market system that gets only occasional attention is that, in the absence of the market system the burden of decision making by public authority is crushing--because of the complexity of decisions that have to be made. Look at it this way: Might decision makers confronted with a poor piece of machinery that they can try to repair do better than decision makers who have to start from scratch with no machinery at all? Participant Don't we have to consider needs
as well as wants? Isn't that what professions are supposed to do? Can't
market gurus see that advertising (and its companion, cooperative media,
news, etc.) renders individual choice questionable? Would you want your
doctor to be market- oriented? Ever? Or your teacher, architect, researcher,
artist, journalist, politician, and so on? Doesn't the market system's
goal of "freedom" need to examine the various definitions of
freedom more? I know that market system advocates also are willing to
admit the need for regulation, but how does regulation currently apply
to what I'm talking about? It can't apply to art and culture and the professions,
can it? Don't they have to be self regulating? And how does that come
about, when there is such financial encouragement for them to be market-oriented?
But markets are harsh; they broadly permit each of us to try, whether we are aware of what we are doing or not, to ruin someone else's business and livelihood. And they permit that kind of damage on an enormous scale, sufficient, for example, to kill an entire community or town and render the learned occupations of millions of people worthless. So we all look for protection and for excuses for the demands we make. That we do both, as thru tariffs, to give an advantage to people in or own country, and, as in licensing, subsidies, and trade restrictions within our own country, to give an advantage to our group within the nation. A humane society--don't you
think--must provide some of the protections sought. And there is, consequently,
a limited case for tariffs as there is a limited case for obstructing
free trade within a nation. And, as you say, demands will lead to corruption--and
again in both tariff policy and protective domestic policy. As professionals, educators, and business leaders we have bemoaned the "commercialization of the professions and education" and criticized the "commodification of workers." Rightly so, not only because it leads to commercial values driving every development in our societies, but (most important, methinks) because it has created a global commercialization/commodification of what remains of the "Natural World". The main reason conservation and environmental movements continue to fail is that they are represented by biologists, ecologists, and animal lovers who are repeatedly overwhelmed and co-opted by financial and political power players into accepting the utilitarian paradigm of "natural resources." If the global market continues its exercise of "freedom" to consume all of nature, and if environmentalists don’t expand their ranks to include people who are competent to put constructive brakes on this fatal process, then I fear our grandchildren will find themselves wandering, hungry and helpless, in an empty global market by the end of this new century. Charles, what are your thoughts
about the market's penchant to treat everything living on earth as a resource
for human capitalization and consumption? Is something sacred? I can make some responses, however. One is to point out--though it is a point that does not much interest you because it is so familiar--that in addition to those stupid market advocates who, as you say, believe the market system will take care of everything are many millions of its advocates who grant its great defects. But they also believe that all alternatives to an only weakly-regulated market system are worse. Historically they have said, for example, that a non-market society puts so much power in the hands of the state as to guarantee degeneration into dictatorship. Or they might say, for example, attempts to regulate the professions will bring us to brainwashing. For every defect of the market system that you or I might allege, they offer not a denial of the defect but an argument that we will do worse by trying to do better. These are tough customers and I treat them with respect, agreeing that they deserve answers to their challenges. Still, I believe, as you do, that in our market- dominated society we are on many wrong courses and their damage to a civilized life is enormous. Can’t we do something? Can't we plan? you ask. We all know some of the reasons that we can't or do so only weakly and some of the reasons track back to the limited intelligence and incentive that presumably plague not just market societies but all societies. I would mention here, however, obstacles that are less universal--that are attributable to the market system itself. One is the sharp contrast between getting what we want from the market system--simply go out and buy it--and getting what we want out of the government (which is our major instrument for getting things that we can't get from the market system). I have power to buy a bag of groceries, but I do not have power, say, to abort a new Wal-Mart. To get what I want, I have to organize. Hard work, not always pleasant. Expensive. Hostile adversaries. No guarantee of success, and a high probability of failure. I would be foolish to join in trying. In a nonmarket society, no such contrast, because one would go through government for everything. A second obstacle peculiar to the market system is the bifurcation of leadership and the consequent weakness of popular control over one category of leadership. In a market system, many of the greatest social tasks no longer remain in the hands of the state but are delegated to business executives. The resources of the business group are formidable, their strength enormous. And, though the great mass of people exercises great control over the commodities and services that business offers, the great mass does not have adequate control over the activities of business executives in politics, education, the arts, research, and so on. In short, we live in a society in which half of our rulers we cannot adequately instruct or control. A third obstacle peculiar to market systems is that, though political leaders and officials can be commanded (either by their superiors or by votes) to perform, the other group of rulers cannot. Well, they can be commanded to cease and desist, but not commanded to perform. To get what we want out of them they have to be rewarded and the size of the reward is as large as is necessary to stimulate them to perform. The political leadership knows this. It also knows that if the business leadership is not sufficiently rewarded and thus slacks off on new investment and jobs, it will be the political leaders, not the corporate executives, who will lose their jobs. So political leadership, despite its many conflicts with business leadership, is fundamentally deferential to it. So we get only weak attempts at best to correct many of the features of our society that your questions, Dick, identify. I disappoint you, I am sure. You would like something more hopeful. So would I! Charles Lindblom I largely share your concern and agree with you in your characterization of what is happening to society. But I will add that if and when we say that the market is doing all this to us, we should instead say that we the people who inhabit these various societies are doing it. "Market system" is a name for certain patterns of behavior, our behavior. We make the market; the market does not make us. Evidence: we once operated a market in slaves, and then abolished it. We once operated a market system overwhelmingly male, the women working at home rather than for pay. That too we abolished (not by law but by changing custom). And it is we--nothing automatic or nonhuman--who have marketized the professions, as well as communion with the Almighty. But clearly the market system we created brings with it a swarm of temptations, such as those that induce us to commercialize the professions or induce small children to stick close to the TV on Saturday morning, or to allow an evangelist the audacity to commercialize God. Are we capable of restructuring the market system so as to curb an excess of commercialization? Not in any future that I can imagine; perhaps in a more distant future. Participant As for efficiency, the cost structure (which, the last time I looked, was largely a function of subsidization of third class--I may be wrong here) of mail means that in my neighborhood businesses can hire guys to go door to door and hang junk on your doorknob for less than it costs to do it by mail. Granted these guys are not paid a minimum wage, but their presence in the country is in itself a function of the government, no? Also, I am not persuaded that government is left to undertake projects with more conflicting objectives than private sector does. What is the design of an automobile except a gazillion conflicting objectives that must somehow be balanced? But I do think that government officials and bureaucracies are even less accountable than business executives, and I think accountability is important. I am not arguing for either
government or private enterprise. I actually think that duplication of
functions (as in the illegal mail carriers) keeps everyone more honest
than would otherwise be the case. I'd like to see a private, or privately
run, national park of large dimension and see what happens to it. (As
you know, there are quite a few smaller preserves, both in this country
and abroad.) When you suggest that it is
we humans who make the professions market-oriented, etc., that is, we
have ultimate control--we did end slavery, I wonder though if the market
system is not so strong and pervasive that it is essentially autonomous--like
technology, which also seems under human control, but may not be. We could
not eliminate automobiles or computers if we tried, could we? And could
we end the market system without ending democracy? As a rank amateur in this wonderful mix of professionals, here is my suggestion: * Agree with one another that our world has changed with tremendous speed in this century, and that all who are concerned with our future need to accept that drastic changes need to be contemplated. * To make this possible, there
needs to be an artificial and temporary acceptance not to argue for EITHER
OR, but to search for solutions in something like the following steps:
The above may seem kindergarten stuff, but if properly facilitated (far beyond my capabilities) I have seen some remarkable results from such elementary strategies. As an afterthought: the above
may seem like overloading the number of issues for human decision-making.
But in my former profession of mediating labor conflicts, I always found
that the more complicated the stated dispute, the easier mediation became.
If the dispute was focused on wages alone, getting agreement was a tough
objective. But if there were other issues like health coverage, union
shop, and vacations, then the process of coming to an agreement was much
easier. Charles Lindblom One might respond to this by asking: Why not put all projects into the market system? The answer is that when projects hurt some people badly enough, their pros and cons have to be weighed and a political decision made on them--the wish for profit of profit-seeking sellers is not enough to justify the damages. So, you might say, the nasty projects go to government, the nicer ones go to the market system. And of two managers, equally efficient by all possible standards or tests, the one assigned to a non-market project will come out looking less efficient than the one assigned to a market project. (Of course, we debate endlessly
on which projects hurt some people greatly enough to prohibit assigning
them to the market. We have, for example, some people now arguing that
almost no possible damage to the environment warrants non-market regulatory
projects, while others believe that possible damages are catastrophic
for our future.) You ask if democracy possible without market system. Widely--almost unanimously assumed not possible. I think to the contrary it might be possible for a higher-grade democracy than so far exists. And maybe even with our imperfect democracy. The question has hardly been explored, while much pronounced on. The question is confused with the question of whether we can have liberty without the market system. Liberty to shop for just those commodities and services that suit our preferences? That liberty requires consumer goods markets. Liberty to choose among jobs? That requires labor markets. Charles Lindblom Societies have to cope with disagreements, small and large. Inevitable. So I'd play down the search for agreement--nor end it but de-emphasize. Look instead and harder for how to proceed in the face of disagreement. Nor only is disagreement inevitable, I think that most of us, me included, like it, even prize it. We often enjoy it, we are educated and stimulated by it, and we are saved from dull conformity by it. And it is not just a small amount of it we prize. l would prize, for example, more disagreement among my colleagues in their opinions about the future of the market system (more disagreement, say, on the big bang thesis, and certainly more disagreement on the future we want for, say, the US). Dick rightly says the market system is to a great degree autonomous, out of our control. How can that be? It is because our traditional agreed beliefs render us incompetent to deal with the market system effectively. Democrats, Republicans, and Socialists--their disagreements are trivial, compared to what we need. Charles Lindblom Sometimes I think of the market system as God's great joke, and at the expense of humankind. A gift so great as to seduce even great minds. And a blight never to be eradicated. Of God's other gifts to humanity, I know of no other so simultaneously both white and black. Is it God's malice? Irresponsibility? Humor? Here he gives human beings the brain capacity to construct on a simple foundation of their modest capacity to trade with each other a vast and now worldwide structure of interrelationships that makes comfort and riches possible, as no other structure does, and permits an enormous range of personal freedom (not for all but better than in any other structure). He has permitted us to create in the market system the greatest accomplishment in social organization or cooperation that has ever been achieved for even designed in blue print. Compared to the state, even a national market system is a far greater coordinator, and compared to the now global market system the nation state is a small operator. The market system is of vast scope in the number of people in it, motivated by its opportunities, and cooperating with others in it. Nothing like it in the world. It is of vast scope because it coordinates us in detail in almost every aspect of our lives today, unlike the state that regulates or coordinates us, aside from traffic lights, infrequently. Do we want to establish a claim on the nation's resources? Get a job. Do we want to draw on the services of a coffee grower, shipper, roaster? Simply buy a cup of coffee, and you will, with others like you achieving a collective effect, set in motion many millions (no exaggeration) of people. Bringing a cup of coffee to anyone calls for and achieves predictable, orderly, hence coordinated or organized, responses from growers, shippers, railroads, locomotive makers, hence steel makers, hence ore diggers, hence electric suppliers, hence wire makers, hence pencil makers and computer operators. A cup of coffee is the result of coordinated action or behavior embracing many millions. No other social organizer matches it. It is Numero Uno and there is no near second or third. The nation's and the world's biggest organizer or coordinator. What a gift--and what a blight!
For one thing, it is harsh, even brutal. I am free to drive you out of
business, and I often do, leaving hundreds or thousands of people out
of work, some never to be employed again, some lost in now obsolete skills.
If I am too old or too sick to work, I face catastrophe (unless some non-market
arrangements save me). If my parents were poor, I start the economic race
with a disadvantage which I may never overcome. In any case, I have no
capital resources except those left me by my parents. I am free, in pursuing
a living despite these obstacles, to ignore the damage I do to persons
around me. If I have a big enough shovel, I can ruin the landscape. If
I have a big enough fire, I can pollute the air. If you are destitute,
I can refuse to come to your help unless I can extract some favor from
you. And so on. What madness! What kind of a God would give us such a
gift on so abhorrent a set of terms! As you say, Donald, it's not a simple
matter of being for or against. Participant Your call for big disagreements makes me think about the role of our International Leadership Forum, where we essentially abandoned the goal of consensus as unattainable except for watered down agreements, in favor of publishing wisdom. Maybe we aren't accepting enough, or pushing enough, for big disagreements. Big Disagreements + Civility = Progress Participant If you will review how I "used" agreement in ll/37, you will notice that I was stressing agreement primarily to discussion over an understanding of what we are disagreeing about. It seems to me that this is a missing and important goal and prelude for the inevitable and useful disagreement about how much you get over how much I get. It seems to me that this is
the difference between adversarial sound-bit education and a better learning
process for citizens before an election. No matter what the process, there
will always be strong (and often bitter) disagreement in most political
debates. An attempt to provide early on some less heated discussion over
what we are fighting about before the end game of decision over the eventual
decision will never remove from you the certain excitement of strong disagreement
before a decision is reached. Participant On your 33:41 and 42: I agree with your instinct that what we often need is not agreement but a framework within which to disagree. I noticed, both as a diplomat and as an academic administrator, that the only way to achieve agreement on what to do next was to carefully avoid trying to agree on WHY we were agreeing. Maybe the next time we can
discuss this I'll also try to find out whether you resonate with the definition
of "consensus" I learned to appreciate by working with a Samoan
colleague on the board of the University of the South Pacific (in Fiji):
". . . the acquiescence of those who care, supported by the apathy
of those who don't." In our Western way of looking at democracy,
through the prism of voting, we tend to teach children and even grownups
that the best way to move ahead is to "divide the house." Doesn't
seem to work very well in Congress these days. I think it is the disagreement about who is Chosen and who is Not Chosen. Surely with their superior wealth of numbers and biomass we must acknowledge that viruses and insects are God's favorites on this planet. We humans, bless our souls, build our global markets and satellite into space as the vehicle for their holy expansion. Alms for a tiny god. Charles Lindblom I say that because--to take
for example an issue on which disagreement is rife--we do not and will
not (at least for the next few hundred years and probably never) agree
on how far to go toward equality of income and wealth (an issue that will
come before us in policy, say, on taxes, social security, farm subsidies,
and public education). Necessarily policies have to be chosen, other policies
discarded. That choice must finally be a political or power choice, not
a thought choice or brain choice for, as I just observed, thought and
brain will leave us in disagreement. We will hope that the power or political
choice will not be made by tyrants, gangsters, or even by subtly powerful
elites but instead by such a power or political formula as majority rule.
The consequence of this line of argument is that we should be teaching
each other to try to reach some agreements, to be sure, but not too many
and to use our brains and good will not to think alike but to come to
defensible conclusions to be expressed in what we vote for. Not the intellectual
but the political resolution of disagreement when policy choices have
to be made: that is what we should aspire to, and not agreement or consensus.
I will not argue that the market system is efficient, as almost all its advocates do. The market systems we have constructed provide only a minimum of benefits for some people, they do not level the playing field for young new entrants, they undermine the professions, they bias research and education, and they corrupt politics, and sabotage democracy--among other market defects. These are all values that most of us want, even highly prize; and I cannot say a system is efficient if it fails to give to its participants the values they want. Ah, well, its advocates reply, the market system is efficient in producing those goods and services that can be produced and distributed by the market. Well, that's a large part of the problem: a market system is lopsided, turns a society's attention in certain directions, and neglects other directions, hence other values than those marketed. Can't call that efficient, must call it a distortion of rational society. Leaving that conclusion hanging for the moment, I want to set against it the proposition that opponents of the market system--overwhelmingly and with few exceptions--mostly economists--simply do not understand the complexity of economic organization. They think, for example, that it is easy to decide what products are needed in society, hence easy to schedule their production. But that's only an easy first question, for of course we need bread, say, and medical services. The harder question is how much of each, a question for which there exists no correct answer and on which dispute is inevitable. Or, for another example of difficulties, imagine you’re being given each year a Sears catalog and asked to write down for each commodity the amount you will need that year. Can you think that far ahead and predict? The much bigger problem is that your catalog contains no prices. You can't choose everything, but how much can you chose? The problem for you with the catalog as well as the central planner without prices is that you can't choose without knowing the implications of any one choice for what you can have of other choices. Obviously the choice of an auto implies greater restrictions on alternative choices you would also like to make than the choice of a pair of socks. Here I want just to suggest, not complete, a list of the myriad difficulties of achieving even a half-efficient plan of production. Once their economy began to grow both in size and variety of output, the Soviets could not cope with such problems as these, nor can any nation without a market system. The heart of the problem, other than its size alone, is the necessity of measuring cost (by which I mean values given up to obtain any desired value). In the economy, rational choice on how to use resources and for what products in what amounts requires cost calculation. Prices in a market system give us measures of costs, never accurately but usable and indispensable. Prices and other attributes of market systems give us a first approximation to a sensible use of our resources. An indispensable first step. Far better, I think, to take second, third, and n steps to improve on the results than to try to eliminate that first step. I don’t know any substitute for that first step. Rather than transcend the market system I would like to see a society mold and shape it . I am told that artillery gunners are taught to open fire with a deliberate miss that will instruct or guide their subsequent zeroing-in shots--something like that. The major areas for molding the market? At least two. First and most familiar: tackle inequality and insecurity, as through, for a start, unemployment compensation, old-age pensions, and free public education. There’s much more to be done along those lines. Second and less familiar: cope--in ways hardly yet discussed--with the excessively powerful individual incentives of the market system which, though they get credit for what we mistakenly call market efficiency--drive many of us to such corrupt behavior as a number of you have pointed to in commenting, say, on the degeneration of the professions. How to deal with the second we do not know. It may be that subtle cultural changes will indirectly help us cope with the excess of incentives. Perhaps we shall begin to recoil from their effects: possibly some specific interventions in the market system, like taxes as heavy as to take the fun out of the pursuit of riches. Participant Your comment about disagreement leads me to mention that so much of our education is now more like training, making graduates alike. The accountability binge we are currently on is a good example of why it is that way. Education should make people different from each other. That's how we'll get innovation, which is the necessary engine for a successful market approach, but which neither the market nor present day education are all that successful in fostering. In that sense, market system zealots are their own worst enemy. Participant How can you start with a question (the price of information) to which the answer will nearly always be “It depends"? How does a "market enthusiast" avoid becoming seriously disoriented in the Information Age? Won't you, as therapist to the marketeers, have to develop a way of thinking about markets that doesn't start with price? Charles Lindblom To understand not just that, but all the fundamental points about economy and market I would start with the need for and benefits of widespread coordination on a national and now global scope: the market system as organizer of human cooperation, as in my words yesterday, cooperation among many millions to bring you a cup of coffee. Then I would talk about exchange as a method of cooperation that minimizes (but does not eliminate) coercive cooperation and that displays potentials for rational choice about what to cooperate on--what objectives. That would bring me to the necessity of cost calculation for rational choice and that in turn to prices as remarkable instruments for cost calculation. In all that, I think it would not disrupt my story to acknowledge that information is our major resource and that its value "depends". That has always been true of all resources: the value of a piece of land, for example, depending on its location, then on its location relative to neighboring ever changing activities. Or the value of apples falling when sugar cane became available. Or the value of computers declining when outperformed by newer better ones. Well, I tried, but may have missed the core challenge of your questions. Participant Participant The problem is that balancing these two is made increasingly difficult because technology allows for infinite rationalization and coordination, pulling parts into larger wholes that can be owned. Thus "balance" gives way to manipulation and a deeper split in society between winners and losers. I am seeing this on the edge of my own work as a rather independent psychoanalyst: the pressure is on to develop protocols for everyone that can be responded to by a suite of drugs. Every child, every adult. There is no cause, only symptom. The measure of health is competence to work. |
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