Discover more from Patrik Schumacher THESES
Markets and Discourses #3
Serialized Treatise about Prosperity and Politics after the Libertarian Revolution
This is a theory of world society’s best future, a treatise in social philosophy and a political manifesto in defence of a radical, stateless capitalism. The premise of this treatise is that the world economy, including the most developed and prosperous arenas of world society, has entered a period of secular stagnation, i.e. it is advancing significantly below its technological potential. This treatise further asserts that the world economy’s stagnation could be overcome, i.e. a more dynamic, prosperity enhancing development process could be unleashed, if our outmoded political processes that have become barriers of economic advancement can be disempowered. A radical systemic societal transformation is required. This is what is meant here by ‘revolution’.
The current system can be best described as crony capitalism, or less polemically as interventionism. This political interventionism that suspends or buffers market dynamics and substitutes economic rationality by top down administration of power block interests arose in the era of nationally based mechanical mass production, i.e. at a time when the suspension the markets’ information processing and allocation system was less damaging than in the current era of a much more complex and dynamic globalized post-fordist platform capitalism.
Current interventionist crony capitalism, both in its democratic and authoritarian variants, is thus the critical target of this treatise, the system that must be overthrown and replaced by a constructive revolutionary transformation. There is no doubt that the system of interventionism is operating in crisis management mode, with unprecedented measures of unpredictable import, and with a significant risk of another precipitous crisis. Malcontents are proliferating everywhere and divergent radical political voices have been gaining followers. This includes the global libertarian movement promoted here. However, the numerically dominant voices fuel dangerous populisms, both right-wing and left-wing. The more sophisticated and academically based/backed left is equally dangerous because it is equally bereft of any constructive ways out of the global stagnation. In fact, any empowerment of left-wing or left-leaning political forces will only further paralyse an already stagnant world economy, and probably trigger the outbreak of a deeper economic crisis. Such a crisis, although very dangerous, with a risk of barbaric economic and political retrogression, would also present an opportunity for radical libertarian solutions to get a chance somewhere. The choice will be stark: Barbarism or Libertarianism.
This treatise is trying to contribute to the intellectual preparation of the libertarian movement for this moment, by offering a comprehensive historical and theoretical account of the state of the current technological, social and economic world, its challenges, opportunities, and potential solutions, as well as strategies for proliferating these solutions. The treatise hopes to give further conviction and confidence to those who want to step up to lead the libertarian revolution.
The author has come to the conclusion that the human project going forward would flourish best without resorting to attempts at self-steering via coercive collective action, and should rather attempt to steer its progress via markets and discourses. The political project defended here could be described as anarcho-capitalism. The embrace of the label anarcho-capitalism here does not imply that the author fully subscribes to the ideas of Murray Rothbard, nor that he counts himself among the narrow circle of his followers gathered within and around the Ludwig von Mises Institute. Rather, there are many philosophical and theoretical divergences between this treatise and the work of Rothbard. However, the term anarcho-capitalism, combining anarchism with capitalism, is a good description of the author’s vision for an economically superior societal system at the current historical juncture. The position defended here, like Rothbard’s, entails the rejection of minarchism and asserts that nation states could roll back and eventually give up all their currently held monopoly powers, including money, legislation, courts, policing, and defence. All necessary functions currently monopolised by state institutions could be taken up by non-state organisations operating within competitive markets and guided by open discourses. Current nation states might thus gradually atrophy to become folkloristic shells without power, like the UK monarchy. This “withering away of the state”, to use famous phrase from Karl Marx, can happen within the framework of current nation state democracies, and the author does not expect, imagine or promote the libertarian revolution as violent overthrow of legitimate political orders. However, it is naïve to imagine this could happen without fierce ideological battles, resistance and strife. Important advances will probably be made only within the context of a severe, prolonged economic crisis. A successful break-through in only one of the economically and culturally most advanced nations might be enough to show the way and trigger a domino effect that eventually effects a libertarian turn in the trajectory of world economic and political order. Another scenario might be that some large advanced nation states break up into smaller units opening up a larger field of experimentation concerning the extent to which economic freedoms are unleashed and to what extent the maintenance of some local forms of citizen-wide binding collective decision making, local government, or even welfare and paternalism, can remain viable in the face of an otherwise borderless competitive division of labour. Libertarians can be rather relaxed about small states as they have far less scope for paralysing economic interventionism than large states.
This treatise is a tour de force through all that seems enlightening and relevant within the monumental corpus of modern civilisation’s theoretical self-descriptions, selected and integrated from the vantage point of the anarcho-capitalist hypothesis.
While the author has joined the global libertarian movement and finds here intellectual congeniality and proselytizing comrades in arms, both the intellectual sources and the intended audiences of this book are much wider. The book proposes an expansion and theoretical reframing of the libertarian intellectual universe, an expansion and reframing that delivers yet further good reasons and arguments for the radical expansion of everybody’s freedom all libertarians call for.
The reliance on an unfettered market system includes also the meta-market for markets, i.e. affording the freedom for entrepreneurs to set up and structure new markets. Such a system is a radically bottom up system in contrast to the usual politically controlled system of highly constrained markets. Against the supposed wisdom of elected officials and the supposed rationality of their bureaucracies the market order relies on ‘swarm intelligence’, on the ‘wisdom of the crowd’, and the ingenious problem solving capacity of competitive entrepreneurship. The market order aggregates and integrates myriads of partial individual wisdoms, washing out most mistakes in the process. The price systems functions as a scarcity detection and rapid broadcasting mechanism facilitating myriads of simultaneous local adaptations to changing supply and demand conditions. All exchanges and decisions are plugged into this highly sensitive and powerfully radiating system. On top of the price system rides a Darwinian profit and loss system that continuously weeds out unproductive and strengthens productive strategies, thereby making productive progress inevitable.
However, the market system is not the only globally radiating system of communication that aggregates and integrates all knowledges to produce an unbeatable swarm intelligence. The network of markets is complemented by the simultaneously radiating network of discourses. Here too we can rely on a Darwinian evolutionary mechanism - the mechanism of controversial debate and the differential reproduction/proliferation of ideas - that drives progress. The progress made here delivers the knowledge and ideas that markets can try out in practice, including markets for markets, markets for legal order, and for political order. As soon as competition is set free, in markets and in discourses, productive progress is inevitable. This much we can predict, although its much harder, perhaps impossible, to predict the particular solutions that will succeed. Whether what succeeds is likely to be the best we could have had, or at least the best of what is out there somewhere somehow, can only be appraised via an institutional or constitutional analysis, i.e. by probing the degree of openness and freedom in both markets and discourses.
Libertarianism seems to call for a society of private market exchanges with a diminished scope for politics, while libertarianism’s most radical expression, anarcho-capitalism, even implies, seemingly, that politics will disappears altogether. ‘Markets and Discourses’ challenges this aspiration for an ‘apolitical’ society and instead insists that political life, understood properly, will, for good reasons, very much intensify rather than vane after the libertarian revolution. This intensification is due to the proliferation of innovations and parallel options in all the ‘political’ areas of societal development like the introduction of cutting edge technology, employment relations, policing, environmentally sustainable energy provision, and the provision of law and forms of legal dispute resolution. There will be so much more to debate, evaluate and proselytize about. This should be good news for all of us libertarians who are passionate about politics and the common weal: the success of the libertarian political project does not imply that political discourse ceases and that we’ll have to retire from political life and thereafter care for our back gardens rather than for humanity’s world historical progress. This treatise will, among many other ambitious endeavours, sketch a positive picture about a much needed and much energized political life after the libertarian revolution, a revolution that will have to be, to borrow a phrase from Leon Trotsky, a permanent revolution.
This treatise presents a theoretically grounded political manifesto with world-historical intent, inspired by and aspiring to join the illustrious lineage of prior treatises attempting to accelerate the trajectory of human civilisation via theories of societal evolution with forward drive, a lineage that includes, among others, works of Locke, Hume, Rousseau, Smith, Kant, Hegel, Bastiat, Proudhon, Marx, Kropotkin, Menger, Weber, Durkheim, Parsons, Lenin, Trotsky, Rubin, Peirce, Mead, Mannheim, Popper, Bateson, Simon, Mises, Hayek, Rothbard, Coase, Friedman, Sartre, Foucault, Deleuze & Guattari, Luhmann, Habermas, Radnitzky, Kirzner, Sowell, Latour, Cohen, Aglietta, Negri, Nozick, Hansmann, Baumol, Williamson, Posner, Bowles, Gintis, Hoppe, Lester, Stringham, Weyl, Buterin and many more. This very rugged, indeed contradictory list represents the ingredients of the author’s personal intellectual path and attempt to home in on the world historical learning curve. The contradictory nature of this list is in character with the inherently dialectical nature of the historical discursive process of philosophy that proceeds via no-holds-barred controversy and where breakthroughs have often resulted from combustive confrontations and syntheses. This treatise enlists many theoretical resources that are usually not connected to the Libertarian movement, amongst them the Marxist tradition, in particular in its transformed sublimation of Juergen Habermas’ oeuvre, to argue for a libertarian, indeed anarcho-capitalist, revolutionary transformation of world society.
The main thesis of this treatise states the rationality of both markets and discourses, and the compounded rationality that emerges from the interplay between markets and discourses.
The scope of this treatise is ambitious as it tries to offer both a philosophical and scientific grounding for the libertarian project, as well as offering substantive positions and concrete proposals concerning the societal arrangements and tendencies that would allow a libertarian society to flourish. This treatise therefore works through the following major areas of intellectual endeavour: philosophy, history, the theory of society, economic theory, the sociology of morality and moral philosophy, social psychology, legal theory, political theory, the theory of ideology and discourse (publicity) as historical force, anarchism, the theory of revolution (radical reform), and finally a reflection on sources of meaning and motivation (atheist spirituality).
It is one of the most fundamental premises of this work that these topics and sciences can ultimately not come to full fruition in isolation. Although division of labour is a necessary engine of progress, also of intellectual progress, this progressive division of labour must be accompanied by continuous parallel efforts of theoretical unification. It should be noted that most of the great innovators in any of the fields enlisted here have been casting their view widely across boundaries as they were penetrating deeper within their own fields.
This treatise is an effort in theoretical unification, with a determinate practical purpose. It therefore presents a network of explanations and theses, aspiring towards a comprehensive theoretical system. Although the sources that contribute to the tour de force of this treatise are diverse, and in their raw state imply many incongruences, the attempt has been made to integrate the extracted theoretical resources into a coherent perspective that can give coherent practical guidance.
The concept of discourse has many variants in philosophy and the social sciences, since its proliferation in the 1960s. Discourse is a key category in French poststructuralist philosophy, especially in the work of Michel Foucault, as well as in the oeuvre of Juergen Habermas.
Foucault’s concept emphasises the practical and political import of everyday and institutional routine discourses, and has coined two key composite concepts, namely the related concept of ‘discursive practices’ and ‘discursive formations’. Although this treatise does not engage with Foucault’s philosophy and politics directly, these concepts are being employed here, as they are useful, and by now widespread markers of the importance of remembering that all social practices, including economic life, are linguistically and ideologically mediated practices. Discourse has become a central concept in philosophy, the social sciences and the humanities via the influence of post-structuralism, and with this the so called method of ‘discourse analysis’ as method of investigating societal domains and issues. It denotes the investigation of an area of social life like gender relations, mental health, or the artwork via a critical analysis of the key operative concepts, tropes, truisms and typical arguments. When a sociologist like Niklas Luhmann investigates institutions like love, morality, or contemporary western political systems he is doing this via an extended discourse analysis, albeit in his terminology he is analysing love, morality and politics as ‘systems of communications’. The concept of discourse in this broad sense must be distinguished from Habermas’ narrower concept. For Habermas the event of discourse is always reflective communication, i.e. a critical communication about communication that breaks the routine flow of communications, and might eventually lead to explicit communication about the underlying values, principles, standards and validity claims that are always underlying the routine flow of communications and interactions.
Accordingly this treatise distinguishes critical-reflective versus operative discourse. Usually, if not otherwise specified, the phrase discourse denotes the former rather than the latter.
Discourse in the sense of critical-reflective discourse is theoretically informed but practically oriented and therefore geared to orient practice. It is deliberative and indeed argumentative, deliberating and arguing about the pros and cons of actions or proposals. Political discourse in particular is a general public discourse arguing about social trends and proposals from the perspective of the common weal. However, there might be divergent notions of the common weal, either due to diverging ideologies or interests, or due to both intermingled, and thus the one of the tasks of public discourse is to achieve a convergence of perspectives due to mutual perspective taking, as a precondition to moving towards consensus.
The concept of revolution promoted here is non-violent. The term ‘revolution’ is used to mark a contrast to both evolution and to reform, and thus implies a radical and rapid transformation. This treatise reckons with both conscious theory-led political strategies and actions, as well as with thereby unleashed dynamics of transformation and self-organisation that will then have to be tracked and critiqued by a learning theory.
The libertarian premise of this treatise is that the radical extension of the neoliberal restructuring programme that started in the early 1980s is the best way forward for the most advanced societies. The left and the majority of the academic elite, with the telling exception of economists, look back at the 1960s and 1970s with nostalgia and view neoliberalism as a cold blooded, selfish power politics initiated by big business. The neoliberal revolution, promoting free trade, privatisation, deregulation, tax cuts and an end to the expansion of redistribution, is thus seen as the result of a successful class struggle from above, waged and won by the capitalist class exploiting the weakness and disorientation of the working class during the economic troubles of the 1970s. The stagflation of the 1970s was indeed a factor in the development towards the neoliberal revival of market solutions. However, the success of the neoliberal revolution can neither be reduced to a power struggle, nor conceptualized as inevitably flowing from the economic failure of the attempts to “dare more democracy” or socialism in Western Europe and Nothern America. Failed policies, especially in the absence of a critique with a credible constructive countervision, all too often lead to a doubling down of the failed policies, attributing the failure to an insufficiently bold application of the prevailing ideology and its recipes. The crucial factor in the success of the neoliberal revolution lies in the domain of discourse, in the fact namely that a successful discursive battle was waged that convinced the relevant elites like economists, intellectuals, as well as political and business elites. The scientifically grounded, inspirational intellectual project and movement initiated by Friedrich von Hayek did bear fruit and constitutes an essential ingredient in this political transformation. That Hayek was the intellectual Hero of Margaret Thatcher is well known. Hayek had clearly seen that the resistance to the dangerous and dangerously infectious intellectual and moral fervour of socialism has to be met with an intellectual vision that is equally inspired. The fact that his scientific predictions turned out to be right in the 1970s and that he was awarded the Nobel Prize in economics at that time helped, and is indeed evidence, both of his intellectual credibility and of the fact that his influence was spreading, first within economics, and then further.
Discourse matters, and the neoliberal discourse gave fervour and backbone to the radical and sustained transformations in economic policy pursuit during the 1980s and 1990s. But, to be sure, it also matters that this discourse was indeed rational and well founded and that its policy recommendations were therefore sound and successful, congenial to the development of the forces of production that had become possible the micro-electronic revolution and telecommunication revolution, ushering into the new social-economic epoch of postfordism.
This ‘historical truth’ of neoliberalism remains valid, also after the 2008 meltdown. This truth was, if properly analysed, indeed confirmed rather than confounded by the crisis. More than ever, the programme of rolling back the state by means of a radical deregulation as well as the privatisation of all purported government functions, i.e. functions currently still taken up by governments and state bureaucracies, has become historically possible and promises to unlock pent up creativity and productivity potentials. This is becoming increasingly urgent due to the tragic and scandalous economic stagnation of the advanced societies. Increasing degrees of individual freedom, especially within the economic sphere, will, so the hypothesis, unleash an unprecedented productivity boost via entrepreneurial creativity, disciplined by the rational selection process of market competition. Only a libertarian revolution can really burst the current politically induced stagnation and allow for the best possible utilisation and fullest further development of the stream of new technologies that emerged from the convergence of computation and telecommunication. The radically new and open ended nature of new AI empowered technologies posits a promising take-off moment for human progress. Current technological systems like robotic manufacturing, 3D printing, and web-delivered services can absorb an enormous amount of innovation, compared with the older assembly line system. However, the progress in sight is held back by the societal structures and ideologies of yesteryear. With Marx we can state that the political superstructure and the politically framed relations of productions have become fetters on the use and development of the forces of production. This is testified to by the scandal that Europe delivered zero productivity growth and consequently zero per capita income growth over the last decade, at this time of unprecedented scientific and technological breakthroughs. The conditions for a successful libertarian revolution that can accelerate world history and human progress are over-ripe.
While the neo-liberal market liberalisation of the last four decades was progressive and congenial to the simultaneous post-fordist socio-economic restructuring of recent decades, this liberalisation was slowed down and stunted by rear-guard political resistance when it should have continued towards a more radical path, potentially all the way to a “stateless” society. This treatise imagines a society of radical political decentralisation via a competitive field of mini polities organized as corporations competing in the market for living together. These corporations might be shareholder owned or cooperatives of various kinds. These polities might be run as franchises of global providers. Whether we end up calling these entities, i.e. these mini polities, or their parent company, “states” or not is an open question. The key point is that the competitive dynmamic will most probably drive towards the dominance of liberal regimes where free trade, free markets, free contracting and extensive social freedoms will probably be trending strongly due to the productivity enhancing thrust of such features. Some polities, like retirement communities who have saved up resources accumulated elsewhere, might take different routes, but that’s ok. The variety of political offerings will be a life enhancing boon for all. People will probably be mostly voting with their feet rather than at ballot boxes. In any event, this treatise is not arguing not for an eternal ideal but for a historically specific opportunity and for the hypothesis of the relative superiority of such a revolutionary development in comparison the current big state system.
Karl Marx formulated the conditions for revolution as follows: “At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or -- this merely expresses the same thing in legal terms -- with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.”[i]
This formulation remains valid and the insight it expresses serves as a fundamental premise the whole approach promoted in this treatise. On this basis we can formulated a key thesis of this treatise: A libertarian social revolution is called for to burst the obsolete statist fetters that increasingly constrain production and innovation and to reset the relations of productions to allow for the fullest utilisation and further development of the productive forces.
Productivity is the key measure of societal progress in this treatise. All economic growth per capita, i.e. any increase in the average standard of living, in prosperity, is due to productivity gains via technological and/or organisational innovations. However, it must be clarified at the very start of this treatise, a treatise in which social productivity a most central concern, that productivity gains includes any progress in product development, as well as the invention of wholly new products. This has to be emphasized because the term productivity has connotations of being primarily about efficiency gains and thus cost reductions in the production of known, established, standard product categories. Although this remains an important component of productive progress and advances in prosperity - after all our physiological needs and creature comforts are rather invariant and thus ushered in highly stable product categories - a lot of progress has been delivered, as is increasingly being delivered by new, disruptive products and technologies. While the 19th century was marked by the efficiency gains achieved via a massive extension of the division of labour and the mechanisation of the production process of given products like textiles, the 20th century was marked by the invention and development of unprecedented products like automobiles, aircraft, radio, movies, television, and personal computers etc. Machines were now no longer confined to the factories but entered and enhanced the realm of consumption, i.e. urban and domestic life. However, these new products categories then became also the site of both continuous gradual qualitative product improvement as well as the site of continuous production efficiency gains. In any event, it is important to note that the material freedom we now enjoy owes a lot to these novel, innovative products. It is also noteworthy that with the systemic restructuring of industrial economies to what will here be referred to as post-fordist network society simple efficiency gains with respect to standard products is no longer the prevalent form of productive progress. Instead of the fordist mechanisation in the context of ever expanding economies of scale - the primary site for measurable cost-efficiency gains - we are now witnessing increasing economies of scope, addressing myriads of niche markets and tailored products, but also, increasingly, disruptive new products and services like Facebook, twitter, Second Life, uber, Airbnb, youtube, Netflix, amazon, deliveroo, bitcoin, etherium etc. Every so called ‘start up company’ is aiming for this kind of disruptive novelty (although not all of these novelties are really delivering wholly new product or service categories). To the extend that they succeed they powerfully feed into our prosperity, and thus are included here under the heading of productivity gains.
This treatise thus works with an expanded concept of ‘productivity gain’, i.e. as a shorthand for the combined concept of product innovation and productivity gain. Similarly, Marx’s closely related central concept of the ‘development of the forces of production’ becomes the development of the productive forces/products. The motivation to keep using the concept of productivity rather than only referring to prosperity and prosperity gains, is the to always keep an eye on production as the necessary means of procuring prosperity which appears in the realm of consumption.
The question might be raised why productivity should be the key aspiration and not a thicker or richer concept like a free human flourishing? Indeed, this latter concept denotes our key aspiration, and this concept can be fleshed out with various thick descriptions, while productivity is a thin measure. Its character as a relatively straightforward tangible measure makes the productivity concept so useful (although a science has developed around the precise definition of various concepts and their empirical application). Everything we might wish for socially or individually requires resources, even if this scarce resource is sometimes only our time, and therefore productivity gains further all of our aspirations, actual or potential. Productivity gains deliver prosperity, and prosperity implies material freedom. It is through the development of the productive forces, delivering productivity gains, that humanity as a whole enhances its material freedom, i.e. the global collective capacity to “domesticate” the indifferent and often hostile physical universe and to turn it into our serviceable, pleasurable “home”. Small differences in the rate of productivity increases, i.e. in the rate of per capita economic growth can make a huge difference in the long run, as growth cumulates and compounds. Differences in growth rates that might be nearly imperceptible make a momentous difference if they continue across a generation. No society can afford to be oblivious to these facts without severely compromising the flourishing of its members.
Unfortunately, the value of productivity, productivity gains, and economic growth can probably no longer be presumed to be uncontested in an era with increasing awareness of climate change and climate risk. There are many voices that urge against what some of them call the “growth ideology”[ii]. There is also talk of “degrowth” and “postgrowth”.[iii] Harvard professor and former IMF chief economist Kenneth Rogoff suggests that “there is a certain absurdity to the obsession with maximizing long-term average income growth in perpetuity, to the neglect of other risks and considerations.”[iv] However, we need to be wary of equating economic growth with material resource depletion, increased energy consumption, and growth of pollution and environmental degradation. Economic growth is, as a statistical measure, the annual increase in the monetary value of all the goods and services produced. This is first of all growth in value and expresses thereby subjective preferences. This is compatible with a zero carbon economy. Investments and efforts in environmental upgrading produce value, in accordance with preferences for upgraded environments, and will also show up as economic growth. Here as everywhere, productivity gains remain absolutely crucial as means of increasing our collective material freedom. Productivity gains imply savings in labour resources and gains in capital. More capital and labour is then available to be allocated to research and investment into the zero carbon economy. As a simple quantitative measure, productivity, i.e. labour productivity, is defined as output per labour hour. This is a simple measure only if we consider increased quantities of material product. However, we must measure in money or value here to capture qualitative improvements in output of products and services. We should also include a further crucial qualitative aspect in an enhanced concept of productivity that exceeds easy measurement, namely improvements in working conditions.
As David Friedman explained in ‘The Machinery of Freedom’ the free markets’ productivity optimisation takes working conditions into account: “If under one arrangement a worker produces a dollar an hour more than under another but the conditions are so much worse that he will gladly accept a wage of two dollars an hour less to work under the other, which is more efficient? For both the employer, who saves more on wages than he loses on production, and for the worker, the physically less productive arrangement is the more efficient. The efficiency of capitalism takes account of nonmonetary as well as monetary costs and products.”[v]
Technological progress has historically delivered productivity gains in all three dimensions – quantity of product per labour time, quality of product, and ease/quality of labour conditions - and promises to deliver along these dimensions further into the future, without limits. Even increasing quantities of products do not necessarily imply an increasing use of physical substances or an increasing environmental burden, if innovations like e.g. miniaturisation and bio-degradable materials come into play. We can include a further enhancement by conceptually internalizing negative environmental externalities. Then we operate conceptually with a non-trivial concept of productivity gain that encompasses qualitative/value increases, at increasingly less burdensome working conditions, with an increasingly lighter environmental footprint. While we cannot expect that every single technological or organisational improvement delivers an upgrade of production processes on all these fronts, the overall progress can integrate progress on all these dimensions.
Productivity was also the key category of Karl Marx’s system. Marx thought that the capitalist relations of production had and would increasingly become fetters on the full utilisation and further development of the productive forces and that a socialist revolution in the most advanced arenas of the world economy would be able to unleash a further flourishing of the forces of production. However, Marx’s hypothesis of the productive superiority of socialist planning was proven wrong, both empirically, by the world historical experience, and theoretically by Mises and Hayek.
For a former Marxist, the hardest aspect of the ideological transmutation to anarcho-capitalism was the renunciation of Marx’s grand vision and political project of mankind reaching full collective self-consciousness and self-control. Marx’s project was inspired by Hegel’s account of human history as the unfolding of the (human) spirit in accordance with a developmental logic destined towards freedom and self-consciousness. Hegel had traced this process in elaborate detail by means of interpreting the recorded history of mankind and the history of ideas and world views. While Hegel thought this unfolding of the (human) spirit towards freedom and self-consciousness found its culmination in the very event of his philosophical system, Marx saw it as a task to be accomplished by communist world revolution.
Here is one of Marx and Engels earliest formulations of this lofty project: “Communism … for the first time consciously treats all naturally evolved premises as the creations of hitherto existing men, strips them of their natural character and subjugates them to the power of the united individuals.”[vi]
Marx’s most inspiring message thus was his spirited call and political project for humanity to wrest control from the alienating, anarchic capitalist process that confronts each individual actor with the collective results of all individual acts as an alien force. Socialist revolution was to usurp and unify the hitherto divided productive forces and world communism was eventually to allow humanity to self-consciously shape and plan its own development through a centralized democratic process that would be able to rationally stream-line progress and assure the equal participation of all. The market was to be abolished and democratic economic planning was to take over. Mankind would finally be constituted so as to be able to consciously shape its own future and make history a project of conscious collective self-development.
Here is Marx’s glorious but vain promise in his own words (co-authored with Friedrich Engels): “All-round dependence, this primary natural form of the world-historical co-operation of individuals, will be transformed by this communist revolution into the control and conscious mastery of these powers, which, born of the action of men on one another, have till now overawed and ruled men as powers completely alien to them.”[vii]
This lofty conception still animates Juergen Habermas’ work, and resonates in his, more modestly conceived, concept of public autonomy.
Marx wanted to replace the anarchism of markets with conscious decision making. This meets a complexity barrier and a barrier in terms of diverse world views. In contrast most libertarians based on Mises, Hayek, Rothbard lionise markets and bet everything on markets alone. In contrast, this treatise bets on markets plus discourses, but in contrast to Habermas’ idea, these discourses are not presumed to lead to grand collectively binding societal decision making.
The recent flourishing of the crypto-currency industry is a perfect example for the power of unhampered (permissionless) markets augmented by extensive and intensive discourses. The markets here are more open, liquid, innovative and competitive than anywhere else. Each product is developed in a context of intense open discourse, via white papers, open source development on GitHub, project communications on Discord etc. There is also an intense collective overarching discourse trying to steer the overall crypto industry culture, ethos, best practice etc., through analysis and argument. Forums range from twitter polemics and youtube debates to scientific papers. There is also collective decision making via voting within each project or DAO (Decentralised Autonomous Organisation), just like in any partnership or shareholder corporation, but there is no collective decision making on the scale of the crypto eco-system as a whole, nor (at the time of writing) on the scale of society at large. This eco-system flourishes without any state regulation, and indeed flourishes exceptionally well precisely due to the absence of state interventionism.
The discourse part of ‘markets and discourses’ retains an element from Marx and Habermas, namely the aspiration to shape human destiny self-consciously via discourse but again, crucially, without requiring or allowing any scope for society-wide collective decision making.
The crucial presumption of Marx and the socialists was and is that such a socialist revolution would allow overall productivity levels to soar. Tragically the opposite was the case (and more than ever remains the case): the socialist revolution and the system of state planning slowed down the further development of productivity and prosperity. The compelling explanation for this tragic failure was delivered by Ludwig von Mises and Friedrich von Hayek.
Marx’s vision and project, that had inspired millions around the world, was crushed, both in practice and in theory. But Hayek’s vision of the epistemic power of freely competitive, indeed anarchic but adaptive and self-optimising market processes should be equally inspiring. Hayek’s vision ties up deeply with evolutionary theory, emphasising the productive potency and rationality of evolutionary processes. The libertarian political project is the project of liberating and unleashing this potency and rationality for contemporary world society.
However, the thesis proposed here argues that Habermasian discourse theory has to be injected as another essential ingredient of the libertarian movement’s self-conception and of its conception of the society it is trying to unleash.
If Mises had over-estimated the deliberate-rational, explicitly goal-oriented aspect of human action, and even transferred this over-estimation to his account of the world-historical process, then Hayek under-estimated the increasingly conscious, discursive aspect of human historical progress.
The contribution of conscious orienting discourses to societal evolution becomes undeniably evident since the advent of modernity in the 17th and 18th Centuries, where discourses and literatures emerged in the domains of political theory, political economy and juris prudence, as well as history and sociology in the 19th Century influenced the further societal development, and continue to exert such influence.
We can agree with Hayek that these orienting discourses were all too often overreaching through the unfortunate tendency towards what Hayek called “constructivist rationalism”. This tendency, especially prevalent in the first wave of modern reason, during the period we now call the Enlightenment, consists in dismissing rule-based moral traditions only because adherence was dogmatic rather than reasoned and in attempting to substitute them with explicitly reasoned simplistic “rational”, constructed schemas. Socialism is the prime example of a project misguided by constructivist rationalism. This rationalism that dismisses tradition because it is merely traditional and not deliberately conceived misses the point that traditions can have a deep, albeit unknown rationality due to the long sifting process of a competitive cultural evolution. This constructivist rationalism also involves an underestimation of the complexity of the ordered social process that the evolved traditions maintain. As Hayek puts it in the Fatal Conceit: “The process of selection that shaped customs and morality could take account of more factual circumstances than individuals could perceive, and in consequence tradition is in some respects superior to, or ‘wiser’ than, human reason.”[viii] However, Hayek’s insight has its own pedigree within modern discourse, in particular in the Scottish Enlightenment, via David Hume and Adam Smith who to some extend anticipated Hayek’s perspective. Another major precursor was Edmund Burke and his critique of the French Revolution and its intellectual sources. According to the conservative philosopher Roger Scruton, Burke “saw no greater danger in the French Revolution than the presumption that reasonable politics must be generated by rational thought”[ix]. But, to be sure, there is an irony or seeming paradox in the position of a critical-rational philosopher who argues against the reign of rationality. Scruton brings out this irony that marks the anti-rationalist conservative intellectual: “Burke’s response was imbued with the philosophical high-mindedness of the people he criticized. … And by a tour de force of rational thought he justified the kind of politics that rational thought (he believed) puts in jeopardy.”[x] Scruton displays the (apparent) paradox further as follows: “There is, therefore, a kind of paradox at the heart of Burke’s conservatism, and it is one that endures to this day. Conservatives in the British tradition are heirs to an island culture, in which custom prevails over reason as the final court of appeal. Their political process is governed by an unwritten constitution, whose principles are themselves a matter of custom rather than explicit rules.”[xi]
Another precursor of Hayek’s insight can be located in the 19th century German historical school of jurist, especially in the work of Savigny. Indeed Hayek must have been familiar with this argument as espoused by Savigny, as it was quoted and rehearsed by the founder of the Austrian School of Economics Carl Menger, in his 1883 treatise on
“There is, says Savigny, ‘no completely separate and isolated human existence. Rather, whatever can be viewed as separate is, when considered from another side, a member of a larger unit. Thus each separate human is of necessity to be considered at the same time as a member of a family, of a nation, as the continuation and development of all previous time’.”[xii]
Menger goes on to summarize Savigny’s view as follows:
“The historical school of jurists utilizes the above notion to arrive at the thesis that law is something above the arbitrariness of the individual, is even something independent of the arbitrariness of the temporary generation of the national body. They state that it is an ‘organic’ structure which cannot and must not be arbitrarily shaped by individuals or by single generations, that it is a structure which, on the contrary, is opposed as something higher to the arbitrariness of the individual, of the entire age, of human wisdom.”[xiii]
Menger then points to the practical political significance of this conception:
“From this thesis the above school now further derived consequences which are in part extremely practical. It concluded that the desire for a reform of social and political conditions aroused in all Europe by the French Revolution really meant a failure to recognize the nature of law, state, and society and their ‘organic origin’. It concluded that the ‘subconscious wisdom’ which is manifested in the political institutions that came about organically stands high above meddlesome human wisdom. It concluded that the pioneers of reform ideas accordingly would do well less to trust their own insight and energy than to leave the reshaping of society to the ‘historical process of development’.”[xiv]
Here thus was an immediate source for Hayek’s insight and criticism of constructivist rationalism. Menger, however, also saw the potentially problematic aspect of this doctrine and its political deployment and refers to it as a “conservative basic principle highly useful to the ruling interests”[xv].
Modern political discourse went through its own learning process on this point. Hayek’s warning against constructivist hubris is just this, a warning, and cannot be an injunction against rational discourse as a search for institutional reforms and improvements; and his heuristic of giving the benefit of the doubt to tradition, can of course only be a heuristic for critical investigation, and not a denigration of all attempts at a rational explanation of the complexities of the evolved social order. This implies that dogmatic conservatism has to be rejected as much as constructivist rationalism. In accordance with this, Hayek rejected being labelled a conservative.
We should not forget that societal progress in the West accelerated since the enlightenment and with the modern orienting discourses of political philosophy and jurisprudence. The heuristics of presuming the rationality of the (successful) real applies also to the reality of the discourses. They very probably delivered a net benefit, despite constructivist blunders, and helped to pave the way for the prosperity engine that is capitalism. Indeed, these orienting discourses crucially include the discourse of classical laissez faire political economy. The influence and overall contribution of these discourses to the progress of modern society is undeniable, despite the tragic failure of Marx's grand contribution (the hard won lessons of which have indeed been learned and discursively absorbed). Therefore a comprehensive theory of society and societal development must include this crucial factor. It would indeed be perverse if the participants in this ongoing process of discursive steering thought that its overall historical net effect was negative or negligible.
The recognition of the ideological sphere in general, and the specific modern version of rational-argumentative, evidence referencing discourses does not counter or suspend the overarching importance of evolutionary processes as these discourses together represent just another co-evolving subsystem, albeit a sui generis subsystem that needs to be taken account of in an overarching theory of societal progress.
Ludwig von Mises book ‘Liberalism’ gives a spirited historical account of liberal capitalism as the creation of the Scottish enlightenment philosophers. Here Mises traces and emphasises the influence of economic and political discourse on the crucial socio-economic transformations towards capitalism in the 18th and early 19th century. While this account is perhaps over-idealistic, in the Marxian sense of idealism versus materialism, Mises’ book can be marshalled in support of the thesis that the theory of modern society must include a theory of public discourse, and therefore must include itself. A comprehensive theory of society must, as Niklas Luhmann insists, become autological. Despite writing ‘Liberalism’ Mises theoretical system, as displayed in his monumental ‘Human Action’, did not explicitly embrace autological self-inclusion. Indeed libertarianism in its current form is not able to theorize itself with the sparse conceptual resources it is based upon. Thus libertarianism requires a conceptual enrichment to gear up to full autological self-inclusion. This is one of the tasks this treatise is performing for libertarianism.
Mises’ system of classical liberalism or minarchist libertarianism includes works such as ‘Liberalism’ and thus takes account of the historical role of original and ambitious public discourses. Discourse is here, and this is historically correct, primarily seen as addressing the state. This orientation towards state action is not a necessary condition of public political discourse about matters of general societal regulation. Society can self-regulate without the state, but no longer without discourses. While purely bottom up processes of self-regulation without conscious guiding efforts delivered all prehistoric and most premodern social institutions and societal formations, contemporary world societal developments can hardly be left to blind evolutionary trial and error processes, but instead must be guided by a complex and global system of discourses.
In the absence of the state, so the thesis of ‘Markets and Discourses’, these crucial guiding discourses must continue, and indeed will flourish unencumbered by the corrupting forces that compromise public discourse within the context of state power.
This treatise presents a constructive challenge to the conceptual foundations of libertarian theory. It uses the social philosophy of Jürgen Habermas’ to expose a gap in the basic categories of libertarian social philosophy that has led to a blind spot in its conception of modern society and its conditions of development. The gap is due to the narrowness of the libertarian conception of human action. Libertarian social philosophy, including Mises’ Human Action, as well as all social theory adhering to the rational choice paradigm, conceives of all human action in terms of individuals’ means-ends rationality. According to Mises individuals aim to maximize utility by choosing means to further purposes in accordance with their preferences.
This conception is blind to Habermas’ crucial distinction of communicative action versus instrumental action. Classical liberal and libertarian social philosophy only recognize what Habermas calls instrumental action which includes strategic action as sub-category, i.e. instrumental action in relation to other people rather than in relation to inanimate things. In contrast to instrumental action, communicative action is inherently dialogical. It is action oriented towards reaching a mutual understanding. This type of action presupposes a shared life and often has no explicit goal. It can thus not be reduced to the model of individual goal-oriented action that sees interlocutors as means to the individual’s end. Although Habermas is not emphasising this, communicative action includes the gratuitous chats that fill our days and which do serve the function, not purpose, of continuous updates of our knowledge and world orientation.
This reflective insight into the functionality of non-goal-directed socialising can in turn lead to a deliberate instrumentalization of this function, not only by the socialising individuals themselves, albeit only exceptionally rather than pervasively, or by organisations like business firms when they plan office parties and other mechanisms facilitating freewheeling socialising by their staff. This gratuitous socialising is a potential mechanism of immediate vital productivity enhancing information exchange, or a step towards this by building up the trust and emotional bonds conducive to such genuine information exchange. The resultant spreading of a genuinely collaborative corporate culture across the firm enhances the productivity potential of the organisation, and might indeed be a necessary ingredient of any corporation surviving in competitive markets. The fact that the corporate action, indeed the action of a manager, instructed or self-motivated, setting up the opportunity for freewheeling chatting was itself an instrumental action, does not undo the fact that the ensuing interactions are genuinely non-instrumental, communicative interactions.
Habermas does not refer explicitly to casual, chatty, “random” communications as an important type of communicative action. Habermas, however, uses the phrase life-world with connotations of everyday life and he does emphasize that genuine communicative action is a precondition of the formation and reproduction of the self-conception, understanding of interests and knowledge that is in turn presupposed in all instrumental action. Communicative action is thus primary and cannot be dispensed with.
Classical liberal and libertarian social philosophy are blind to Habermas’ distinction of communicative versus instrumental action. This blind spot in the basic typology of action types leads to a further blind spot, namely the failure to take account of discourse, a special reflective variant of communicative action, as necessary ingredient of societal self-regulation and progress.
Anarcho-capitalist political debate and activism is focussed on the goal of eliminating the state, on wresting resources and decision powers from political institutions to return them to private institutions and individuals. It seems as if the endgame of anarcho-capitalist activism is to achieve this withdrawal of all political power with the prospect that thereafter everybody can finally go back to their respective private and individual pursuits of happiness within markets. This seems to imply the abandonment of the res publica, the abolishment of the political arena. This implicitly self-effacing bent of libertarian political discourse, and its prospect of a society of pure market exchanges, is unrealistic and unsustainable.
Markets must be complemented by discourses.
After the libertarian revolution there will be neither government, nor any central legislation via governments or parliaments. However, the discourse of juris prudence will continue after the libertarian revolution. Once the legal provisions and processes, and the development of the legal system, have been wrested from the inefficient hands of state courts and parliaments, and transferred to the initiative of entrepreneurs competing in markets of law provision, scholarly legal discourse will be, more than ever, in demand. For instance, the advantages or disadvantages of recognizing intellectual property rights will continue to be debated after the libertarian revolution. Such public discourses, both in their scholarly and in their more popularized layers, make sense and will be conducted in the hope of achieving legal convergence, even in the absence of expectations or mechanisms of achieving a once-for-all and one-fits-all decision backed up by force.
But again, scholarly discourse, although a bottom up, competitive process in its own way, is itself no market process. Exchanges of property titles, money and monetary negotiations neither can nor should determine legality or justice, just as monetary exchanges neither can nor should determine scientific truth. Rather, both justice and truth are determined by the exchange of arguments in discourses.
The very technological base of economic progress depends on the progress of science. Science is a discourse, and discourses constitute a radically distinct type of human institution with a distinct social logic and criterion of success. The sciences therefore cannot be equated with markets, nor should they be assimilated to markets, even after all government subsidies to science have been abolished. Even today all scientific activities are also somehow tied up with economic exchanges, labouring at least indirectly under the constraint of economic reproduction, just as they are also, like all market exchanges, labouring under the constrain of legality.
The domains of economy, science, and law a.o. have been differentiated and cannot be collapsed as the Marxists tragically presumed, trying to sublate them into politics, thereby annihilating them. Neither can they be collapsed into a mere market process. These insights are most emphatically articulated in Niklas Luhmann’s theory of modern, functionally differentiated society, and have also been absorbed within Habermas’ comprehensive theoretical edifice.
It is a fundamental thesis of this book that all political philosophy discourse proper is addressed to an unlimited communication community, i.e. world society, rather than any national or otherwise parochial polity. Accordingly, in this treatise, it is always the global, planetary long term common weal that is the presupposed point of reference for the deliberation of advantages and disadvantages of the debated economic or political institutions and systems.
This implicit reference to a truly global, all-encompassing common weal has been the vantage point of all or most of the great treatises of political economy, including Adam Smith’s ‘Wealth of Nations”, Karl Marx’s Capital, and Ludwig von Mises’ Human Action. The same applies to Niklas Luhmann’s Social Systems Theory and Juergen Habermas’ Theory of Communicative Action. To put this thesis into the insightful terms of the late Wittgenstein, the orientation towards the most general public interest is part of the “grammar” of this “language game” of political economy and philosophy. This global impartial perspective is an aspiration and contested claim that will have to prove itself in discourse against the suspicion of partiality.
[i] Karl Marx, Preface to: A Contribution to the Critique of Political Economy, London, January 1859,
[ii] Matthias Schmelzer, The Hegemony of Growth - The OECD and the Making of the Economic Growth Paradigm, Cambridge University Press, Cambridge UK, 2016
[iii] Iris Borowy and Matthias Schmelzer (eds.), History of the Future of Economic Growth - Historical Roots of Current Debates on Sustainable Degrowth, (Routledge Studies in Ecological Economics), Routledge, New York 2017
[iv] Kenneth Rogoff, “Rethinking the Growth Imperative,” Project Syndicate, 2012, Quoted in: Schmelzer, Matthias. The Hegemony of Growth (p. 1). Cambridge University Press.
[v] David Friedman, The Machinery of Freedom: Guide to a Radical Capitalism, , 1st edition 1973, 3rd edition 2014, Writers' Representatives LLC, New York
[vi] Karl Marx & Friedrich Engels, The German Ideology (1845-46), Progress Publishers, Moscow 1964, pp. 89-90
[vii] Karl Marx & Friedrich Engels, The German Ideology, written in German in 1845, first published in 1932, reprinted: Prometheus Books, New York 1998
[viii] Hayek, F.A.. The Fatal Conceit: The Errors of Socialism (The Collected Works of F.A. Hayek) (p. 65). Taylor and Francis
[ix] Roger Scruton, A Political Philosophy, Bloomsbury Publishing, London 2006, p.vii
[x] Roger Scruton, A Political Philosophy, Bloomsbury Publishing, London 2006, p.vii
[xi] Roger Scruton, A Political Philosophy, Bloomsbury Publishing, London 2006, p.vii
[xii] Friedrich Carl von Savigny, Zeitschrift für geschichtliche Rechtswissenschaft (Berlin, 1815), I, p. 3 ff., quoted in: Carl Menger, Investigations into the Methods of the Social Sciences, New York University Press, New York 1985
[xiii] Carl Menger, Investigations into the Methods of the Social Sciences, New York University Press, New York 1985
[xiv] Carl Menger, Investigations into the Methods of the Social Sciences, New York University Press, New York 1985
[xv] Carl Menger, Investigations into the Methods of the Social Sciences, New York University Press, New York 1985