Tuesday, February 05, 2019

Naomi Beck on Hayek (4): The Convergent Evolution of Liberalism Through Property, Trade, and Punishment

Beck criticizes Hayek for failing to provide sufficient evidence to support his claims about history.  In particular, she complains about Hayek's "sketchy description of the origins of private property and of long-distance trade--two pillars of free market civilization," and so what we see here is "history at the service of theory" (106).

While I agree that Hayek's history is too "sketchy," I would argue that he does at least offer a rough outline of the history of property and trade that can now be supported and elaborated by the research of economic historians and evolutionary theorists over the past 40 years.  As I have indicated in a previous post, that research challenges Hayek's Freudian theory of trading behavior as requiring a repression of our evolved instincts.  That research also suggests that Hayek was wrong in not stressing the importance of the natural instinct for punishing cheaters in enforcing the laws of nature.  Beck denigrates Hayek's history while remaining silent about this research that partly confirms and partly corrects Hayek's claims.

As Beck indicates (73), Hayek saw the cultural evolution of free markets as corresponding to what biologists today call "convergent evolution."  Species that are not closely related genetically can show convergent evolution in evolving to have similar solutions to an adaptive problem.  So, for example, insects, birds, and bats have all evolved wings to give them the ability to fly although these species have very different phylogenetic origins.  Similarly, Hayek suggests that the diverse cultural traditions of human beings tend to converge towards similar rules of social order that solve the problem of how to overcome conflicts of interest in achieving social cooperation.  Hayek observes:
"it is quite possible that one kind of system of such rules is so much more effective than all others in producing a comprehensive order for a Great Society that, as a result of the advantages derived from all changes in the direction towards it, there may occur in systems with very different beginnings a process corresponding to what biologists call 'convergent evolution.'  'The necessities of human society' may bring about an independent emergence, at many different times and places, of the same sort of system, such as that based on private property and contract.  It would seem that wherever a Great Society has arisen, it has been made possible by a system of rules of just conduct which included what David Hume called 'the three fundamental laws of nature, that of stability of possession, of its transference by consent, and of the performance of promises,' or, as a modern author sums up the essential content of all contemporary systems of private law, 'freedom of contract, the inviolability of property, and the duty to compensate another for damage due to his fault.'" (LLL [2], 40).
If Hayek is right, then we should see in the evolutionary history of human social order that those societies based on private property, free trade, and contract--Hume's three laws of nature--are manifestly successful in showing growing wealth and population.  Hayek sketches that history beginning with exchange and specialization in primitive groups and long-distance trade beginning at least 30,000 years ago in the Paleolithic age (FC, 38-39).  He implies that the migration of human ancestors out of Africa depended on trade in an extended order (FC, 41).  Oddly, this seems to contradict Hayek's claim that trading arose so recently in human history--within the last few thousand years--that it could not have become an evolved instinct.

Hayek sees evidence that some of the ancient Greek cities--particularly, Athens--protected private property and trade in ways that promoted a surge in the growth of wealth and population and that allowed for the development of the first global trading networks.  In contrast to Athens, ancient Sparta resisted the "commercial revolution," and consequently Spartan society never achieved high civilization (FC, 31-32, 39-40, 44, 46).

Hayek also sees evidence that ancient Rome during the last years of the Republic and the first two centuries of Empire had laws protecting private property and contract in ways that promoted growth, but then "this first extended order" declined when centralized government impeded commercial freedom.  He sees this as a repeated pattern in which civilization advances when a government protects individual liberty so that there can be an increasingly complex order of spontaneous and voluntary cooperation; but then the government abuses its powers in suppressing individual liberty, so that civilization declines as wealth and population declines (FC, 32).  He sees the same pattern in ancient Egypt and imperial China: civilization advances during times of weak government control over society that allows for capitalist growth, but then the expanding power of a central government brings a decline in growth.

In the history of Europe during the later Middle Ages and the early modern period, Hayek indicates:
"It was not under the more powerful governments, but in the towns of the Italian Renaissance, of South Germany, and of the Low Countries, and finally in lightly-governed England, i.e., under the rule of the bourgeoisie rather than of warriors, that modern industrialism grew.  Protection of several property, not the direction of its use by government, laid the foundations for the growth of the dense network of exchange of services that shaped the extended order" (FC, 33).
Recent research in evolutionary science and in economic history gives some support to Hayek's history of how extended social orders of cooperation arise from the enforcement of Hume's three laws of nature.  Beck says nothing about this.

First, as summarized in Morris Hoffman's The Punisher's Brain, evolutionary science sustains a slightly modified form of Hume's three laws.  (Previously, I have written a post on Hoffman's work.)

Like Hayek and Hume, Hoffman thinks human beings have always faced what he calls the Social Problem.  The problem arises from our human nature as both selfish and social animals, so that we must always face the question: cheat or cooperate?  We are inclined to cheat others in our group whenever cheating would be to our selfish advantage.  But we are also inclined to cooperate, because living in cooperative groups has always given us long-term advantages in the struggles of life.  We have evolved instincts both to cheat and to cooperate.  But we also have a third evolved instinct--to punish cheaters in order to reduce cheating and increase cooperation by increasing the costs of cheating.  We are guided by three rules of right and wrong rooted in our evolved human nature to promote cooperation by securing property and promises. Rule 1: Transfers of property must be voluntary.  Rule 2: Promises must be kept.  Rule 3: Serious violations of Rules 1 and 2 must be punished.  Hoffman is a trial judge in Denver, and he thinks these rules underlie everything that is done by judges and jurors.

Hoffman interprets "property" in a broad sense as starting with self-ownership and encompassing one's life, health, and possessions, as well as the life, health, and possessions of one's family and others to whom one is attached.  Hoffman here echoes Locke's argument for self-ownership as the ground of property rights.  Understood in this broad way, Rule 1 embraces criminal law, while Rule 2 embraces contract law.

Classical liberals could accept this as a good statement of their claim that the primary purpose of law is to punish force and fraud and secure the liberty of individuals to live as they please so long as they do not harm others.

Hoffman supports his argument for these rules and punishments being rooted in evolved human nature with various kinds of empirical evidence from economic game experiments, animal behavior, behavioral endocrinology, neuroscience, brain imaging studies, evolutionary anthropology, child psychology, and legal history.

Although this largely confirms Hume's account of the "three laws of nature" as endorsed by Hayek, it emphasizes more than Hume and Hayek do the importance of the evolved instinct for punishing cheaters.  Hayek only rarely speaks of punishment, as when he says that "under the rule of law, government can infringe a person's protected private sphere only as punishment for breaking an announced general rule" (CL, 206).

By comparison with Hayek and Hume, John Locke is more emphatic in affirming the natural right to punish--the "executive power of the law of nature"--as the fundamental doctrine for liberal social order.  I have written about this here and here.

The second line of recent research supporting Hayek's evolutionary history of liberal order is in economic history.  Many economic historians now agree with Hayek that throughout history those societies that have enforced institutional rules protecting private property, trade, and contracts have flourished in ways that promoted growth spurts in wealth and population.

In particular, Hayek was right about the "commercial revolution" in ancient Athens as illustrating the convergent evolution towards liberal order.  In The Rise and Fall of Classical Greece (2015), Josiah Ober has surveyed the evidence that ancient Athens in the 5th and 4th centuries BCE was one of those premodern societies that showed an "efflorescence" (in the terminology of Jack Goldstone)--a period of increased economic growth as well as increasing population and cultural achievement promoted by a vigorous commercial life that is similar to what we see today in modern liberal societies.  (I have written about this here.)

Ober argues against the common assumption of many scholars that ancient Greece was poor and experienced little or no economic growth.  He shows that Greece in the classical era had rates of growth in both consumption and population that were much higher than the premodern norm and higher than any period in Greek history until the middle of the 20th century.  He offers the sort of institutional explanation of economic growth advocated by Douglas North and others: "Fair rules and competition within a marketlike ecology of states promoted capital investment, innovation, and rational cooperation in a contest of low transaction costs" (103).

Similar conclusions about the ancient Greek economy have been supported by Alain Bresson in The Making of the Ancient Greek Economy: Institutions, Markets, and Growth in the City-States (2016). The ancient Greek economy showed some of the features of capitalist society that supported a long period of unprecedented economic growth.  The rule of law enforced property rights and contractual obligations in a way that sustained both domestic and international markets for trade.  The Greek city had two institutions for trade--the agora, or internal market, and the emporion, or market for international trade.  This trade allowed for an extensive domestic and international division of labor.  The Greek world experienced the first world economy based on long-distance trade.

This was made possible by the institutional enforcement of Hume's three laws of nature--private property, exchange, and contract.  This can also explain Goldstone's account of the other "efflorescences" in premodern history--spurts of growth in wealth and population--that include the High Middle Ages in northwestern Europe (1150-1250), Golden Age Holland (1570-1670), High Qing China (1680-1780), and Great Britain during the Industrial Revolution (1760-1830).

And yet, in none of these cases, does one see the self-sustaining and accelerating explosion in economic growth that began in Great Britain around 1850, which Deirdre McCloskey calls The Great Enrichment.  Although Northian institutionalism can explain the earlier efflorescences of economic growth in per capita income of up to 1% per year, it cannot explain the unprecedented growth in the past two centuries, in which liberal societies have seen increases in average income from 1800 to the present of over 1,000 to 3,000 per cent.  To explain that, McCloskey argues, we need to see the crucial rhetorical change that led to the great Bourgeois Revaluation that recognized and honored the moral and intellectual virtues of the bourgeois commercial society  While Hayek never developed this idea, he does perhaps point to it in speaking about modern commercial societies as being "under the rule of the bourgeoisie."

This looks like what Hayek identified as the convergent evolution of liberal social order:  whenever and wherever societies have adopted the rules of liberal order, this has produced spurts of growth in wealth, population, and cultural complexity; and now with the global spread of those rules over the past 200 years, this has produced a self-sustaining and accelerated explosion of growth beyond anything ever seen in all of human history.

Beck is silent about all of this.

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