I venture the judgment, however, that currently in the Western world, and especially in the United States, differences about economic policy among disinterested citizens derive predominant from different predictions about the economic consequences of taking action - differences that in principle can be eliminated by the progress of positive economics - rather than from fundamental differences in basic values, differences about which men can ultimately only fight.--Milton Friedman (1953) "The Methodology of Positive economics" in Essays in Positive Economics, p. 5
Friedman relies here on [A] a tacit distinction between basic values and not-so-basic values. When there is (fundamental) disagreement over these society returns, we can say, to the state of nature. So, not unlike one of his Chicago mentors, Henry Simons, he relies on the idea (recall) that states presuppose considerable consensus. (I have noted the somewhat disastrous afterlife of this idea in Chicago economics elsewhere; e.g. here and here.) Another, no less consequential, distinction he relies on [B] is that between disinterested and (ahh) self-interested citizen. Presumably the disinterested citizen advocates the public or common interest, whereas the self-interested citizen promotes a self/sinister interest.
This means that in a functioning political unity -- i.e., one with considerable background consensus -- if we encounter public disagreement, there are for Friedman three possible sources of controversy: (i) disagreement over likely outcomes of policy; (ii) disagreement over which no-so-basic value to prioritize [in the context of major agreement]; (iii) people advocating their own interest as opposed to public interest. In principle, and this is the point of Friedman's essay, (i) can be eliminated as positive (that is empirical) economics progresses. This suggests, and again this is no surprise, that for Friedman a mature positive economics will be characterized by consensus over the relationship between policy and outcomes. In addition, in principle, (ii) can be eliminated as normative economics progresses. Friedman does not spend much time on this, and it is unclear if he agrees with Robbons who does not expect such convergence in normative economics, or with later more optimistic professional philosophers.
An important consequence of Friedman's stance is that it entails that if, one agrees with him and understands oneself as a policy-scientist (and Friedman often does), one can model public policy debates with representative agents who exhibit public spirit. For these will all agree on the common good. For those who think of 'Chicago' as a bastion of self-interest this is surprising. It is worth noting this because it makes clear that the subsequent public choice (Buchanan/Tullock) and rent-seeking (George Stigler, etc.) revolution (by his Chicago trained contemporaries) also impacts Friedman's own program.
Another important consequence of Friedman's stance is that one cannot assume that public spirited representative agents will agree across space and time, especially as they become culturally more distant. This has obvious consequences when one aims to do comparative policy work.
I could end here, but I want to call attention to a feature in Hayek's thought (ca 1945). Consider the closing two sentences, in particular, from the following passage from a justly famous essay:
The price system is just one of those formations which man has learned to use (though he is still very far from having learned to make the best use of it) after he had stumbled upon it without understanding it. Through it not only a division of labor but also a coordinated utilization of resources based on an equally divided knowledge has become possible. The people who like to deride any suggestion that this may be so usually distort the argument by insinuating that it asserts that by some miracle just that sort of system has spontaneously grown up which is best suited to modern civilization. It is the other way round: man has been able to develop that division of labor on which our civilization is based because he happened to stumble upon a method which made it possible. Had he not done so he might still have developed some other, altogether different, type of civilization, something like the "state" of the termite ants, or some other altogether unimaginable type. All that we can say is that nobody has yet succeeded in designing an alternative system in which certain features of the existing one can be preserved which are dear even to those who most violently assail it-such as particularly the extent to which the individual can choose his pursuits and consequently freely use his own knowledge and skill. F Hayek (1945 "The Use of Knowledge in Society," 528
In the paper, Hayek treats the price system as a natural machine with a clear purpose: "We must look at the price system as such a mechanism for communicating information if we want to understand its real function." (526) This is compatible with the thought (a) that the price system has many derivative functions and (b) that the real function can be undermined or obstructed. (For Hayek's argument, (b) is very important.) And one can easily see, that the gap between Hayek and Ordoliberalism is fairly small, if Hayek were to grant the Ordos that (c) one of the key functions of the state is not just not to interfere with, but to maintain actively the conditions that enable the proper functioning of the price system.
Now, one may well wonder, why Hayek assumes that there is one and only one "real function" of the price system. I think he helps himself to this claim without argument. But let's stipulate he is right about this, and that it's methodologically kosher to attribute functions to social systems at all. Even so, one may well wonder what function the communicating of information serves. In this paper he is rather silent about this more fundamental end. And here it is clear that whatever it is, not unlike Friedman later, Hayek relatives this more fundamental function to "our civilization."
And somewhat surprisingly, not unlike Simons and Friedman, Hayek also assumes considerable agreement over what Friedman calls basic values. This is clear from his response tho those who reject the price system as privileged machine. To them he de facto says, 'we agree about some of these fundamental ends -- which may call in short-hand individual 'freedom' and 'autonomy' -- and any replacement of the price-system will have to secure these, too.' My interest here is not whether this is an accurate claim about either the status of these ends in our civilization nor the extent to which illiberal critics of the price-system would endorse these. (I am, it should be clear, skeptical of both.) But rather that Hayek, too, ends up suggesting that if there is any disagreement over the functioning of the price system, it will not be due to disagreement over fundamental ends. And this suggests, that if there is disagreement, the other side(s) is/are engaged in special pleading.
Not for the first time I am struck by the lack of space for genuine pluralism over ends in twentieth century liberalism. As regular readers know I think this plays no small role in the predicament it finds itself today.
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