One further comment, while I’m thinking of Chris Caldwell. He is, after all, a reminder that there are journalists who are much smarter, intellectual, and certainly better read than most academics, including me. We had lunch recently, while he was working on his euro-zone essay. I was then ordering books for my spring law and economics class, and he saw the copy of that elegant collection of essays by Ronald Coase, The Firm, the Market, and the Law.
It was a telling detail that Christopher remarked on how much he admired Coase’s essays on the reasons why there are firms and institutions. Not “The Problem of Social Cost,” but the essays seeking to set out the conditions under which the endless succession of market transactions cannot do what an institution, hierarchically organized and top down in its authority and ordering, is able to do.
Like Christopher, I find that the fundamental intellectual problem of democracies today is less the value and legitimacy of the market and the price mechanism, but instead the problem of ‘coherent institutions’ in the sense that Coase sought to draw out in his essays on the industrial firm. I realize that this sounds strange, given that I quite share the view of many that the current administration’s policies are deeply anti-market. The anti-market behaviors, however, have not done much to undermine the sense of its legitimacy or its relationship to fundamental freedom of choice (the individual mandate notwithstanding). Whether I am right or wrong about that, I persist in thinking that the more fundamental problem is instead how one achieves coherence in a complicated democracy for certain matters for which one needs institutions that can achieves the long term stability and settlement in order to engage in long run and strategic behavior.
At this particular moment in time, curiously, the intellectual problem is not how to justify the price mechanism, but how to justify what Hayek, for one, saw as the problem of organic institutions and their functioning, the problem that is also important to his libertarian vision, the formation of institutions that can sustain liberty.
And note that the rule of New Class experts, seeking what Telos used to call “the wholly-administered society,” is not a function of greater coherence. It is actually what happens when institutions of ordered liberty falter, and create gaps that the mandarin-experts, replacing democratic legitimacy with technocratic claims of expertise, rush to fill in governance. In that sense, coherence within institutions, in the libertarian and democratic sense, is that which protects against the alternative claims of technocratic, expert – but let’s be real, today merely credentialled – legitimacy that arise when the former lags. I believe that what I have said here is quite consistent with, and indeed required by, Hayek’s political economy.
“Coherence” is a big problem for the United States at this moment, let alone Europe. China has coherence, at this moment, but only of a kind that Thomas Friedman could admire. The task, rather, is how to achieve coherence, “ordered liberty” to use the constitutionalist phrase, in a democracy. Because it is quite certain that less coherence does not automatically equal more democracy, and that more coherence automatically equals less democracy.