Saturday, April 23, 2016

The Moral Foundations of the Modern Social Order - By Bionic Mosquito

I have taken the title from a line in When Money Fails, by Gary North:
Wilhelm Röpke was not the most technically competent free market economist of our time, but he was the most accurate one. He was the one economist in the free market tradition who has forthrightly acknowledged that social theory is broader than economic theory. Economics is a subset of social theory, not the other way around. Röpke spent a great deal of time thinking about the moral foundations of the modern social order.
The issue being addressed is economic, the division of labor society:
This is not a technical issue; it is a moral issue. The division of labor did not increase in the West apart from the West’s social and moral order.
North’s piece is focused on the moral and legal framework that makes the division of labor possible.  I intend to move in a slightly different direction.
North cites Röpke; the subject work is Röpke’s International Economic Disintegration. Röpke wrote the book in the late 1930s, published in 1942.  I will focus on Chapter V, beginning page 67 in the embedded PDF:
THE problem to be discussed here is deemed so important, that it should be used as the starting point of any causal analysis of the present disintegration of world economy worthy of the name.
In reading both North and Röpke, it seems to me the discussion could also be applied to the social order much more broadly defined.  Chapter V is entitled “THE IMPORTANCE OF THE EXTRA-ECONOMIC FRAMEWORK FOR THE WORKING OF THE ECONOMIC PROCESS.”  I will propose considering it in the following context:
As has been remarked earlier, no one will seriously dispute that this traditional spirit of economic science was, and still is, largely coloured by belief in not only the sociological autonomy, but also the sociologically regulating influence of the market economy.
Röpke suggests that a robust market economy cannot survive or thrive absent a framework that is found outside of pure economic science – a market economy cannot function in just any social environment.  One might consider: can the NAP properly function autonomously, without consideration of the broader social framework?
If the answer is yes, then anything goes – the libertines and the dreamers are right.  If the answer is no, one might decide to take Hoppe more seriously when considering the NAP.
Implicitly and explicitly, it was and still is held that a market economy based on competition and essentially unhampered by any agency outside the competitive market is an ordre naturel which, once freed from all impediments, is able to stand indefinitely on its own feet…
Thus the competitive market appeared to be a “philosopher’s stone,” which turned the base metal of callous business sentiments into the pure gold of common welfare and solidarity…
With government (as we know it today) out of the way, is it reasonable to expect that a libertarian order would blossom out of the remains – without any other changes or requirements?  Could the libertarian order stand “on its own feet”…“once freed from all impediments”?
If yes, score one for the libertines and dreamers; if no, Hoppe gets a shout.
So far the competitive market economy was considered sociologically autonomous: it needed no special laws, no special state or special society, required neither a special morality nor any other irrational and extra-economic forces and sentiments.
Can a libertarian society survive and thrive under any conditions, without a “special society” or a “special morality” or any other “forces and sentiments” outside of the NAP? If it can, the libertines and dreamers are correct.  If it cannot…well, you know.
Rarely or never was this belief stated so crudely, but surely few will to-day deny that the general tendency of the liberal philosophy ran—and in some quarters still runs—in this direction.
This is also the general tendency of those who believe a libertarian society can survive and thrive under any social or moral framework.  Maybe they are right, maybe not.
Far from consuming and being dependent on socio-political integration from outside the economic sphere, the competitive market economy produces it—or so runs the argument.
Does the NAP produce an orderly society, or are certain conditions within society necessary pre-conditions for the NAP?  As to economics, Röpke suggests that certain conditions are necessary pre-conditions:
If views like these were ever held at all, it has become obviously impossible to continue to hold them to-day. …we are forced emphatically to deny that this order is anything like an ordre naturel independent of the extra-economic framework of moral, political, legal and institutional conditions…
The world around us tells us that achieving a society grounded in the NAP is far more difficult and far more complicated than achieving a relatively sophisticated division-of-labor economy.  To open one’s eyes is to see this reality.  If extra-economic moral and institutional conditions are necessary for the proper functioning of the relatively simple division-of-labor economy, how much more true must it be for achieving a society that respects the non-aggression principle?
…it is highly doubtful…that economic integration can be sufficiently relied upon to produce automatically the degree of socio-political integration it requires.
The chicken or the egg?  Does this question apply also to consideration of the NAP in a broader social context?
Röpke offers his view:
…it would be a great mistake to think that that would make the market system an ethically neutral sphere. On the contrary, it is a highly sensitive artefact of occidental civilization, with all the latter’s ingredients of Christian and pre-Christian morality and its secularized forms…
Before jumping on me or Röpke, note that he includes “its secularized forms.”
It is difficult to imagine how the leading thinkers of former generations could have been more or less blind to this fundamental truth, which seems so obvious and even trivial to us to-day.
Are Röpke’s thoughts regarding the division-of-labor economy equally applicable to the libertarian political order and to some of the “leading [and not-so-leading] thinkers” of this school?
I just wonder….
Reprinted with permission from Bionic Mosquito.