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Working Paper No. 49. Capitalistic Competition as a Communicative Community – Why Politics Is Less “Deliberative” than Markets

PublicationWorking paper
Deliberativ demokrati, Företagandets villkor, Michael Wohlgemuth, Opinion
Working Paper No. 49.
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Abstract

Discourse theorists such as Habermas tend to disregard the communicative character and discoursive power of market processes and at the same time overrate the ability of political deliberation to discover and implement social problem solutions. Mainstream economists have little to contribute to this debate since they regard both economic and political “markets” as simple instruments for the aggregation of given preferences. Hayek and other “Austrian” market process theorists, however, provide a rich theory that highlights the role of competition as a process of discovery, persuasion, experimentation and opinion formation. I use this analytical framework in order to show first that real market processes in many respects correspond to most ambitious claims of ideal deliberation such as “domination-free discourse” or “the unforced force of the better argument”. Next, I confront the deliberative ideal with predicaments of real political discourse, stressing opportunity costs (rational ignorance, shortage of attention, decision costs), asymmetric incompetence and the interventionist bias of political deliberation, and problems of “cheap talk” (preference falsification, opinion cascades, enclave deliberation). In order to make political discourse most effective within the limits described above, I argue in favour of privatisation, decentralisation and constitutionalisation as policy conclusions. I end with a summary comparison of economic and political competition as means to discover and disseminate local knowledge in society.

Wohlgemuth, M. (2004). Capitalistic Competition as a Communicative Community – Why Politics Is Less “Deliberative” than Markets. Ratio Working Paper No. 49.

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Working Paper No. 49. Capitalistic Competition as a Communicative Community – Why Politics Is Less “Deliberative” than Markets
Working paperPublication
Wohlgemuth, M.
Publication year

2004

Abstract

Discourse theorists such as Habermas tend to disregard the communicative character and discoursive power of market processes and at the same time overrate the ability of political deliberation to discover and implement social problem solutions. Mainstream economists have little to contribute to this debate since they regard both economic and political “markets” as simple instruments for the aggregation of given preferences. Hayek and other “Austrian” market process theorists, however, provide a rich theory that highlights the role of competition as a process of discovery, persuasion, experimentation and opinion formation. I use this analytical framework in order to show first that real market processes in many respects correspond to most ambitious claims of ideal deliberation such as “domination-free discourse” or “the unforced force of the better argument”. Next, I confront the deliberative ideal with predicaments of real political discourse, stressing opportunity costs (rational ignorance, shortage of attention, decision costs), asymmetric incompetence and the interventionist bias of political deliberation, and problems of “cheap talk” (preference falsification, opinion cascades, enclave deliberation). In order to make political discourse most effective within the limits described above, I argue in favour of privatisation, decentralisation and constitutionalisation as policy conclusions. I end with a summary comparison of economic and political competition as means to discover and disseminate local knowledge in society.

The Communicative Character of Capitalistic Competition
Article (with peer review)Publication
Wohlgemuth, M.
Publication year

2005

Abstract

“Ideal speech situations”, “domination-free discourse” or “deliberative communities” describe political ideals proudly cherished by many sociologists. The sometimes explicit, sometimes implicit, motivation is to mobilise political discourse as an instrument to tame or transform the capitalistic “system” according to alleged needs of “society”. Most economists and defenders of capitalistic competition, in return, don’t care about communicative communities. The individual market actor is assumed or demanded to be free to choose among given alternatives satisfying given preferences subject to given constraints. Why, then, should homo economicus argue (van Aaken 2003)? There is no “communicative action” among the individuals that populate economic textbooks, there is only “commutative action”. Only a few, mostly “Austrian”, economists realised that the exchange of goods and services within the spontaneous order of “catallaxy” involves an exchange of knowledge, ideas, opinions, expectations, and arguments – that markets are indeed communicative networks (e.g. Hayek 1946/48; Lavoie, ed. 1991; Horwitz 1992). In fact, and this will be my major claim, market competition is more “deliberative” than politics in the sense that more information about available social problem solutions and their comparative performance, about people’s preferences, ideas and expectations is spontaneously created, disseminated and tested. This very idea is anathema for followers of Habermasian discourse ethics. The intellectual thrust and political clout of their vindication of deliberative politics critically seems to depend on a mostly tacit assumption that markets fail to address social needs and regulate social conflicts. Political discourse therefore ?steps in to fill the functional gaps when other mechanisms of social integration are overburdened? (Habermas 1996: 318). I will claim that the argument should be very much the other way around: politics and public deliberations are overburdened mechanisms – unable to deal with an increasingly complex and dynamic society. Moreover, the requisites of ideal speech communities are so enormous that functional gaps are inevitable. Partly, these gaps can be closed if market competition steps in. Partly, reorganisations of the political system are needed. Hence, I am not arguing that Habermas is wrong by stressing the need for open discourse in order to reach informed agreement among citizens who seek to realise mutual gains from joint commitment by contributing to common (public) goods and submitting to common rules of conduct (s.a. Vanberg 2003). I am challenging his neglect of capitalistic competition as a communicative device and his disdain for the classical liberal conception of bounded democracy that respects individual property rights (e.g. Habermas 1975; 1998).

The Communicative Character of Capitalistic Competition
Artikel (med peer review)Publication
Wohlgemuth, M.
Publication year

2005

Abstract

“Ideal speech situations”, “domination-free discourse” or “deliberative communities” describe political ideals proudly cherished by many sociologists. The sometimes explicit, sometimes implicit, motivation is to mobilise political discourse as an instrument to tame or transform the capitalistic “system” according to alleged needs of “society”. Most economists and defenders of capitalistic competition, in return, don’t care about communicative communities. The individual market actor is assumed or demanded to be free to choose among given alternatives satisfying given preferences subject to given constraints. Why, then, should homo economicus argue (van Aaken 2003)? There is no “communicative action” among the individuals that populate economic textbooks, there is only “commutative action”. Only a few, mostly “Austrian”, economists realised that the exchange of goods and services within the spontaneous order of “catallaxy” involves an exchange of knowledge, ideas, opinions, expectations, and arguments – that markets are indeed communicative networks (e.g. Hayek 1946/48; Lavoie, ed. 1991; Horwitz 1992). In fact, and this will be my major claim, market competition is more “deliberative” than politics in the sense that more information about available social problem solutions and their comparative performance, about people’s preferences, ideas and expectations is spontaneously created, disseminated and tested. This very idea is anathema for followers of Habermasian discourse ethics. The intellectual thrust and political clout of their vindication of deliberative politics critically seems to depend on a mostly tacit assumption that markets fail to address social needs and regulate social conflicts. Political discourse therefore ?steps in to fill the functional gaps when other mechanisms of social integration are overburdened? (Habermas 1996: 318). I will claim that the argument should be very much the other way around: politics and public deliberations are overburdened mechanisms – unable to deal with an increasingly complex and dynamic society. Moreover, the requisites of ideal speech communities are so enormous that functional gaps are inevitable. Partly, these gaps can be closed if market competition steps in. Partly, reorganisations of the political system are needed. Hence, I am not arguing that Habermas is wrong by stressing the need for open discourse in order to reach informed agreement among citizens who seek to realise mutual gains from joint commitment by contributing to common (public) goods and submitting to common rules of conduct (s.a. Vanberg 2003). I am challenging his neglect of capitalistic competition as a communicative device and his disdain for the classical liberal conception of bounded democracy that respects individual property rights (e.g. Habermas 1975; 1998).

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