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Friday, August 1, 2008

Hubris in the First Degree

“[A]s president, I will commit two billion dollars each year on clean-coal research and development. We will build the demonstration plants, refine the techniques and equipment, and make clean coal a reality.”

That’s what John McCain, the Republican presidential candidate, said back on June 18 in Springfield, Missouri. My first reaction was this: “That’s mighty generous of Sen. McCain. I didn’t know he had that kind of money.”

Then I remembered he doesn’t. But if he wins the election in November he’ll have something better: the American taxpayers. They produce — what? — about $14 trillion worth of goods and services a year, which makes any individual fortune pale to invisibility by comparison.

In the end, that’s why people run for president of the United States, isn’t it? They have big ideas, so patently sensible and desirable–to their author, that is–that the rest of us must be compelled to go along whether we want to or not.

Yeah, yeah. A veneer of moral legitimacy will be accorded to this system by the election that puts the schemer in office. But many people won’t have voted for the winner; they’ll either have voted for someone else or abstained altogether. And the ones who will have voted for the winner may not like his particular spending program. They may have simply found him marginally preferable to the alternatives.

Nevertheless, once inaugurated, and assuming he can harness the “democratic” forces that include high-power lobbying, rent-seeking, and legislative log-rolling, the new president will have the power to enact costly impositions on the rest of us.

Isn’t self-government divine?


How Do They Know?

There’s more to the story. McCain sees clean-coal technology in our future. But how does he know that’s the way to go? His experts told him. How do they know? They just do. They’re experts.

Either those experts think a real free market (as opposed to the reigning mixed corporatist economy) would develop clean-coal technologies if permitted or they fear it would not and want the government to intervene. If it’s the second alternative, we ought to wonder why their preferences should be permitted to override those of the throng whose choices would otherwise determine the nature of energy development in a free market.

But if the experts instead believe that clean coal is what the market would select, then they indict themselves on a charge of hubris in the first degree. How can they know what a nonexistent unfettered market process would bring about?

Some years ago Nobel laureate James Buchanan rightly criticized a strain of “free-market” thinking which holds that, in principle, an omniscient being could anticipate the outcomes the market process would produce. Wrong, Buchanan said, for that would imply that markets aim at outcomes external to themselves, and such a view betrays a fundamental misunderstanding of what markets do.

For Buchanan, “[T]he lsquo;order’ of the market emerges only from the process of voluntary exchange among the participating individuals. The lsquo;order’ is, itself, defined as the outcome of the process that generates it. The lsquo;it,’ the allocation-distribution result, does not, and cannot, exist independently of the trading process. Absent this process, there is and can be no lsquo;order.’. . .”

In other words, human beings do not robotically execute plans formulated in some Platonic realm separate from their day-to-day world. On the contrary, “They confront genuine choices. . . . The potential participants do not know until they enter the process what their own choices will be.”

Human beings are not program-bound computers facing a known set of alternatives. They are persons on the Misesian model: creative entrepreneurial beings facing an open-ended world in which genuine surprise is possible.

“From this it follows,” concludes Buchanan, “that it is logically impossible for an omniscient designer to know, unless, of course, we are to preclude individual freedom of will.”

This overlooked function of the market means that competition is more than a “discovery procedure,” to use F.A. Hayek’s phrase. The market doesn’t merely discover what’s already there waiting to be discovered, like someone’s discovering an island. Rather, the market process creates what it “discovers” by virtue of being an environment in which freely choosing individuals do things in particular situations that they might never have anticipated doing had they not faced those situations. And remember, those situations themselves are the product of people’s unanticipated choices in earlier situations, and so on ad infinitum.

In light of this truly radical perspective on the free market, we are entitled to ask: If an omniscient being couldn’t know if clean coal is the best choice, how can McCain and his experts know?

Laissez faire, laissez passer.

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.