Monday, May 11, 2015

Carlos Santiago Nino against Hayek

In Argentina Friedrich Hayek is often dismissed as a mere defender of privilege. But in the early 90's an academic, Carlos Santiago Nino, still thought it necessary to provide some arguments before rejecting Hayek's ideas. I would like to examine Nino's objections to the notion of spontaneous order.

Carlos Santiago Nino (1943–1993, link to the wikipedia) was an Argentine jurist and philosopher. He was very influential in the 80s, especially when Argentina returned to democracy after the defeat in the Falklands war. He became personal assistant to President Ricardo Alfonsin and coordinator of the Council for the Consolidation of Democracy, a body created by the new government for the purpose of designing institutional reforms.
Nino was what Americans call “a liberal”. He took the ideas of the academics that dominated the American and British universities –among others, John Rawls, Joseph Raz, and Jeremy Waldron– summarized them and made them popular among Argentine academics. Most importantly, in a country in which few people are able to read English, he put everything in Spanish. But he didn't just copy; though it is true that he adopted the theories that were already influential in American and British universities in his time (and remain dominant today), he was a capable thinker himself.
Nino accepted Waldron's idea that the moral justification for property rights must lead to a redistribution of wealth, even to limitations on the kind of goods that people are allowed to possess.1 He endorsed the idea of collective rights2, and made the usual objections against both the efficiency and the morality of free markets.3
From what I have written about Nino's mentors in this blog, it must be clear that I disagree with him. Nevertheless, Nino was much better than the kind of intellectual that dominates Argentina at the beginning of the 21st century. While Nino provided arguments (flawed in my opinion) academics like Eugenio Zaffaroni use invective and scorn. Nino was under the spell of Oxonian Analytic-Philosophy. Professor Zaffaroni, recently retired from Argentine Federal Supreme Court, is an admirer of Michel Foucault. In fact Nino challenged Zaffaroni's theories in a very instructive debate. No academic seems able to find courage to do it today.
In the 80's, Nino's friend and like-minded liberal Genaro Carrió had a very civilized debate with Sebastián Soler, a “liberal” in the 19th century sense. At the beginning of the 21's century, Soler is simply dismissed and insulted. The change in the ideas that dominate Argentine universities is made clear by the fact that Nino's main disciple, professor Roberto Gargarella, is a Marxist.4


Nino against spontaneous order

In his book Foundations of Constitutional Law (Fundamentos de Derecho Constitucional) Nino defended the notion of “positive” rights –sometimes called economic and social rights– that is, rights to a positive delivery of goods or services, usually from the government. In that context, he charged against Hayek's notion of a spontaneous order. He asserted that it was false and based on a series of confusions. Nino argued (I translate from p. 399) that “the market's order is based on the structure of property which, as it is obvious, is established by statutes deliberately dictated which validate certain acts of possession and transmission of goods -which may have not been recognized by them- and attribute to these acts certain rights and obligations -which may have been given different effects- statutes that establish punishments against those who interfere with those rights. Secondly, these statutes are enforced by courts and the police who are sustained by the product of the obligation to pay taxes. In the third place, the market works through contracts which demand statutes, courts, officials, and taxes to sustain them. In fact, to a greater autonomy of individuals it must correspond a larger State interventionism in the form of contract execution. And as more causes of contractual nullity are recognized, there will be less State interference, in the form of a negative to provide the public service of coercion to enforce those contracts”.


What is spontaneous order?

It is clear to me that Nino failed to understand Hayek's argument. First of all, he failed to see what is spontaneous: it is nothing less that the very activity that drives the life of a nation. Laws establish the formalities of contracts and how they are enforced, but they neither establish the purposes of these contracts nor the kind and quantities of things that people buy and sell. Statutes regulate the rights of inventors and innovators, but they neither create those inventions nor decide which of them will be successful in the market.
The French economist Frederic Bastiat pointed out that we should marvel at the fact that a big city like Paris is provided with all sorts of food, clothing for summer and winter, tools, bolts, cigarettes, and toys, without any authority's decision about how much fruit, flour, shirts, overcoats, pliers, and teddy bears are to be produced. Nobody decides how many trucks are needed to move all these goods. Nevertheless, they arrive in time, each one in proper quantities, and very little is wasted. That is the fundamental spontaneous order. That is the order on which the well-being of people, often their very survival, depends. But we don't marvel at it, it is so essential to our lives and so pervasive that we take it for granted.
Moreover, experience shows that it is precisely when authorities decide that they can impose a better order and take to themselves the task of deciding how much flour and shirts will be made that these goods become scarce and poorly made. Socialists of all parties seldom learn from these experiences; they don't stop and think about the odd fact that life went better without their orders. As they are unable to conceive that order might be spontaneous the only lesson they learn from disaster and hunger is that next time they will appoint better planners and regulators.
In Italy, Fascists thought that they had found a better way than marxists and socialists: production would be regulated by boards of employers and employees. They created corporations where each group in society (or rather, the groups in which they thought society was divided) had a place reserved, no matter how many votes they would have had in a regular election. That system didn't work either. Nevertheless, in Argentina a large number of people still believe that order would be better established if only the representatives of each relevant “sector” of society agreed to “sat down to a table” (that is the set phrase), have a talk, arrange their differences, and issue a plan that would secure everyone's well-being.
Plan by a single authority is bad; plan by committee is worse. What must be understood is that the problem is not how or by whom these decisions are made; the problem is that such order won't be spontaneous.
Furthermore, we must be aware that “spontaneous” does not mean “thoughtless”. There is much more thought and care involved in spontaneous order than in any plan or regulation. Except that they are the thoughts and goals of millions of people who interact and adapt to each other without anyone bossing them about and telling what they have to do.
Hayek wrote in his book Law, Legislation, and Liberty: “The possibility of men living together in peace and to their mutual advantage without having to agree on common concrete aims, and bound only by abstract rules of conduct, was perhaps the greatest discovery mankind ever made” (vol. 2, p. 136). That is the fundamental spontaneous order, the one that is defined by the fact that it requires no agreement on collective goals. Marxists, Nazis, corporatists, nationalists, and socialists of various kinds, thought (and still think today) that such common goals are indispensable. They can't conceive an order without them. So fundamental are they for these groups, their leaders, and intellectuals, that in default of agreement they are prepared to force people to adhere to their goals. That they describe them as national purposes, race world-views, or class interests, is –according to Hayek– secondary to the fact that all of these doctrines reject an order that is spontaneous and has not to be directed.
It is sad that well educated people and even academics like Nino fail to see that they get most of the goods that made life enjoyable –even possible– by an order that is spontaneous. The essential order to which Bastiat, Menger, and Hayek pointed out is not the system of laws, which of course they acknowledged, but the order that is established when millions of individual plans –each one different!– adapt to each other.

The legal system

But even laws and codes have much that is spontaneous. Nobody invented the notion of a contract, or of credit, or of paid services. Today we have laws about such things, but the practice, and the very concepts, originated long before those laws. Some people started exchanging food, firewood, or tools, and many others realized that they could improve their well-being in that way.
They started using some forms, some words, ceremonies, and written documents for their agreements. Some thought that it would be a good idea to produce things they didn't need, just in order to exchange them for goods they needed. That is the beginning of specialization and the division of labor. Many of them found that there are certain goods that are readily accepted by most people, goods that are easy to transport, and don't get spoiled by the passing of time. Whenever they were uncertain about their future needs, or whenever they couldn't find the products they needed, they chose to exchange their products for those goods, as an intermediate step. These were, with various degrees of success, chunks of salt, hides, spices, gold, silver, and many other things. That is, according to the Austrian economist Carl Menger, the origin of money. In time, laws established coins and much later, paper money. But contracts, wills, marriage, property, and money started spontaneously, as parts of an order that laws secured and modified but seldom (if ever) they created.
Socialists of all parties prise themselves for their realism, nevertheless they seem to assume that nobody exchanged berries for firewood, nobody left his cows to his children, before some authority called people from the villages and adjacent farms and told them that from then on they will have an institution called “contract” and another called “will”.
Those who write statutes and codes find these things already working; they settle some things, modify others, but seldom invent a new practice from scratch. Even in the introduction of the French Civil Code, the jurist Portalis wrote that “codes are made by time, but to speak more properly, one does not make them”.

1 See his Fundamentos de Derecho Constitucional (Foundations of Constitutional Law) p. 364.
2 Op. cit. p. 371.
3 Op. cit. p. 372-373.
4 A translator and follower of British Marxist Gerald Cohen.

No comments:

Post a Comment