It is often difficult to understand the motivations of political
agents based only on their choice of political party or their vote on a specific
issue. However, if we can determine their political core—their prime directive,
key assumptions, and choice of strategies—then analyzing and predicting actions
by the polity is greatly simplified. The purpose of this paper is to isolate the
prime directive of the polity and the various ways it is put into action based
on key assumptions and strategies. For simplicity, only the political core of
progressives and classical liberals will be considered.
For any politician, the chance to address a crisis, real or
imagined, is seen as an excellent career move. Former U.S. Representative and
White House Chief of Staff, Rahm Emmanuel expressed this concisely in 2008,
“You never want a serious crisis to go to waste. Things that we had postponed
for too long, that were long-term, are now immediate and must be dealt with.
This crisis provides the opportunity for us to do things that you could not do
before" (Seib 2008) . Politicians
see a crisis as a situation resulting from chaos that creates uncertainty in
the electorate. It is this chaos, real or threatened, and the resulting
uncertainty that is used to make the case for political action. Thus, the prime
directive of the polity is to reduce chaos and uncertainty. In simpler terms,
this directive can be restated as an effort to increase order.
If the prime directive of the polity is to increase order, what
are the underlying assumptions of progressives and classical liberals that
determine the strategies they choose to achieve that order? There are two
opposing views about the emergence of economic order. Similar to the ongoing
debate between cosmologists over evolution and intelligent design, is the rift
between economists over spontaneous order and induced order. Fredrick Hayek wrote
of spontaneous order as “functioning without a designing and directing mind . .
. the spontaneous collaboration of free men often creates things which are
greater than their individual minds can ever fully comprehend” (Hayek 1948) . In contrast,
induced order refers to the effort of a hierarchical polity seeking to foist
order by executing centrally conceived master planning.
Progressives and classical liberals stand together in their
desire for economic order and the avoidance of uncertainty. Both groups also
point to the importance of well-defined and enforced property rights as
essential to an efficient economy. The bifurcation begins with their key
assumptions about the nature of economic markets. Classical liberals assume
that free markets will, under the guidance of the Smithian invisible hand,
result in spontaneous order while approaching Marshallian optimality. Progressives,
on the other hand, assume that markets require the oversight and management of
a central planner, implementing induced order as the only way to avoid or
remedy the inevitable market failures and achieve Kaldor-Hicks optimality. Thus
in the quest for order, the opposing parties clash in the marketplace of
political ideas. Based on these two underlying assumptions, progressives seek a
commanding heights form of governance, while classical liberals attempt to encourage
self-governance. The commanding heights approach allows induced order to be
imposed by the progressive central planner, while the classical liberal sees
self-governance as essential for the emergence of spontaneous order in free
markets.
The dichotomy between these two philosophical approaches to bringing
about economic order can be illustrated by comparing the business cycle
theories of Keynes and Hayek. Keynes sees the underlying cause of cyclicality
as the result of market failure in the form of animal spirits that requires a
commanding-heights fiscal policy to restore the market to equilibrium. In
contrast, the Hayekian or Austrian view is that business cycles result from
monetary disturbances, usually instigated by the central bank, that create
market distortions. The remedy, then, is to restore interest rates to their
natural rate and let the market forces work to bring about a recovery from the
boom/bust cycle.
The final impact of induced order is the attempt to use the
same commanding heights approach to remedy so-called “social injustice.” Thomas
Sowell, in his book The Quest for Cosmic
Justice, explains how progressives seek to expand the use of commanding
heights to induce order and bring about market equality of results. In other words,
the polity moves beyond fiscal policy and attempts to remedy such things as disparity
in income and education (Sowell 1999) .
Once Pandora’s box of induced order has been opened, opportunities for its use
will be difficult to restrain.
In conclusion, while both progressives and classical
liberals seek well-ordered markets, they diverge over the explanation of how to
create such order. Progressives seek to address the problem by using commanding
heights to induce order, while classical liberals look to well ordered free
markets and self-governance to generate order spontaneously. This great
philosophical divide continues to fuel the political and economic debates over
efficient public policy and is likely to continue for some time.
Works Cited
Hayek, Friedrich. Individualism and Economic
Order. Chicago: University of Chicago
Press, 1948.
Press, 1948.
Seib, Gerald F. "In
Crisis, Opportunity for Obama." The Wall Street Journal. November
21, 2008. http://online.wsj.com/article/SB122721278056345271.html (accessed
October 13, 2013).
21, 2008. http://online.wsj.com/article/SB122721278056345271.html (accessed
October 13, 2013).
Sowell, Thomas. The
Quest for Cosmic Justice. New York: Touchstone, 1999.
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