Speaking
Freely is an Asia Times Online feature that allows
guest writers to have their say. Please
click hereif you are interested in
contributing.The Lily: Evolution,
Play, and the Power of a Free Society by
Daniel Cloud
Reviewed by Mark A DeWeaver
The latest book by Princeton University
political philosopher Daniel Cloud, is dedicated
to North Korea's new Paramount Leader Kim
Jong-eun. It is a pitch for economic and political
freedom as the surest route to membership in what
Pyongyang's "unofficial spokesman" Kim Myong Chol
calls the "elite club of strong and prosperous
states." (See North
Korea nears age of affluence, Asia Times
Online, Aug 11, 2011.) As the North hopes
to join this club as
early as this year, Cloud's gift to the Young
General could not have come at a better time.
You might think that authoritarian regimes
should have an advantage over free societies
because they can force people to conform to a
rational plan. Freedom, it would seem, isn't free
- it comes at the cost of irrationality. Free
enterprise results in Hilferding's "anarchic
production," democracy in Marx's "parliamentary
cretinism." Shouldn't the North Korean way of
doing things be better?
Cloud argues that
the apparent irrationality of the free society is
actually its principal source of strength. The
problem with planning is that it is limited by the
cognitive capacity of the planner. The free
society instead takes advantage of evolutionary
forces, which through trial and error produce
results that generally could not have been
anticipated a priori.
Cloud's
argument rests on the distinction between
declarative and performative knowledge. The former
is knowledge of facts, knowledge that can be
transmitted to others in written form. X tons of
iron ore and Y tons of coking coal will produce Z
tons of steel. The latter is knowledge of how to
do something. The mechanic's intuitive
understanding of how to tinker with a broken
machine, for example. This is knowledge that
cannot easily be put into words.
Unfortunately for any would-be philosopher
kings - and even for North Korea's "heaven sent,
sun-like" rulers - performative knowledge plays a
key role in the solution of real-world problems.
Not only does much of the economically relevant
information in society consist of facts about what
Hayek called "particular circumstances of time and
place," but many of the techniques for making use
of these facts are not even amenable to precise
explication. Even if Hayek's "man on the spot"
were able to convey all of the declarative
knowledge at his disposal to a central authority
he might still be unable to give a satisfactory
account of what needed to be done.
The
economic advantage of the free society is not
simply that it can make effective use of all the
declarative knowledge available to its members
through the price system, as Hayek argued in his
seminal 1945 article "The Use of Knowledge in
Society." Its freedom also allows new performative
competencies to emerge through natural selection.
The outcomes it achieves are therefore not
limited to those that could be figured out in
advance by individual decision makers - be they
heaven-sent rulers or profit-maximizing
entrepreneurs. Instead, Cloud argues, as a result
of individuals' "trial-and-error testing of
incremental, negotiated, possibly frivolous
modifications of systems of practices that were
already working," the "wild power" of evolution
exploits "all the possible functions of a form and
its immediate modifications, without
restriction...Any attempt at detailed central
planning would only get in the way of the
evolutionary process, substituting the narrow
judgment of a mere human person for the omniscient
oracle of natural selection."
In biology,
it is obviously the organism that is acted on by
natural selection. For a theory of social
evolution to make sense, it is necessary to
identify analogous units of selection within
society. For these to evolve in the same manner as
their biological counterparts, Cloud argues that
they must satisfy three criteria.
First,
they must be indivisible so that parts share a
"common selective fate" with the whole. Note that
this rules out entities from which it is possible
for individuals to disassociate themselves - for
example, the German Volk or the proletariat.
Cloud's story, while having everything to do with
Darwin, has nothing to do with social Darwinism.
Second, the process that generates new
units must be "fair" in the sense that the
interests of the individual people involved are
all taken into account. This makes it possible for
a diverse range of forms to emerge in a manner
analogous to the "fairness" exhibited in sexual
reproduction, where the genes of both parents are
equally represented in the offspring. And third,
this process must be frequently repeated so that
there is sufficient opportunity for a large number
of variations to be tried.
Democratic
governments and capitalist firms meet all three
criteria. Both are usually indivisible. Both are
based on processes that are supposed to take
everyone's interests into account (negotiation and
voting). And both are formed frequently.
By contrast, one-party states and
state-owned enterprises are at a clear
disadvantage. While they meet the indivisibility
criterion, they fail the "fairness" and "frequent
formation" tests. As a result, the evolutionary
process is stifled. Only a limited range of
variation is possible and innovations emerge much
more slowly, if at all.
In a free society,
Cloud argues that capital plays a role not unlike
that of the genome in facilitating natural
selection. Firm formation can be thought of as
analogous to sexual reproduction, with proprietors
combining money and skills to form new social
organisms in much the same way as parent animals
combine their genes to form new individuals.
Marx argued that capital simply produces
more capital, leading to periodic "crises of
accumulation." Cloud's argument shows that there's
actually a lot more to it than this: more "fit"
capital reproduces more successfully than less
"fit" capital. As a result, the population of
firms evolves over time. The real crisis is that
of the planned economy, where state interference
stops this whole process in its tracks.
Without technological change, perhaps none
of this would matter. "If we froze our technology
at 1911 levels for a thousand years," Cloud
believes "we would eventually be able to centrally
plan our economy without any loss of efficiency."
But modern economic growth is ultimately about
inventing new technologies and developing their
practical applications. This requires the
performative knowledge of inventors and
entrepreneurs rather than the declarative
knowledge of the planner. And only the "Oracle of
Selection" can sort out the geniuses from the
crackpots.
The free society must be based
on negotiation rather than compulsion. This means
that its intellectual life mirrors the
evolutionary processes that determine its
political and economic arrangements. Just as these
arrangements are not the product of any
preconceived plan, so there is no official
ideology restricting what individuals may believe.
Common sense consists not of a body of dogmas but
rather of ideas that survive debate. Ridicule,
rather than censorship, is the ultimate arbiter of
what is unworthy of belief.
Thus the free
society is a playful society. It is constantly
innovating, constantly coming up with new ideas,
constantly trying new things. It thrives on irony
and humor rather than on certainty. And it
typically cannot even account for its own success.
It simply accepts anything that works.
The
lesson for the Young General is that free
societies, as the Dao De Jing has it, "accomplish
everything by doing nothing." They are, Cloud
concludes, "like the flower, who has no rational
plan to provide for herself, but still ends up
dressed more richly than Solomon."
The
Lily: Evolution, Play, and the Power of a Free
Society by Daniel Cloud, Laissez Faire Books
(2011). ISBN-10: 0983541418. Price US$14.
Mark A DeWeaver, PhD, worked as
a research analyst in Shenzhen, China from
1991-1995, first for W I Carr and later for
Peregrine Brokerage. He manages Quantrarian Asia
Hedge, a fund he co-founded in 1999. He can be
reached at deweaver@quantrarian.com.
(Copyright 2012 Mark A DeWeaver. Used by
permission.)
Speaking Freely is an
Asia Times Online feature that allows guest
writers to have their say. Please
click hereif you are interested in
contributing.
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Cloud argues that
the apparent irrationality of the free society is
actually its principal source of strength. The
problem with planning is that it is limited by the
cognitive capacity of the planner. The free
society instead takes advantage of evolutionary
forces, which through trial and error produce
results that generally could not have been
anticipated a priori. 
