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The Problem of Coordination in Politics: What Critics of Neoliberalism Might Draw from its Advocates

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Polity

Abstract

As critics of neoliberalism highlight the significance of market failure, contemporary political science tends to refrain from explicitly addressing evaluative questions about the relationship between politics and markets. This article explores how political analysis, even where deeply critical of neoliberalism, might draw from the work of “Austrian” theorists who inspired the emergence of neoliberal ideas. Friedrich A. Hayek, in particular, emphasizes the profound epistemological challenges that complexity poses for the political sphere. How, he asks, can it address complex choices and trade-offs involved in formulating and achieving policy objectives? How can the political sphere achieve coordination in a way that is sufficiently decentralized to capture the locally situated forms of knowledge and values dispersed across society? An analytical focus exploring these questions can help achieve a balanced assessment of the strengths and weaknesses of political and market processes in a way that complements and enriches widely used post-positivist approaches in political science.

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Notes

  1. Dag Einar Thorsen and Amund Lie, “Kva er nyliberalisme?” in Nyliberalisme—ideer og politisk virkelighet, ed. Dag Harald (Oslo: Universitetsforlaget, 2007).

  2. For example, Alfredo Saad-Filho and Deborah Johnston, Neoliberalism—A Critical Reader (London: Pluto, 2005).

  3. Andrew Gamble is just one of a few leading scholars on the British left who have recently engaged closely with the work of Hayek. Others include David Miller, Raymond Plant and Hilary Wainwright. See the work of Simon Griffiths, e.g. “‘Comrade Hayek?’ Andrew Gamble and the New Right,” Journal of Political Ideologies 12 (2007): 189–210, and “Market Socialism in Retrospect,” Contemporary Politics 12 (2006): 25–44.

  4. Andrew Gamble, Hayek: The Iron Cage of Liberty (Cambridge: Polity, 1996), 192.

  5. Jeremy Shearmur, Hayek and After: Hayekian Liberalism as a Research Programme (London: Routledge, 1996).

  6. Paul A. Samuelson and William D. Nordhaus, Economics (New York: McGraw-Hill, 1995), 23.

  7. Charles E. Lindblom, Politics and Markets: The World's Political Economic Systems (New York: Basic Books, 1977), 17–18.

  8. Ibid.

  9. Ludwig von Mises, “Economic Calculation in the Socialist Commonwealth,” in Collectivist Economic Planning: Critical Studies on the Possibilities of Socialism, ed. Friedrich A. Hayek (London: Routledge, 1920), 106.

  10. Mises, “Economic Calculation in the Socialist Commonwealth,” 130.

  11. Henry D. Dickinson, “Price Formation in a Socialist Community,” The Economic Journal 43 (1933): 237–50.

  12. Oskar Lange, “On the Economic Theory of Socialism: Part One,” The Review of Economic Studies 4 (1937): 53–71.

  13. It is questionable whether Barone himself saw equation-solving to be a practicable procedure for central planning. See Don Lavoie, Rivalry and Central Planning (Cambridge: Cambridge University Press, 1985), 21. He alludes to the vast amount of data that would need to be centralized in order for the ministry to calculate the prices using his model, referring to the bureaucracy required by socialism, as the “army of officials whose services would be devoted not to production but to the laborious and colossal centralization work of the Ministry.” Enrico Barone “The Ministry of Production in the Collectivist State,” in Collectivist Economic Planning, ed. Friedrich A. Hayek (London: Routledge, 1908), 290.

  14. Friedrich A. Hayek, “The Competitive Solution,” in Individualism and Economic Order, ed. Friedrich A. Hayek (Chicago: University of Chicago Press, 1940), 201–02.

  15. Friedrich A. Hayek, “The Present State of the Debate” in Individualism and Economic Order, ed. Friedrich A. Hayek (Chicago: University of Chicago Press, 1935), 154; Hayek “The Competitive Solution”, 188–89.

  16. Whereas Dickinson's proposals suggest that the central planning board could set wage levels and final goods prices as well as factor prices, Lange's proposals only apply to factor prices. His proposed model of a socialist economy includes labor and final goods markets.

  17. Friedrich A. Hayek “The Use of Knowledge in Society,” in Individualism and Economic Order, ed. Friedrich A. Hayek (Chicago: Chicago University Press, 1945).

  18. Israel M. Kirzner, The Driving Force of the Market: Essays in Austrian Economics (London: Routledge, 2000), 136.

  19. Allen E. Buchanan, Ethics, Efficiency and the Market (Oxford: Oxford University Press, 1985).

  20. Lavoie, Rivalry and Central Planning.

  21. Daniel K. Finn, The Moral Ecology of Markets: Assessing Claims About Markets and Justice (Cambridge: Cambridge University Press, 2006), 25.

  22. Friedrich A. Hayek “Individualism: True and False,” in Individualism and Economic Order, ed. Friedrich A. Hayek (Chicago: Chicago University Press, 1946), 14.

  23. John O’Neill, Markets, Deliberation and Environment (London: Routledge, 2007), 74.

  24. See, for example, Gamble, Hayek: The Iron Cage of Liberty.

  25. Friedrich A. Hayek, The Constitution of Liberty (London: Routledge and Kegan Paul, 1960), 94–95.

  26. Hayek, The Constitution of Liberty.

  27. Friedrich A. Hayek, The Road to Serfdom (London: Routledge and Kegan Paul, 1944).

  28. John O’Neill, The Market: Ethics, Knowledge, and Politics (London: Routledge, 1998).

  29. See, for example, Donald Anderson and Terry Leal, Free Market Environmentalism (San Francisco, CA: Pacific Research Institute for Public Policy, 1990).

  30. Jonathan H. Adler, “Taking Property Rights Seriously: The Case of Climate Change,” Social, Philosophy and Policy 26 (2009): 296–316, at 299.

  31. Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge: Cambridge University Press, 1990).

  32. Adler, “Taking Property Rights Seriously,” 311.

  33. Donald Anderson, Free Market Environmentalism, Property Environment Research Center Report, available from http://www.perc.org/articles/article870.php (accessed 13 October 2009).

  34. Friedrich A. Hayek, Law, Legislation and Liberty (London: Routledge and Kegan Paul, 1979).

  35. See, for example, Herbert A. Simon and Associates, “Report of the Research Briefing Panel on Decision Making and Problem Solving,” in Research Briefings 1986 (Washington, DC: National Academy of Sciences, 1986), 17–36.

  36. Charles E. Lindblom, “The Science of ‘Muddling Through’,” Public Administration Review 19 (1959): 79–88, at 81.

  37. Ibid.

  38. Ibid., 85.

  39. Kees van Kersbergen and Frans van Waarden, “Governance as a Bridge Between Disciplines,” European Journal of Political Research 43 (2004): 143–71; Andrew Jordan, “The Governance of Sustainable Development: Taking Stock and Looking Forwards,” Environment and Planning C: Government and Policy 26 (2008): 17–33.

  40. Jon Pierre “Introduction” in Debating Governance: Authority, Steering and Democracy, ed. Jon Pierre (Oxford: Oxford University Press, 2000), 3.

  41. Walter M. Kickert, Erik-Hans Klijn, and Johannes F.M. Koppenjan, Managing Complex Networks: Strategies for the Public Sector (New York: Sage, 1997); Erik-Hans Klijn “Does Interactive Decision-Making Work? Expanding Rotterdam Port,” in The Rise of Interactive Governance and Quasi-Markets, ed. Bas Denters, Oscar van Heffen, Jeroen Huisman, and Pieter-Jan Klok (Dordrecht: Kluwer, 2003); Johannes F.M. Koppenjan and Erik-Hans Klijn, Managing Uncertainties in Networks (London: Routledge, 2004).

  42. Kickert, Klijn and Koppenjan, Managing Complex Networks, 44.

  43. Koppenjan and Klijn, Managing Uncertainties in Networks, 10.

  44. Ibid., 61.

  45. For example, Kickert, Klijn and Koppenjan, Managing Complex Networks.

  46. For example, Koppenjan and Klijn, Managing Uncertainties in Networks, 258–60.

  47. Gerry Stoker, “Governance as Theory: Five Propositions,” International Social Science Journal 50 (1998): 17–28.

  48. Kenneth Hanf and Fritz Scharpf, Interorganizational Policy Making: Limits to Coordination and Central Control (London: Sage Publications, 1978), 348–49.

  49. Ibid., 349.

  50. Maarten Hajer “Discourse Coalitions and the Institutionalization of Practice: The Case of Acid Rain in Great Britain,” in The Argumentative Turn in Policy Analysis and Planning, ed. Frank Fischer and John Forester (London: UCL Press, 1993), 45.

  51. Martin Rein and Donald A. Schön, Frame Reflection: Toward the Resolution of Intractable Policy Controversies (New York: Basic Books, 1994).

  52. Martin Rein and Donald A. Schön, “Frame-Reflective Policy Discourse,” in Social Sciences and Modern States—National Experiences and Theoretical Crossroads, ed. Peter Wagner, Carol H. Weiss, Bjorn Wittrock, and Hellmut Wollman (Cambridge: Cambridge University Press, 1991), 276–82.

  53. Ibid., 262.

  54. John Dryzek, “Policy Analysis and Planning: From Science to Argument” in The Argumentative Turn in Policy Analysis and Planning, ed. Fischer and Forester, 226.

  55. John Dryzek, “Policy Analysis as a Hermeneutic Activity,” Policy Sciences 14 (1982): 309–29.

  56. Helen Longino, Science as Social Knowledge (Princeton: Princeton University Press, 1990), 80.

  57. Nicholas Stern, Stern Review: The Economics of Climate Change (London: H.M. Treasury, 2006).

  58. In the U.K. around 50 percent of CO2 emissions are thought to be associated with energy use in buildings. See BRE, Part L Explained—The BRE Guide (Watford, U.K.: BRE, 2006).

  59. Robert Lowe and Tadj Oreszczyn, “Regulatory Standards and Barriers to Improved Performance for Housing,” Energy Policy 36 (2008): 4475–81, at 4476.

  60. Ibid.

  61. This discussion is based on research undertaken by this author about U.K. sustainable housing policy, which has involved interviews with and attending seminar presentations by a range of different stakeholders from the public and private sector with relevant interests and expertise.

  62. Kirzner, The Driving Force of the Market: Essays in Austrian Economics.

  63. Rein and Schön, Frame Reflection, 32–34.

  64. Neil Carter, Rudolf Klein, and Patricia Day, How Organisations Measure Success: The Use of Performance Indicators in Government (London: Routledge, 1995).

  65. See, for example, Carole Doherty, “A Qualitative Study of Health Service Reform on Nurses’ Working Lives: Learning from the U.K. National Health Service (NHS),” International Journal of Nursing Studies 46 (2009): 1134–42, at 1139.

  66. Gwyn Bevan and Christopher Hood, “Have Targets Improved Performance in the English NHS?” British Medical Journal 332 (2006): 419–22, at 421.

  67. Dryzek, “Policy Analysis as a Hermeneutic Activity.”

  68. Friedrich A. Hayek, Law, Legislation and Liberty (London: Routledge and Kegan Paul, 1973), 16.

  69. Ibid., 17.

  70. See, for example, Jukka Pekkarinen, Matti Pohjola, and Bob Rowthorn, Social Corporatism: A Superior Economic System? (Oxford: Clarendon Press, 1992).

  71. This parallels the point made by Gus DiZerega, “Liberalism, Democracy, and the State: Reclaiming the Unity of Liberal Politics,” Review of Politics 63 (2001): 755–82, that the democratic process can be understood as a process of knowledge discovery. Notably, the current debate in the U.K. about sustainable housing and the meaning of “zero carbon” is taking place largely outside of parliamentary democracy and party politics, with a recent survey showing that 75 percent of Members of Parliament did not know about the government's zero carbon target. COMRES, APPG on Sustainable Housing, MPs survey September 2009.

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    Dan Greenwood

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The author is very grateful for the support received from the Governance and Sustainability Programme at the University of Westminster, funded by the Quintin Hogg Foundation, during the time of writing this paper. The author would also like to thank the three anonymous referees at Polity, Professor John O’Neill at University of Manchester, as well as colleagues at Westminster for their helpful comments on earlier drafts.

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Greenwood, D. The Problem of Coordination in Politics: What Critics of Neoliberalism Might Draw from its Advocates. Polity 43, 36–57 (2011). https://doi.org/10.1057/pol.2010.22

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