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The Communicative Character of Capitalistic Competition: A Hayekian response to the Habermasian challenge

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  • Wohlgemuth, Michael
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    "Ideal speech situations", "domination-free discourse" or "deliberative communities" describe political ideals proudly cherished by many sociologists. The sometimes explicit, sometimes implicit, motivation is to mobilise political discourse as an instrument to tame or transform the capitalistic "system" according to alleged needs of "society". Most economists and defenders of capitalistic competition, in return, don?t care about communicative communities. The individual market actor is assumed or demanded to be free to choose among given alternatives satisfying given preferences subject to given constraints. Why, then, should homo oeconomicus argue (van Aaken 2003)? There is no "communicative action" among the individuals that populate economic textbooks, there is only "commutative action". Only a few, mostly "Austrian", economists realised that the exchange of goods and services within the spontaneous order of "catallaxy" involves an exchange of knowledge, ideas, opinions, expectations, and arguments – that markets are indeed communicative networks (e.g. Hayek 1946/48; Lavoie, ed. 1991; Horwitz 1992). In fact, and this will be my major claim, market competition is more "deliberative" than politics in the sense that more information about available social problem solutions and their comparative performance, about people's preferences, ideas and expectations is spontaneously created, disseminated and tested. This very idea is anathema for followers of Habermasian discourse ethics. The intellectual thrust and political clout of their vindication of deliberative politics critically seems to depend on a mostly tacit assumption that markets fail to address social needs and regulate social conflicts. Political discourse therefore ?steps in to fill the functional gaps when other mechanisms of social integration are overburdened? (Habermas 1996: 318). I will claim that the argument should be very much the other way around: politics and public deliberations are overburdened mechanisms – unable to deal with an increasingly complex and dynamic society. Moreover, the requisites of ideal speech communities are so enormous that functional gaps are inevitable. Partly, these gaps can be closed if market competition steps in. Partly, reorganisations of the political system are needed. Hence, I am not arguing that Habermas is wrong by stressing the need for open discourse in order to reach informed agreement among citizens who seek to realise mutual gains from joint commitment by contributing to common (public) goods and submitting to common rules of conduct (s.a. Vanberg 2003). I am challenging his neglect of capitalistic competition as a communicative device and his disdain for the classical liberal conception of bounded democracy that respects individual property rights (e.g. Habermas 1975; 1998).

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    Paper provided by Walter Eucken Institut e.V. in its series Freiburg Discussion Papers on Constitutional Economics with number 04/1.

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    Date of creation: 2004
    Handle: RePEc:zbw:aluord:041
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    1. von Hayek, Friedrich August, 1989. "The Pretence of Knowledge," American Economic Review, American Economic Association, vol. 79(6), pages 3-7, December.
    2. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    3. Berggren, Niclas & Karlson, Nils, 2003. "Constitutionalism, Division of Power and Transaction Costs," Public Choice, Springer, vol. 117(1-2), pages 99-124, October.
    4. Mark Pennington, 2003. "Hayekian Political Economy and the Limits of Deliberative Democracy," Political Studies, Political Studies Association, vol. 51, pages 722-739, December.
    5. Dennis Mueller, 2001. "Centralism, Federalism, and the Nature of Individual Preferences," Constitutional Political Economy, Springer, vol. 12(2), pages 161-172, June.
    6. George A. Akerlof, 1989. "The Economics Of Illusion," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 1-15, March.
    7. Michael Wohlgemuth, 2002. "Democracy and Opinion Falsification: Towards a New Austrian Political Economy," Constitutional Political Economy, Springer, vol. 13(3), pages 223-246, September.
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