Category: Equitablog

You have to be able to hold in your mind two things about economist James M. Buchanan:

1. He was a total loon:
   • a strong believer in the de Maistrean trinity of Patriarchy, Orthodoxy, Autocracy as necessary for society—essential Noble Lies.
   • a man who in 1970 wanted to shut down America’s universities as teachers of evil, and regretted the failure of nerve that made that impossible.
   • a man who saw Martin Luther King Jr. as a teacher of evil—whose response to the Civil Rights movement and its peaceful civil disobedience campaign was not “to make us love our country, our country must be lovely” but rather” but how dare he claim that an African American be “openly encouraged to use his own conscience”—rather than shutting up and accepting his subservient Jim Crow position.
2. A man who saw things that other economists did not and would not have without him: The Calculus of Consent http://amzn.to/2v9jQQk is a great book. James Buchanan was—as, IIRC, only Jim Poterba and I were willing to say at the post-announcement MIT economics faculty lunch in 1986—a defensible choice for the Nobel Prize in economic science.

If you cannot hold both those ideas in your mind at once, you do not understand James M. Buchanan:

James M. Buchanan (1970: THE “SOCIAL” EFFICIENCY OF EDUCATION: Il Politico 35:4 (December), pp. 653-662 http://www.jstor.org/stable/43207303: This paper was presented at the General Meeting of the Mt Pelerin Society in Munich in September 1970: “In this paper, I shall examine the effects of modern education…

…on the socio-political-economic philosophy of university university students in the United States and the impact of this philosophy on social policy.

I shall examine the following propositions:

1. For the first time, “education” is now effective. Students are acting out the ideas that they have absorbed in their academic experience.
2. This effectiveness has only recently emerged because of:
   • the transformation of traditional conservative institutions-notably the family, the church, and the law.
   • economic affluence that has produced the relatively new “parasitic option” out of the more general “samaritan’s dilemma”.

I should emphasize that these are propositions to be examined and discussed. They provide one possible interpretation of what we see around us in American higher education in 1970. Alternative interpretations are possible, and these lead to quite different implications. By discussing the propositions here, I argue only that they seem sufficiently plausible to warrant my concentration in this paper, nothing more.

Education is Effective: My central hypothesis is that students in American colleges and universities are demonstrating that they have indeed paid some attention to what their instructors have been saying to them. They are acting out, in word and deed, what they have been taught in classrooms from elementary schools through the university postgraduate schools, what they have seen on their television screens, what they have read in their newspapers, from the underground rags through
the New York Times.

This effectiveness of education is new to our time. But I do not suggest that it results from any sudden or dramatic change in educational inputs. My subsidiary hypothesis explaining the change is quite different. The educational inputs have, of course, changed, but the changes have surely been gradual over the last forty years. The observed output has been rather suddenly transformed because only in the 1960’s did the inputs come to have much influence on outputs. The production function shifted. In the 1960’s, and for the first time, the socio-political inputs into the educational process began to be “efficient”. Until this decade, the effects were relatively unobservable. What we are now getting by contrast is a highly visible output that seems directly to be related to inputs. The reason for this change lies in the transformation of countervailing influences.

An implication of my central hypothesis is that the educational process has never provided an effective means through which the traditional socio-political values of American (read Western) institutions have been transmitted. Hence, we have not witnessed some implicit conspiratorial take over of a once-near-ideal educational structure by those bent on undermining the traditional system. At best here, we have experienced some shifting in the input mix toward the inclusion of more anti-market, _dirigiste _elements, which have been, however, long in the dominant position. The values of the system stood the shocks of the nineteenth and early twentieth centuries in spite of the educational structure because the countervailing influences were serving an effective social role. These influences may be broadly summarized in three institutions-the family, the church, and the law.

Institutions of Social Order: I do not suggest that these institutions exerted their primary influence in some positive sense. They embodied some explicit indoctrination, of course, some teaching of the value standards of the culture, some transmission of an appreciation for the structure of social rules. I suggest, however, that these institutions were more important in a negative way. As they operated, at least until the mid-dle of this century, the functional role of these institutions was one of preserving and enforcing the rules of civil order. They were essentially conservative in function; they acted not so much to instill positive support for these rules as to forestall and to prevent overt departures from these rules. That is to say, these institutions served to contain potentially disruptive criticisms of the established order. Perhaps more accurately, we may say that the criticisms of society were damped by these essentially conservative institutions.

Some examples may be useful here because the historical role imputed to these institutions is an important element of my hypothesis about educational process. The family did not change the value system of the six -year old child so as to make him really not want to take candy from the baby. Family control was established in the
quite different sense of informing the six-year old that, should he take the candy from the baby, he would be spanked. Order within the family structure was preserved by the threat of sanctions. Similarly, the church did not fulfill its socially functional role by effectively modifying man’s inherent proclivity to sin. Despite its teaching of the ethic of Christian love, the church’s primary behavioral influence stemmed from its instillation of fear of divine retribution. The fear of hellfire rather than the joy of love was instrumental in guaranteeing tolerable behavioral standards among ordinary men.

More importantly perhaps than either of these institutions, the family and the church, was the institution which we may broadly call “the law”. Historically, law served the socially efficient role summarized in the term “enforcing the rules”. Individuals were led to behave in accordance with established rules because they were led to believe that overt departures from these rules would be subject to prosecution. Men refrained from stealing because they fea-ed the consequences-arrest, conviction, prison terms. This may have been accompanied by relatively little weight on the ethic of obedience.

In all three institutions, the fear of punishment, once instilled, led to habitual patterns of behavior which embodied adherence to established rules. Once such habits were formed, the immediate and explicit threat of retribution need not have been omnipresent.

Education in Institutional Order: Within a social order in which the family, the church, and the law fulfill the roles outlined above, the educational process can quite different from that in a social structure where these institutions fail. In a regime of institutional order, the educational experience can best be organized and supported in an atmosphere of of critical inquiry. Indeed, the whole notion of scholarship stems from this conception of education’s functional role in a social order. He is the institutional location for the free spirits, for the intellect gadflys, for the heretics of all ages. The advantages of unrestricted freedom to follow “truth where it may lead” were secured precisely because the potential excesses were contained, so to speak, in the institutional cocoon that was the university. The community of schoglars went about their essential business of discussing truth, arguin and properly so, about angels on pins, with little or no explicit concern for the world about them, and, more importantly, arguing as if relevance did not matter. The “ivory tower”, the “walls of ivy”, the “groves of academe”-these are not idle metaphors. They accurately describe what the university was supposed to be in its ideal-type image as it formed a part in an ordered society.

In this protected, cloistered educational process, students could, and did, examine, adopt, and espouse almost all conceivable heresies-right, left, up, down, and center, reformist, revolutionary, reactionary. Student energies were dissipated, student concern was expressed-but always within the confines of the academic groves. In these colonies, as it were, students were rarely instilled with the existing value standards of the external world, including the socio- economic. Most students passed through their university-college years as radical reformers if not latent revolutionaries, and we all recall the saying that everyone is a socialist at twenty.

It is important to recognize this in any consideration of the role that the teaching of economics and social science has played. The students’ image of the entrepreneur, or, more broadly, the students’ conception of the workings of the market structure, has rarely been either the sophisticated understanding of the professionally-trained market economist or the more pragmatic appreciation of the man of affairs. The spontaneous coordination of the market process, the Mandeville-Smith vision of the invisible hand-these are not ideas that carry with them instant and romantic appeal. They stir the intellect rather than the emotions, and rare indeed has been the stu-dent whose passions rise at the clopping of hooves of Böhm-Bawerk’s horses at the trading fair. Quite by contrast, the passion for the market as a social institution can perhaps only emerge from the quiet study of one whose life resembles that of a Scotsman-cum-philosopher. The passions of the students are much more likely to be stirred by instant identification of evil men, by the shining ray of revealed truth, by the gospel of social salvation.

If the students’ image of the businessman, the students’ conception of market order, has been the set of confusions that I have described, how can we explain, historically, the perseverance of this institution through the centuries in the Western World? If some minimal transmission of the value structure has not been accomplished by the educational process, how can we explain the continuing support for traditional socio-economic-political institutions?

Survival Potential of Market Institutions: I should answer these questions in two ways. I should argue, first, that there is tremendous survival potential in free market institutions. Indeed, it may be argued that some sort of market arrangements will more or less naturally emerge out of almost any socio- political environment. So long as men are men, which to economists means so long as they are preference functions, other men will find it to their personal advantage to satisfy the private wants of potential buyers. This is the very meaning of the term “laissez-faire”. If left alone, markets will emerge, and even sometimes in spite of a complex maze of regulations and restrictions. The results may not, of course, attain even tolerable efficiency since trades can be organized that will exaggerate rather than reduce initial distortions introduced by arbitrary interferences. Nonetheless, markets will be formed within whatever institutional structure that exists. If we accept the survival hypothesis, it is easy to see how market institution can remain and even prosper in a cultural-intellectual environment or climate that is alien to a market-oriented philosophy. The students, young and old alike, the scholars and intelligentsia, may not understand the market order, and they may use it as the butt some of their most vitriolic criticism. They may rail at its neglect of human values, its elevation of property rights about human rights, at its dismal view of human nature. At the same time, however, practical men may be getting and spending, providing goods and services in increasing abundance not only for themselves and other ordinary mortals, but for the otherwordly intelligentsia as well.

Perhaps I exaggerate here. Every age and every country has its Mises, its Hayek, its Frank Knight, its Milton Friedman. And there probably is some minimal level below which the numbers of scholars who understand and espouse a market philosophy cannot fall if the institutional structure itself is to be preserved. This level may itself vary in some direct relationship to the power of governments to intervene. I do not think, however, that my exaggeration seriously distorts the description of affairs that may have characterized the Western World for almost a century. In essence, I should argue that the market has survived in spite of the false conceptions of the great mass of intellectuals.

This is not to denigrate the contributions of the relatively few scholars and social philosophers, the few teachers at all levels, when I say that it has been the survival characteristics of the free institutions rather than their powerful messages that have been effective. The permanent and continuing messages of the antimarket intellectuals failed, until quite recently, because of the containment of these messages within the ivory towers, not because of the overriding weight of the counterarguments offered by the adversary minority. Neither the majority of pundits who have traditionally been grossly ignorant in their denunciations of the “blind forces of the market” nor the small minority of the market’s academic-intellectual defenders have exerted much influence on the historical development of social institutions. In this particular respect, Keynes was, I think, wrong. The
academic scribblers exerted far less influence in undermining the free society than their numbers might have allowed us to predict. I hypothesize here that the reason for this relative absence of influence lies in the containment exercised by the traditional conservative institutions referred to above-the family, the church, and the law.

The Social Value of Ineffective Education: As I have indicated earlier, these institutions may have done little or nothing to convert persons into ideological supporters of traditional and existing social values. They did, however, force persons to conform to the external embodiments of those values. The individual accepted the fact that he must obey the rules or suffer the consequences of his disobedience. He was not allowed the romantic option of disobedience without sanction. The alternatives that he confronted were confined to adherence to those rules that existed or the suffering of punishment for violation. In other words, the individual was forced to choose between joining the system, the “establishment”, or becoming an outcast who could expect to be treated as such. He was not permitted the soft option offered in a parasitic role, the prospect of opting out of the system while continuing to survive on the system’s charity.

Within this structure of society, it should be emphasized that the educational process served a useful social function. It allowed for, and encouraged, open criticism of and overt dissent to prevailing value standards and existing institutions. The university or college provided the proper place to allow the heretic free reign. Heretical challenges from the academe stirred responsiveness in the institutional order, and a gradual transformation of both values and institutions took place. Reform was accomplished by allowing the heretic to advance revolutionary notions, well contained within the academe, which might then be pragmatically translated into practical policy improvements.

In any directly observable sense, this education was almost totally infective. In a longer perspective, however, the short-run ineffectiveness of education was precisely its social strength. The process was useful because students were not allowed directly to impose the ill-informed and romantic nonsense learned from the academe in the great world beyond. In this context, it did not really matter that the prevailing socio-political philosophy of the predominant majority of academicians ran counter to the institutions of the social order.

The Failure of the Institutions of Order: There is general agreement that the conservative institutions noted-the family, the church, and the law-no longer serve the historical role outlined above. The child in the permissive family secures no sense of obedience to authority, no fear of punishment for disobedience. His church leaders have taken all fear of divine retribution off his shoulders, and the fires of hell are not promised as the consequences of his transgressions. More seriously than either of these, the law itself has been subverted into an agency for positive reform, for changing existing rules as opposed to its role in enforcing these rules that do exist. The individual is openly encouraged to use his own conscience in determining whether or not he should obey a particular law, and often with little or no threat of punishment if he disobeys.

All of these institutions of negative reinforcement for orderly behavior have been, at best, seriously eroded. This suggests clearly that the social need for positive reinforcement is correspondingly increased. If the six-year old fears no spanking for taking the baby’s candy, he must be taught the ethical value of respecting others* property. If the potential arsonist fears neither hell’s fire nor the strong arm of the law, he must be positively indoctrinated with the value of exercising mutual respect for the rights of other men. The possible role of education in this positive reinforcement process seems obvious. The glint in the eye of the professional educator as he mouths the traditional cliches about the “liberal arts” can
be seen a mile away. He sees that education may only now come into its own as a major formative influence.

But this is precisely what has come to happen, and most of us do not at all like at all what we are seeing as a result. We see students now being allowed to act out what we previously allowed only as academic fantasies. Unrestrained and with little or no sense of mutual respect and tolerance, they flaunt ordinary rules of conduct; they disrupt others in the pursuit of their affairs ; they have almost destroyed the basic order that once prevailed on campuses everywhere.

All of this would be disturbing enough if the students’ excesses were confined within the ivy walls. But having learned none of
the simple virtues in either family, church, or school, why should we expect the child-men to behave differently in the great society beyond the groves? The animals are in the streets, literally, and if college buildings burn so do banks, as we are finding this year in America.

The Parasitic Option: If we do not like what we see and if we accept my hypothesis about the reasons, there exists a simple solution. If education is now being effective for the first time and the results are not quite what we might have expected, the simple solution is one of cutting off the external sources of support. If society does not think that it is getting its money’s worth from the educational processes as they exist, if the admitted advantages of free inquiry are more than outweighed by the negative effects of direct political action by militant groups centering their headquarters on the nation’s campuses, why not simply close down the universities?

This seems a straightforward question, but closer examination of modern attitudes reveals that, despite all of his misgivings about what he sees, neither the ordinary citizen nor his political representative is willing to take such steps toward corrective solutions. Unwilling to cut off public and private financial sources, he acquiesces in the continuing deterioration that he sees all about him. Why is the ordinary citizen so reluctant to act here? This reluctance is but one manifestation of the most pervasive quality of our age, one that also explains the breakdown of the inst tutions of order previously discussed. Economic affluence has placed modern man in what I call the “samaritan’s dilemma”. He is simply unwilling to force those who refuse to join the system to exist wholly outside the system. He is quite willing to allow for the existence of parasites, those who feed upon him without contributing to his well being. This is essentially what the student class has already become, and it is also what the postgraduate class may become during the 1970’s.

Apparently unwilling to enforce the rules of the existing system on the student classes, and apparently unwilling to confine the behavioral excesses to the campuses, modern man finds himself being rapidly forced to allow the parasites entry directly into the political-decision process. The spring of 1970 marked the possible beginnings of an important shift in American policy, a shift that I view with much gloom. Students were successful in university after university in politicizing the academe, and, beyond this, they were successful in making their voices heard by political leaders. With little regard for facts, and spurred by the romantic cliches of the moment, the masses formed, with little or no resistance.

It is in this perspective that we must come back to our assignment. The student’s image of the entrepreneur, his conception of market order, did not really matter very much so long as his criticism was left in the ivy walls and the facts of life forced him to join the system and abide by its existing rules once his college-university years were passed. As most of us realize from personal experience, his radical and romantic fantasies soon faded away a« he matured, intellectually and psychologically, becoming gradually aware of the values of the institutions that surrounded him. All of this may be changing, and very rapidly, if the student and poststudent of the 1970’s is allowed to obtrude his own naive, uniformed, and romantic fancies directly into the political process, while himself remaining a parasite feeding on the rest of society. For the first time, the student’s failure to understand and to appreciate the workings of the market order, for the first time his failure to understand and to appreciate the crucial role played in such an order by the entrepreneur, by the profit and loss, reward-punishment structure of the market, may become critical influences on the formation of social policy. For the first time in the United States, the quasi-comic mout- hings of neo- Marxist slogans may come to be taken seriously by practicing politicians, as seems to be the case in 1970.

There is no way that we can get the educational house in order within the medium-term future. If my rather pessimistic picture contains elements of descriptive reality (and I hope that it does not), Western society’s main task is to shift itself, by brute resolution, out of the samaritan’s dilemma, to close off the parasitic option now available to the student and post-students who refuses to conform to ordinary rules of conduct. I wish that I could think modern man capable of even this modest step toward some restoration of sanity.