Brad DeLong has a review of James Scott’s Seeing Like a State which I found pretty useful in clarifying some of my disagreements with him (Brad, not Scott). What he sees as a fundamental problem in Scott (that Scott is a Hayekian in denial, and that his denial of his intellectual heritage leads him erroneously to claim that markets are harmful to human freedom) I see as pointing to an important, but underplayed set of themes in Scott’s argument. Which is to say that I would have liked Scott to develop the reasons why he disagrees with Hayek more explicitly, but I think that they are clearly present in the book, and are in some respects at least, compelling.
How can market-driven standardization have the same consequences as the commands of architects who have never lived in the cities they design, or as the collectivization of Soviet agriculture, or as the forced “villagization” of Tanzanian peasants? It is unclear. … Woven into the critique of agricultural development programs are asides about the destructiveness of DDT, the effect of sterile hybrid seeds in diminishing the autonomy of the farmer, the vulnerability of American monoculture farms to pests and epidemics, and the pre-packaged relatively-tasteless—but overwhelmingly cheap—rubber tomatoes developed to be machine-sprayed and machine-picked. However, people bought (and buy) rubber tomatoes because they are cheap—because relatively little social labor is required to produce them. … The argument that market-driven processes are as harmful to human freedom as state-led high modernism appears suddenly at the end of a discussion of the importance of practical, local knowledge and expertise.
Scott calls this practical, local knowledge “metis,” taking the word from the skill traditionally attributed to Odysseus. Takes it to be a counterweight to the type of theoretical or technical knowledge held by bureaucrats, scientists, and others (pp. 309-341). Most such practical knowledge cannot be easily summarized and simple rules, and much of it remains implicit: the devil is in the details. … But when we look around at modern large-scale bureaucratic capitalism, we see what Scott calls “metis” everywhere. Everything from the flick of your wrist so that the supermarket laser-scanner reads the bar code (try it some time) to the virtual experience at flying 747’s that airline pilots gain in simulators to knowing when you have lost your lecture audience and need to back up to knowing when it too risky to drive the moving van over Donner Pass—all of these are forms of metis. Attempts to design-out metis—to turn workers into efficient, pre-programmed automatons as in the imagination of Frederick W. Taylor—usually fail. We have lost many forms of metis. But as Scott points out, many of them are well-lost …
The key fault of what Scott calls “high modernism” is its belief that details don’t matter—that planners decree from on high, people obey, and utopia results. Note that Scott’s conclusion is not just that attempts at high-modernist centrally-planned social-engineering have failed. It is—as von Mises argued 70 years ago—they are always overwhelmingly likely to fail. …
Yet even as he makes his central points, Scott appears unable to make contact with his intellectual roots—thus he is unable to draw on pieces of the Austrian argument as it has been developed over the past seventy years. Just as seeing like a state means that you cannot see the local details of what is going on, so seeing like James Scott seems to me that you cannot see your intellectual predecessors.
That the conclusion is so strong where the evidence is so weak is, I think, evidence of profound subconscious anxiety: subconscious fear that recognizing that one’s book is in the tradition of the Austrian critique of the twentieth century state will commit one to becoming a right-wing inequality-loving Thatcher-worshiping libertarian (even though there are intermediate positions: you can endorse the Austrian critique of central planning without rejecting the mixed economy and the social insurance state). … And when the chips are down, this recognition is something James Scott cannot do.
I think that this is fair up to a point – Scott should develop his critique of bureaucratic capitalism much more explicitly than he does. But I also think that doing what Brad wants him to do would have led him to write a very different book. Seeing Like a State is in large part an intervention in an internal argument within the left, arguing against the grand planners and for the Jane Jacobs types and the anarchists. Introducing a proper critique of Hayek, Mises and the rest would have greatly lessened its impact within that debate, by allowing the targets of Scott’s critique to focus on the mean things Scott would have probably said about pro-market types who they dislike, while ignoring the flights of arrows intended to pierce their own hides. I should note that I’m an unimportant member of one of the broad groups that Scott is attacking (I like and use rational choice theory; this doesn’t change the fact that Seeing Like a State is the only book in the social sciences I have read in the last ten years that made me want to write a fan letter to the author after reading it).
What Scott argues, as I understand it is as follows. First – that processes of rationalization lead to the destruction of metis, or local knowledge if you would prefer, and the prioritization of codifiable, quantifiable, epistemic knowledge. Second, that this process involves obvious and (sometimes quite important) trade-offs, but may often be worth it – e.g. there is no point in idealizing serf-like conditions that preserve local knowledge at the expense of human freedom. Third, that the real problem is when the creation of epistemic knowledge is combined with high modernist attempts to engage in social engineering. This arrives at similar conclusions to Hayek etc about how terrible collectivization processes are, but from different premises. Specifically, what Hayek etc would see as the result of state planning, Scott sees as the result of broader forms of rationalization (hence, perhaps, the linkages to Foucault that Brad worries about) when they coincide with a certain kind of state hubris (the hubris doesn’t necessarily follow from the creation of codifiable knowledge).
Thus, I think there is a argument against the Hayekians which is not very far from the surface of Seeing Like a State and which can be drawn out quite easily. First – Scott makes it clear that the processes of market development and of state imposition of standards goes hand in hand. Brad talks about how the very first example that Scott draws on – German scientific forestry in the nineteenth century – is intended to show the failures of state planning. But as Scott makes clear, the relevant failures are driven as much by the market as by the state – Scott writes about how the “utilitarian state could not see the real, existing forest for the (commercial trees)” and about how the
forest as a habitat disappears and is replaced by the forest as an economic resource to be managed efficiently and profitably. Here, fiscal and commercial logics coincide; they are both resolutely fixed on the bottom line.
This is an important sub-theme of the book, and indeed of our understanding of how states and markets have developed hand-in-hand. Sometimes, the state has sought to impose its view for reasons of its own interest and survival (whether this be the promotion of ‘public order,’ the increase of fiscal revenues or whatever), sometimes at the behest of market actors who are interested in standardization, and sometimes for rationales that blur these two together.
Scott doesn’t draw this out as a critique of the Austrians, but it is still clear evidence of his profound difference from them. He is much more interested than they are in the actual political processes through which markets come into being. To misquote Tilly, markets make the state and the state makes markets. This is something that is touched on by the new institutional economics in its own way (cf. Doug North) but that doesn’t, to my knowledge, get any proper attention in the Hayekian or von Misean corpus. I stress the words “to my knowledge” since Hayek’s arguments on this theme are scattered across various books – but I strongly suspect that there isn’t anything that is really germane to this. More generally, I think that there’s a kind of selective blindness in the Austrian corpus to the question of exactly how active states are in constituting markets, because this would raise all sorts of awkward theoretical and political problems. Markets – even and perhaps especially Hayekian markets – don’t exist in an institutional vacuum – and the institutions on which they rely are going to shape the extent to which they succeed or fail in making use of local knowledge. In particular, markets that involve interaction between people who don’t know each other (impersonal exchange) require substitutes for personal knowledge and relationships(in the form of mutually understood standards and enforcement mechanisms).
This leads on to the second point – that a lot of what Scott argues is correct. His claim, as I read it is less about the specific problems of state-created institutions, than the ways in which a large variety of abstracting institutions or standards miss out on, and perhaps undermine important forms of local knowledge. As I understand him, any standards sufficient for impersonal exchange are likely to abstract away the actual relationships that people have with their environment. Here, Scott is less a closet-Hayekian than a more-or-less-overt Polanyian, who develops some of Polanyi’s arguments (especially his claims about the institutional consequences of long distance trade, and the economy as an instituted process) to make them sharper and more interesting.
I think that Scott’s claims are more credible than Brad suggests. Again, modern markets require long distance exchange between people who don’t know each other, and hence require impersonal forms of knowledge that are instantiated in commonly held standards of one sort or another. My favourite example of this is the Codex Alimentarius’s standard lexicon describing different stages of putrescence in fish. These standards have to substitute for more intimate and more direct forms of knowledge – large scale markets typically can’t work without them.
A good example of this is credit markets. It used to be that they depended primarily on personal knowledge of the borrower and his character (here, I’m borrowing from the work of Bruce Carruthers). Now, they depend on a variety of formal metrics, risk scores and pseudo-quantified assessments by credit rating agencies and the like. This is by no means necessarily a bad thing – it has resulted in a vast expansion of credit, and allowed many people to borrow money who couldn’t previously. But it does mean that some forms of knowledge that may have been valuable, and that were available in an era when bank managers knew all their customers personally, have been lost. It also may result in a fetishization of the quantifiable and a lack of attention to the realities underlying abstract metrics (which is arguably part of the reason for the recent crash in mortgage lending markets – the metrics that markets used were palpably insufficient to describe the underlying risks of particular complex financial instruments).
Another, more homely example is food. Brad criticizes Scott’s discussion of the much-cited tasteless tomato arguing that it are an example of market success rather than failure – people bought tasteless tomatoes because they were cheap. This seems to me to have a bit of a flavor of a revealed preferences argument, and also to miss the point. I lived in Florence for three years, a city which has cheap and delicious tomatoes, despite being some distance from the parts of Italy where tomatoes are grown. While I can’t prove it, I strongly suspect that the deliciousness of the tomatoes had a lot to do with informal relationships between the small shops where you bought the tomatoes, the small companies that delivered them, and the small farms from where they were bought. Certainly, this would be consonant with the research that I and many others have done on the Italian political economy and how it works. Italy protects small businesses and local communities in a lot of ways. This means that it misses out badly on certain economies of scale. It also means that certain kinds of high quality production are possible in Italy that are difficult or impossible to replicate elsewhere – a myriad of small firms cooperating to produce final goods through purely informal means. Hence the success, for example, of Italian sunglasses, shoes, and (the rather unglamorous topic of my own research) packaging machinery. All of these build on forms of informal knowledge that would likely be damaged in a more standard market economy, where collaboration happened (to the extent that it did), within the hierarchy of the firm, or through arms-length contracts.
Thus, there are trade-offs. Italian firms in small-firm districts are excellent at gradual innovation and refinement of knowledge – in part because of their reliance on metis. They are not so good at producing profound, industry-changing forms of innovation. They also tend to stick closer to home than their equivalents in other countries (somewhat ironically, they replicate the logic of Avner Greif’s mediaeval Maghribi merchants far more than the behaviour of his Genoese traders).
To return to the more homely example of food, Florence has an excellent restaurant culture, where you can eat out cheaply and incredibly well if you avoid the tourist traps.1 But it systematically emphasizes local cuisine, along with a few imports from the South (pizza and pasta) and the north (some Bolognese and Milanese dishes). Chinese food in Florence is (or was when I was there) terrible, and Indian food was relatively very expensive and no better than mediocre in quality. In contrast, most US cities of my experience have a lower overall standard of food, but a much greater variety of restaurants producing different cuisines, sometimes at a quite high standard of quality (if rarely as high as in the cuisine’s home countries or regions). US cities are far more open to different kinds of food than Italian cities. I suspect that much of this can be attributed to the dominance of particular forms of local knowledge in Italy, which on the one hand preserve certain traditions of quality that would be infeasible to preserve in the US, but on the other hand make people less likely to branch out into new forms of production and consumption that don’t fit with their prior experience.
This allows me to come back to the roots of my disagreement with Brad. Brad is a fan of markets, and believes that they contribute in very important ways to human freedom. I agree with him on this. But I think that Brad sometimes underemphasizes the real trade-offs that markets may involve, and overstates his criticisms of people who are concerned with these trade-offs. Sometimes, perhaps often, these trade-offs are relatively slight – as Brad says, many forms of redundant local knowledge can be discarded without compunction. Sometimes, these trade-offs are real, but still worthwhile – while we should acknowledge the costs of markets, we should acknowledge that the benefits of introducing them are higher. And sometimes they are not worth paying – there are areas of social life where marketization has more downsides than advantages. (the question of which areas of social life fall under which category is obviously important, but this post is much too long already).
1 I seem to remember (although I can’t find the post) Brad rudely disagreeing a couple of years ago with someone who suggested that delicious cheap food was available in European cities in a way that it wasn’t in the US, and claiming that this was an illusion of the upper middle classes who could afford to eat well anywhere, or words to that effect (my memory could be flawed, in which case I apologize in advance). For what it’s worth, as a grad student with a relatively meagre stipend in Florence, I could afford to eat out three nights a week in good restaurants.