Knight and Johnson have produced one of the most profound books in recent memory dealing with the questions of political structure and the processes that are necessary to reconcile our differences and to learn to live better together. They begin with the profound recognition of our deep differences in beliefs, personality, talents, and circumstances, and yet acknowledge that we must find a way to coordinate our activities to realize the social gains from cooperation. The answer is to be found in the institutions within which we interact with one another. Ultimately, they provide a fresh argument for the strong claim in political economy— that being, while people no doubt populate the political landscape, effective social change isn’t about people, but about the proper institutions. Institutional problems demand institutional solutions.
While discussions of social change are important, this is not the aim or focus of the book. It is democratic institutions that they want to defend for it is the experimentation that the democratic process affords that enables the appropriate feedback and disciplines our differences in order for us to achieve the social benefits made possible by radical diversity while minimizing the costs. Democratic institutions are instruments for the generation of knowledge about the effectiveness of different social arrangements.
In addition to their emphasis on institutions per se, Knight and Johnson also correctly put great stress on the contexts within which institutions operate. There is a nested nature of political institutions that must always be acknowledged and identified in assessing the operational efficacy of any set of institutions for coordinating social affairs. As they sum up, we must identify the institutional arrangement that can serve as a mechanism for (1) coordinating effective institutional experimentation, (2) monitoring and assessing effective institutional performance for the range of institutions available in any society, and most importantly, (3) monitoring and assessing its own ongoing performance. Since democracy as an institution provides precisely this mechanism in their interpretation, it should be accorded priority in our political theory discourse and political practice. By according democracy priority status, however, Knight and Jackson do not mean to suggest that we should coordinate all our social, economic and political interactions democratically. That would be giving democracy a first-order priority, which they are unwilling to do. Instead, they argue for a second-order priority, which means that when it comes to the critical task of selecting, implementing, and maintaining effective institutional arrangements, this is where democracy should be accorded a priority.
In many ways, I am in significant agreement with Knight and Johnson’s approach and argument. This actually shouldn’t be that much of a surprise to readers given our shared analytical rational choice institutionalist perspective, and a proper reading of the Frank Knight-James Buchanan-Vincent Ostrom perspective on democratic ways of relating one to another that I have written on in a variety of places. Buchanan’s own system can be understood as striving for a political order that exhibits neither discrimination nor dominion of some individuals over others. And Frank Knight and Buchanan were quite clear that the lack of a direct line to truth in political affairs meant that we worked with “relatively absolute absolutes” at best, and as such, we relied on ongoing processes of democratic discourse for building consensus and realizing social cooperation in political life. And Vincent Ostrom argued very effectively that democracy is best seen as a way of relating one to another, and not just the institution of majority voting.
But in the interest of raising some critical points to the Knight and Johnson project, let me state that I don’t believe that they effectively address the critical point in the Frank Knight-James Buchanan-Vincent Ostrom understanding of democratic practice. This essential point is about the vulnerability and failure in the institutions of democracy to operate as discoverers and transmitters of the necessary information to improve social cooperation. Democratic institutions often fail to serve as the very mechanism that Knight and Johnson highlight. We could identify the reasons for this breakdown as being the existence of: (1) perverse incentives among the voting public; (2) significant barriers to entry in politics, which means that the competitive process is not as effective as needed; and (3) negotiation costs are such that conflicts persist rather than get eliminated through bargaining processes. For those familiar with this literature, they will recognize that these are conditions which Donald Wittman in The Myth of Democratic Failure went to great pains to demonstrate didn’t exist, and thus that traditional public choice theorizing was incorrect. And my colleague Bryan Caplan has shouldered the intellectual burden of Wittman’s challenge in The Myth of the Rational Voter and taken on Wittman’s denial of these three pillars, but has shown that due to “rational irrationality” the vote process does not aggregate into a desirable outcome in which errors are canceled out. But Caplan doesn’t shy away from the critique of democratic institutions either. The problem with democracy is that voters get exactly what they want—so in this sense democracy is ‘efficient’ in translating voter preferences into policy outcomes—but what we want is what is wrong. We get the government we deserve in Caplan’s model. Voters want the wrong things, and according to Caplan, they want those wrong things because they don’t have to pay the full price for their wrong choice. It is a very cute argument by Caplan, and he does in my mind best Wittman on his own terms.
Knight and Johnson do not address the Wittman-Caplan debate over democratic efficiency, but that debate is critical to the assessment of the robustness of the institutional mechanism for social learning that they postulate. If, somehow, the ongoing social experimentation afforded by democratic institutions does not reveal information effectively, nor provide the necessary negative feedback in an effective way, then the democratic institutions we are giving priority to may in fact lead us astray. Rather than realizing the gains from social cooperation and learning to live better together, we experience fractionalization, on-going conflict, and (I would argue) ultimately a disjoint between voter preferences and policy outcomes. We get a government none of us would want if we knew what we wanted. I depart with Caplan on this part because to me the critical question isn’t the individual actor but the machinations of politics inside of which voter preferences are transformed into public policy decisions. Knight and Johnson want their democratic institutions to be robust even in the wake of unfavorable circumstances, but perhaps that would be the case only if the first-order priority principles were strong enough to trump the second-order priority of democracy when democracies are vulnerable. This is one way to understand Hayek’s critique of the democratic fetish, while maintaining a firm commitment to liberal principles of justice, the rule of law, and constitutional constraints. In Hayek’s system democracy is a second-order priority, and the primary priority should be the liberal order within which democratic processes of selection could be very effective.
As Knight and Johnson want to argue, this is ultimately an exercise in comparative institutional analysis. This is indeed a very welcomed perspective in political economy. So let me conclude with another nod to complete agreement. Early on in their work they contrast ideal theory and non-ideal theory in political philosophy, and they state unequivocally that while they find fault in ideal theory, they do not adopt the non-ideal approach. A part of this debate is semantic, but I want to agree with Knight and Johnson because they want to fight for the realm of ideal theory, provided that the ideal is what I would term a realistic ideal. Meaning, an ideal that is appropriately constrained in its thought experiments about the good society; it is what we know about the operation of institutions and the structure of incentives and flow of that information.. The term theory in the social sciences and humanities has been misused too often to mean flights of fancy unmoored from the reality of physical and human constraints. Perfection is denied to man; utopia is not an option. But that doesn’t mean we cannot theorize within that constraint.
Good theory – in economics, in philosophy, in politics, etc. – should not succumb to free floating abstractions. But that shouldn’t also condemn us to an exclusive focus on momentary concretes. We should be able to engage in theorizing about human institutions populated with fallible but capable human actors, who have differences, yet can realize tremendous gains from social cooperation if they simply come to adopt rules that enable them to live better together rather than apart or in conflict. Democratic institutions are one of the mechanisms we have stumbled across that enable us to achieve social cooperation when appropriately constrained and limited within its proper boundaries.
F.A. Hayek once argued that: “But nobody can be a great economist who is only an economist – and I am even tempted to add that the economist who is only an economist is likely to become a nuisance if not a positive danger.” When discussing Hayek’s quotation, I have also added the following caveat – ‘Nobody is as dangerous as an economist who knows only economics except a moral philosopher who knows no economics at all.’ It is the interaction between technical economics (rational choice, institutional analysis, and invisible hand explanations) and social philosophy where we find the best works in political economy. Knight and Johnson’s The Priority of Democracy is in that line of thought and represents one of the most important reflections on the subject of the role that democratic institutions play in enabling human societies to benefit from radical diversity while minimizing the costs associated with our profound differences with one another. Learning to live better together through the nested set of institutions that constitute a society of free people is critical to the theory and practice of democratic self-governance.