Zen and the art of entrepreneurial capitalism

Many years ago, Robert M. Pirsig’s hippy cult novel Zen and the Art of Motorcycle Maintenance was one of my favourites.  A few weeks ago I discovered he’d written a sequel in 1991 called Lila: An Inquiry into Morals.  I’ve been reading it as a break from seemingly interminable marking of student essays and exams (now mercifully finished).

Like many a 70s hippy (including me), Pirsig seems to have mellowed and discovered the virtues of market capitalism as he aged, framing it with his trademark notion of Zen “Quality”. 

I found several interesting things about the passage from Lila reproduced over the fold.  One is that Pirsig seems to be channeling Austrian theoreticians (especially Hayek and Popper) without overtly referencing them or seemingly even being aware of their existence.

The other interesting angle, and the main reason for this post, is that it encapsulates a lot of my own thinking about human social and economic organisation especially the role of entrepreneurialism and innovation.  The need to avoid stifling innovation as the primary engine of capitalism’s remarkable success was Hayek’s principal answer to those who argued for socialism or even a strong social democratic welfare state.  I attempted to provoke discussion on this topic in a previous post, but it ended up being sidetracked by a prolonged argument about the virtues or otherwise of the libertarian LDP’s election policies.   It seems to me that the more general issues that Pirsig raises are much more interesting.  In particular, if we accept the general thrust of his argument (as I do), what does that say about optimal forms of social, economic and political organisation (particularly when social and economic activity should be regulated and what form regulation should take)?  And optimal in what sense?

So Phaedrus had been right in running then. But now — funny thought — this was actually his home. All his income came from here. His only fixed address now was right here — his publisher’s address on Madison Avenue. He was as much part of the Giant as anyone else.

Once you understand something well enough, you don’t need to run from it. In recent years each time he returned to New York he could feel his fear of this old monster lessening, and a kind of familiar affection for it growing.

From a Metaphysics of Quality’s point of view this devouring of human bodies is a moral activity because it’s more moral for a social pattern to devour a biological pattern than for a biological pattern to devour a social pattern. A social pattern is a higher form of revolution. This city, in its endless devouring of human bodies, was creating something better than any biological organism could by itself achieve.

Well, of course! My God! Look at it! The power of this place! Fantastic! What individual work of art can come anywhere near to equalling it? Sure: dirty, noisy, rude, dangerous, expensive. Always has been and probably always will be. Always been a hellhole if what you’re looking for is stability and serenity… But if you’re looking for stability and serenity, go to a cemetery, don’t come here! This is the most Dynamic place on earth!

Now Phaedrus felt it all around him — the speed, the height, the crowds and their tension. All the early strangeness was gone now. He was in it.

He remembered that its great symbol used to be the ticker tape, ticking out unpredictable fortunes rising and falling every second, a great symbol of luck. Luck. When E. B. White wrote, “if you want to live in New York you should be willing to be lucky,” he meant not just “lucky” but willing to be lucky — that is, Dynamic. If you cling to some set static pattern, when opportunity comes you won’t take it. You have to hang loose, and when the time comes to be lucky, then be lucky: that’s Dynamic.

When they call it freedom, that’s not right. “Freedom” doesn’t mean anything. Freedom’s just an escape from something negative. The real reason it’s so hallowed is that when people talk about it they mean Dynamic Quality.

That’s what neither the socialists nor the capitalists ever got figured out. From a static point of view socialism is more moral than capitalism. It’s a higher form of evolution. It is an intellectually guided society, not just a society that is guided by mindless traditions. That’s what gives socialism its drive. But what the socialists left out and what has all but killed their whole undertaking is an absence of a concept of indefinite Dynamic Quality. You go to any socialist city and it’s always a dull place because there’s little Dynamic Quality.

On the other hand the conservatives to keep trumpeting about the virtues of free enterprise normally just supporting their own self-interest. They are just doing the usual cover-up for the rich in their age-old exploitation of the poor. Some of them seemed to sense there is also something mysteriously virtuous in a free enterprise system and you can see them struggling to put into words but they don’t have the metaphysical vocabulary for it any more than the socialists do.

The Metaphysics of Quality provides the vocabulary. A free market is a Dynamic institution. What people buy and what people all, in other words what people value, can never be contained by any intellectual formula. What makes the marketplace work is Dynamic Quality. The market is always changing and the direction of that change can never be predetermined.

The Metaphysics of Quality says the free market makes everybody richer by preventing static economic patterns from setting in and stagnating economic growth. That is the reason the major capitalist economies of the world have done so much better since World War II than the major socialist economies. It is not that Victorian social economic patterns are more moral than socialist intellectual economic patterns. Quite the opposite. They are less moral as static patterns go. What makes the free-enterprise system superior is that the socialists, reasoning intelligently and objectively, have inadvertently closed the door to Dynamic Quality in the buying and selling of things. They closed it because the metaphysical structure of their objectivity never told them Dynamic Quality exists.

People, like everything else, work better in parallel than they do in series, and that is what happens in this free enterprise city. When things are organised socialistically in a bureaucratic series, any increasing complexity increases the probability of failure. But when they’re organised in a free enterprise parallel, an increase in complexity becomes an increase in diversity more capable of responding to Dynamic Quality, and thus an increase of the probability of success. It is this diversity and parallelism that make this city work.

And not just this city. Our greatest national economic success, agriculture is organised almost entirely in parallel. All life has parallelism built into it. Cells work in parallel. Most body organs work in parallel: eyes, brains, lungs. Species operate in parallel, democracies operate in parallel; even science seems to operate best when it is organised through the parallelism of the scientific societies.

It’s ironic that although the philosophy of science leaves no room for any undefined Dynamic activity, its science’s unique organisation for the handling of the Dynamic that gives it its superiority. Science superseded old religious forms, not because what it says is more true in any absolute sense (whatever that is), but because what it says is more Dynamic.

If scientists had simply said Copernicus was right and Ptolemy was wrong without any willingness to further investigate the subject, then science would have simply become another minor religious creed. But scientific truth has always contained an overwhelming difference from theological truth: it is provisional. Science always contains an eraser, a mechanism whereby new Dynamic insight could wipe out old static patterns without destroying science itself. Thus science, unlike orthodox theology, has been capable of continuous revolutionary growth. As Phaedrus had written on one of his slips: “The pencil is mightier than the pen.”

That’s the whole thing: to obtain static and Dynamic Quality simultaneously. If you don’t have the static patterns of scientific knowledge to build upon you’re back with the caveman. But if you don’t have the freedom to change those patterns you’re blocked from any further growth.

You can see that where political institutions have improved throughout the centuries the improvement can usually be traced to a static-Dynamic combination: a king or constitution to preserve the static, and a parliament or jury that can act as a Dynamic eraser; a mechanism whereby new Dynamic insight can wipe out old static patterns without destroying the government itself.

Phaedrus was surprised by the conciseness of a commentary on Robert’s Rules of Order that seemed to capture the whole thing in two sentences: “No minority has a right to block a majority from conducting the legal business of the organisation. No majority has a right to prevent a minority from peacefully attempting to become a majority.” The power of those two sentences is that they create a stable static situation where Dynamic Quality can flourish.

In the abstract, at least. When you get to the particular it’s not so simple.

It seems as though any static mechanism that is open to Dynamic Quality must also be open to degeneracy — to falling back to lower forms of quality.

This creates the problem of getting maximum freedom for the emergence of Dynamic Quality while prohibiting degeneracy from destroying the evolutionary gains of the past. Americans like to talk about all their freedom but they think it’s disconnected from something Europeans often see in America: the degeneracy that goes with the Dynamic.

It seems as though a society that is intolerant of all forms of degeneracy shuts off its own Dynamic growth and becomes static. But a society that tolerates all forms of degeneracy degenerates. Either direction can be dangerous. The mechanisms by which a balanced society grows and does not degenerate are difficult, if not impossible, to define.

How can you tell the two directions apart? Both oppose the status quo. Radical idealists and degenerate hooligans sometimes strongly resemble each other.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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Liam (B.LOLconomics)
Liam (B.LOLconomics)
13 years ago

Oooh, this is why I hated Motorcycle Maintenance so thoroughly (that, and there wasn’t nearly enough motorcycling). We can agree to differ, Ken, but I find this kind of cod-political science nail-chewingly didactic and pat.

The power of those two sentences is that they create a stable static situation where Dynamic Quality can flourish.
In the abstract, at least. When you get to the particular its not so simple.

ORLY? Or perhaps I should say INVISIBLE DIALECTIC? Or how about I CAN HAS JOHN STUART MILL?

Liam (B.LOLconomics)
Liam (B.LOLconomics)
13 years ago

It was Marx’s point before it was Hayek’s, if I recall correctly. And it’s only self-evidently true if you frame it as a statement limited by terms (entrepreneurialism+economic freedom=adaptability=flexibility=Quality). Never mind that those terms are, “in the particular”, always very laden with concrete and often nasty political agendas.
As to majoritarianism and the Robert’s Rules of Order, I wonder what Pirsig thinks these days of the People’s Republic of China, a thoroughly entrepreneurially free-market economy driven by economic goals pretty similar to his Dynamic Quality, but politically led by tyrannical butchers? Or that his BMW R series from the first book, that emblem of Quality, was designed and manufactured in a West German closed-shop factory in a corporatist state re-built with NATO money and maintained by American bombers?

skepticlawyer
13 years ago

It’s easy to nitpick someone like Pirsig, Liam, but I don’t think that does justice to the larger point Ken is making here. To me (and maybe this is fresh in my mind because I’ve just re-read some of Constitution of Liberty in preparation for an exam tomorrow), this piece is linked to the point Hayek (and Ken) both made on the link between merit and success in a market economy.

In short, there is no neat correlation between merit and success in a market economy. You can be as innovative as you like and still finish up with the seat out of your pants. You can also have individuals of great brilliance in a socialist economy ‘second guess’ the market and come up with a great idea, as Ferdinand Porsche did before and during the war and other German industrialists did post-war. Acknowledging that is simply to acknowledge the truism that there are very clever people in the world who are very good at solving problems.

Hayek’s point (and I think Pirsig’s) is that they can’t do it forever. The longer innovation is centrally planned (I just realised what a strange phrase that is) or only rewarded on very confined terms, or the link between innovation and market reward is undermined the harder it’s going to be.

Liam (B.LOLconomics)
Liam (B.LOLconomics)
13 years ago

Its easy to nitpick someone like Pirsig, Liam

True, SL, true. I can’t help it if I enjoy dumping buckets from behind a keyboard, and I’m sorry for stinking up the thread with my banal sarcasm.
To be serious: my criticism of Pirsig here is the same as the one I’d make of the Chicago economists of whom he’s a contemporary; that they idealise a form of economic freedom in the abstract, one that works cut loose from any form of democratic freedom or economic justice. I mention the PRC as an illustration that economic freedom by itself isn’t necessarily any worthwhile freedom at all. Life in the Shenzen Special Economic Zone would probably fall quite short of Dynamic Quality for a lover of the unpredictable streets of NYC, and certainly would for me. Given the choice between Quality as expressed by someone unconsciously cribbing Hayek (as Ken rightly says he is) and Quality as formulated perfectly well by hundreds of years of Western political philosophy and jurisprudence, I’ll take the broad church of thinkers, ta muchly.
This is quite a separate matter, of course, to my unfunny criticism of his style. I forswear further lulz.

Liam
Liam
13 years ago

Id rather like to continue living in a society that embodies both liberal democratic values and economic prosperity

Precisely. I don’t think Pirsig understands liberalism or democracy, without which you wind up with a decidedly suboptimal society, regardless of its economic vibrancy or entrepreneurial spirit. A statement like “democracies operate in parallel” shows that he’s ignorant of the rest of the world who manage to make capital-D Democracy work without entrenched binary Parties.

Patrick
Patrick
13 years ago

Im wondering how many people agree that his (and Hayeks) essential point about the critical role of entrepreneurial/innovative activities in the success of capitalism and the flexible systems they need to thrive is almost self-evidently true?

I do. It seems so self-evident that I struggle to say it – that capitalism works because
a) the central planners are simply incapable, no matter how smart, of getting the allocations right;
b) the central planners will always be left in the dust by what the dynamic system chokes up by accident but no-one realised was useful; and
c) the central planners never really motivate most people to achieve, and certainly nothing like the ever-potentially lucrative but constantly driving ‘rat race’ does.

melaleuca
13 years ago

Sorry, Ken, but by the time I got to the third paragraph of Pirsig’s piece I realised I would rather gouge my eye out with a fork than read any further.

I often feel the same way about Marx.

And sometimes Mark Bahnisch: “… relatively conservative developmentalist political science ideology of modernisation …” http://larvatusprodeo.net/2008/06/30/beyond-the-red-state-blue-state-dichotomy/

But back on topic- I think their might be some value in teaching innovation and entrepeneurship in secondary school. It isn’t all or mostly about education but it has to more worthwhile than home economics and PE.

melaleuca
13 years ago

Ken,

I think the quality of left-thinking would be improved if those who study the social sciences- a bastion of leftism- were compelled to study some economics.

On the other hand, the quality of economics graduates would be better if they were compelled to study some of the social sciences.

observa
observa
13 years ago

As an old biker(well a young one then) I was immediately attracted to Pirsig’s way of thinking, particularly as I was grappling seriously with economics and the Monetarist vs Keynesian debates at the time. I’d define them broadly as the Austrian and Keynesian views of the world now and the dynamic tension that puzzled Pirsig and myself at the time is how to marry the two, which we intuitively suspect is the Holy Grail of the Third Way even today. Naturally the young man had a socialist heart but as he grew older and wiser he gained the market head. It’s inevitable that dealing with engineering, the technical and man-made construction, that the pursuit of economic quality would be of increasing interest and importance. How much in terms of resources forgone should we invest in quality over quantity is always at the forefront of technical solutions to needs, but was there some serious shortcoming in the overall paradigm that often forced the sacrifice of quality for quantity, with concomitant lessening of overall social outcomes? Like Pirsig I had the nagging feeling there was and that was always his unfinished dilemma. There is a Third Way Robert meboy and I have glimpsed it, or at least the path by which we truly discover it. It lies in a Keynesian construction of a Constitutional Marketplace, within which the Austrian dynamism can have its full head. The former sets the overall heading but it is the seamanship of the latter that propels the voyage and steers best through uncharted waters. It’s imperative to get the overarching constitution of the marketplace right first and foremost. To do that you have to wipe the current slate clean and begin thinking afresh about what best suits us in a Rawlsian sense, given that we start from the here and now. Of course you could start that process from a Mediaeval standpoint, but that would be nonsensical. No, we start from here with the benefit of history and analytical thought that gives us the ability to identify the pressing issues that need to be accommodated today. Pirsig intuitively understood the issues, but he couldn’t find the keystone that would lock the two pillars of the Third Way structure together. I have glimpsed just such a keystone, but it came from a long and arduous journey and going back to those first principles over and over again. Pirsig was almost there and that was his great insight for mine. He had pioneered much of the journey.

TerjeP
TerjeP
13 years ago

some tunnel vision libertarians who are so obsessed with economic freedoms that breaches of civil and political liberties (which have been far more frequent in the West since 9/11) scarcely register with them

Care to name a few prominant libertarians that fit the mould? I can’t currently think of any. And even if you could name some examples I’m sure that they are such an insignificant minority that they leave your comment still running close to empty.

And why are economic freedoms “an obsession” in the pejorative sense, whilst other freedoms are special? Most people in the west won’t have their personal civil liberties violated on a regular basis but they will have their economic freedoms imposed apon on a daily basis. The former may be vastly more severe but the later is vastly more prevalent. And pursuing an agenda for economic freedom takes nothing away from those that pursue an agenda for civil liberties. Your implied criticism is a bit like saying that plumbers don’t spend enough time doing carpentary. In fact freedom in one area usually validates and enhances the cause for freedom in other areas. There is good evidence that economic freedom creates wealth. And good evidence that wealth fosters democracy. And good evidence that democracy fosters civil liberties. There is no shame in advocating economic freedom.

Ken you really ought to cut the routine where by you borrow all the key libertarian arguments but wash your hands of libertarianism.

Patrick
Patrick
13 years ago

Ken you really ought to cut the routine where by you borrow all the key libertarian arguments but wash your hands of libertarianism.

Love the sin hate the sinner? I like Ken but that did make me laugh :)

NPOV
NPOV
13 years ago

The last thread you tried to start about this, somebody posted a link to an interesting article quoating a stat that suggested something like 27% of Americans thought about becoming enterpreneurs, but only 9% actually did, whereas in Europe, only 15% thought about it, but 14% actually went ahead (I don’t remember the exact numbers, too lazy to find the article).

I think it’s not unreasonable to suppose that the safety net provided by a social democracy is a big factor in the level of risk people are prepared to take on – and probably a bigger factor than the level of tax you’re likely to pay if your business takes off.

conrad
conrad
13 years ago

Liam: “I mention the PRC as an illustration that economic freedom by itself isnt necessarily any worthwhile freedom at all”

You might think that Liam, but that’s only because you live in a rich country. I’m sure a few hundred million people that used to live in poverty in China wouldn’t agree with your statement. Economic freedom is wonderful for people that didn’t used to have it, and as KP notes, not orthogonal to liberal/democratic values, and as Terje notes, it tends to lead to more liberal/democratic values — and that’s certainly what is happening in China and has happened in many other parts of Asia. The great thing about money is that once people have enough of it, the smart ones have enough time to start worrying about things.

Mark Hill
13 years ago

I tend to think that economic freedom leads to civil liberties and civil liberties lead to economic freedom. I’m an optimist.

“I think its not unreasonable to suppose that the safety net provided by a social democracy is a big factor in the level of risk people are prepared to take on – and probably a bigger factor than the level of tax youre likely to pay if your business takes off.”

Yes it is. European growth rates are appalingly low. Venture capital has a part to play. So does savings of entrepreneurs.

Sceleoretic growth is called the “European disease” for a reason. Of course, as long as the US fights unfeasible wars, they will grind themselves into poverty.

socio
socio
13 years ago

Most people in the west wont have their personal civil liberties violated on a regular basis but they will have their economic freedoms imposed apon on a daily basis.

Can I ask what economic freedoms of mine are being imposed upon today?

My blip about economic freedom/market fundamentalism is the commodification of human relationships, the eroding of values based on tradition, respect, ethics etc and replacement with an amoral commercial imperative that places profit above the public good and/or environmental cost for example.

So yes I believe they are critical, esp as Conrad notes, in those societies that haven’t yet experienced their benefit but this does not translate to carte blanche in those societies that have already developed a strong innovative focus.
Some sort of protection is needed as Hayek noted: “[..]if we were always to apply the rules of the extended order [markets] to our more intimate groupings [families], we would crush them. So we must learn to live in two sorts of worlds at once.”
Some sort of balance is required.

Mike Pepperday
Mike Pepperday
13 years ago

I, too, have glimpsed the way and it is called democracy. Democracy is rule by the people and a perfect democracy would be where every citizen has a perfectly equal say in making the rules. I think there is no third way yet a third way is an ongoing necessity. That is to say: one can work out the principles of laissez faire and it is all beautifully coherent, and one can work out the beauties of socialism and it is coherent. In practice either on its own is a disaster, so some third way has to be steered. But this is not something that can be figured out in terms of coherent principles.

If it is not coherent it must be decided on a case by case basis: free market here, Keynesian there. Who may decide? If it be politicians they will have their bias to one or the other. Thus the decision in individual instances should be by the people who are affected.

It is not just theory. Arguably the worlds most prosperous country (higher GDP per capita than ours) operates on this basis. Has been doing so for 160 years. Of course no decision pleases everyone but it pleases the majority and everyone wins sometimes. Suggestions to restrict the democracy are invariably rejected and over time the people have kept extending it in the direction of perfection.

I would not be surprised if it fitted Observas recipe of a Keynesian construction of a Constitutional Marketplace, within which the Austrian dynamism can have its full head, but that is an outcome of accumulated decisions, not a pre-setting. I dont think that the former sets the overall heading but it is the seamanship of the latter that propels the voyage and steers best through uncharted waters. I think that the people make decisions on a case by case basis. Itd be hard to detect any overall heading though one can see themes that persist.

Observas deduction that Its imperative to get the overarching constitution of the marketplace right first and foremost is, on this view, in error. The only required element of the constitution is that it provide for no one to be privileged, for everyone to have an equal say. Expressed like that, it is amazing that anything else could ever be seriously suggested and yet it always is.

NPOV
NPOV
13 years ago

Mark, if Western European growth rates are so “appallingly low”, then how is it that the standard of living in virtually all of Europe is just as good as that in other Western nations? (indeed, some would argue somewhat better). Or are you claiming that, say, 30 years ago European standards of living were vastly greater than those in the U.S., or Australia, etc.?

And how do you account for statistics indicating that those considering enterpreneurship in Europe are far more likely to follow through with their plans than those in the U.S.? (Admittedly, what’s arguably more interesting is how many are successful – does anybody have figures for that?)

Ken – I have to ask, one slightly off-topic post isn’t on its own going to derail a thread surely? I’m certainly curious to know what Jason posted.

NPOV
NPOV
13 years ago

BTW, according to http://eh.net/encyclopedia/article/schon.sweden,

Annual Economic Growth Rates per Capita in Industrial Nations and the World Economy, 1871-2005

Year Nordic Countries Other Europe US Japan World
1871-1975 2.0 1.7 1.8 2.4 1.5
1975-2005 2.2 1.9 2.0 2.2 1.6

So yes, “other Europe” has lagged slightly behind the U.S. But it doesn’t appear to be the strongly social democratic ones.

Rob W
Rob W
13 years ago

Was Pirsig a hippy? I thought he was an Academic who cracked up because he lived in his brain so much that he lost track of the rest of life. Perhaps the success of his first book and its popularity with ‘hippies’ came about partly because of the massive fractures in our interpretations of the world during the Sixties. It wasn’t only the criminalised drugs which unravelled many brains, it was also the harsh conventional psychotropic drugs, and the even harsher shock treatments that troubled souls were subjected to then. For all the philosphy in Zen and The Art of Motor Cycle Maintenance, it’s a simple theme. Pirsig lost not only his mind but his memory. The word Zen doesn’t automatically mean ‘hippy’. Zen is an old philosophy focussed on leaving an attachment to thought behind and finding a sort of central awareness which goes beyond interpretation. (It IMPLIES a sort of breakdown, a deliberate cognitive dissonance, but that dissonance is not as desperate or weird as that massive loss of faith which probably began with the Beats or maybe even with the Atom Bomb.) Pirsig used his understanding of mechanical order, his arguments with philosophy, his work as a teacher and the basic aim of defining Quality through conversations with his son in order to regain a functional relationship with the world. It’s sad that the book didn’t help his son who committed suicide at an early age, partly it’s said because he found the book humiliating. I thought that Lila was about a vain attempt to reach out for another lost soul. Pirsig had been lost, he slowly put his life back together. Then lost his son. In Lila, he is reaching out to another lost soul, eventually without success. Lila’s addiction to things other than quality is poignant in those terms. Freedom from the constraints of the gross worlds is a part of it all. Remember, the commentary about New York occurs while he is waiting for Robert Redford who wants to film the first book and also as Lila fails to discover any quality in her past life, is robbed and thus begins her fatal descent. The descriptions of the city are also contextual rather than a comprehensive philosophy in themselves.

Patrick
Patrick
13 years ago

rigid anti-dismissal laws are a bad idea IMO; wed be better served by improving the social safety net and retraining opportunities for displaced workers, while allowing employers a reasonably free rein in deciding who and how many they employ

I agree completely.

for example, its possible to frame regulations that set targets or objectives but leave open the manner of achieving them, thereby allowing for innovative approaches involving collaboration etc.

The hard part is that this requires, or at least I think it does, very vigorous enforcement powers.

Re Denmark, since I love linking to the Economist, I will link to this article on a Danish entrepreneur – except she’s American. Moneyquote, though:

Some of her Danish investors were very upset when she brought these [US] other investors on board. Why do you need so much money now,’ they asked, insisting that they would have been ready to provide us with more money eventually, when they decided that we needed it, she says. She decries this lack of ambition and argues that her firm’s brimming portfolio of drugs, never mind its stunningly lucrative deal with GSK, would not have been possible if she had stayed put in Copenhagen.

Mark Hill
13 years ago

NPOV,

It makes a hell of a difference when it is compunded. Swedish unemployment is always above 12%. Hidden unemployment is equal to or higher than that.

Are you going to tell me having deteriorating skills and no savings helps entrpereneurialism? Sure spare time and inspiration are essential. But they have no savings, weakening skills and less interaction with customers or suppliers.

Yes they have agenerous safety net. America has different levels of a safety net, and private charities do more. I’m not arguing about the efficacy of this, but it is just done differently and more generously than most people assume.

But how many people who live poverty are there because they are failed entrepreenurs? How many who have made it big say “it would have been easier if the dole payments were bigger”?

The Nordic countries have high levels of opennness to external economies. This is their advantage in costs and attracting and generating trade and foreign direct investment in and out. Multinationals engage in FDI, attracting the best managers and financial economies of scale.

Mark Hill
13 years ago

“Mark, if Western European growth rates are so appallingly low, then how is it that the standard of living in virtually all of Europe is just as good as that in other Western nations? (indeed, some would argue somewhat better). Or are you claiming that, say, 30 years ago European standards of living were vastly greater than those in the U.S., or Australia, etc.?”

That’s err, “very contentious”…

Two strongly libertarian articles which are actaully very fair and balanced:

Denamrk:

http://mises.org/article.aspx?Id=905

Sweden:

http://mises.org/story/955

NPOV
NPOV
13 years ago

Who wouldn’t agree with allowing employers “reasonably free rein”. The key word is surely “reasonably”, and arguments over unfair dismissal laws seem to come down to what specific examples would classify as reasonable case for dismissal.
The laissez-faire approach is surely to insist that employers should be able to dismiss employees for whatever reason they like, without having to explain why to the employee. After all, employees are expensive to replace, and no employer would just fire somebody because they took a single sick day, or indeed without giving any good reason at all, surely?

Mark Hill
13 years ago

“The laissez-faire approach is surely to insist that employers should be able to dismiss employees for whatever reason they like, without having to explain why to the employee.”

No you are building up another strawman to beat down.

The contents of the contract are what is important.

NPOV
NPOV
13 years ago

Fair and balanced?

“The obsession with equality delivers a crushing, daily blow to anyone with a new idea or the inkling to cultivate an ability that surpasses the norm”

…without any links to stats on enterpreneurship on Denmark.

And FWIW, I don’t particular believe Australia would benefit particular from trying to turn itself in Denmark or Sweden. But even from the point of view of encouraging innovation and enterpreneurship I’m less worried about us heading in that direction than the opposite way.

observa
observa
13 years ago

I take on board your skepticism Mike but you might like to think of an overarching CM as like a Magna Carta against the divine right of elected kings. It is simply a blueprint of ideals against which the depredations of the king and his nobles is measured and reined in, or rather better still, uncalled for and glaringly anachronistic. Take Rudd’s bestowing of $35 million upon Toyota and its shareholders. Supposedly picking hybrid winners, which Mr Watanabe when asked didn’t exactly know what Toyota would do with such pleasant largesse. Oops dumbo! An overarching economic Magna Carta is somewhat overdue and it doesn’t have to be all things to all people, just an agreeable direction statement for all. The need for such a blueprint doesn’t come along every day, but I’d suggest AGW is a pretty powerful catalyst for one now. Add an impending world economic crunch and that will certainly concentrate the minds. Certainly such an outline of direction will be open to interpretation in practice and perhaps substantial revision should circumstances radically alter, but that’s nothing new. It’s the underlying tenets that are important rather than some tedious instruction manual for all time. Nothing like a good mission statement to remind us all to constantly separate the wood from the trees, but it’s equally important it’s not some esoteric claptrap. Focussing on the issues at hand and getting the balance right is the art. In hindsight, Pirsig was always consumed by the quest for striking that balance for mine.

NPOV
NPOV
13 years ago

Mark, sure, but the reality is that there will always be employees out there that will sign on to contracts that effectively do give employers completely free reign in terminating the agreement, out of either desperation, ignorance, or carelessness (I’ve certainly never once bothered to read every last paragraph of an employment contract, have you?).

Mark Hill
13 years ago

“And FWIW, I dont particular believe Australia would benefit particular from trying to turn itself in Denmark or Sweden. But even from the point of view of encouraging innovation and enterpreneurship Im less worried about us heading in that direction than the opposite way.”

What, you’re worried about unfettered markets not delivering innovation?

http://en.wikipedia.org/wiki/Eric_Maskin#Software_patents

“Maskin suggested that software patents inhibit innovation rather than stimulate progress. Software, semiconductor, and computer industries have been innovative despite historically weak patent protection, he argued. Innovation in those industries has been sequential and complementary, so competition can increase firms’ future profits. In such a dynamic industry, “patent protection may reduce overall innovation and social welfare.” A natural experiment occurred in the 1980s when patent protection was extended to software,” wrote Maskin. “Standard arguments would predict that R&D intensity and productivity should have increased among patenting firms. Consistent with our model, however, these increases did not occur.” Other evidence supporting this model includes a distinctive pattern of cross-licensing and a positive relationship between rates of innovation and firm entry. [4]”

The most innovation occured during a “market free for all”. You want more innovation but a move to more laissez faire markets “worries” you? Are you serious?

“Mark, sure, but the reality is that there will always be employees out there that will sign on to contracts that effectively do give employers completely free reign in terminating the agreement, out of either desperation, ignorance, or carelessness (Ive certainly never once bothered to read every last paragraph of an employment contract, have you?).”

Yes, they will always be there and will be a very small majority which does not justify having less economic efficiency across the whole economy.

You should read everything you sign. I do. You are vilifying employers and free labour markets when you are that reckless with your own liabilities? The same thing could have happened to the guy who refused to work seven days a week. He might have agreed to it. How is it unfair to then dimsiss him (if that’s what happened)?

Nicholas Gruen
Admin
13 years ago

NPOV – can you provide the link to the article linked to in comments to Ken’s last post? (I’ve had a quick look myself but it’s a long thread.) This is the article suggesting that more people think of becoming entrepreneurs in the US, but a smaller proportion go ahead and do it.

NPOV
NPOV
13 years ago

You don’t need to convince me on patents. A move to a more laissez-faire market only concerns me wrt areas where regulation and tax and redistribution do provide a substantial net benefit. FWIW, I’ve no doubt I would substantially benefit personally from it, if I was happy to wrap myself up in a cocoon and not concern myself with the reality of life for those less fortunate than myself.

Allowing employers free reign to write up whatever employment contracts they want sounds to me like a recipe for employees only being sure of a reasonable employment terms once they hire a lawyer to go through their contracts with a fine-tooth comb. As it is now, I can confidently apply for any job I see in advertised, and not concern myself with whether I’m likely to wind up with an employer who thinks nothing of firing on a whim.

Hey, why even mandate that a contract must be written up at all? I could do with an assistant – perhaps I’ll find someone that’s happy to sleep in the garage and I can pay in grocery vouchers. Government doesn’t need to know anything about it.

NPOV
NPOV
13 years ago
Nicholas Gruen
Admin
13 years ago

The Mieses articles on Denmark and Sweden are fair and balanced. And I’m a monkey’s uncle.

The one on Sweden begins thus.

One of the enduring myths of the “Third Way” welfare state is that a nation as a whole can have a high standard of living–even if no one really has to work–as long as government transfers massive amounts of wealth from those who are well off to those who are less well off.

Sure – and Kevin Rudd is my auntie.

As Ludwig von Mises and Murray Rothbard have pointed out, in a private-market society, individuals cannot gain wealth unless they produce goods that are demanded by large numbers of people.

Thanks guys.

I gave up at that point. And yes it’s true, there was a brief breezy mention that life for the downtrodden in Swedish cities might be better than in Newark – but hey, what of it when you can toss off pearls like those from Ludwig and Murray.

Mike Pepperday
Mike Pepperday
13 years ago

Ken
My answers are (a) yes, (b) let policy setting be democratic for there is no general rule.

I dont particularly see it as laissez fair v socialism. I was just using them as shorthand examples of two ways of life. The former is what you are talking about: the individualistic, entrepreneurial, competitive, independent-negotiate-your-own-life, negative freedom, equal opportunity, procedural justice, materially optimistic, socially pessimistic (human nature bad), role identity. The latter is egalitarian, collective, cooperative, brother’s keeper, interdependent, positive freedom, equal outcome, distributive justice, materially pessimistic, socially optimistic (h.n. good), social identity.

My point is they are each logically (and psychologically) coherent. The necessary middle path is not. Policy settings are collective whereas the essence (the ideal-type) of the innovative individualist is a war-lord. So in effect you are asking how we arrange things so that the collective gets the benefits of individualist innovation. The settings must be slack enough not to stifle the go-getters but tight enough to prevent descent into a Hobbesian free-for-all (well, laissez faire Enron robber-baronism). This is the third way and it is ad hoc.

For example, work-place regulations. I see no general principle for deciding them. Each issue has to be decided on its merits, case by case. Patricks comment at #27 illustrates the point as does NPOVs at #30: reasonably free rein as does much else in the comments. People argue back and forth but how to DECIDE? The way it is, we have the government of the day deciding and it has a built-in bias toward one of the two ways of life (not to mention other incentives). If such matters were to be put to a vote the public, who have to wear the consequences, would make the decision.

Observa

I wonder if it is possible to construct an economic Magna Carta or mission statement that would achieve majority support and which actually said something eg would prevent the largesse to Toyota. Social blueprints are the sort of thing that imperial or fascist governments develop. I shouldnt think there are any underlying tenets except that every citizen should have an equal say in making any tenets.

Patrick
Patrick
13 years ago

I suspect Ken agrees with the first part of my comment at 27, since he wrote it ;)

NPOV
NPOV
13 years ago

BTW, to see comment 27, you can type:

javascript:document.getElementsByTagName(“ol”)[0].childNodes[27-1].scrollIntoView();

NPOV
NPOV
13 years ago

(Hmm, that automatically converted the double-quotes to non-standard ones, so you can’t copy and paste it into the address bar as is).

Liam
Liam
13 years ago

Back from work, sad to have missed out so far on an interesting conversation.
To answer Ken’s #10 question, I accept Hayek’s point about entrepreneurial unplanned activity generally surpassing planned economic activity, in much the same way that I accept Marx’s point about capitalism’s tremendously creative force in the bourgeois stage. I’d also add; “of course”.
They’re only “self-evident” as they pertain to economic activity, and this is what I am arguing about Pirsig’s soap-slippery Quality; I don’t accept the corollary that raw prosperity makes for a better society in itself. Prosperity for societies, like money for individuals, permits many more freedoms, but in the end those freedoms are always won through social struggle, not industrial work. Capitalism has produced a more comfortable society for us, and I agree conrad, for me, but what we and I want out of society is entirely bound up by our modernist expectations. Personally, I love the benefits of industrial capitalism, especially (ahem) my Japanese single-cylinder motorcycle, but I don’t pretend that my way of looking at the world is universally human. In the past people defined their social Quality differently than we do, that’s the whole point of Pirsig’s reinvention of Zen for modern times. It’s anti-anti-modernism, and there’s a place for it, but there’s little about it self-evident.

You can see that where political institutions have improved throughout the centuries the improvement can usually be traced to a static-Dynamic combination: a king or constitution to preserve the static, and a parliament or jury that can act as a Dynamic eraser; a mechanism whereby new Dynamic insight can wipe out old static patterns without destroying the government itself.

This argument of Pirsig’s is historically determinist in the extreme, and it’s this kind of prose I object to.

Liam
Liam
13 years ago

To further clarify:

The focus is on entrepreneurialism/innovation, whether readers regard them as critical aspects of a prosperous society

I do regard them as such.
When it comes to building a liveable rather than simply a rich society, however, I look not to entrepreneurs but to organisers and activists, whose focus is upon building social capital and securing “Quality” through struggle.

melaleuca
13 years ago

There’s plenty of capitalism, innovation and entrepreneurship in Africa, but with few exceptions the place is a basket case. The role of good governance and social factors are downplayed be libertarian types but are obviously very important to economic success. I think good government has a symbiotic relationship with the market economy rather than a predatory relationship. The experience of the Nordic Model countries demonstrates that a symbiotic relationship can exist even when the size of government is much larger than it is in the Anglosphere.

JC
JC
13 years ago

Theres plenty of capitalism, innovation and entrepreneurship in Africa, but with few exceptions the place is a basket case.

Yep it’s a veritable silicon valley.

The role of good governance and social factors are downplayed be libertarian types but are obviously very important to economic success.

Name one libertarian who thinks bad governance is a better choice. Good governance/small government and the rule of law are far more important than what’s in the ground in terms of assisting in raising living standards.

Nabakov
Nabakov
13 years ago

“Two strongly libertarian articles which are actaully very fair and balanced:”

Remind me again of the floods of immigrants fleeing those Scandinavian hell holes for the totally free markets of Somalia and Afghanistan.

One of the biggest immigrant rushes of all time is Mexicans and other Latin Americans crossing into the US. But not because they’re escaping their stifling over-regulated homelands. Quite the contrary. They want to get away from anarchy and the arbitrary rule of force and go to the nearest country where there’s a coherent and stable Government offering a large, well-developed, expanding and fairly rigorously enforced system of laws and support systems that give you at least a fighting shot at not just surviving but flourishing.

In the western world, most people seem to tend to vote for a Government that will do more for them whereas classically pure Misean/Friedmanite policies seem to need dictators to impose them from above a la Pinochet. And even then the Government still hung onto Chile’s main source of foreign exchange, the copper mines.

Y’know, not everyone wants to be a gung ho entrepreneur with a shapeshifting career portfolio living off their wits and devil take the hindmost. There are an awful lot of people out there who want a stable life where they can earn an honest living from and contribute to a decent and prosperous community that allows them to enjoy their life and raise a family with some comfort and security. And that takes massive amounts of hard-won consensus with many tradeoffs along the way.

It’s hard not to think of a hard core libertarian as the bloke who said “fuck all this new-fangled and totally boring communal sowing and reaping shit, I’m off to personally kill me a woolly mammoth” and was next seen outlining an enormous footprint with his skin and hanks of hair.

If you want the benefits of living in a thriving first world economy in a globalised world then you have to accept it comes with certain restrictions too. It’s the old rights vs responsibilities dichotomy again.

On the other hand. I understand you can make a real killing these days in the Somalian mobile phone provider market.

“But, but us libertarians do believe in government. We just want a smaller one.”

In that case, you’re not a true libertarian. You’ve accepted the underlying principles of how we live these days and are now just haggling over the price.

Nabakov
Nabakov
13 years ago

“You can see that where political institutions have improved throughout the centuries the improvement can usually be traced to a static-Dynamic combination: a king or constitution to preserve the static, and a parliament or jury that can act as a Dynamic eraser; a mechanism whereby new Dynamic insight can wipe out old static patterns without destroying the government itself.”

Your old dialectician you. But yeah, you can’t have creative destruction without something to destruct. Which in turn needs to built on something solid that can handle and keep evolving under all that constant bloody hammering and sawing and drilling.

And getting back to the original post, Pirsig’s a a great example himself of what he’s talking about. A few decades or so of being a mentally troubled vet and strolling academic, getting baked on pot and motorbike fumes, running riffs on friends in the wee small hours and he comes up with a product that would have generated enough royalties to buy the sole BMW dealership in Zazenland.