Image credit. Following up from Efficiency and Freedom (2/3) - The Spectrum of Efficiency.
Freedom - The Systematization of Efficiency
Fostering a high degree of personal autonomy, a free society empowers individuals to take rational decisions, far more extensively and coherently than in a paternalistic society. In this way, citizens of a free society tend to generate efficient solutions - inventively, systematically and en masse. A network of rational decision springs up more comprehensively than ever - which may go a far way in explaining the unique coincidence of unprecedented levels of freedom and the take off of humankind as a species capable of escaping from the Malthusian trap while sustaining uninterrupted economic growth.
At the same time, of course, solutions are efficient relative to the boundary conditions within which rational decisions are taken. Put differently, efficiency, of course, is always conditional.
Freedom implies the ability of people (increasingly defined as the adult population) to prefer, advertise and even enforce differing boundary conditions which engender differing instantiations of efficiency.
Thus, until the late 1970s, post-war Americans seemed to have preferred a larger scope for free markets than did the British. East Germany was regarded as the economic paragon of the Eastern Bloc, apparently working out sufficiently different boundary conditions, than countries with the same rough societal order, to end up with an efficiency regime producing higher levels of material wealth. Other Communist countries may have had to emphasise efficient forms of repression that precluded an alternative efficiency regime productive of a higher standard of living.
Competing regimes of efficiency
At any rate, freedom encourages efficient behaviour, but in doing so it also encourages competition for different schemes conditioning efficiency - often, schemes of different moral emphasis, such as those demanding more or less welfare arrangements, respectively.
I suppose, from sufficiently far a vantage point, competition for the frameworks within which efficient strategies are to be worked out adds a welcome experimental quality to the free society.
(a) Adaptability-through-experimentation and the the strong element of (b) gravitation-toward-efficiency, would seem to help explain
- the resilience of free societies - (societies that have acquired freedom at an early stage do not seem to jettison robust conditions of liberty over the long run - consider Germany, whose experiments with Nazism and Communism ended with "mean reversion" toward robust conditions of freedom),
- "the corridor of success," and
- the "paradox of freedom," the remarkable persistence of freedom in peoples and cultures not particularly aware of or committed to political agendas explicitly championing liberty.
The two features inherent in free societies - (a) adaptability-through-experimentation and (b) gravitation-toward-efficiency - certainly contribute significantly to another notable peculiarity: The tension between competing efficiency regimes is attenuated by the presence of "efficiency-attractors," i.e. efficient outcomes toward which people tend to converge over more or less extended periods of trial and error.
As a mental note for future reference, to some extend, one may think of efficiency-attractors as manifesting the compelling logic of "Zweckrationalität" (means-end rationality) (Max Weber) which is so extensively present a characteristic of human action in civil societies.
Efficiency-attractors become pivotal shapers of freedom, and they are an issue that makes libertarians part company.
As we will see from the below quotations, freedom and her boundary conditions, including prominently the ethical choices underlying them, are significantly shaped by evolving efficiency-attractors. They imply an open-mindedness vis-à-vis the (thesis of the) evolutionary character of the ethical underpinnings of liberty, which, of course, conflicts with deontological defences of freedom that rely on a static set of ultimate ethical principles from which the meaning and implications of freedom are to be deduced.
Thus, in opposition to Murray Rothbard, Harold Demsetz makes the case
...for the relevance of efficiency to definitions of better rights systems within the confines of private property rights system. In fact, we frequently encounter notions of fairness, equity, and justice that seem derivative from efficiency considerations. These notions are particularly conspicuous for situations in which transaction cost is likely to be high, and, therefore, in which rights assignment clearly has efficiency implications.
In a rear-end collision involving two cars, there is a prima facie case that the driver of the second car is liable. Could this be "because" in the general case the driver of the second car can avoid such accidents more cheaply than the driver of the first car? This rule of law is especially applicable at the slow speeds of city traffic, but for high speed expressways it not applied so rigorously; the driver of a second car has a more difficult time avoiding rear-end collisions at expressway speeds, and we often observe minimum speed limits in expressways.
If the owner of a factory considers locating next to an existing laundry, and the owner of that laundry protests in court that soot from the factory will raise the cost of laundering, the factory owner is more likely to be held liable for damages than it the it is the laundry that contemplates locating next to an existing factory ... [this is probably attributable] ... to the generally correct judgement that he who has not yet located his business can move his business to another location at less cost than he who has already fixed his assets into a particular location.The very notions of fault and accident seem inextricably tied to the cost of avoiding damaging interactions.
(Demsetz, H. (1988), Ethics and Efficiency in Ownership Control and the Firm, Blackwell, pp. 271-272)
And Demsetz pushes the point even further:
The legal rules of thumb we adopt [...] seem to reflect basic efficiency considerations. Efficiency seems to be not merely one of many criteria underlying our notions of ethically correct definitions of private property rights, but an extremely important one. It is difficult even to describe unambiguously any other criterion for determining what is ethical. (Ibid. pp. 272-273)
Let him conclude for our purposes:
The property rights system is in large part a set of definitions and rules of behaviour that specify which forms of competition are approved and encouraged and which are not.
I believe there is a strong correlation between the efficiency consequences of various forms of competition and the degree to which they are judged to be proper and ethical.
Competition via violence is generally frowned upon, partly because toleration of violent competition would obscure ans assessment of underlying net benefit calculations. the thief who steals an automobile does not necessarily value it more than its original possessor, but the person who purchases it does. Competition via"voluntary" negotiations, as in the case of product innovation ... is more likely to yield an increase in the real wealth of a society than is competition via violent "involuntary" methods, precisely because the former offers a superior technique for weighing benefits and costs, as these are measured in the market, and for filtering out net loss situations.