“The analysis begins with one of the most severe constraints facing all humans in all societies and throughout history - inadequate knowledge for making all the decisions that each individual and every organization nevertheless has to make.’’ (ix)
The problem, the challenge - of the ‘constraint of inadequate knowledge’ - is the overwhelming foundation of this work. In manifold ways, with innumerable examples, added to clear explanation, Sowell presents a coherent, persuasive, engaging explanation.
Great! How does he do this?
“This approach rejects the common practice of ‘characterizing processes by their hoped for results rather than their actual mechanics.’ ‘Profit-making’ businesses, ‘public interest’ law firms, and ‘drug prevention’ programs are just some of the many things commonly defined by their hoped-for results. . . . So called ‘profit-making’ businesses, for example, often fail to make a profit.’’ (x)
This (seemingly simple) mental adjustment, creates profound changes in understanding organizations. For example . . .
“Socialism in this book is defined not in terms of such goals as equality, security, economic planning, or ‘social justice,’ but as a system in which property rights in agriculture, commerce, and industry may be assigned only by political authorities, rather than through transactions in the marketplace.’’ (x)
Sowell examines what incentives drive individual and organizational decisions. “Lofty goals have long distracted attention from their actual consequences.’’ (x) This highlights the first half theme.
The second half . . .
“Even within democratic nations, the locus of decision making has drifted away from the individual, the family, and voluntary associations, and toward government. And within government, it has moved away from elected officials subject to voter feedback, and toward more insulated governmental institutions, such as bureaucracies and the appointed judiciary.’’ (xiii)
Commenting on ‘Social Trends’ . . .
“Not all information is new information. History is a vast storehouse of experience from generations and centuries past.’’ (xiv)
How can this knowledge be lost, rejected?
“Old taboos have been replaced by new ones. Well-known entertainer Anita Bryant vanished from the media and became a nonperson almost immediately after voicing criticisms of homosexuality.’’ (xiv)
Sowell point is that freedom is not increasing. Knowledge is no longer available about forbidden subjects.
“The unifying theme is that the specific mechanics of decision-making processes and institutions determine what kinds of knowledge can be brought to bear and with what effectiveness. In a world where people are preoccupied with arguing about what decision should be made, this book argues that the most fundamental question is not what decision to make but who is to make it.’’ (xxii)
Who! - not - What!
Part I - Social Institutions
1 The role of knowledge
2 Decision-Making Process
3 Economic Trade-Offs
4 Social Trade-Offs
5 Political Trade-Offs
6 An Overview
Part II - Trends and Issues
7 Historical Trends
8 Trends in Economics
9 Trends in Law
10 Trends in Politics
Sowell’s concern, even love, of freedom permeates this book. His definition - ‘freedom is choice - fewer options is less freedom’. He consistently explains that ‘intellectual freedom’ is only one type of freedom. Freedom to write, teach, speak, proclaim, is essential to this class. For the rest, where to live (zoning), what kind of car, how discipline children, etc., etc., can be more important.
“It is the difference between the preferred and the imposed values that necessitates the use of force - the curtailment (or extinction) of freedom. In this context, an ideology of categorically transcendent values - whether religious salvation or ‘social justice’ - is an ideology of crushing power.’’ (378)
Why ‘ideology of transcendent values’ so destructive?
“The logic of transcendent values drives even the humane toward the use of force, as those not with the same values prove recalcitrant, evasive, or undermining - provoking indignant anger. . . . This systemic logic rather than intentional design drove Robespierre - ‘a man of great sweetness of character’ - to mass executions.’’ (378)
French monarchs killed hundreds. Robespierre executed tens of thousands. Not the same. For example . . .
“No one expected the humane social programs initiated by the new deal to lead to bureaucratic empires issuing their own laws - more laws than congress - unilaterally, outside the constitutional framework.’’ (379)
This unexpected result of good intentions that become institutionalized is key theme. Note his illustration . . .
“Initial insurgents began under a different set of incentives. . . . Once they achieve their goal, the new incentive structure tends to attract and select successors with different characteristics. This has been the history of Christianity, Marxism, civil rights movement, regulatory agencies.’’ (153)
Organized, institutional systems are interesting . . .
“People who chose to be Christian under the prosecution of the Roman Empire were not the same who chose to be Christians after Christianity had become the state religion.’’ (153) (See parable of wheat and weeds - Matthew 13)
Another fascinating comparison . . .
“Both Adam Smith and Karl Marx were systemic social analysts. In Smith’s classic, ‘The Wealth Of Nations’ laissez-faire Capitalism was advocated - as a system - because of (beneficial) systemic characteristics which were ‘no part’ of the ‘intention’ of the capitalists, whom smith excoriated as dishonest, oppressive and ruthless, and for whom he had not a single good thing to say in a nine hundred page book.’’ (153)
What about Marx?
“By the same token, Karl Marx’s ‘capital’ condemned capitalism for (detrimental) systemic characteristics which Marx refused to attribute to the individual moral failings of the capitalist, who remained objectively the creature of circumstances, ‘however much he may subjectively raise himself above them.’(153)
What other similarity?
“Both Smith and Marx dealt with the systemic logic of capitalism, and neither based his theory on individual intentions, or on a hyper-rational man, which both have been accused of.’’ (154)
What a fascinating connection!
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