Rationality, Progressivism and the Market

The market and progressivism pose two alternative approaches to rationality. Progressives argue that social deliberation can be purposeful and that incentives that might distort rationality in deliberative decision making, such as special interest group incentives to lobby for political benefits, do not distort deliberative processes sufficiently to outweigh the benefits from deliberation. Market theorists argue that rationality depends on information appropriate to a given time and place that cannot be communicated or discerned by a deliberative body, and less so by society at large. Economic actors have specialized knowledge such as price and technological knowledge that is difficult to communicate and far too complex to be known by outsiders. This knowledge is not the knowledge of general experts, economists or the like but rather of people who understand narrow production and market demand problems because the information required is very specific. For instance, do the people of Oshkosh like a different kind of Italian food from the people of Rochester or of Madison? Do bagel consumers in Manhattan have a different taste from those in Queens, Brooklyn or Wisconsin? This kind of information can be learned through trial and error.

The organizational life cycle and organizational learning would be critical to the second kind of information but not the first. In order to survive, organizations would need to obtain and utilize the second form of information, and the incentive to do so would be the threat of organizational death. In contrast, organizations need not learn if knowledge is deliberative. All that would be required were knowledge deliberative in nature would be the hiring of outside experts to maintain or improve institutions.

This has been the claim of Progressives and New Deal social democrats who have instituted an increasing degree of government intervention. Knowledge is general in nature and so requires the help of experts trained in general theory.

There should be empirical tests available as to which approach to rationality works better. Where there are more bankruptcies, over a 40 year period do economies do better or worse? If they do better, then there would be some support for the market-based model of rationality. If they do worse over the long term, then the social democratic-progressive model would be better supported. Likewise, the possibility of organizational birth would be associated with the market-based model of rationality. Where there are more organizational births, one would expect to see greater economic vitality according to the market-based model. Deliberative processes would tend to lead to stability, hence organizational learning, death and volatility would be associated with long run economic vitality under the market-based model. But more gradual change, which would be limited by economic and scientific theory, would be associated with success under the social democratic-progressive model. Volatility and risk associated with responsiveness to price and demand fluctuations would be associated with economic success under the market-based model but not under the social-democratic-progressive model.

Another importatn question is where do innovations occur most frequently under this continuum:

total state control--->social democracy---->limited state

Which of the three is associated with the most innovation? This can be viewed within the United States. Does innovation occur more in states with the least government intervention or the most? Did innovation occur more frequently in the nineteenth century or the twentieth century?

Party Affiliation and the Media's Lying Quality

In the nineteenth century news sources openly identified their party affiliations. That practice gradually eroded in the twentieth. The New York Times claimed that objective journalism was their goal. They made a good stab at it, but by now they are a Democratic (and social democratic) newspaper. Most other newspapers followed their lead because journalists believed that the Times was the best paper, the newspaper of record. As a result, the newspapers have tended to follow a Democratic Party line.

The television networks were established during a period when the Democratic Party was dominant. Although they do not express a party affiliation, they are mostly supportive of the Democratic Party. This is inequitable because the air waves are public property and should not all be allocated to one party. There needs to be open discussion of partisan dominance of the television networks.

It is time for consumers of news to demand that news sources openly affiliate with one party or another. It is pointless to claim, as do many conservatives, that a Democratic Party newspaper like the Times is biased toward the Democrats. Of course it is. Rather, readers should demand integrity from media. Integrity means that media ought to state the party or ideology with which it is affiliated. It is the false claim to objectivity that irritates conservatives, not the fact that media is biased. Objecting to bias is like objecting to the grim reaper. You can complain all you want, but you're going to be reaped anyway. The fact that social democrats do not make bias complaints about the media is significant evidence that the conservatives' complaint is true.

Many in the media vapidly claim that they are not biased. But it does not occur to them that conservatives frequently complain that they are biased and social democrats defend them. This alone closes the case. There is no reasonable doubt if all on one side complain and all on the other defend them. That is what bias means.

I agree with conservative attacks on the Times just as I agree with reasoned attacks on Barack Obama and Hillary Clinton. But isn't it time to call a social democrat a social democrat and start confronting real issues? These would include abolition of the Department of Education; abolition of the Federal Reserve Bank; privatization of the Post Office; privatization of social security, educational vouchers........

College Senior on Wal-Mart

A graduating college senior has written the following about Wal-Mart:

"Wal-Mart, the company that has changed the way business is being done today. Wal-Mart being the largest retail in the world has shifted businesses from the United States to China...Wal-Mart claims that it helps people in the middle class and lower class society, but who really benefits from their way of business practices?...

"What does Wal-Mart really offer to the public; do the prices really meat the consumers needs? Yes, Wal-Mart does have the lowest prices then anywhere else but through their stampede over other businesses they don't really leave much room for quality and expertise in the product that we as the consumer purchase. Through billions of dollars of merchandise that is imported through Chinese manufacturers not one has any long lasting quality..."

Howard S. Katz on Unemployment

Howard S. Katz has written a superb blog on unemployment.