Sound Money

Another brilliant piece of work by the master, Thomas Sowell. Quite a theoretical book but an incredibly useful framework. I’ve observed numerous recent events through Sowell’s visions since I started reading the book. The ability for ideas to immediately infiltrate one’s framework and lexicon is a true hallmark of greatness.

A vision is our natural inclination or the feeling we get before we have reasoned towards a theory or deduced consequences. Sowell sees two broad ideological visions, the constrained and the unconstrained. Very few political movements embody one vision alone. So, while one may want to characterise the constrained on the right of the political spectrum, and the unconstrained on the left, this is a mistake. In my opinion, the left-right divide is damaging to political debate. Sowell’s articulation of the bases for the constrained and unconstrained visions allows one to more clearly understand one’s natural political inclinations and constructively witness the benefits and weaknesses in each vision. This approach should encourage more constructive political discourse and outcomes. My goodness, we need more of that!

In the Constrained Vision (CV) the fundamental social challenge is to make the best of the possibilities within our constraints, rather than try to change human nature. Full compassion for everyone’s needs, for example, is impossible and unhelpful in the CV. Rather than try to change man’s nature, the CV focuses on how the desired moral and social benefits can be produced in the most efficient way. The CV emphasises systematic processes and their ability to generate the desired results efficiently. Individual results, fairness and justice all subordinate to the efficiency of the processes in balancing scarce resources in achieving sustainable outcomes. Justice and fairness are tolerably observed to serve their social function of maintaining order.

The Unconstrained Vision (UV) has much less interest in processes, incentives and unintentional social benefits derived from the process. The UV regards intention to benefit others as being the essence of virtue and believes that the long-run development of a higher sense of duty as the most important goal. The UV sees no limits to human knowledge and believes man is capable of directly feeling/sensing other people’s needs as equally important to his own, consistently acting impartially. Therefore, the UV views the fundamental problem in current institutions, rather than the limitations of man. Rousseau characterised this well saying, “man is born free but is everywhere in chains.”

While the UV believes the ability of individuals, the CV theorizes that any individuals’ knowledge alone is grossly inadequate for social decision-making. Hence there is a disdain for centralised decision-making in the CV because large risks arise when errors are made. By contrast, the UV believes in the power of an educated elite to direct society along its chosen path. This approach is efficient and allows for scientific implementation of social policies, in the UV. In the CV, social processes have an order, even if they aren’t intentionally designed, but they take time and have costs, which isn’t desirable in the UV’s pursuit of desirable outcomes.

Since the UV interprets much of the world’s malaise is due to existing institutions, it sees beliefs that aren’t habituated yet as more valuable to achieve social change. The UV feels bound by past decisions and wants to capitalise on the more recent information. This creates a bias against “conventional wisdom”, towards youth instead, which is in stark contrast to the CV which reveres the wisdom of old and the knowledge embedded in culture. One can appreciate why the UV is inclined towards youthful overthrow of institutions, while the CV is inclined to elderly conservatism.

Sincerity, intentions and justice are paramount in the UV, so whether rewards are merited, reflect existing conditions, privilege or luck matters! Leaders and policies are chosen with a view to ending privilege and luck. The CV is unconcerned by these factors, rather judging policies by their ability to extend the most social benefit, given man’s limitations at the lowest social cost. The CV is concerned with fidelity to the role at hand, as a husband, wife, businessperson, investor, etc. The CV believes that the greater good for society emerges as individuals purpose their own individual self-interest within their role, and that individuals are merely required to pursue their individual role to the best of their abilities. By contrast, the UV deplores role stereotypes and consistently seeks to democratise roles. Personally, I have a natural inclination towards the CV, but these observations started to chip away at my sense of pure advocacy. I don’t have anything against individuals focusing on their fidelity to their role, but I also see a role for democratisation of roles, broad ranging interests and broader awareness of other’s conditions.

In the CV, religion, devotion, moral principles, honour and nobility are efficient tools to get humans to treat each other well by introducing trade-offs into decision-making, even though they don’t actually solve all the moral questions. But the UV doesn’t want to be bound by these ideas. It believes in the power of individuals to act impartially in all moments, without a belief structure as guidance. Personally, while I’m not religious, I do see the value in organised religion. More importantly, I think individuals can have non-religious belief structures. Once again, great to reflect on my inability to fully embody the CV, what I see as my natural inclination.

Returning to nature, which is important in both visions but viewed oppositely. The UV believes that nature starts with large inequality but can be changed. The CV sees existing nature much more equally than the UV. That particular groups have exceeded others intellect or morality serves as proof of the ability to change in the UV. The obstacle to improvement in nature is the existing social order. Natural inequality is used as another rational reason for the elite to govern in the UV. While the CV doesn’t discount the possibility of change, it doesn’t believe that it is worthwhile trying to change the nature of humans.

Equality and freedom are seen in opposite terms. In the UV there is no conflict between the concepts, whereas in the CV the pursuit of equality comes into conflict with freedom. Milton Freedom put this well, “a society that puts equality of outcome ahead of freedom will end up with neither equality nor freedom. The use of force to achieve equality will destroy freedom and the force introduced for good purposes will end up in the hands of people who use it promote their own interests.”

The CV sees man through a Hobbesian lens, “life is nasty brutish and short.” Thus, in this vision it is no surprise that humans disregard the agonies of others and take part in crime and war. The CV solution to war is to raise the cost through preparation, public awareness of the dangers, promotion of patriotism to raise readiness for war and make adversaries aware of one’s military prowess to deter attack. Rather than try to seek the causes of war or crime, the CV tries to explain peace and provisions to produce it. The CV believes that weak nations forfeit the privilege of being neutral. By contrast, the UV looks for explanations of war and crime; economic, psychiatric and educational. The UV believes that humans are naturally averse to war and crime, it wants to demilitarise and reduce defence budgets because these are seen as unnecessary expenses.

Freedom, in the CV, is the means to choose amongst systematically generated opportunities, rewards and penalties without being subjugated to the conclusions of organised entities. One is free as long as the political processes don’t confine one’s actions. But in the UV, if the means to attain one’s goals are lacking then there is no freedom in result, even if there is freedom in process.

 Returning to specific political ideologies, the UV isn’t actually Marxist/Socialist. The purest forms of the Unconstrained Vision desired no destruction of private property, didn’t want government to manage the economy nor did they favour redistribution of income. They thought that the pervasive moral responsibility and the power of reason would make individuals capable of sharing voluntarily. In this sense, one can actually see the UV in libertarianism. It’s the impatience of those with UV inclinations to achieve the desired results that leads them towards socialism and Marxism, using the power of the state to coerce the desired outcomes. Centralised control over the numerous aspects of society obviously introduces all sorts of constraints though. So, while Marxism and socialism may appear to characterise the UV ideologically, they are not consistent with the UV.

A truly constrained vision would probably be so extremely conservative in nature that few political parties would be able to embody it. I’m not sure if I’d be able to! The extreme obedience to authority, loyalty and fidelity to one’s role appear to be heavy constraints. Personally, I am concerned by the potential infringement on what I perceive as my freedom to make choices, disagree with authority and sceptically critique the mainstream knowledge. It would be great to read clear historical or futuristic CV examples. I’m sure there are reasonable rebuttals to my concerns, but the concerns remain legitimate.

I found it incredibly useful to think through the two visions. On closer reflection, I see a natural personal inclination towards both visions but in different contexts. I like the UV’s belief in individual’s ability to grow and improve. This is a useful ideology to apply to friends, colleagues, juniors, etc. Believe in and encourage the self-development of those around you through clear, open and honest communication. I think that fairness, justice and intentions do matter, which is aligned the UV.

The question is, does this vision work as an organising principle in large numbers? I think it makes sense for smaller groups of people to impose a UV approach on their interactions, aiming for fairness, justice and caring intentions. But this is a naïve and unsustainable approach in large numbers. If you just scale the interactions upwards slightly, problems can arise. Try implement fairness, justice and good intentions with someone who doesn’t see the world the same way and witness personal anger and frustration as the other person takes advantage of you. Some people don’t give two sh*ts about your intentions and they certainly aren’t going to honestly share their intentions with you.

Even if someone means well, they could easily be confused. I find myself confused by my own intentions frequently. The older I get, the more I realise that my intentions matter less.

Scaling the question into a wider realm, life is unfair, injustice will always exist, and intentions don’t get the job done. While I have incredible belief in the power of individuals to grow, the madness of crowds and the fallibility of humans has stuck with our species through all ages. Humans respond to incentives and constraints; we don’t all act altruistically. Serious errors are made when people think that the world is unconstrained. We are always bound by constraints. At the extreme, our time on this earth is finite. The UV starts to become dangerous on a macro level when it directs frustration at current conditions towards existing institutions and societal structures, naively arguing that we could tear down societal structures without generating chaos.

Given I spend more time analysing, theorising and debating in the macro realm, I perceive a strong personal bias towards the CV.  But on reflection I witness a strong inclination in interpersonal relationships towards the UV. I guess I just don’t theorise about my interpersonal relationships.

Super useful framework for those who enjoy socio-political ideologies. I hope to foster better political discourse with these communication tools at my disposal.