Neoliberal Solutions to Uncertainty

Frank Auerbach 'Bacchus and Ariadne' 1971

Last week I described ‘discovery procedures’ that facilitate the tricky process of social interaction. Suppose now that in spite of available discovery procedures it remains impossible to find out what another person is thinking or intending when they act. Because nobody acts in a social setting without interacting, communication becomes indispensable. You cannot discover another person’s goal or meaning by communicating, yet obviously communication is needed in order to interact. Communication is a precondition for all discovery procedures, although different discovery procedures may require different modes of communicating. 

The question then is, under what constraints does communication operate? In order for communication to help discovery as an aid to interaction there must be a high degree of freedom in the social system. Let’s think of this as a neoliberal view of the social system loosely equivalent to the neoliberal view of the economic system. All participants must know they have considerable and relatively equal freedom to communicate openly and make reciprocal demands of each other, if these demands are compatible with the communication code. 

For example: Although I do not understand you, I am content for you to do whatever you want or need to do as long as we act reciprocally with common understandings of the communication standard. In exchange you will allow me to do what I want. Once this undeterminable connection is made, neither of us determines the other. Your action choice is no longer contingent on my action choice, and vice versa. 

As a consequence, in theory, the problem of ‘not knowing’ each others intention is bypassed. It is not solved. Nor is it discovered. It simply becomes irrelevant. This change happens only because -- in a condition of freedom to which we have become fully sensitised -- we have, each time by chance, encountered mutually acceptable and understandable terms of interaction. 

A neoliberal social system

A radical neoliberal and hyper-abstract view of the social system would be one that says social order is not created intentionally by political control or legal domination (institutions), nor by socialisation and value consensus (networking, culture). Rather order is a problem that solves itself. Order arises piecemeal through our mutual interaction in communication. 

From a neoliberal perspective the uncertainty and contingency that characterises all action in interaction -- the ‘not knowing’ which I described last week -- generates its own solution by forcing the beginning of communication. If communication is the underpinning of social order, then social action might seem to be an effect rather than a cause of social order.

The social system is the total zone of communication broken up into self-defining subsystem zones such as politics, law, administration, and economy. In a vital sense these functional subsystems interact with each other just as humans interact with each other, i.e. with the constraint that they cannot understand the other’s goal or meaning system, and by having to respond to every new interaction as the situation arises.

The most important ‘policy’ insight of the neoliberal approach is that these zones or subsystems which we often regard as arenas of intentional and instrumental action (e.g. legal, economic, political, bureaucratic) are in fact zones in which relatively little can be achieved because relatively little can be understood. Whatever happens is mostly indeterminate and occurs as a chance working through of ongoing communication between actors in uncertain interaction. 

A central point that follows from this insight is that efforts to deliberately overcome indeterminability and incalculability may lead to overload in the subsystem. As in the neoliberal economic viewpoint, the policymaker is advised to keep his pre-devised means-end guidance of operations to a cautious minimum. Because of the ongoing problem of ‘not knowing’, policy interventions are likely not to succeed in many cases and may cumulatively obstruct spontaneous self-regulation of the social system. 

The prospects for progress are less bad than they might look at first sight from a neoliberal standpoint. Neoliberalism is, after all, a perspective that aims to assist us by warning us of the ever-present danger of system overload. For that reason alone, neoliberalism might be a progress-oriented theory (progress without a plan). 

In an abstract way the social system has evolved as it has because it became sensitive to the problem of not knowing. It takes the difficulty in its stride. The system functions alright because it has accumulated a rich and complex history of indeterminate solutions. It has got accustomed to permanent cognitive instability, and it reproduces rather than eliminates the expectation of not knowing. 

The improbability of order is built into the system, so the response mechanisms are perpetually on alert for challenge and change. The system reproduces itself because unpredictability is now routine and predictable. In other words, uncertainty is brought under control not by gaining cognition about the contents of other minds (that’s impossible) but rather by establishing lines of inquiry, procedures for interaction and suchlike.

An ordoliberal social system

The theory which says that law spontaneously evolved from culture is not quite true. Certainly it is the case that norms evolved into rules and laws, but there was a lot of deliberate action and conscious, motivated choice, design, and modification along the way. This action process was the origin of the ‘institutional’ discovery procedure I mentioned last week in The Concise History of Not Knowing.

Instrumental design was evident in the increasing differentiation and specialisation among subsystems of governance. What came to be called the ‘separation of powers’ was a potentially infinite organisational subdivision on horizontal and vertical axes, all of them contained under a single ordo umbrella -- the state. 

This is the ordoliberal viewpoint in which an institutional-regulatory order is created by man to be compatible with the market economy and democratic polity. Early-twentieth century economic sociology provided the classic theory in which social action in relation to organisational orders is (at its root) subjective, intentional, meaningful interaction between individuals who can be practically oriented to one another’s behaviour. There may be an assumption that means-end action is instrumentally rational or rationally calculated. 

All such ‘social order’ actions, if they are interpreted as assuming the possibility of forming adequate expectations of a person’s goals and motives, are ones that the neoliberal theory declares to be impossible.

A brief history of ‘order’: The overall empirical process was a ratchet effect of informal norms becoming formally institutionalised, and formal norms becoming informally socialised, with continual pressure exerted in both directions. However, the conceptualisation of social order began in the social sciences (and earlier in the minds of wilfully impertinent seventeenth century lawyer-politicians) with meaningful instrumental order-creation as a response to arbitrary rulership, economic monopolisation, and violence. [Some of our historical essays have already provided examples.]

Subsequently along came reversion to the primordial conceptualisation of culture as the binding force distinguishing one society from another, becoming an endless source of confusion in mid-twentieth century North American sociology and late-twentieth century North American institutional economics and political science. [My book Capitalism, Institutions, and Economic Development was critical of this culturalist approach.]

In parallel, but elsewhere and with less fanfare, the possibility was raised that perhaps, after all, there was no firm or continually uniform foundation for order in society. It is this third conceptual manoeuvre, with its scepticism about the feasibility of meaningful or intentional action in social interaction, that I have chosen to call ‘neoliberal’. 

Not surprisingly the neoliberal perspective has received a sceptical or nonplussed response from the pundits. It is hard to like or comprehend a theory that takes people out of the game and puts abstract systems in charge. Nevertheless, the social system version of neoliberalism offers insights about limits to the efficiency and sustainability of deliberate means-end action by ‘the state’. It opens up fresh avenues for explaining the ultimate limits -- i.e. overloading -- of activist economic policy and the welfare state.   

Blending the two perspectives?

The ideal way forward -- it seems obvious -- is to bring back the ordoliberal theory of meaningful instrumental order while gently blending in the useful elements of a neoliberal theory. Let’s just say for now that this constitutes an attempt to absorb neoliberal and ordoliberal perspectives into one another. 

An old and recently rediscovered ordoliberal insight is that over time governing institutions of society have ‘depersonalised’ some procedures and decisions. In effect, persons removed persons from some action scenes in order to make means-end governance more effective (substituting rules for persons). But it is never quite clear why and how this change actually happens.

The neoliberal insight is that systems become more important than persons and independent of persons. The system sets the scene by determining the limited action availability to persons, offering little prospect of effective means-end governance (spontaneous communication substitutes for rules and persons). But it is never quite clear why and how this change actually happens

In both viewpoints, people are being removed from action. We shall eventually see how and why passive neoliberal depersonalisation of the system involves and requires human agency. We will also see that active ordoliberal depersonalisation is structurally shaped, like a dull compulsion, by system imperatives. These positive developments occur in zones of discovery where the effects of ‘not knowing’ can be mitigated through modes of communication that establish lines of inquiry, procedures for interaction and suchlike.

In conclusion, overlapping themes of ‘depersonalisation’ indicate the potential for neoliberal and ordoliberal perspectives to absorb each other in productive ways. Stay tuned for further conceptual clarifications as well as upcoming seventeenth century real-people institutional examples of the solutions to ‘not knowing’ viewed from these perspectives.



Michael G. Heller ©2014

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