Recently I have been reading a book, The Economic Organization, by Frank H Knight. I was struck by Knight’s brief and clear discussions of the concept of rationality.
For Knight, as for most of the modern discussion of reason, rationality is the part of life in which we are economizing. Economizing is solely instrumental in its value. The rational plan, in Sun Tzu’s words, gives not just victory but victory with ease.
Of course, the ‘enlightened self interest’ of instrumental rationality departs arbitrarily from self interest. In pursuit of ‘efficiency’ - the maximization of ‘useful’ to total output - the organization so formed has some men - managers & capitalists - have nearly arbitrary authority over others. This authority can only be limited by the substitution of ‘political’ for ‘economic’ modes of organization, ideally a democracy or democratic socialism.
In the enlightenment - the Neoclassical Era of my title - reason was considered the sine qua non of life. Voltaire’s article Taste and Knight’s concept of “intelligent tastes, and intelligent opinions” point to this. After all, what is intelligence but reason?
One can see clearly that ’economical’ cannot play the role that ‘intelligent’ or ‘reasonable’ plays in our language.
In truth, reason as economizing has tuly strange consequences. As chess grandmaster Stuart Rachels points out, if rationality is at its core instrumental then many of the traditional uses of reason become merely peripheral, at best extensionally true.
A hard bitten wolf in the wild is far more economizing than I, a soft hearted blogger. Some of the most beloved uses of reason are merely historical associations like “Lucifer” and “Venus”. Economizing is thus not the λόγον ἔχον that man has in distinction from all other animals, in fact quite the opposite.
Further, economizing is in this manner necessarily associated not with plenty and ease - the neoclassical ideal - but with hard times and poverty. A dark age peasant planting wheat was surely more economical than Voltaire planting apple orchards to look at their flowers. And yet only a bigot would claim the peasant more reasonable than Voltaire.
Of course, there was the claim that the neoclassical concept of reason was simply the bourgeois ideal of economy and it was as simply ridiculous as I have said. Comte de Maistre even used similar examples of the obligate carnivore making his living with a daily murder fulfilling the full truth of the Enlightenment ethic.
But there is another option. We could use the definitions of the classical liberals themselves:
The use and fabrication of instruments of labour, although existing in the germ among certain species of animals, is specifically characteristic of the human labour-process, and Franklin therefore defines man as a tool-making animal.
Capital, Vol 1, Part 3, Chapter 7, Section 1
In short, intelligence, considered in what seems to be its original feature, is the faculty of manufacturing artificial objects, especially tools to make tools, and of indefinitely varying the manufacture.
Creative Evolution, Chapter 2, Section 3
The word ‘tools’ in these passages is used to refer to the literal tools of manufacture, but of course neither in context nor out can a person be fooled. Not only is the chief tool of humanity the social organization, but even the effect of physical tools is due to their effect on social organization. If Jethro Tull had built one seed drill, then we would be at a medieval level of agricultural production today. What also needed to be invented was specialized seed plow makers.
Today we are seeing the effect of agricultural tools on our social organization in the headlines. A mismatch in upstream capital goods - microchips - has caused the prices of certain other capital goods - John Deere Tractors - to move almost discontinuously.
One must question: if reason is economizing, what is the notion of ‘short term’ which distinguishes this social function from others? I propose that there is none, ‘to adjust consumption to production’ simply is economizing. Indeed, if the period is allowed to be instantaneous, then one arrives exactly at a traditional Ramsey-esque problem in dynamic economics.
As my friend Alex Williams has emphasized, a notion of constraint that works solely through Knight’s fifth function of social organization sells human rationality short. We don’t have to solely use the existing tool of raising unemployment by fiat.
In essence, the traditional measures of constraint reify the short term. The location of the frontier is a choice over the medium term.