Adam Arvidsson on Milton Friedman: Freedom, Ethics and the new P2P Economics

Reblogged in part from Adam Arvidsson’s Actics blog, where, after some general comments about the importance of Milton Friedman in the history of economics, Adam makes the following commentary:

Adam Arvidsson:

To Friedman ‘freedom’ would work as a guarantee for efficiency – free markets where individuals acted with a minimum of restraint would be more efficient than centrally planned allocation systems. But ‘freedom’ was also an important value in itself. It was more important that people be ‘free’ than that they be equal. This emphasis on freedom as an ultimate value was based in a belief, inherited form ‘classical economists’ like Adam Smith (and classical liberalism in general), that the freedom to choose is what defines human nature. To champion freedom- defined as free individual choice- as against state regulation was thus a way to champion human nature against the artifice of society or ‘socialization’. This philosophical move managed to effectively bracket the question of ethics. To Friedman it was not important what people chose, as long as they chose freely. (This position was perhaps particularly clear in the famous line in his 1962 book Capitalism and Freedom, claiming that  “There is only one social responsiibility of business [..] to increase its profits.”).

Today this embracement of freedom as an abstract principle seem problematic to us for, chiefly two reasons.

First, it is fairly clear to us, having absorbed the impact not only of Michel Foucault, but also of Friedrich Hayek, that the kind of freedom- the freedom to chose rationally- is by no means a natural human quality, it is the outcome of a long term and fairly intensive project of socialization (or ‘civilization’ to use Hayek’s term). People have not always had the capacity to be free agents in Friedman’s sense, but the realization of that kind of freedom is a historical fact contingent on the establishment of a highly particular (liberal, capitalist) ethical order. This way ethics re-enters through the back door. As economists and social thinkers we can no longer bracket off the question of ethics by introducing an idea of ‘natural ‘ human freedom. Rather we need to question and examine the ethical framework of that very idea (and the ethics if the social system to which it belongs).

This philosophical need for a new reflexivity about the ethical context of economic action and economic thinking- our inability to keep wearing the ‘veil of ignorance’ necessary for a position like Friedman’s, is paralleled by an emerging recognition of the growing economic role of ethics itself.

In the contemporary economy, productivity and innovation are contingent on complex forms of cooperation and interaction that are often autonomous and self-organized. This means that the ethical qualities of actors, how they relate to others, how they respect their own values and those of others, how much they give back to the (however temporary) community that they find themselves in, become variables that enter directly into the production function. Indeed the most exciting forms of production right now are various forms of peer-to-peer systems that rely on ethical rather than monetary coordination. (P2P systems have been notoriously more successful than corporate models in building complex things like software)

Management is discovering this through concepts like ‘Return on Values’, where it is argued that investments in corporate values have direct economic returns through their ability to streamline forms of cooperation. But this new role of ethics as something internal rather than external to economic calculus has not yet been grasped by economics. Indeed, most economists are dinosaurs in this respect. Their models and assumptions are based on an old economic system: a bureaucratic, industrial capitalism where it was possible to separate ethics and economics and assume, like sociologists form Weber to Habermas have done, that economic action is chiefly guided by a calculating instrumental rationality. It was possible to think that way, because in the industrial, Fordist organization the ethical context of production (and of economic action in general) was relatively stable, inscribed in the regulations of the bureaucratic corporation, or in societal norms more generally. Now we produce value by producing such norms and regulations, by producing ethically significant contexts that can act as however temporary ways of coordinating fluid forms of cooperation.

Economics today needs to take this ethical productivity in account. Michel Bauwens extensive work on P2P production is an attempt in that direction. Actics is another. It is a system that aims to the make value of ethical action visible.

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