Knowledge And Decisions

The twentieth century has brought so many changes across the face of the earth — in science, culture, demography, living standards, devastation — that it is difficult to disentangle purely institutional changes from this tapestry of human events. Indeed, it is impossible to fully do so, for at least one of the great world wars of this century grew out of a particular brand of totalitarian institution and its drive to conquer “today Germany, tomorrow the world.” In addition to the carnage of war, the twentieth century has seen the unprecedented horror of deliberate slaughter of millions of unarmed human beings because of their categorical classification: Jews, Kulaks, Ibos, etc. These events too have been intertwined with institutional change.

In terms of general trends in the social application of knowledge, there are a number of ways in which decision making has tended to gravitate away from those most immediately affected and toward institutions increasingly remote and insulated from feedback. The variety of institutional changes, even in a given country, presents an intricate, kaleidoscopic picture, which becomes still more complex when extended to international scale and interwoven with the fast changing historical events of the century. Still, on a spectrum stretching from individual decision making at one end to totalitarian dictatorship at the other, the general direction of the drift is discernible. It is fairly obvious in the case of national changes from democratic to nondemocratic governments (as in various Eastern European and South American countries) or — among autocratic governments — from loosely controlling and removable autocrats to enduring and pervasive party totalitarianism (as in Russia and China). Even within democratic nations, the locus of decision making has drifted away from the individual, the family, and voluntary associations of various sorts, and toward government. And within government, it has moved away from elected officials subject to voter feedback, and toward more insulated governmental institutions, such as bureaucracies and the appointed judiciary. These trends have grave implications, not only for individual freedom, but also for the social ways in which knowledge is used, distorted, or made ineffective.

These institutional changes have been accompanied by social changes. Perhaps the most far-reaching social change in the past century — in the United States and elsewhere in the Western world — has been that vast numbers of people have ceased being residual claimant decision makers and become fixed claimant employees. When the bulk of the population consisted of farmers (whether owners, tenants, or sharecroppers), the options and constraints facing the economy as a whole were transmitted more or less directly to those individuals, in the form of varying rewards for their efforts, whether those rewards were in money or in produce. The connection between efforts and outcomes was clear, though not all-determining: the weather, blights, and other menaces to crops and livestock made risk also a very personally felt variable. The transformation of Western economies from agriculture to industry brought with it a reduction in the proportion of the population consisting of autonomous economic decision makers. However much “consumer sovereignty” was retained, as producers their role as fixed claimants to some extent insulated them from the direct consequences of their own decisions, largely by limiting the scope of their decision making itself. This was not necessarily a net increase in security, either objectively or subjectively. They might find their futures varying considerably from prosperity to privation — but largely as a result of decisions made by others. The immediate question here is not whether they were better or worse off on net balance, but rather, what did this mean for their knowledge of what was happening, and for the social consequences of that knowledge?

Parallel with these economic developments, the political expansion of the franchise meant that people with progressively less decision making experience in the economy were acquiring progressively more power to shape the economic sector through the political process. A price-coordinated economy, as such, can function without being understood by anyone. But insofar as it must function in a given legal and ultimately political structure, the extent or manner in which these latter structures allow it to function depends upon how others judge its results — or whether they choose to judge or control its processes instead.