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context refers to the process by which a ‘public space’ is opened up for people, within which they are able to engage in negotiation and contract.

CONCLUSION: COMPETITION AND LIBERTY

The voluntary competition of a free market, in which human beings are freed of domination by coercive elites, is not limited simply to the competition of ideas as expressed in speeches (‘the marketplace of ideas’). In addition, it encompasses all of the voluntarily expressed forms of life, each of which can be seen as an ‘entry’ in the competition for adherents.

Habermas has charged Gadamer with the error of reducing ‘the objective framework of social action’ to ‘the dimension of intersubjectively intended and symbolically transmitted meaning’ (Habermas 1977, p. 361). In contrast, Habermas claims to incorporate the ‘constraint of reality’ in the form of labour and social power relations, which ‘behind the back of language…affect the very grammatical rules according to which we interpret the world’. Yet, as noted above, it is the Habermasian project that typically ignores other forms of communication (e.g. market bids), empowering the intellectuals—the dealers in words—and privileging the spoken over the unspoken.

In his response to Habermas’s charge, Gadamer argued that ‘it is absolutely absurd to regard the concrete factors of work and politics as outside the scope of hermeneutics (Gadamer 1976, p. 31). Asks Gadamer: ‘Where do [prejudices] come from? Merely out of “cultural tradition”? Surely they do, in part, but what is tradition from?’ Tradition is in fact formed from experience, from—among other things—work and politics. Work and politics can indeed change tradition, but that does not earn them a status outside of the hermeneutical experience.

The discourse of society extends beyond the spoken, to encompass the exchanges of the market as well as the choice of ‘styles of life’ and forms of community. A revealing comparison for political economy would be to contrast the libertarian ‘framework for utopia’ in Robert Nozick’s Anarchy, State and Utopia (see, especially, Ch. 10), in which communities and forms of life compete for human acceptance within a framework of uncoerced choice, with the forced ‘consensus’ of socialism described by Robert Heilbroner, in which:

Dissents, disagreements, and departures from norms…assume a far more threatening aspect than under bourgeois society, for they hold out the possibility of destroying the very commitment to a moral consensus by which socialist society differs from capitalist.

(Heilbroner 1978, p. 347)

The uncoerced competition of ideas, forms of life, and communities is the defining characteristic of the free society. But this competition and, indeed, the market process itself, can be adequately understood only as discovery procedures. Discovery does not mean, in this context, the simple ‘uncovering’ of

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already existent entities, but the introduction of true novelty, surprise, and innovation into the world. It is because man is capable of becoming other than he is that the liberty which lies at the base of the market process is so important. The orthodox utilitarian calculus of rational maximization is inadequate—either as an explanation or a defence of the market system: As Buchanan states:

Man wants liberty to become the man he wants to become. He does so precisely because he does not know what man he will want to become in time. Let us remove once and for all the instrumental defense of liberty, the only one that can possibly be derived directly from orthodox analysis. Man does not want liberty in order to maximize his utility, or that of the society of which he is a part. He wants liberty to become the man he wants to

become.

(Buchanan 1979, p. 112)

NOTES

1 Susan Hekman (1986, pp. 139–59) argues that, while Gadamer offers us no methodology of the social sciences, his philosophy has implications for the method and practice of social science.

2 It is Ludwig Lachmann’s view that:

in the study of human action we are able to achieve something which must for ever remain beyond the purview of the natural sciences, viz. to make events intelligible by explaining them in terms of the plans which guide our action.

(Lachmann 1977, p. 152)

For other approaches consistent with such a subjective orientation, but placed on a different philosophical footing, compare Carl Menger’s empathetic approach, in which he contrasts the subjects of social sciences to the theoretical entities of the natural sciences (‘atoms’ and ‘forces’), and concludes: ‘Here the human individuals and their efforts, the final element of our analysis, are of empirical nature, and thus the exact theoretical social sciences have a great advantage over the exact natural sciences’ (see Menger 1985 [1883], p. 142). Compare also Ludwig von Mises’ neoKantian approach, within which ‘action’ is a category, or pure concept of the understanding, which allows us to combine the manifold of impressions into the unity of a judgement, i.e. of knowledge (see Mises 1978).

3For an exposition of the philosophical background in Aristotle, Hegel, Husserl, and Heidegger involved in Gadamer’s philosophical hermeneutics, see Palmer (1987).

4Stubblebine summed it up in this way:

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As a scientist, the social scientist has no basis on which to commend one criterion over another. Put another way, the social scientist is hopelessly lost as a scientific ranker of outcomes—whatever be his competence as a generator of theories of outcomes.

(Stubblebine 1975, p. 14)

5Cf. Richard Ebeling (1986) on prices as texts requiring interpretation.

6See Habermas’s criticisms in his ‘Review of Gadamer’s Truth and Method’, in Dallmayr and McCarthy (eds) (1977). Gadamer’s response can be found in ‘On the scope and functions of hermeneutical reflection’, in his Philosophical Hermeneutics (trans. and ed. Linge 1976). Habermas defends his criticism in ‘Summation and response’, in Continuum 8, 1970.

7Habermas’s objective positing of what people ‘really’ want, independent of their actual choices, is subject to the same critique offered in this essay—of both Galbraithian ‘dependency effects’ and orthodox public-goods theory. Habermas’s view is analogous to a static ‘equilibrium’ (or ‘end state’) approach, in contrast to Gadamer’s dynamic (or ‘process oriented’) approach—exemplified in his discussion of language offered in Part III of Truth and Method.

8Gadamer explicitly links tradition and reason, in a way that complements the Hayekian criticism of forms of ‘constructivist rationalism’, including coercive economic ‘planning’:

there is no such unconditional antithesis between tradition and reason… tradition is constantly an element of freedom and of history itself. Even the most genuine and solid tradition does not persist by nature because of the inertia of what once existed. It needs to be affirmed, embraced, cultivated. It is, essentially, preservation, such as is active in all historical change. But preservation is an act of reason, though an inconspicuous one. For this reason, only what is new, or what is planned, appears as the result of reason. But this is an illusion.

(Gadamer 1982, p. 250)

9‘Thou’ is merely the now archaic form of the English ‘You’; in German this is expressed as ‘Du’.

10An approach similar to mine is taken by Frank Van Dun (1986) in his essay ‘Economics and the limits of value-free science’. Van Dun argues that the very pursuit of economics as a rational endeavour involves the scientist in a set of ethical commitments—that is, to the ethics of conversation, and thus to a transcendence of any claim to a complete divorce from ethical commitments.

11Interestingly, many Habermas-inspired attempts to apply this model of unrestricted conversation typically confine themselves to the ‘conversation’ found in a journal article, a political speech, a committee hearing, or a planningcommission meeting! Not only does this reveal the class biases of the intellectuals who have written on this topic (and whose stock-in-trade is made up of just such products), but it reveals an extraordinarily cramped view of the human conversation. Cf., for example, the following essays: Fred R.Dallmayr’s ‘Public policy and critical discourse’ (pp. 161– 91 in Dallmayr 1984); Ray Kemp’s ‘Planning, public hearings, and the politics of

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discourse’ (pp. 177–201 in Forester 1985); and Forester’s ‘Critical theory and planning practice’ (pp. 202–7 in Forester 1985).

12 See, for example, Oskar Lange’s ‘On the economic theory of socialism’:

each individual separately regards the actual market prices as given data to which he must adjust himself. Market prices are thus parameters determining the behavior of the individuals.

(Lange and Taylor 1964, p. 70)

13 Compare F.A.von Hayek’s ‘Competition as a discovery procedure’:

Utilisation of knowledge widely dispersed in a society with extensive division of labor cannot rest on individuals knowing the particular uses to which wellknown things in their individual environments might be put. Prices direct their attention to what is worth finding out about market offers for various things and services.

(Hayek 1978, p. 181)

14Or, as Donald McCloskey (1985, p. 118) put it: ‘Rhetoric in the sense used here … is reason writ large.’

15On this, see Hume (1978 [1739–40], p. 415): ‘Reason is and ought only to be the slave of passions, and can never pretend to any other office than to serve and obey them.’

16To assert that the analogy of conversation can help us to understand the market exchange process is not to assert an isomorphism between the two phenomena in every dimension. In some ways, perhaps, the analogy is more illuminating when shined in the other direction—with the traditional model of exchange helping us to understand better what goes on in a conversation. Cf. Donald McCloskey (1985, pp. 76–8) on the use and limitations of metaphor in economics: for example, the conceptual treatment of children as ‘durable goods’ in Gary Becker’s economic theory of the family.

17Such activity, i.e. real learning, is typically banned from neoclassical equilibrium and perfect-competition models, which assume (in one way or another) perfect information and perfect foresight for all market participants. Such assumptions naturally ‘set up’ economics for the kind of ‘miss-the-point’ criticism offered recently by Amitai Etzioni (for example, see Etzioni 1986a and b). A better approach, reformulating equilibrium without becoming entangled in Etzioni’s conceptual confusion, can be found in O’Driscoll and Rizzo (1985).

18I do not mean to imply that no ‘Galbraithian’ criticisms of advertising can be found in some of Gadamer’s writings, but only that to the extent that they are present they represent a departure from Gadamer’s central themes.

19Buchanan’s essay, ‘Order defined in the process of its emergence’, was originally published in Literature of Liberty (Winter 1982).

20For an example of a revealing treatment of choice which keeps this distinction in mind, see Sokolowski (1985). See also Aristotle’s Nichomachean Ethics 1112b35: ‘we do not deliberate about ends but about means (the “toward-the-ends”)’. The translation ‘means’ is completely inadequate to capture Aristotle’s point, which is to reveal the kind of part/whole relationship appropriate to ‘means’ and ‘ends’

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without treating them as independently-existing pieces. This is another version of the same problem being treated by Buchanan (1985) and at greater length by O’Driscoll and Rizzo (1985, pp. 130–59).

21See also Popper (1950). On the logical impossibility of predicting our future choices, see Schick (1979).

22This public-goods-based contractarian theory of the state has been subjected to withering criticism on wholly internal grounds by Joseph Kalt (1981). The status of the state’s very existence as a public good would itself require coercion for its creation, thus effectively undercutting any contractarian basis for the genesis of the state.

23For a fuller exposition of this issue, with some empirical examples of public goods, see Palmer (1983). See also Palmer (1989) for a treatment of markets for intellectual goods without patents or copyrights. A criticism of orthodox publicgoods theory which focuses on institutions can be found in Cowen (1985).

24For the case of natural resources (including treatments of pollution externalities), see Stroup and Baden (1983); see also Anderson and Hill (1975). For the case of property right and the magnetic spectrum, see Mueller (1983).

25See, for example, Klein (1987). For a discussion of the bundling of noncomplementary goods, see Olson (1965), especially pp. 132–67.

26For a discussion of exclusion devices, see Goldin (1977):

The evidence suggests that we are not faced with a set of goods and services which have the inherent characteristics of public goods. Rather, we are faced with an unavoidable choice regarding every good or service: shall everyone have equal access to that service (in which case the service will be similar to a public good) or shall the service be available selectively, to some, but not to others? In practice, public goods theory is often used in such a way that one overlooks this important choice problem.

(Goldin 1977)

See also de Jasay (1989) for a dynamic treatment of public goods.

27See, for example, Brubaker (1975) and Schmidtz (1987).

28Coase’s point is that persuasion can also be seen as a form of information: this is complementary to, but not the same as, the thrust of my argument.

29As Littlechild has put it:

[the manufacturer] has to help the consumer to act entrepreneurially. For this purpose, advertising may well have to be persuasive, even accompanied by a catchy jingle, because it is necessary to attract the consumer’s attention, and persuade him that it will be worthwhile to take an interest.

(Littlechild 1986, p. 34)

30Legitimate property rights, like law, emerge spontaneously from the interaction of the interested parties. As Bruno Leoni has pointed out, law is a ‘horizontal’ rather than a ‘vertical’ creation: ‘The legal process always traces back in the end to the