Suppose technocracy has all the systemic problems Jeffrey Friedman suggests in Power Without Knowledge. Does he think this is nonetheless the best option available? Or might there be an alternative worth trying?
Friedman thinks there is a better way. Referencing the work of Albert Hirschman in Exit, Voice, and Loyalty, Friedman believes the best (though still flawed) means for solving social problems is found through capitalism and exit through the private sphere, and dubs his alternative system an exitocracy.
An exitocracy is a system where social problems are solved not by targeted policy interventions, but by a general policy focused on maximizing the opportunity for exit – that is, for people to be able to leave their current situation in search of a better one within the private sphere. He notes that some might argue an exitocracy is more a form of meta-technocracy than an alternative to technocracy. Rather than engaging in definitional disputes, he argues that if one dubs an exitocracy a technocracy, one should realize how it fundamentally differs from existing technocracy:
An exitocratic government would unquestionably be a state. But it would differ from a technocratic state – judicious or injudicious – in that, instead of attempting, case by case, to produce solutions to any and all social problems that might arise, its cardinal goal would be to provide a framework within which individuals could attempt to solve – or better, escape – the problems that afflict them as individuals, whatever their origin (society-wide or not). Where this is possible, such a state would allow exit to trump technocratic voice. What would remain of technocracy would be the attempt to provide public goods, including those that are foundational to a private sphere in which individuals using exit can flourish.
In considering how to judge technocracy against exitocracy, we would need to “ask if actions in the private sphere would tend to be epistemically superior in achieving the [goals] of technocracy in comparison to the voice-based public-sphere problem solving on which ordinary technocracies rely. If the answer is yes, then we can judge ordinary technocracy, judicious and injudicious alike, as illegitimate according to its own standards.”
What would make exitocracy epistemically superior to technocracy? Friedman argues that the epistemic burdens of a functioning exitocracy are much lower and much more reliably achieved than those facing a technocracy:
To use exit reasonably well, in comparison to the use of voice, the decision-maker (such as the consumer or worker in an exitocracy) considers only the effects of the various options she is able to experience. In using voice, however, the technocratic decision-maker must reach far beyond experiential knowledge so as to judge the significance of social problems for anonymous others, to speculate about their causes, and to speculate about the efficacy of various solutions and the side effects they may cause…the relatively reliable knowledge of customers and workers can be put to use, but without expecting them or any other identifiable agents to have reliable society-wide knowledge. Inasmuch as it is inherently difficult for anyone to have such knowledge – even to those who are judiciously attentive to ideational heterogeneity – the exitocratic alternative would appear to be the better one.
Private sphere exit options in a capitalistic system have built-in systemic advantages over technocratic solutions, despite the fact that agents within both systems have the same cognitive limitations:
The epistemic advantage of economic competition is not that any identifiable capitalist is less fallible than any other, or that capitalists, as a group, are less fallible than technocrats, as a group, but that capitalism allows more than one fallible solution to be tried concurrently, with those affected by the problem using personal experience to judge which of the competing solutions is relatively acceptable…The essential requirement, then, is that there be a diversity in the options available to consumers, based on diversity in various competitors’ fallible ideas about what consumers need and are willing to pay for. The same applies to diversity in the options available to workers, based on diversity in various fallible employers’ ideas about what workers need and the work conditions they are willing to tolerate.
This system would also dissolve the difficulties of epistocratic identification described in the fourth part of this series:
This qualitatively changes the situation that leads to the problem of epistocratic identification. In an exitocracy, competitors offer solutions to the people’s problems, and the people evaluate these solutions – not, however, by trying to adjudicate among the competitors’ theories about, or interpretations of evidence about, the society wide efficacy of various solutions; nor by trying to outguess or out-research the competitors so as to come up with solutions of their own; nor by relying on heuristics such as the competitors’ educational pedigrees; nor by trusting in the competitors’ dedication to the common good or their strength of will. Instead, they directly try out the competing solutions that the competitors create. In the ideal type, consumers or workers need know nothing about the attitudes, the character, or even the identity of those who sell them things or pay their wages. They need only know whether the results for them personally are better than the alternatives they have tried.
While ideational heterogeneity presents substantial difficulty for an effective technocracy, it actually enhances the effectiveness of an exitocracy:
In this analysis, the very thing that renders the problem-solving activities of an ordinary technocracy relatively unreliable – ideational heterogeneity – enables relatively reliable (although by no means perfect) problem-solving in an exitocracy, ceteris paribus, because in an exitocracy ideational heterogeneity among producers and employers allows them to offer competing solutions.
However, this does not mean Friedman is all-in on libertarian style free market capitalism. In order for exitocracy to effective, Friedman says, it must be accompanied by a program of income redistribution. Friedman says the redistribution would be “far more ambitions than a universal basic income” and would take the form of “redistribution along the lines of Rawls’s Difference Principle”, although the “rationale for exitocratic redistribution” is “not the achievement of social justice” of the sort Rawls envisioned. Instead, Friedman argues that “Exit opportunities will often require economic resources. These can allow one to enter into alternatives to the situation from which one would like to exit. Thus, if the experimentation promised by the exit option is to be possible for more than the rich, economic redistribution is called for.”
And this wraps up Friedman’s critique of technocracy and his idea for a better alternative. Rather than using a technocracy, which gives power to those without knowledge, Friedman advocates for exitocracy combined with income redistribution, in order to ensure those with knowledge have the power to improve their own circumstances as they see fit. I’ll spend the subsequent posts describing what I see as the strengths and weaknesses of Friedman’s case.
Kevin Corcoran is a Marine Corps veteran and a consultant in healthcare economics and analytics and holds a Bachelor of Science in Economics from George Mason University.
READER COMMENTS
Mactoul
Feb 1 2023 at 8:25pm
There isn’t Soviet Union any more and all countries permit exit. Indeed, the chief problem is finding admission– immigration slots are far fewer than people wanting exit.
john hare
Feb 2 2023 at 3:31am
I interpreted the post somewhat more broadly than changing countries. Suppose I don’t want to participate in the Social Security system and want to exit? Or building code restrictions that prevent building cheap inside my budget?(personal experience) Or my taxes supporting a school system that seems overpriced and under delivered? And so on and so on.
Kevin Corcoran
Feb 2 2023 at 7:21am
Yes, John Hare is on the right track here. When Friedman speaks about exit, he isn’t using that to describe immigration and emigration – or at least, those would only be very specific and narrow examples exit. As another example, consider the plight of Sandy Meadows, as described by George Will in this article:
This is much more like the typical case relevant to Friedman’s description of technocracy vs exitocracy. In an exitocratic society of the sort Friedman advocates, there wouldn’t have been any technocratic occupational licensing regulations blocking Meadows from entering the business of flower arrangements, and thus blocking her ability to exit from poverty. Rather than technocratic policy attempting, in Will’s words, to ensure “Louisianans were protected by their government from the menace of unlicensed flower arrangers”, exitocracy would have allowed Meadows to enter the field and then, in Friedman’s words, she would have been allowed to add to the “diversity in the options available to consumers, based on diversity in various competitors’ fallible ideas about what consumers need and are willing to pay for.”
Henri Hein
Feb 2 2023 at 1:44pm
I have a nit with this. As I understand Friedman’s point about the failures of Technocracy, in order to steel-man its defense, he assumes a Public Interest approach on behalf of the technocrats. Licensing laws are at least partially motivated by Public Choice, though. So it’s not necessarily the best example. Although I’m sure you are correct that in an Exitocracy, Meadows would have had other options.
Kevin Corcoran
Feb 2 2023 at 2:28pm
Hey Henri –
You are correct that Friedman does assume a public interest angle on the part of regulators and technocrats as opposed to a public choice angle. But I think the example holds. Precisely because Friedman assumes a public interest approach, his criticisms of technocratic barriers to entry hold even if one totally disregarded public choice explanations.
While Will is clearly being sarcastic when he attributes those occupational licensing laws to a sincere desire among regulators to ensure people are “protected by their government from the menace of unlicensed flower arrangers”, Friedman’s argument shows that you would could take that concern as sincere, and even then as a matter of “ordinary technocracy” the policy would still be “illegitimate according to its own standards.” This makes Friedman’s critique of technocratic policy and economic regulation, if anything, even more radical and all-encompassing than your typical public choice policy wonk would put forward.
Henri Hein
Feb 2 2023 at 1:50pm
This reads as an interesting twist. I haven’t read Hirschman’s book, but the case as summarized here sounds close to arguments traditional US liberals often make for the welfare state and programs like UBI. A workable social safety net makes exiting your job easier.
I enjoyed this series on Friedman’s book. Thanks for all the write-ups.
Kevin Corcoran
Feb 2 2023 at 2:32pm
I’m glad you enjoyed the series! I have two more posts still forthcoming, one where I highlight strengths and the other where I call out what I see as weaknesses.
One point to clarify, however – the case summarized here isn’t really attributable to Hirschman and Exit, Voice, and Loyalty. Friedman uses the distinctions that Hirschman sets forth in that book, but Friedman argues that Hirschman wrongly places greater emphasis on the use of voice as opposed to the use of exit. Friedman accepts the framing, but he severely criticizes Hirschman’s arguments for the efficacy of voice, and argues instead that exit is the superior option.
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