A General Theory of Equilibrium Selection in Games Book

This book revolves around one of the foremost critiques of socialism made on the twentieth century: the problem of knowledge framed by F. A. Hayek; that is, how to coordinate the actions of individuals "in possession of unique, partial, tacit and possibly erroneous knowledge." Hayek claims that the subjectivity inherent to this problem means that market competition provides the only efficient solution to that problem. Since the problem of knowledge is central to economics, Burczak tries to address what he calls socialism's "agoraphobia" (the fear of markets); while recognizing that the knowledge problem renders any central planning inefficient, the author rejects many of the moral conclusions Hayek extracts from the role of markets and spontaneous orders in economic life, relying on postmodern Marxian thought and the capability approach in order to tackle what he perceives as problems of a pure market-based system.

The first chapter is dedicated to an introduction to Hayek's thought and the dialogue it establishes with socialist theories, both those of his time and contemporary Marxian approaches. Chapter 2 is about Hayek's view of economics: for him, individuals are seen as having subjective perceptions not only of their goals, but also of their resources and constraints; because of that, he defended that economic outcomes should be explained by individual action and not by autonomous social structures. Hayek's methodological individualism, however, acknowledged the social influences that shape individual action, unlike other, reductionist individualist models. In that sense, his ideas can be seen as a strain of postmodern thought.

Chapter 3 discusses Hayek's theory of justice: common laws emerge as a result of evolutionary processes, in order to establish the necessary foundations for economic activity. The rule of law provides an institutional framework that is likely to improve people's lives, since the evolutionary processes would, in his view, converge to impartial solutions acceptable to all. Hayek is averse to non-impartial laws, such as attempts to legislate distributive justice, because they would disrupt the impartiality of the framework (and that would have consequences in economic activity).

Chapter 4 criticizes Hayek's notion that the spontaneous order that gives origin to common law is necessarily just: the power given to judges through jurisprudence introduces a strong subjective element into a system purported to be objective, as legal actors are subject to problems of knowledge not too unsimilar to those that afflict economic actors; and those decisions will reflect society's biases. Entrepreneur activity, for example, is seen in classical liberal literature as an universally accessible activity, but the existence of systematic barriers preventing poor people from getting credit could (and here the author handwaves by mentioning credit rationing theory; one might point that alternate means of financing, such as microfunding, can help negate that effect, but that enters too much into economic terrain for my interests here, and the theoretical possibility is a credible enough worry) result in an unfair system, as those people are denied the means to seize the uniquely perceived opportunities. If market orders are not necessarily just, the author claims, then Kirzner's account of entrepreneurism giving origin to legitimate property isn't valid. While that, by itself, doesn't present a case for a distributive, interventionist, theory of justice, the author claims that is evidence against common law as an articulation geared towards common good.

Building on Chapter 4's arguments about how spontaneous orders might contain biases, Chapter 5 proposes an alternate theory of justice, drawing on Marxian readings of Aristotle and the capability approach developed by Amartya Sen and Martha Nussbaum. Doing so introduces elements of reductionist essentialism, as it relies to an extent on shared perceptions of values and the good life, resulting in a rather limited pluralism; however, it provides a logically consistent basis for the proposed model.

Chapter 6 enters into Marxian theory proper, as the author discusses the meaning of exploitation. Drawing on the concept of self-exploitation in ancient labor, Burczak points out that exploitation does not lie on private property itself, but on the appropriation of the products of labor by capitalists, due to contracts exchanging wages for labor time. Therefore -- the author claims --, as long as that kind of contracts are forbidden, markets and private property don't necessarily are causes of exploitation, just as their absence does not mean the absence of exploitative relations of labor, as the so-called socialist experiences of the twentieth century bring into evidence.

Chapter 7 extends last chapter's conclusion about a market formed exclusively by worker-owned, democratically-managed firms, and tries to address some of the problems the author perceives on the resulting model: the lack of economic stimulus, the existence of barriers to entrepreneurism, and the lack of proposals for distributive justice. His proposals draw on postmodern Marxian literature, while taking into account the coordination problems pointed by Hayek.

The final chapter of the book summarizes the arguments elaborated in the previous chapters, and proposes a model that combines private property, competitive markets formed by worker-owned firms, and a government responsible for welfare-promoting institutions; while the institutional arrangements, in the end, fail to fully address the knowledge problem, it does raise interesting questions about the limitations of worked-owned firms on their own and the virtues of the model. "Socialism After Hayek" is not just an attempt to revitalize the dialogue between political theories distant to one another, but a valuable book with interesting insights of its own. An interesting read for anyone interested in politics and justice.