Knowledge And Decisions

Ringing calls for a national consensus on this or that are often preposterous in the literal sense of putting in front what comes behind. It is true that — viewed in retrospect — those national consensuses that have in fact been achieved have often been both practically fruitful and emotionally satisfying. This is because, given the enormous cost of consensus, it is unlikely to be achieved, except on something of overwhelming urgency to an overwhelming majority of people. Unity in wartime, when national survival is threatened, is an obvious example. In short, it is the high value involved in the result — survival, in this case — that makes us willing to pay the high cost of consensus. It is not the cost that creates the value, however. Nor can we make other things valuable by incurring large costs for them, such as by trying for a national consensus about them. On the contrary, we satisfy our desires at least cost — which is to say, we can satisfy more of our desires — by minimizing the amount of consensus that is necessary. We easily provide ourselves with food and clothing precisely because there is no consensus needed as to what is the best food or the best clothing. If we had to reach a consensus first, we might destroy ourselves in the process of trying to meet simple basic needs. Man’s equally pervasive spiritual needs — whether met in religious or ideological ways — have often led to such mutual destruction, ranging from persecution to wholesale slaughter, when particular religious or political creeds required consensus as part of their tenets. Individualism and pluralism in social, political and economic processes reduce the need for consensus — at the cost of presenting an untidy spectacle of “chaos” to those eager for a consensus in support of their own particular subjective values. The Constitution of the United States implicitly recognizes the very high cost of consensus in some areas by flatly forbidding the government from even attempting to reach a consensus in religious matters. Yet the cost of consensus is implicitly treated as negligible in naive complaints that “the American system seems less well adapted to the mobilization of a positive energetic will.”¹³ That failing is sometimes known as freedom.

One of the problems involved in understanding decision making through any kind of institutional process is that the cause of a decision must be distinguished from the mechanism that transmits it. The ancient practice of killing the messenger who brought bad news suggests that this separation of causal factors from transmitting mechanisms is especially difficult in emotion-laden areas. Institutions frequently transmit unwelcome news — such as the unacceptability of one’s performance in school or on the job, or the reduced availability of a desired commodity or the unlikelihood of one’s political ideals being realized. The question then is whether the institution was itself responsible for this outcome, or was simply a messenger bringing bad news. Attempts to prevent institutions from conveying bad news — e.g., nofail grading, “job security,” price controls, etc. — raise the cost of transmitting knowledge and retard the adjustment to that knowledge.

Before attempting to determine the effect of institutions, it is necessary to consider the inherent circumstances, constraints, and impelling forces at work in the environment within which the institutional mechanisms function. The analysis of these impulsions and constraints — i.e., social “theory” — must at least supplement the consideration of institutional mechanics. Decision making depends not only on the kinds of processes through which decisions are made, but on the nature of the trade-offs involved. Perhaps the easiest kinds of trade-offs to visualize are economic trade-offs, which can be quantified in money terms, but broader social trade-offs may be even more important, even if expressed in less tangible terms. Economic, social, and political trade-offs will be considered in the next three chapters.

Chapter 3 Economic Trade-Offs