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Markets, morals, mediocrity and all that

By Daniel M. Ryan
web posted December 11, 2006

There has been one criticism of Canada that tends to reliably rile Canadians, it being: "Canada? It's still a colony. All your ‘leading lights' dream of escaping from it." There is a parallel, directed towards the U.S., which tends to rile Americans: "Americanism is mediocrity." The reason why these two barbs sting is, each tends to be proffered as a well-aimed criticism at the end of a well-reasoned argument. It is truly a man or woman of note who can stand to be on the receiving end of one of these missives, and politely respond: "So, we haven't quite gotten our act together yet. Why would it be a concern of yours?"

In the case of the United States, the mediocrity criticism is one directed at an ideal, one supposedly symbolized by the United States. Put briefly, it is: "a Constitutional democratic republic, with a policy of minimal government, and consequently a free market, produces only mediocrity."

In the olden days, this criticism was directed at goods and services. This variant, though, tends not to last long, because it's easily seen through. Back in the old Adam Smith days, when value was thought to be a result of production costs, the typical response would be, "it's good enough at its price" or, "you find anything better, you buy it. What's the problem?" Nowadays, it's realized that economic value is subjective, so the "free markets breed mediocrity" argument, as applied to goods and services, is even easier to see through. "Your opinion, sir," is all that it takes. There's no need any more for a Henry David Thoreau to laboriously recount the sweat and time put in to manufacture a most excellent pencil – one pencil.

The chief source of hurt caused by the "mediocrity of the market" criticism, is engendered when it is aimed at the "marketplace of ideas." A scholar tends to be quite disturbed by a criticism that a businessperson would just counter with a laconic question, "do you know of one better at the same cost around here?"

Undoubtedly, this is because the merging of the marketplace and the ideas world is the result of a kind of grafting, or extension through metaphor. Scholars tend to be unbusinesslike, because it's much harder to separate one's ego from the product of one's thought than it is to do so for a physical good or service produced by one's effort. As a result, scholars have a greater tendency to take criticism of their product personally. No need to wonder why the Lockean extension of the free market to the knowledge world has proceeded so slowly, and incompletely.

"Mediocre," though, is largely a catchall term, which makes it a broad brush indeed. Supposed "mediocrity" in scholarship can mean ignoring the obvious or not being very well read in the field. Given the way the American academy has developed, it's a plausible guess that the latter criticism is what "mediocre" typically amounted to. The former criticism is really a synonym for "shoddy," and is not that hard to answer with "yes, admittedly, I was shoddy this time" if the criticism is accurate.  

The trouble with the use of the word "mediocre," though, is that it also encompasses thought that is both new and correct, but also is deemed "uninteresting" or "pedestrian" by the criticizer. Had the word "mediocre" been used, precisely, to mean this evaluation alone, then a lot of the sting would have disappeared from its use. The scholar who got his or her latest work labeled "mediocre" would have, typically, been disappointed, once the shock of the first labeling had been gotten over. Like the businessperson, the scholar would have responded with a laconic "well, it's the best that I've got so far."

This conclusion, though, is not the one that has been drawn. Instead, the charge of "mediocre" is supposed to be indicative of a fundamental flaw in the marketplace of ideas, one that necessitates governmental intervention and support. The extension of the marketplace model to the marketplace of ideas has led to the odd belief that "mediocre" scholarship is the result of throwing too little money into the scholarship pool. Ironically, the academy is still stuck in the Adam Smithian cost-of-production mindset – odd for an institution which is expected to be at the forefront of progress.

Considered from the vantage point of pure theory, it is hard to see where this supposed flaw could be. A general equilibrium model for the "marketplace of ideas" is easy to put together, through extending the ones we already have and use, for goods and services, to scholarship.

In general equilibrium, everyone is constrained by habit. The precondition to a state of general equilibrium is everyone buying and selling, making and consuming, the same goods and services throughout time. Once demand is fixed in this way, the most economical means of producing goods and services is discovered and latched upon. The reaching of this state of maximal economizing, given the fixedness of demand, marks the arrival of general equilibrium. Since everyone is a creature of optimal habits in the state of general equilibrium, all rational expectations are realized. There's no need to worry about rationally-conceived future plans falling through, as there is no more uncertainty and risk.

In the "marketplace of ideas," this implies a state of knowledge where everyone knows the content of whatever field he or she has specialized in, and knows how to find out anything else he or she needs to know, expeditiously and cheaply. All obscurities are gone, and all knowledge, whether new or old, is explained clearly, in a form easy to assimilate without compromising informational quality. Any differences in comprehension are the result of previously accumulated "knowledge capital" in one's head. The optimizing process results in a Rolodex-mediated specialization process. If you don't know yourself, you know where to find what you know, or (if you lack the requisite knowledge capital) you can easily find out who does know. Through optimization, knowledge supply matches knowledge demand. The intellectual marketplace clears all ‘round. Like any owner of capital goods, the knowledgeable person earns the standard rate of return on intellectual capital (if knowledge is considered in isolation, which it shouldn't be because knowledge capital is necessary but insufficient for knowledge production) resulting in increased knowledge. Knowledge begets knowledge.

In such a marketplace of ideas, the "mediocre" label is irrelevant. All it would signify is "unreasonable customer." The shoddy and the unlearned would, of course, be weeded out through the competitive process.

Where in this model is it mandated, or implied, that government should intervene for the benefit of "promoting excellence?" Clearly, the answer is "nowhere." So why did the government get into the racket, anyway?

To put it bluntly, out of prestige needs. If there is any flaw in the application of the "marketplace of ideas" model to the real world of today, it would be in the need for heroes, or for bragging points. There are a favoured few in the intellectual world, ones who join the ranks of the immortals, who are lionized in a way that epoch-creating businesspeople never are. This difference is a crucial one in understanding why the "marketplace of ideas," as it exists now, doesn't run along as smoothly as the marketplace of goods and services does. There are no "pearls beyond price" in the business world, which interfere with the necessary detachment of ego from product. In the intellectual world, there still is, in the hope of reaching "excellence," a status which amounts to being immortalized in the textbooks. This dream does inculcate a kind of guildsman's attitude in the professoriate.

What would happen, should the rate of production of "immortals" grow to a frequency where a genuine bestowal of immortality becomes a "nine days' wonder" and nothing more? Then, this "pearl beyond price" would become…a pearl, with a price finally attached. There would be little further need for the hero-worship that is so prevalent in the world of scholarship; its replacements, as far as bragging points are concerned, would arise according to the Law of Comparative Advantage.

It could be objected that this "paradigm shift" (actually, it would be the construction of the final paradigm) will result in bland mediocrity, regnant. This objection resembles another old saw: that the marketplace promotes immorality.

This charge seems to be prima facie true. There's even an economic rationale that comes with it: since the purveying of immoral goods carries a psychological cost, there should be easy money in it for those who can stand that associated psychic cost, whether it be in the form of a "fox in the bosom," public stigmatization, or both. After all, didn't every new form of entertainment get off the ground thanks in large part to porn or scandal?

The trouble with this argument, though, is that it ignores demand. It only carries with it the assumption that there is a limitless demand for immoral products, an assumption far more dubious than the homely maxim "the only ‘sure thing' in the marketplace is a sure way to go broke" is.

Yes, it is possible to go broke through underestimating the taste of the public. Remember the Super Bowl show featuring Janet Jackson's "wardrobe malfunction?" Remember the outcry? Remember how the NFL backed away from it?

There have been more recent examples of the supposedly sure demand for scandal, immorality, etc. failing to materialize. There was not a hint of "censorship" in the withdrawal of the O.J. Simpson comeback special; it was prompted solely by marketplace demand – an insufficiency of it, net of boycotts, of course. Since racism is a kind of immorality, Michael Richards' recent débacle is just as instructive a counterexample. The TV industry has long been used to editing shows to make them more palatable to a general audience. The Hays Code in movies, a private venture, ensured the growth of the movie industry beyond the "takeoff" stage. When these examples are considered, the perennial cries of ‘market censorship' seem only to merit the response, "so, you underestimated the public…."

As is the case with many other criticisms of the marketplace, this one is revealed to be little more than a dogma, one rooted in anchor bias. A different kind of anchor is implanted by this advice from a cousin of mine, now a successful marketing executive: "The easiest product to sell is the Bible." He didn't assume it; he learned it, through becoming a successful door-to-door salesman when a youth. It is sometimes possible to get rich through purveying "filth," but a close look at such "filth" reveals that it is only immoral at the margin – it pushes the envelope a little, and tends to target curiosity seekers willing to open their wallets. Considered rationally, such products are only one of many "sensationals" to get a new product, or industry, off the ground. Many of the other kind of sensational new products are about as immoral as a family reunion at your aunt's. They tend to be something that would qualify for lampooning by the now-defunct, but long-running, Home Improvement show. ESR

Daniel M. Ryan is a regular columnist for LewRockwell.com, and has an undamaged mail address here.

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