IN his book, Green Philosophy – How to Think Seriously about the Planet, the Conservative philosopher Roger Scruton relies heavily on the idea that the ‘market’ is a homeostatic entity.
This book is well worth reading because its insistence that local action based on love of place is the solution to climate change, chimes with some views on the Left and is obviously an area of overlapping consensus. However, I think he tends to underplay the importance of international action – why not have both?
Scruton is a conservative in the Burkean mould and is a believer in his ‘little platoons’. He is therefore deeply suspicious of universals and international groupings (it should be remembered that Edmund Burke’s magnum opus Reflections on the Revolution in France, in which the platoons are invoked, should be seen in the context of that event and not necessarily of universal import). The EU, for example, comes in for particular criticism for its reliance on the Precautionary Principle, which he describes as a ‘meaningless nostrum’.
But my main bone of contention is his constant use of homeostasis, which he uses to justify the ‘market’ as the most effective counter governmental attempts to solve the climate change. The word homeostasis comes from the Greek houmio steisis. Which translates as ‘staying the same as’ and is related to the concept of balance, harmony and equilibrium. It is normally associated with living organisms, including humans. Scruton’s strategy is to co-opt this theory about the natural world and apply it to the functioning of the ‘market’. He writes, for example, that the market is simply one example of a homeostatic system that receives and responds to ‘negative feedback’ when things go wrong. And a little later he writes: “This well-known mechanism (which depends upon individuals assuming the risk of their own decisions) parallels the homeostatic systems that maintain animals in being, through the negative feedback provided by pain, fear and stress.” He even uses the word ‘adaption’ to reinforce the idea that the ‘market’ is a quasi-law of nature. This in turn suggests that the ‘market’ is untouchable and that any attempt to interfere with it by the State is likely to be disastrous and upset its natural equilibrium.
In fact, homoeostasis is normally associated with bodily systems like core body temperature, blood pressure and blood oxygen content rather than systems like the ‘market’. To be fair Scruton hints at this with the use of the word ‘parallel’, suggesting that he is really using homeostasis as an analogy – although at other times he seems to mean it literally. Unfortunately for him homeostasis doesn’t work literally or as an analogy.
To test this we simply have to ask ourselves what counts as equilibrium? As far as bodily functions are concerned that’s fairly straightforward because they can be objectively measured. It is not as easy to answer with the ‘market’. The idea of general economic equilibrium is based on a mathematical model which assumes that individuals are perfectly rational agents in pursuit of their rational self-interest. But even Adam Smith, the supposed progenitor of this arid theory – acknowledged that people can also be motivated by irrational passions and sympathy and power relationships between master and labour. Of course, devotees of the theory will argue that it’s not the theory that is wrong but the people who make bad decisions – hence the argument that poor people are really the architects of their own demise. But the many cases of actual panic in the ‘market’ and booms and busts led Keynes to the conclusion that equilibrium is an exception to the norm. Uncertainty is built into all economic activity and is as far from a homeostatic system as it is possible to imagine. Free marketer economists are fond of saying that in the long run the economy will return to equilibrium if the government doesn’t interfere, but this is the exact opposite of a homeostatic system, which remains in equilibrium unless something like illness interferes. The ‘market’ just isn’t a homeostatic entity. And of course Keynes was famous for his retort that ‘in the long run we are all dead’.
This doesn’t stop Scruton from making some almost comical normative claims about the ‘market’ like ‘markets promote cheerful co-operation between their participants’. There’s more I could say about how the blithe use of the word ‘market’ conceals the deeper human interactions of capital, exchange and labour within the material world – not as natural law at all but a human construct. But I will end with an observation that by trying to use homeostasis to explain the ‘market’ Scruton inadvertently undermines the very thing that has made capitalism one of the most exciting, dangerous and effective systems ever created by humanity – it’s sheer creative and destructive dynamism. Those of us who think it is not the end state of human development are often, somewhat ironically, the very ones who recognise this – and not the traditional defenders like Scruton.