I’d like to explore what’s going on in Daniel Klein’s “Knowledge Flat Talk: A Conceit of Supposed Experts and a Seduction to All.” Klein has come in for criticism lately, which spurred my following investigation.

Klein’s thesis is that mainstream economists assume not only shared knowledge among economic actors in society (everyone at some point – or everyone period if you fancy “economic imperialism”) but shared interpretation of knowledge, which he calls somewhat achingly “flat talk.”  This splitting of hairs is reminiscent of the “unknown unknown” concept, but there’s sense to be made of it with a bit of intellectual elbow grease.

Klein cites the example of Wittgenstein’s use of the rabbit-or-duck image to make his point about differing interpretations. He relates this to economic inquiry by stating that game theory and models of economic equilibrium assume both shared knowledge and the interpretation thereof, the basis for claims of information asymmetry. The framework for knowledge – “playing soccer,” “fixing a car,” etc. – is commonly held, but specific information is lacking by certain participants. But if such synchronicity of interpreted knowledge is missing, these models break down. You end up with 11 people on a field with a kickable round object and knee high socks wondering what to do with themselves, or a 2 ton contraption with wheels and a mass of metal and wire to decipher, respectively. Klein laments the economic profession “flattening” everything down to mere information, the more of which the better for correcting perceived negative economic outcomes.

(As an aside, Klein is correct that popular economic methodology here has failed to take account of the above – as far as I know, anyway – but wrong to to suggest that this is insurmountable. Klein rejects on normative grounds the “people’s romance” that, if taken far enough, might successfully broaden the scope of shared interpretation of knowledge –  e.g., that the Census is benign in intent and helps successfully direct federal funding to deserving communities – to make information asymmetry the only remaining problem. But alas, even mere informational problems are the stock in trade of the Hayekian critique we know so well.)

At an Institute for Humane Studies seminar I attended in 2006, a Muslim student asked me on our way back from lunch one day mid-week if libertarianism was really just cultural relativism. Truth be told, I forgot how I responded, but if he were to ask me now I’d say “yes.” I know of no modern state that limits itself to the enforcement only of laws that the modal libertarian thinks it ought to, and the evidence for this being what citizens generally desire is at this point beyond dispute. So in effect,yes, the libertarian is a cultural relativist, because the culture of most folks includes the statist impulse to enforce all aspects of moral reasoning (in differing bundles), making the lack of such an impulse tantamount to a disregard for the preservation of culture and a tolerance for letting the civilizational chips fall where they may.

True, even the desire for a state that enforces only contracts is a kind of support for a certain social outcome, but it’s awfully threadbare given its open-ended nature; the equivalent paltry liberal philosophy on the non-libertarian (or rather more precisely, non-propertarian) side of the ledger would be the Rawlsian veil of ignorance, wherein people are asked as a mental exercise in political philosophy to disregard their “situated selves,” i.e. precisely the bundle of cultural artifacts, aesthetic preferences and normative commitments that make them who they are.  Also include here is the concept of deliberative democracy, where as long as everyone gets to make an informed opinion without threats of sanction, civil or political, the resulting debate over the fate of society is up for grabs. There’s a new book elaborating on all of this.

Klein’s cultural relativism is subtly on display in this quote from his essay:

An interpretation is “right” only in the sense that it is better than the relevant alternative. It isn’t “right” in the sense of final or definitive. Once the government starts acting on an interpretation, it tends to become ossified. Every interpretation spurs its own transcendence and superseding. Even if the government does seize on a pretty good interpretation of what’s going on “now,” it is likely to cling to it long after it should have [emphasis mine] been superseded. Moreover, governmentalization of interpretation tends to regiment social affairs and repress the evolution of interpretation.

Klein gives very few concrete examples of of what kind of interpretation he’s talking about. The interpretation of statutory rape as the exercise of man-boy love might be going too far for even Klein, but I don’t see how this is ruled out given the thesis of his paper, which is provided for at a pretty abstract level. There is evidence for the claim that he does not draw a distinction between merely economic matters and all other matters in this critique of governmental interpretation, and that his distrust of “the people’s romance” is smuggled into an otherwise solid essay on economic philosophy that elaborates on the general “knowledge problem.” No, his view of the faulty interpretative powers of government – to know what is going on “now” – goes far beyond the misuse of yesterday’s prices to inform mandatory price ceilings:

Economics ought to teach us to subdue our yearning for common knowledge, a yearning both primordial and too often culturally inculcated.

“Ought” is the operative word. Marxist philosophy (no doubt distorted as someone more familiar with Marxism might inform me) taught a generation of East Germans to yearn for common knowledge, and it worked.  The problem of interpretation, or rather, determination, of prices in day-to-day matters of economic transaction plagued their state socialist society, making them relatively poorer, but the broad contours of an interpretive view of society as class based and solidaristic made its impact, and once in place became the widely shared common knowledge Klein objects to even on positive grounds.

An illustration he provides of the problem of interpretation involves the determination that business practices are “anti-competitive” in the view of the Justice Department’s Anti-Trust Division. This is all very sound, but again only because a pluralistic, liberal (though not libertarian) society is always debating just where to draw the line that clearly identifies where one industry ends and another begins, i.e. the nature of monopoly. But from Klein’s point of view even the very interpretive framework of business-as-properly-competitive is up for grabs. Klein’s preference for an interpretation that takes into account the “transcendence” of governmental interpretive powers undermines the strength of his argument. The “problem construction” sociologists speak of – i.e. the ability to define the narrative – can be cause for the transcendence of the anarchy of interpretation Klein implicitly invokes on behalf of classical liberalism.

Klein’s preference for a world with less common knowledge should not be confused with the supposed impossibility of obtaining it.