Custom, Legislation and Market Order

RICHARD E. WAGNER * I From Mind to Custom in Pareto and Schlicht FOR SCHLIGHT, CUSTOM IS MALLEABLE IN THE LONG RUN, though only within the limit that is created by the autonomy of mind. To be sure, that autonomy resides in formal properties and not in substantive detail. Custom arises through interaction among people, and is described in terms of the substantive details of patterns generated through human interaction. Custom can vary widely across history and territory, despite the universal character of mind. That universal character implies form but not specific content. A drive for clarity, Schlicht argues, is a universal feature of mind that is independent of culture, and that Schlicht explores in quite illuminating ways. What might otherwise be a continuum is rendered discrete by the mind's search for clarity. This injects rigidity and autonomy into custom, even though the substantive features of the resulting custom can vary immensely through time and space. Yet, however immense that variation might be, it is constrained by the mind's universal search for clarity. Like Schlicht, Pareto too thought mind was universal and permanent. Pareto distinguished between residues and derivations. Residues were the basic sentiments that he thought were hard-wired in the mind. While Schlicht refers to such formal intellectual qualities as clarity and symmetry, and not to such emotional qualities as sentiment, the one formulation can be assimilated to the other. In contrast to Schlicht's unified mind, however, Pareto articulated a vision of a bifurcated mind through his formulation of derivations. For Pareto, derivations were the intellectual justifications that the mind advanced to give an appearance of rationality while simultaneously hiding the true sentiments that were at work. Empirically, we observe actions and the justifications that people advance for those actions, Pareto's derivations. We do not observe the genuine residues that truly drive the actions. Thus, ordinary communication is a deceptive and concealing activity, and not one that reveals the truly motivating residues. This disjunction between residue and derivation, however, need not create any difficulties for communication and interaction so long as the residue-derivation gap is similar across those who interact and communicate. What would seem to be important for fluid social interaction is the predictability of expectation that people hold about one another. A debtor can tell a creditor that he just now has put his check in the mail, even though he has not yet done so. The network of social relationships can nonetheless proceed smoothly, as long as the residue-derivation gap remains predictable. Difficulties of communication and the potential for conflict would seem to arise as predictability lessens through increa sed variability in the residue-derivation gap among different interacting persons. Social life may proceed differently depending on the degree of similarity in the residue-derivation gaps at play within a society. This brings me to Pantaleoni. II Pantaleoni and the Parasitical Character of Political Pricing WHILE LUDWIG VON MISES (1920) IS WIDELY CREDITED with demonstrating the impossibility of genuine socialism, as distinct from market socialism, Maffen Pantaleoni (1911) advanced much the same theme nine years earlier. Pantaleoni recognized that what we now call mixed economies contained two incongruent pricing systems existing simultaneously within the same society. (1) One is a system of market pricing. The other is a system of political pricing. The political price system, moreover, cannot exist alone, but can exist only as a parasite attached to a system of market prices. To call this relationship parasitical, however, is not to pass judgment, but is only to describe the nature of the relationship between the two systems of pricing. …