In a recent post I pointed out that Habermas’s theory of communicative ethics and deliberative democracy fails to recognise a fundamental point highlighted by Hayek – that much of the knowledge central to the process of social communication cannot be put into words. In this post I focus on a related error in the Habermasian mindset. Namely, the claim that market processes are inherently ‘alienating’ and ‘anti-social’.

Writing under the spell of Marx, Habermas claims that far from being a liberating force the extension of markets represents a ‘colonisation of the life world’ by the medium of money. Instead of being regulated by face to face interactions, in a market economy, relations between people are dominated by impersonal economic forces (such as prices) that atomise individuals from their society and which encourage an ethos of self-preservation rather than commitment to the common good. The implication of this critique is that wherever possible we should replace markets with institutional structures that reproduce a sense of face to face interaction and which allow people to transcend self-interest. The assumption here is that the ideal of a deliberative democracy modelled on something akin to the civic republicanism of ancient Greece would facilitate the desired social transformation.

Read the rest of the article on the Pileus website.

Mark Pennington is the author of Robust Political Economy: Classical Liberalism and the Future of Public Policy

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IEA Fellow of Political Economy

Professor Mark Pennington is a fellow in Political Economy at the Institute of Economic Affairs and is also a lecturer in Political Economy at King's College, London. Mark holds a PhD from the London School of Economics, has been published in a number of publications and is co-editor of The Review of Austrian Economics.