Is the Price Mechanism a Process of Discovery?

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In the popular imagination, markets and democracies go along together. But you're sort of opposing them as different ways of decision making. What we're trying to do is argue that there are incredible things that markets can do. And also, this is the point that limblu makes, is that you don't ever get any democracies. There are no historical examples of democracies which have not had markets going together wisdom. So there is some plausible, complex causal relationship between the two but certain things that markes are going to be terrible at doing. These very often will be those instances where human interaction with each other can help us understand how politics works.

Democracy posits the radical idea that political power and legitimacy should ultimately be found in all of the people, rather than a small group of experts or for that matter arbitrarily-chosen hereditary dynasties. Nevertheless, a good case can be made that the bottom-up and experimental nature of democracy actually makes for better problem-solving in the political arena than other systems. Political theorist Henry Farrell (in collaboration with statistician Cosma Shalizi) has made exactly that case. We discuss the general idea of solving social problems, and compare different kinds of macro-institutions — markets, hierarchies, and democracies — to ask whether democracies aren’t merely politically just, but also an efficient way of generating good ideas.

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Henry Farrell received his Ph.D. in Government from Georgetown University. He is currently the Stavros Niarchos Foundation Agora Institute Professor of International Affairs at the Johns Hopkins School of Advanced International Studies. He was the 2019 recipient of the Friedrich Schiedel Prize for Politics & Technology. He is a member of the Council on Foreign Relations and co-leader of the Moral Economy of Technology initiative at Stanford University. He is a co-founder of Crooked Timber blog, as well as the Monkey Cage blog at the Washington Post.

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