The short answer is, it depends. But on what? The purpose of this post is to etch out how we can estimate what level of government we need. The recent actions of my government (United States) restricting our civil liberties in the name of security got me thinking about the subject. I ranged from reflecting back on my socialistic youth to contemplating the consequences of anarcho-libertarianism. The answer came contemplating Hayek’s notion of emergent social order and trying to understand why and where that social emergence comes from.
In statistical economics, we understand that a system in equilibrium is at a state where we know the least about it. The system will respond to the exogenous/extensive constraints and evolve an internal/intensive/endogenous structure corresponding to the extent of our limited knowledge. This is the principle of maximum entropy. Adam Smith said “the Division of Labour is Limited by the Extent of the Market.” The division of labor he describes is the degeneracy of the economy measured by the partition function. It is fundamentally the number of things individuals can do based on the wealth of the system. As entropy increases the degeneracy of the system increases. Said another way, as the society becomes wealthier its degeneracy increases. I think Marx said something similar but his idea of degeneracy and mine are very different animals!
An increase in societal degeneracy/specialization occurs when wealth increases. The increasing wealth allows more and different jobs to be realized. Thus in a society as we increase wealth we increase the societies degeneracy and we increase the income inequality. In a (mostly) free market where individuals are indistinguishable before the law, we see wealth distributed in a canonical form.(Lienhard 1971) Canonical here means natural and results from the aggregation of individual action. When we group people together this is what we get. Sure for periods of time there may be perturbations from this distribution. However, these perturbations are removed through various social forces, even in relatively illiberal societies. Because the overall tendency is towards a state of maximum entropy, arbitrary distributions that are not canonical have to exert force in order to maintain that distribution. This exertion of force causes them to deplete their resources to maintain the distribution. If they can commandeer social resources, then they also deplete everyone’s reserves. The society will wane and be assimilated/conquered by another.
Unfortunately, we have in our history long examples of great social inequality lasting centuries, notably feudal Europe. However, as we increased social wealth, such unnatural inequality faces ever increasing pressure to end. After the formation of the United States, slavery lasted four-score and seven-years. This, I think, is largely attributed to the wealth we saw come about from the industrial revolution. The Third Reich lasted about 20-years. Communist Russia survived 70-years. As our society gets wealthier these inequalities can only last for shorter and shorter periods of time.
We can see the speed of social forces acting and butting against established social structure with the Remix Culture. We create meme’s and send them around the world. An idea, a quirky moment can go viral and reach millions in hours. It is hard to imagine any fixed structure that can withstand such an onslaught without expending significant resources in doing so.
When we look at the role of government in our lives we need to imagine government in a different light. We need to ask how can government enable action of its citizens without arbitrarily restricting any one or allowing one individual to restrict the action of another. This comes to sort of a minimalist state envisioned by Hayek in the Constitution of Liberty and by Robert Nozick in Anarchy, State, and Utopia. The state is only large enough and taking only enough resources to support its fundamental role. As a society grows, it evolves a stronger and stronger set of social norms and common law. These are perhaps the most significant constraints that we face in our daily lives. No such order could ever be legislated and enforced. If the state acts to preserve a certain social structure as society matures that structure will be obliterated. As a society declines the state can act to preserve a social structure for only as long as they can hold off being conquered. The state ends, but the society does not. The state acting in a minimalist nature that I described before is the only response that will lead to the preservation of the government, otherwise it is only a mater of time.
Jaynes (1994)saw that the trend in the entropy (entropy gradient) would be a key indicator for politicians. That their objective should be to maintain a positive gradient or face a bifurcation (recession, depression, revolution) of society. Depending on the shock to the system this could be either an orderly restructuring or disorderly. Hayek (1945) noted that our knowledge is fundamentally limited and that to presume knowledge we do not possess limits what we can accomplish. In a statistical economic framework, Hayek’s statement is that presuming more knowledge than we know skews the distribution of wealth in society, artificially reducing it’s entropy. As I understand The Use of Knowledge in Society, it is simply a statement of the second law.