The Social Critic
Fall, 1998

Reality is Not Optional: Thomas Sowell's 
Vision of Man and Society 
by Dr. Edward Younkins  
Professor of Accountancy and Business Administration at Wheeling Jesuit University in West Virginia and author of Capitalism and Commerce. 

In his various writings, Thomas Sowell has presented a unified theoretical perspective and potent intellectual framework for analyzing the social order.(1) Sowell’s systematic and systemic approach derives mainly from free-market economics, is methodological rather than philosophical or political, and is consistent with the views of intellectuals such as Adam Smith, Thomas Hobbes, Alexander Hamilton, Edmund Burke, Oliver Wendell Holmes, Friedrich Hayek, and Milton Friedman. 
Sowell’s tragic (or constrained) vision of man and society is based on the acceptance of the realities of the human condition – we are all limited by independent realities which we ignore to our own detriment. According to Sowell’s vision: (1) Human nature is essentially unchanging and unchangeable – there have been no great changes in the fundamental intellectual and moral capacities of human beings; (2) Human capabilities are severely and inherently bounded for all – man is sharply restricted in his capacity for improvement and has only a very limited ability to affect his surroundings; (3) Life is inherently harsh and difficult – suffering and evil are inherent in the innate deficiencies of human beings; (4) Man is basically self-centered; however, things can be improved within that constraint by primarily relying on incentives (rewards and punishments) rather than on dispositions; (5) Resources are always inadequate to fulfill all of the desires of all of the people; (6) Social outcomes are a function of incentives presented to individuals and the conditions under which they interact in response to those incentives; (7) Given the moral limitations of man and his egocentricity, the fundamental moral challenge is to make the best of the possibilities within the constraints of man’s nature; (8) There are no solutions, only trade-offs that leave many desires unfulfilled and much unhappiness in the world; (9) It is imperative to have the right processes for making trade-offs and correcting inevitable errors; and (10) It is better to cope incrementally with tragic dilemmas than to proceed categorically with moral imperatives – for amelioration of evils and for progress it is generally preferable to rely on systemic characteristics of social processes (such as moral traditions, the marketplace, the law, or families) rather than solutions proposed by government officials. 
Knowledge and Decision Making 
Sowell portrays society as a collection of interconnected and overlapping decision-makers who operate under the inherent constraint of scarcity and consequently face the necessity of dealing with trade-offs – some desirable options must be foregone in order to pursue others. The goal of decision-making processes is to optimize well-being subject to constraints of time, wisdom, and resources. No social value is categorically a good thing to have more of without limits – all are subject to diminishing returns and ultimately negative returns. A person needs to accept somewhat less of one thing in order to get somewhat more of another. 
Information means specific things that a man needs to know in order to make decisions affecting his own well-being. The relevant question is which among a number of options will optimize the satisfaction of the decision-maker. A continuing flow of information about the relative costs and benefits of doing or choosing one thing or another is needed to answer this question. Such knowledge can be extremely costly and is often widely scattered in uneven fragments – the communication and coordination of these scattered fragments is one of the basic problems of society. 
According to Sowell, the crucial systemic process is the market with its continuing flow of signals which allows decision-makers to review a constantly changing mix of options and resulting trade-offs and respond in a fine-tuned fashion by making a series of incremental adjustments based on the information attained. If decisions are to be incremental and flexible, they are best made by economic institutions rather than by political, administrative, or judicial ones. 
Any individual’s personal knowledge is quite small compared to the organized systematic knowledge through which society functions. Sowell argues that only by viewing the economic, social, and political orders as systems can we understand the real role of knowledge in society. In order to cope with the constraint of inadequate personal knowledge, a variety of social institutions and processes coordinate innumerable scattered fragments of knowledge enabling a complex society to function. These social arrangements can largely be understood as mechanisms for economizing on knowledge. 
Decisions are best made through systemic processes that encourage each of us to act upon the limited information we possess while permitting others to respond freely to our initiatives just as we react to theirs. Social causation thus operates in systemic ways with innumerable interactions producing results controlled by no one but falling into a pattern determined by the incentives and constraints inherent in the logic of the specific circumstances. Since no individual has complete information, knowledge in the entire system is sorted and coordinated in fragments by the simple process of each transactor seeking the best deal from his own perspective. As a result, multiple individual choices, determined by immediate and narrow considerations, produce unintended consequences that are socially beneficial in the aggregate. 
Sowell explains that better decisions are made through the market process as opposed to the political process because markets economize on the knowledge needed by any one person to make good decisions and because they convey a sharper sense of constraints, trade-offs, and incentives (rewards and penalties). In addition, people can generally make a better choice out of numerous options than by following a single prescribed process. Another virtue of the market is the promptness and effectiveness with which it transmits feedback thus enabling decision-makers to correct errors and adapt to changing conditions. Feedback mechanisms (including incentives to act on that information) are critical in a world in which no decision-maker is likely to have enough knowledge to be consistently right the first time in his decisions. There is an independent reality which each person sees only imperfectly, but which can be understood more fully with feedback that can validate or change what was previously believed. Effective feedback is the implicit transmission of others’ knowledge in the explicit form of effective incentives to the recipient. 
Nobody needs to have complete information in order for the economy to convey relevant information through prices and achieve the same adjustments as if everyone had such knowledge. Prices are a mechanism for carrying out the rationing function and are a fast and effective conveyor of information through a society in which fragmented knowledge must be coordinated. Accurate prices resulting from voluntary exchanges allow the economy to achieve optimal performance in terms of satisfying each person as much as he can be satisfied by his own standards without sacrificing others’ rights to act according to their own respective standards. Prices maintained by force convey misinformation. Regulatory measures such a price-fixing obscure the true cost of a course of action compared to its alternatives, inhibit the feedback that permits transactors to communicate, and create distortions that harm rather than help consumers. 
The Superiority of Systemic Rationality 
According to Sowell, knowledge consists largely of the unarticulated experiences and rationality of the many as embedded in customs, traditions, and systemic processes such as the market, family, language, and law. Knowledge is a multiplicity of social experiences distilled over generations in cultural processes. 
Sowell argues that systemic rationality is superior to individual intentional rationality. Even the most outstanding individuals are very limited – man lacks the moral and intellectual pre-requisites for deliberate comprehensive planning. The inherent constraints of human beings are sufficiently severe to preclude dependence on individual articulated rationality. Sowell is highly skeptical about the capacity of elites to master complexity and to choose on behalf of others. Not only are the elite and the ordinary person close in capability and morality, there are no uniquely correct answers that would justify transferring decision-making authority to elite surrogate decision makers. There are no solutions only trade-offs with respect to problems such as crime, poverty, and irresponsibility. As a result, the preferred decision-making mechanism is systemic processes that convey the experiences and revealed preferences of the many. The historic systemic wisdom expressed inarticulately in the culture of the many is more likely to be correct than the special insight of the few. The degree of social rationality does not depend on the degree of individual rationality. The relevant comparison is between that total direct knowledge brought to bear through social processes versus the secondhand knowledge of generalities possessed by a smaller elite group. 
Sowell puts his hopes for social order in sturdy institutions – he does not look for unsupported benevolence for society to progress or for solutions to social problems. To the extent that he envisions social changes he thinks in terms of trade-offs rather than solutions. Trade-offs must be incremental rather than categorical if limited resources are to produce optimal results in any social system as a whole. Results depend on the kinds of social processes at work and the incentives, constraints, and modes of interaction generated by such processes. Incentives may be positive or negative (rewards or penalties) and may be structured so there are gradations corresponding to different kinds of results. 
Systemic causation in the form of legal traditions, family ties, social customs, price changes, etc., creates an unintended order which arises as a consequence of individual interactions directed toward various and conflicting ends. These social processes are to be judged by their ability to extract the most social benefit from man’s limited potentialities at the lowest cost. The world is a system of innumerable and reciprocal interactions constrained within the confines of natural and human limitations – individual problems cannot be solved one by one without creating or adding to problems in other areas. 
Sowell takes evils for granted as inherent in human nature and seeks to discover contrivances by which they can be contained. He seeks the special causes of peace, wealth, and a law-abiding order rather than the causes of war, poverty, and crime. Since war is a rational activity engaged in by most nations whenever they have a prospect of gaining anything by it, the goal should be to raise the costs of war to potential aggressors through the threat of force (i.e., by military preparedness and military alliances). Since war originates in human nature, peace (not war) requires explanation and specific provisions to produce it. In addition, with respect to Third World countries, we need to explain the causes of prosperity and development (not the causes of the natural condition of poverty) through responsiveness to systemic economic incentives. Likewise, counterincentives such as moral training, social pressure, and punishment must be created and maintained in order to prevent or deter crime since incentives to commit crimes are commonplace. 
A man has insufficient personal knowledge to rely on reason alone when making decisions. Rational decision-making has costs in terms of time and other resources – the cost of a decision is the cost of the process of deciding. Sowell explains that rational principles themselves suggest a limit to how much rational calculation to engage in. Trade-offs apply to the decision-making mechanism itself. For example, the sorting and labeling of people, activities, and things involves a trade-off of costs and benefits – the more finely tuned the sorting, the greater the benefits and the costs. Beyond some point, sorting categories finer would not be worth the additional cost for the particular decision-making purpose. Also, culture offers a way of economizing on deliberate decision-making by providing a wide range of beliefs, attitudes, values, preferences, traditions, and customs (whose authentication has been historical and consensual) as low cost inputs into the decision-making process as long as there is freedom for the individual to choose whether prospective incremental improvements in the particular decision are worth the additional cost of more rational calculation. These and other social arrangements such as firms, legal traditions, family ties, churches, politics, ideology, voluntary associations, the expert, etc., can be viewed as devices for economizing on knowledge. 
Informal relationships such as personal ties within families and communities are able to acquire much knowledge at lower cost than formal organizations, generally able to apply it in more individualized fashion, and are less likely to adopt previously made decisions as precedents. Informal social processes can adjust the time, scope, and specialness of treatment of the pertinent characteristics of each individual and each episode. Social processes which rely on emotional ties and social penalties such as guilt, fear, shame, or stigma, facilitate mutual accommodation without the use of force and avoid the inefficiencies of force as a social mechanism. Sowell explains that informal relationships or decision-making processes are generally preferable but are not categorically superior to more formal relationships or processes. There must be some discernible benefits peculiar to particular more structured relationships and precedental decisions that can be shown to be greater than the benefits of the corresponding informal decision processes. The apportionment of decision-making between informal and formal processes involves a trade-off of flexibility for security. 
Freedom and Other Process Characteristics 
One of the most important trade-offs is between the amount of freedom and the amount of other characteristics desired in a society such as material goods, scientific progress, or military power. For Sowell, freedom is a process characteristic referring to a social relationship among people – exemption from the arbitrary power of others but not release from the restrictions of circumstances. 
Power is exerted to the extent that someone’s pre-existing set of options is reduced – it is not an exercise of power to offer a quid pro quo that adds to his existing options. Sowell explains that using political power to deal with economic processes reduces freedom. He argues that efforts to produce social benefits must focus on general processes and on power restrictions, meaning restricting the ability of some to reduce the options of others. The most that man can do for freedom through social processes is to establish widely known rules which limit how much power is granted to one person over another and limit the specific conditions under which the power holder is authorized to exercise it. 
According to Sowell, rights are rigidities and boundaries that limit the exercise of government power and carve out areas within which individual discretion is free to shape decisions without being second guessed by political or legal authorities. Rights involve the legal ability of people to carry out certain processes without regard to the desirability of the particular results, as judged by others. Although rights belong to individuals, they originate, take their meaning, and find their limits in the needs of social processes. Political and legal institutions protect the rigidities people want in some areas of their life such as exemption from force or fraud as exemplified in laws on murder, kidnapping, property ownership, etc. The social benefits of property rights are that they present an economic process with greater efficiency, a social process with less strife, and a political process with more diffused power and influence. When general rights (such as those listed above) involve virtually universal desires, incorporating them into law eliminates the transaction cost of pointlessly litigating anew. In addition, peace of mind and a sense of independence and dignity are benefits from operating under known rules applicable to all, rather than being personally assessed and controlled by other individuals. Political and legal systems should be limited to areas in which they have a relative advantage as decision making processes (such as reliability).  
According to Sowell, rights can also mean legal entitlements regardless of their moral merits. In this sense, rights are simply factual claims about the availability of state power to back up individual claims. Social trade-offs are involved in the creation of rights which includes a loss of flexibility – something that is incrementally preferable at a given point becomes categorically imposed at all points by the force at the disposal of the state. 
For Sowell, equality is a process characteristic – a social process which ensures equal treatment represents equality whether or not the actual results are equal. Equality is the equalization of processes. As long as the process itself judges everyone by the same criteria, there is equality of opportunity. There would be a major conflict between allowing freedom of individual action and prescribing equality of social results. 
The argument is not that it is literally impossible to reduce or eliminate specific instances of inequality, but that the very processes created to do so generate other inequalities including inequalities of power caused by expanding the role of the state. Equal results may be attainable only by causing processes to operate very unequally toward different individuals or groups. Attempts to equalize economic power lead to greater and more dangerous inequality in political power. Social results such as differences in income are not deemed sufficiently important to override the process goals of freedom of civil and economic action. 
Justice means adherence to agreed upon rules the violation of which deranges the expectations of others and adversely changes their future conduct as they lose confidence in the general reliability of existing and future rules and agreements. Justice derives its importance from the need to preserve society through the provision of general principles. Sowell explains that men will suffer more by a breakdown of order than by some injustices. What is involved is a trade-off between individual justice and the social benefits of certainty. Judicial activism would derange the whole process. A better verdict may be reached in a specific case but at the cost of damaging the consistency and predictability of the law. There cannot be a law-abiding society if no one knows in advance what laws they are to obey but must wait for judges to create ex post facto legal rulings based on evolving standards rather than known rules. The losses of poorer judicial decisions are offset against the prospective guidance of known rules leading to fewer criminal law violations or needs for civil litigation. General stability of expectations and standards are more important than the particular benefits of wisdom and virtue. A judge should therefore apply the rules even if in the specific instance the known consequences will appear to be undesirable. 
Law exists to preserve society. It follows that criminal justice is concerning with deterring crime, not with finely adjusting punishments to the individual. Sowell explains that law represents the evolved and codified experience of all men who have ever lived – it is the experience of the many, rather than the wisdom of the few. 
Sowell contends that the best processes should be used and protected because the attempt to produce the best results directly is beyond human capacity. It is our bounded rationality that makes general rules of social processes necessary. However, adopting a systemic view does not entirely exclude the individual factor. 
For Sowell, individualism means leaving the individual free to choose among systemically generated opportunities, rewards, and penalties. Each individual’s best contribution to society is to adhere to the special duties of his institutional role. What is morally central is fidelity to duty in one’s role in life. In carrying out defined roles the individual is relying on the experiential capital and unarticulated historical experience of the ages. For example, a businessman should promote stockholders’ interest rather than attempt to improve society and a judge should carry out the law, not try to change it. Specialization is highly desirable. There is a superiority of experts within a narrow slice of understanding. Practically every individual has some advantage over all others because he possesses unique talents, resources, and information. What is denied is that expertise confers a general superiority which should supersede more widely dispersed types of knowledge. 
1. This article represents an introduction to Thomas Sowell’s systematic vision by presenting his essential ideas in a logical, accessible manner.  This is done by rewording and rearranging the ideas found in Sowell’s most relevant works including: Knowledge and Decisions (New York: Basic Books, Inc., 1980), A Conflict of Visions (New York:  William Morrow and Company, Inc., 1987), and The Vision of the Anointed (New York: Basic Books, 1995). Although this brief article can hardly do justice to Sowell’s work which is powerful, clear, and nuanced, it can provide a background for readers who wish to study Sowell’s work in greater depth and detail.  >>
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