GLASNOST AND THE KNOWLEDCE PROBLEM:
RETHINKING EcoNoMIc DEMOCRACY
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the way decentralized and tacit knowledge gets used in society,
and now represents a more positive account of the way economic
knowledge Is created, discovered, and conveyed In market Institutions. The argument contains valuable lessons, not only about why
the tradItional Soviet-type economyand many attempts to reform It
have fidkd, but also why many more conventional Western-style
racy would Involve.5 Socialism would go beyond Western-style representative democracy by extending the application ofdemocratic
principles beyond questions of electing supposedly representative
government officials and Into the whole economy.
In the aftennath ofthe utter collapse oftheseideals, the notion of
economic democracy needs to be rethought Marx’s version did raise
relevantnot only to purely economic matters, but also to the issue of
democracy. The argument suggests an alternative way to extend
democratic values to theeconomy. The upshot ofthis way oflooking
at things might be a different perspective on the possibilities for
reférmlng the Soviet-type economy.
Democracy means more than voting. Voting Is neither necessary
nor sufficientforthe emergence ofagenuine democratic spirit Dicta•
tonal regimes can go through the motions of elections but they arc
not fooling anybody. Mid it is often possible for the participants tc
come to a consensus so that voting can be dispensed with. Indeed,
voting is a last resort atthe end ofa largerconsensus-Ibrmlngprocess
asktwo other (probably equally difficult) questions: What is thecore
meaning ofdemocracy? And what would it mean to achieve it Inthe
economy? Marx was right at least to this extent: Democracy should
apply to all ofour lives and should not be narrowly conceived as a
form ofgovernment. The spirit ofdemocracy that animates glasnost
anpiles to much more than nolitlcal elections and touches on the
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degree to which participants are truly open to one another. To
embrace the spirit of democracy Is to learn what it means to be
“open,” to genuinely listen to what other participants are tryIng to
say. To listen requires that one attempt to hear thetruth-claim ofthe
other person’s words, to take those words In their most powerEd
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whatever direction thedialogue Itselfdraws the particIpants; it must
never become dominated by any one ofthem. The truly satisfying
discussionsare those that are completely out ofanyone’s control and
yet seem headed in a direction In which all ofthe participants are
finding themselves driven.1
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been largely protectea many things long hulclen nave been maci.e
public. The jesuits, achieved only by letting different voices be
heard, have been truly astonishing. Glasnosthas given birth to anew
phenomenon In Soviet society: public opinion, It has generated an
open-ended public dialogue, a serious public questioning of the
ba~icorientation ofSoviet society, openness that was Impossible a
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Democratic discourse thus serves a knowledge-generating flinclion: ItaUows forpeacethlresolution ofdisputes and foranevolutionary learning process. Public political dialogue creates and communicates knowledge in a way that the politics of secret Intrigue and
power cannot. The unhampered give and take during the free
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weed out less-efficient methods of productionInmuch the sameway
that open verbal criticism weeds out weaker arguments In science or
politics. The very open-ended tugging and pulling of alternative
voices, which make a discourse productive ofnew knowledge, also
onerats in the “discourse” ofmnrleetInteraction. As with commimica-
other possible communicative methods, forexample, theiractions as
consumers? To widen the notion of democracy to cover more than
explicit discourse, wemust Include a broader range ofways ofInfluencing one another. Democracymust subsumenot onlythesituations
of literal dialogues, but also the many ways In modern society In
which we are able to communicate at a distance with one another.
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naled the collapse of Marxian aspirations for direct and genuine
control over the economy. Instead, Marxlans settled for attempts
to Influence the Soviet economy indirectly by controlling certain
monetary and fiscalpolicy variables, and by securingthe “commandIng heights.” Although the economyrecovered dramatically under
the NEt’ nnllev. Lenin and his Ibliowers cannot he said to have
between democracy and the economy is conceived as an external
relation, with government servIng as a way to steer markets and
with democracy serving as a way to steer government
This retreat thm destroying to controlling markets may appear to
constitute an answer to the knowledge problem. It recognizes that
marketsserve certain cognitive functions, among which are the flinc-
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contract law, and a stable money and banking system.~
Theproperfunction ofgovernmentin afreeand democratic society
should be seen as maintaining and Improving the rules by which we
live peacefully among one another, not as deliberately carrying out
any one person’s plan. Policymaking should pay attention to setting
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same reason that Marxian central plannIng Is: Policymakers simply
do not know what they are doing. Markets are not simply convenient
things to “have” In the economy, which can be “put to use” in
accordance with government’s goals. Markets are themselves the
source ofknowledge ofhowthings can4get done Mall. The attempt to
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tIouis deliberate control to become democratic is itselfa throwback
to pre-democraticthinking, If we return tothemodel ofconversation,
we see that what makes a discourse democratic is precisely the flict
thatIfls not underanyperticipant’s control. Justas a good discussion
takes on a life ofits own and participantsare carried along by its flow,
so markets constitute an open-ended process with its own systematic
but U theargument I have been summarizing is valid, this analogy
Is all wrong. The only task the central planners should need to
achieveis the last one—getting out oftheway. Ifthe economyis not
now under the planners’ effective control and could not be under
anyone’s control, then reform should not be seen as Involving a
complicated transfer ofconS from the center totheperiphery. The
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