In this post, we continue with our review of Anarchy, State, and Utopia (ASU). We have already reviewed Chapter 1 and the first three subsections of Chapter 2, so let’s just re-grab this philosophical bull by the horns and pick up where we left off. Although the fourth subsection of Ch. 2 contains an extended digression on “invisible-hand explanations” (an aside that could’ve been subsumed in a scholarly footnote or end note), this theoretical detour is by far our favorite subsection of the first two chapters thus far. Up to now, Nozick has left us scratching our heads in disappointment, for Nozick has assumed a Lockean state of nature (we prefer the gritty and ugly realism of Hobbes to Locke’s rose-tinted lens), and he has made many ahistorical and unfounded conjectures about the emergence of protection rackets (we prefer conjectures that can be tested in the real world). The invisible hand subsection, by contrast, introduces a new and helpful way classifying theories. In the words of Nozick (p. 19): “An invisible-hand explanation explains what looks like to be the product of someone’s intentional design, as not being brought by anyone’s intentions.” According to Nozick, a great example of an invisible-hand explanation is the invention of currency (p. 18): “No express agreement and no social contract fixing a medium of exchange is necessary.” Instead, a medium of exchange will emerge spontaneously, even in the absence of a state.
In addition, Nozick contrasts invisible-hand theories with so-called “hidden-hand explanations.” According to Nozick, a hidden hand theory explains unrelated events that are intentionally orchestrated by a single individual or group, while an invisible hand theory, by contrast, explains unrelated events in terms of some spontaneous mechanism lacking any pre-planning or pre-design. (Nozick further distinguishes between two different types of invisible-hand mechanisms–filters and equilibria–but we need not dwell on this technical distinction here.) So, what about “visible hand theories”? Would the “visible hand” be the state? For our part, as much as we appreciate Nozick’s distinction between invisible hand and hidden hand theories (and lament his omission of visible hand theories), Nozick omits the more important question of theory choice. Specifically, what criteria should one use in order to determine whether to accept a theory as true or not, regardless of how that theory is classified? (We will conclude our review of Chapter 2 of ASU later today and jump into Chapter 3 tomorrow morning.)