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It’s a Very Long Way From Frankfurt to Virginia and Rochester: On the hierarchy/market distinction as a false dichotomy

by Bryce Weber (Perth)
for the British Columbia Political Studies Association Conference Simon Fraser University Burnaby, British Columbia May 5-6, 1995

	Critical theory has always understood itself as an emancipatory project,
and this project has been seen consistently by critical theorists themselves as
involving a rejection of instrumental reason and strategic social and political
behaviour as social norms. The pairing of critical theory with variants of rational
choice theory would seem, then, to be anathema to critical theorists. And the
idea that one has by necessity to choose between markets, which are if nothing
else, the playgrounds of strategically rational social actors, and "hierarchy"_or
arbirtary authority_is a particularly hoarey choice to a critical theorist. What I
should like to argue in this paper is that the "choice" between these alternatives
is  based on a false dichotomy, and that the origins of this false dichotomy can
be located in the inability_or unwillingness for whatever reasons_for rational
choice theory and its variants, to move beyond a fundamentally
methodologically solipsistic position. Rational choice based theories could
avoid this dichotomy if they came to terms with the fact that people can, and
necessarilly do, develop mutual understandings between and amongst
themselves that are based on non-strategic motives, and which make perfectly
rational sense without having to appeal to the idea that such strategically non-
rational forms of social action are functions of some kind of biizarre_or at the
least extravagant_act of altruism to do so.

	It is precisely this type of problem that Habermas's account of
communicative action attempts to address. It argues that there is a reflexive
component that functions as the presupposition of everyday language use, in
those cases where meaning and/or shared social understanding is generated;
and that the use of language is possible only to the degree that social actors are
capable of understanding each other in non-strategic terms. Consequently, the
resolution to the problem presented by the either/or of the market or tyranny can
be found in an alternative suggested by the idea that people are capable of
understanding what each other mean and so can discuss their mutual concerns
reasonably. My position is that what is involved in these moments of
communicative interaction is a moment of mutual recognition in which others
are understood not as means to my ends, but as individuals who are the same
as me when I'm not merely motivated by self interest. Herein lies the seeds of a
notion of the "common good".

	It is evident that the better of the rational choice theorists have come to
recognize the limitations of a simplistic rational choice account of the rationality
of social and political action. This recognition has tended to focus on the
inability of simple rational choice theory to account for how social institutions
can exist at all. As Dryzek points out, these institutions could not exist if the only
form of rational action were strategic.2 As I shall argue, James Johnson's3 and
RŽjean Landry's4 approaches share the objective of attempting to get beyond
the limitations of game theory, which they both depict as itself more adequate
than simple rational choice theory. In both cases, this has to do with an
increased acknowledgement by game theory, relative to less sophisticated
derivatives of rational choice, of the social contexts and shared social
understandings within which social action takes place. nevertheless, both
Johnson and Landry attempt to avoid accounting for the inadequacies of a
game theoretic approach through reference to the latter's refusal to come to
terms with reflexive thought or forms of mutual recognition between social
actors that go beyond the explanatory capacities of a competitive model of
interaction. In maintaining this position, both Johnson and Landry may provide
accounts of action with a degree of predictive power, and may provide accounts
of how actors who understand themselves as acting in a strategic fashion will
act. Since this appears to include most individuals currently involved in policy
setting and implementation, this would be no small accomplishment in its own
right. However, it also leaves the broader question aside; that is, how to solve
the problem to which Dryzek refers as the "reflexive incoherence" of the rational
choice based model of explanation.

	It is this question that lies at the heart of my concerns in this paper, not
the adequacy of the models of explanation offered by Johnson and Landry on
their own terms. It should be noted at the outset, however, that the problems that
Dryzek points out are noted by Buchanan himself, that Johnson attempts to
resolve these same problems through his attempt to appropriate the
Habermasian notion of communicative interaction to the needs of game theory;
and that Landry attempts to integrate elements of contract and transaction cost
theories of interaction into an expanded, game theoretic explanatory framework
to the same end. All are fundamentally driven forward by the inevitable
inadequacy of the starting point of rational choice based theories. To put this in
a nutshell, the utility maximizer of rational choice and game theory functions in
the same way as the "Unhappy Consciousness" of Hegel's Phenomenology,
not wanting out of the immanence of its isolation, in which it takes no little
solace, but not being able to explain to itself or to anyone else why it feels
compelled to reduce everything it encounters to the abstract formulae it dreams
up in order to account for the reality it inevitably confronts as hostile.

	My thesis is that Johnson and Landry both see the need to move towards
the social, but refuse to come to terms with what they ought to know is
necessary in order to resolve the reflexive incoherence of the rational choice
position: i.e., the abandonment of the model of utility maximization as the
founding moment of the social institutions which the market, and similarly
competitive forms of social interaction, rely upon for their continued existence.

	The title of the article by John Dryzek from which the title of this present
talk is derived is "How Far is it from Virginia and Rochester to Frankfurt? Public
Choice and Critical Theory."5  What Dryzek argues is that both rational choice
theory and critical theory  can, for different reasons, benefit from a dialogue.6
Dryzek's politics, (viz., his concern with new social movement politics) and his
hope for the development of what he refers to as a "discursive democracy",
place him more on the critical theory side of this divide. Another author who
makes a similar claim, but who is at least methodologically more to the side of
rational choice theory is James Johnson.7 In both cases, they claim to want to
set a dialogue in motion between critical theory and rational choice theory. The
argument they both present is that while critical theory and rational choice
theory are not entirely subsumable to each other, their relative merits can be
used to supplement the shortcomings of the other position.

	Now both Johnson and Dryzek point out the same weakness in rational
choice-based theories, and that is their inability to account for the rationality of
non-strategic action. This manifests itself most strikingly in their inability to
account for the rationality of moral or ethical actions. At its extreme, this blind
spot makes it difficult to explain how social institutions_which are admitted by
the more thoughtful rational choice-based theorists as requiring a degree of
cooperation_can operate successfully. What differentiates Dryzek's position on
rational choice theory from Johnson's is that, although they both point out this
incapacity of rational choice based theories, Dryzek treats the admission of this
theoretical shortfall as an opening into which to inject critical theory content,
whereas Johnson views the admission of this weakness as a merit which can
be used to point in the direction in which rational choice theory needs to move.
Both agree, however, that rational choice theory suffers from the problem
described above.

	What Johnson recommends as a solution to this problem is a move
towards game theory. This argument is similar to that made by RŽjean Landry,
who argues that a third level of complexity can be added to the rational choice
based paradigm; the recognition of the institutional setting within which social
action takes place, understood as a set of largely indeterminant contractual
arrangements between social and/or political actors. What I would like to argue
in this paper, though, is that the move to game theory, and to the kind of theory
of institutions which Landry8 does not provide a solution to the real problem
faced by rational choice theory; that is, its inability to move beyond the position
of a methodologically isolated individual. Or, to put this another way, of the
inability of rational choice-based theories to come to terms with the fact that
competitive social action_which it takes as its model of rational
action_presupposes at both a logical and an empirical level, cooperative social
interaction. Johnson's and Landry's acknowledgement that rational choice
based theories ought to move towards a recognition of other social actors (as a
function of seeking to be successful on self-interested terms, one might add), or
towards the recognition of the institutionally located nature of social interaction
are surely advances over the original, admittedly simplistic account of social
action provided by unalloyed rational choice theory. However, this admission
rather points once again to the weaknesses of rational choice based theories,
since their accounts of social interaction and institutionally established
paradigms of social interaction provide accounts of the latter which replicate at
an epistemological level the "reflexive incoherence" which Dryzek points out,
and which  characterizes the admitted weaknesses of rational choice based
theories as a whole. The reason that it is fruitful to follow out this sort of
development_and Landry's article points this out quite well_is that what is called
for to correct the limitations encountered rational choice theory is a move to the
social which would violate the integrity of the rational choice paradigm itself.
Without this, there can be no solution to the rational choice "problem." The mere
acknowledgement of the social and of other social beings does not resolve the
real problem of atomistic theory, for it is the accounts of what others' existences
mean to the one who acknowledges them, rather than the mere
acknowledgement of their existences, that is where the proof of the pudding is
to be found.

	What Johnson and Landry both propose to resolve the problem of
rational choice theory is a move to increasingly social levels of the explanation
of the rationality of action. My argument is that this goal will necessarily proceed
asymptotically: It will never get to the point it needs, since in both its strategic
and games theory manifestations it continues to refuse to move beyond the
fundamental limitations of its position; and it is these fundamental limits which
are source of its problems to begin with. Society cannot be explained
exhaustively in terms of strategic action_even when this action is
contextualized_if this process of contextualization refuses to acknowledge that
its possibility is predicated on the very thing which the logic of the rational
choice position excludes from consideration as reasonable. In sum, rational
choice theories, even in their most sophisticated forms, are flawed at a
dialectical level in that they suppress the preconditions for their own sense in
order to make sense of themselves.9 Both Johnson's and Landry's approaches
are clever attempts to resolve the problems of rational choice theory without
ever having to abandon the perspective which leads to the problem in the first
place. In other words, their respective approaches are clever and strategic_the
perfect scenario for a rational choice position_and so their attempts carry within
themselves a kind of trope of the problem of rational choice-based theories as a
whole.10

	To even a casual observer the attempt by Dryzek and Johnson to
develop a dialogue between rational choice and critical theory is somewhat
strange. An earlier generation of critical theorists played the same role in
Germany as the so-called "normativists" played in the similar North American
debate of the 1960's, arguing against the positivist-derived positions of
empirical social science in the Positivismusstreit in Germany.11 Rational choice
theory may not be positivist in the strict sense of the term, but rational choice
theory carries forward in the spirit of the positivist tradition, which is
characterized by an aversion to reflexive thought, if Habermas is correct.12 On
the other hand, Habermasian critical theory declares itself to be bent on a
search for the social basis of the normative foundations of the original critical
theory project.13 A conversation between rational choice and critical theory
would thus appear to be a suspect proposition. Dryzek argues, however, that it
can be worthwhile for both sides, inasmuch as critical theory has tended
towards the abstract_an irony for a theoretical position which has traditionally
prided itself for the acknowledgement of its inextricably socially located nature
and as an applied form of thinking. Public choice theory, if nothing else, is
applied. It asks, "Why do people make the choices what they do?" Yet as Dryzek
argues, public choice theory suffers a shortfall in its approach which might be
supplemented by critical theory in its present Habermasian form. Dryzek argues
that the impasse suffered by rational choice theory manifests itself in a number
of different ways. He says that at a conceptual level, the problem of rational
choice-based theories manifests itself in

		...an implicit and contradictory determinism of axioms for individual
behaviour. Empirically, it is an inability to explain high baseline rates of co-
operation and other instrumentally irrational behaviour in prisoners' dilemmas
and other social situations (such as voting). Normatively, the problem is
reflexive incoherence stemming from internal contradiction: normative
public choice only makes sense so long as its own model of man is violated.
Politically, the problem is hostility to democracy...14

	Dryzek goes on to explain that for him, public choice theory is
characterized by its assumption of a homo economicus as the paradigm social
actor, even if this entails a moral theory, such as that of Rawls, whereas by
critical theory he means the school of thought first developed by Horkheimer,
Adorno and Marcuse, which focused on "instrumental rationality" as the source
of domination in modern society and from which, in its present form, we needs
must be emancipated. Habermas, he notes, attempts to move beyond what he
sees as the limitations of his predecessors' position. Habermas has always
maintained that instrumental rationality has its place in social life. The social
pathologies of contemporary society, from Habermas's position, arise when
instrumental reason comes to dominate more of social life than is appropriate.
Some role is thus left by Habermas for "instrumental rationality" in social affairs,
and this form of means/ends rationality is paradigmatic for public choice theory.
What sets Habermas apart from rational choice-based theories, according to
Dryzek, however, is his idea that rationality "means the competence to decide
when it is appropriate to act instrumentally, or in conformity with social norms, or
dramaturgically, as an expressive subject; and that the ability to judge these
qualities in others. this communicative competence is, then, a matter of
intersubjectivity, not just isolated subjectivity."15

	Dryzek points out that the kinds of problems for democracy which come
from the unconstrained pursuit of self-interest, as this is pointed out by the
rational choice-based schools of public choice (Buchanan and Virginia Tech)
and social choice (Riker and the University of Rochester) come down to a
refusal to accept a cognitivist account of the possibility of actually discussing
policy alternatives. From Dryzek's point of view, then, it seems that social and
public choice theories place themselves in a dilemma: they understand
democratic politics to be driven by self-interest, and see this as insurmountable;
but they argue that this form of social action is inevitably destructive of the social
fabric.16 Dryzek argues that the solution to this problem would be to make room
for a cognitivist approach to problem solving in which individuals talk over their
problems in a relatively non-strategic fashion. The non-cognitivism of public and
social choice theory forecloses this possibility. From Dryzek's perspective, the
cul-de-sac that rational choice gets itself into is avoidable if a communicative,
rather than an instrumental or strategic, rationality is employed as the basis for
the explanation of social action.

	Over and above the highly complex accounts of communicative
rationality Habermas provides, the simplest way of explaining what
"communicative action" means is to say that a conversation is "communicatively
rational" if the parties to this discourse discuss things in order to understand the
other person's position, independent of whether they agree with it or not. Now,
this could never take place if the individuals involved in this type of discussion
were speaking to each other with an instrumental intent, since in this situation
the only point of listening to someone else is to find out enough about them to
take advantage of the situation. Communicative rationality does not by any
means guarantee agreement, but it does demand a willingness to hear out
one's interlocutors. Public discussion informed by communicative rationality
makes possible, as Dryzek says, the discussion of "generalizable interests" or
"public goods".17

	As Dryzek points out, the basis for the rational choice position is the
prisoners' dilemma, and the scenarios appealed to by rational choice theorists
posit non-cognitive accounts of this situation: the prisoners are simply not
allowed to speak with each other, and it is assumed that in competitive social
relations, they would not speak with each other either, at least not unless this
were also part of the process of angling for advantage. Dryzek points out,
however, that in social psychology experiments in which individuals were
allowed to talk with each other, conflict over goal achievement by those
involved was substantially reduced. Dryzek adds that the reason for these
developments, from a critical theory perspective, "...is clear: a period of
discussion enables the group's interactions to be governed by communicative
rather than instrumental rationality."18 Applied to an institutional setting, Dryzek
argues that this position can help rational choice out of its cul-de-sac. From his
perspective, it is institutions which promote instrumental rationality and the
unalloyed pursuit of private advantage which lead, as rational choice theorists
themselves acknowledge, to social decadence. Dryzek's solution to this
problem is to introduce new institutions which would facilitate communicatively
rational forms of interaction; what Dryzek elsewhere works out as a theory of
"discursive democracy", which places his work in the same ballpark as that of
Cohen and Arato, for instance.

	Interestingly, Dryzek argues that hierarchies arise within the context of
the attempted manipulation of subordinates, but this_i.e., hierarchy_is
something that seems inevitable on the terms provided by rational choice-
based theories, at least as these are described by Dryzek. He argues that the
evidence of this can be found in the corrosion of the public's willingness at
present to conceive of ways in which government might not be corrupt. He
thinks that the concept, and practice, of communicative rationality offers an
alternative to the instrumental self-interest taken as paradigmatic by rational
choice.

	In short, the "reflexive incoherence of rational choice theory, as this is
depicted by Dryzek, is similar to the Cretan paradox: "If a Cretan tells you all
Cretans are liars, is he telling the truth?" If the only form of social action that is
rational is self-interested action, then this claim can be comprehended rationally
only to the degree that it is an attempt to manipulate those who hear it, so need
not be believed. This is the "reflexive incoherence" of the rational choice
position. Dryzek's position, in the end, is that the public will continue to have to
make choices, and so some form of "public choice" theory will continue to be
relevant. But if people make their choices about shared, public concerns on the
basis of communicatively rational discussion, then the damage that public
choice theory sees as unavoidable can be obviated. What public choice
demonstrates, from Dryzek's point of view, is the "impossibility of political order
founded on unconstrained rational egoism," even though it refuses to abandon
this model of explaining human action.

	Johnson's take on the problem of attempting to maintain political order
on the basis of unconstrained rational egoism is somewhat different from that of
Dryzek. Dryzek's position is that public and social choice theory has built itself
into a dilemma out of which it refuses to move, and that Habermasian critical
theory offers a way out of this situation. Johnson's approach is two fold, in that
he argues that rational choice-based theories are already building themselves
out of the kinds of problems pointed out above through developments in game
theory; and that unlike the Habermasian perspective, which deals with
competitive, strategic action as something that is "parasitic" on prior, successful
communicative action,19 it is communicative action which actually
presupposes strategic action. The first of these points moves us towards the
subsequent discussion of Landry's work; the second is intended by Johnson to
refute Habermas's position by demonstrating that Habermas has an
inadequately nuanced appreciation for the nature of strategic action. In effect,
this sets up the ground work for arguing the case that rational choice-based
theories have the capacity to work out, on their own terms, the problem of
"reflexive incoherence" of social and public choice theory to which Dryzek
points, which Buchanan himself acknowledges,20 and which Johnson accepts
as a given to be worked with and beyond.

	I do not what to suggest in what follows that all of Johnson's criticisms of
Habermas are without merit. A great many of them are, but they are numerous
and many would require a more detailed treatment than what I shall attempt
here. Like Dryzek, Johnson points out that rational choice theory needs to pay
attention to the critical theory position since, as Johnson argues, critical theory
points out the problem that Dryzek shows Buchanan locates which rational
choice-based theories cannot answer; that is,

		...the question of how and what basis social actors define the
context within which their interactions transpire_for which rational choice
theorists currently have no satisfactory solution...while Habermas's discussion
of the problem is perhaps not persuasive, the problem [for rational choice
theory] remains.21

	Johnson takes up this "intuition" of critical theorists in order to prod
rational choice theorists into a more critical understanding of their own
position's key weakness, and he argues that he hopes to, "...show in a
provisional way how game theory extends and deepens the critical theorists
basic intuition that unembellished strategic rationality cannot adequately
sustain social and political interaction.22 What game theorists attempt to do,
according to Johnson, is to incorporate an account of communication into their
own models of rational action.23 From Johnson's perspective, however, the
lacuna in the game theoretic which the examination of communication is
supposed to plug is created through the "widespread indeterminacy in the for of
multiple equilibria and attendant coordination problems."24 The source of the
problems Johnson examines, according to his account, do not come from an
excess of competition, but rather are the result of excessive complication and a
lack of comprehensive information. Johnson's examination of Habermas's
approach to communicative rationality, and communicative action, draws into
focus a number of ambiguities in Habermas's explanation of this which are well
taken. But the pivotal difference between them lies in their respective
understandings of the nature of strategic action, and the relation of strategic
action to communicative action. According to Johnson, Habermas's account of
strategic action is excessively narrow. He argues that Habermas's account of
strategic action is more applicable to the analysis of "parametric action", that is,
action in which social actors deal with others and the world around them as if
they were actually dealing with a given, predefined "natural" world. This
parametrically rational form of action would be appropriately analysed,
according to Johnson, as the product of purely atomistic and irretrievably
egoistic social actors. From Johnson's perspective, however, strategic
rationality necessarily involves the recognition of other social beings, as social
beings, and so strategic, rather than merely instrumental action is the focus of
game theory. According to Johnson, game theorists presume that,

		...social actors can (1)Êunderstand that their environment partly
consist of other intentional agents, and (2) recognize those others as equally
rational. these generalized capacities enable social actors to proceed
strategically by attempting to accommodate the anticipated actions of relevant
others when formulation their own plans.25

	From Johnson's perspective, this means that game theory involves a
recognition of other social selves, which might provide the grounds for a
refutation of Habermas's position. But to this Johnson adds the argument that
Habermas's understanding of the relationship of strategically to
communicatively rational action is incorrect. Habermas's position is that
communicative action is directed towards the development of understanding
between social actors, whereas strategic action is teleologically oriented to
success (and dramaturgically and normatively rational actions are oriented to
social acceptance through norm conformity or to the recognition of one's
needs).26 What differentiates communicative action, from Habermas's
perspective, is that it is not teleological in the sense of the other three types of
action, since its successful completion is not exhausted in achieving its goal, as
he puts this in Theory of Communicative Action. Rather, he argues, only
communicative rationality_or the communicatively rational component of any of
the other three types of action_is capable of generating mutual understanding.
And he argues further that the prior establishment of at least a vestigial degree
of mutual understanding is necessary for the successful completion of any of the
other types of action in question, to the degree that they are understood to take
place within a social context.

	Habermas's critique of strategic accounts of the rationality of social
action, then, is that they presuppose the prior existence (both logically, at the
level of explanation and practically, at the level of social institutions and
everyday social action) of successful communicative interaction. By way of
example, the market, per se, is incapable of generating meaning, but
consumerism requires meaning in order to successfully "market" products. If
everything is reduced to the level of an exchange value, then nothing has
meaning anymore and their will be no motivation on the part of consumers to
purchase those goods which are marketed as providing meaning. Ironically,
then, an ultimate "victory" of the market in its drive to render everything
rationalizable as an exchangeable commodity according to the price system,
would lead to its demise. There is a need, under these institutional conditions,
to provide a space for the development of "meaning" independent of market
rationality, and it is precisely this argument which "arts industry" representatives
make in order to exempt certain forms of aesthetic and cultural production from
market rationalization.27

	From Habermas's perspective, strategic social action acts in a "parasitic"
fashion because it exploits, but cannot replicate, previously successful
communicatively established social understandings, and explanations of social
action which rely on strategic models of the latter suffer the same inadequacy,
according to his account. In a different treatment of this in TCA II, Habermas
argues that "perlocutionary", or for him manipulative speech acts, presuppose a
prior sense of trust and/or agreement which can only be established by non-
perlocutionary speech acts. Or, to put this in less terminologically dense prose,
someone has to trust you before you can trick them. Legitimation crises which
derive from a shortfall of meaning in citizens' lives, such as the no-going one we
have been experiencing_with its particularly acute symptoms which have
manifested themselves in the United States recently_provide another example
of the parasitic nature of manipulative political strategies which exploit and
exhaust sources of meaning which neither the state nor the market can
generate solely by themselves.

	Now, against this position of Habermas's which sees strategic action as
parasitic, Johnson argues that Habermas himself "shows how the very capacity
to engage in normatively governed action that ... practical discourse [capable of
coordinating social action in a voluntary and unmanipulated fashion]
presupposes can emerge only in intimate relation to the development of
strategic competence."28 If Johnson can get away with this argument, what he
will do is to subordinate communicative action to strategic action, and hence
turn the tables on Habermas. In other words, if the "reflexive incoherence" of
rational choice theory can be resolved by means of the move to communication
game theory offers, but communicative action is then argued to be predicated
upon strategic action, not the other way around, critical theory might provide a
supplement to game theory, but it will not be in a position to criticize it as
parasitic. Of course, Johnson's gambit will work here only to the degree that
strategic rationality_which makes sustained political action within a relatively
stable institutional settings impossible over the long term_turns out to be the
source of communicatively rational interaction. And thus, strategic action will
have to be made to appear to be more than what it really is in order to
accomplish this. In other words, Johnson's approach will merely displace the
rational choice problem into another setting, even if it is successful.

	The proof that Johnson offers to demonstrate his case is an argument by
Habermas in which Habermas argues that the development of the capacity for
strategic rationality is one stage of many, (and a relatively early one) in the
development of moral consciousness. From Habermas's perspective, the
development of this capacity is part of a learning process and is an advance
over the child (or adult!) who acts as if the world were made up of objects, or of
objectively given rules. But, from Habermas's perspective, the mastery of
strategic competence _i.e., the ability to recognize the needs of others in order
to manipulate them to get what one wants oneself_soon gives up to a higher
level of moral reasoning. Besides, for Habermas, the mastery of levels of moral
reasoning that represent stages of learning above and beyond the merely
strategic provide the basis for criticizing strategically rational actions from a
moral point of view.

	From Johnson's perspective, however, the need to develop a
competence as a strategic actor as a stage in the development of moral
consciousness is taken as, "crucial to the development of full moral
consciousness. This provides critical theorist with a forceful reason to take
seriously game-theoretic accounts of how strategic competence manifests itself
in performance."29 Johnson seems to think that this allows him to refute the
critique of strategic models of rationality as derivative of communicative
accomplishments. Of course, the gambit here is to argue that communicative
action is derivative, and hence in a sense "parasitic" upon instrumentally
rational action, which would turn the tables on Habermas, but this attempt fails
because it mistakes the temporal precedence of strategic action in the process
of learning with the logical precedence of communicative action over
strategically rational action.30

	Johnson also argues that Habermas's inadequate account of
strategically rational action leads him into the problem of not seeing that in
order to be truly strategic, social actors must "presuppose a broader structure of
communication in order to coordinate social and political action successfully."31
Of course, the point here is not that strategically rational actors recognize the
communicative component of everyday life. The issue is whether they recognize
this in order to be "successful" in instrumental terms, rather than in
communicative terms. Johnson's approach attempts to bury this question rather
than confront it. What Johnson then argues is that game theory recognizes that
the limits to strategic action accounts of the rationality of action. The proof of this,
he says, lies in game theory's own recognition of the high degrees of
indeterminacy involved in social action, and then argues that it is this high
degree of indeterminacy which defines the limits of the explanatory powers of
strategic-rational accounts of social interaction. Indeterminacy, not a reflexive
incoherence is used to account for the problems encountered by game theory.

	Johnson then introduces the notion of "cheap talk"_that is, open
discussion with no costs to actors_as a possible way of accounting for the extra-
strategic element of social and political coordination which he believes is what
Habermas must really be attempting to account for by means of his theory of
communicative action, according to Johnson. What game theory cannot account
for, but then again Johnson argues neither can Habermas, is why "cheap
talk"/communicative interaction has any binding force on its participants. In this
much, Johnson argues that the critical theory approach does extend beyond
that of game theory, for in acknowledging the communicative competence
which Habermas argues makes communicative understandings possible, game
theory must allow that an element of creativity is involved in speech, and this
introduces a degree of indeterminacy into their new-found accounts of the non-
strategic elements of social action that ruptures the desire of game theory
models to provide comprehensive accounts of social action. Beyond this, as
long as game theorists continue to explain the motivation for action as based on
a model of incentives, and "cheap talk" offers none that is rationalizable on
strategic terms, the idea that what someone else says is "credible" to the degree
that it reveals the incentive for a speaker to have made this claim, the game
theory position is further weakened. Johnson concludes by arguing that
Habermas's claim that communicative competence involves the ability to
defend one's arguments on the basis of the giving of good reasons, and to
weigh the reasons others give for their opinions more or less fairly on these
same terms, provides him with something that game theorists lack: i.e., "...a
mechanism that might compellingly account for the binding force of
language..."_so far so good_but Johnson them adds, "... the binding force of
language in strategic interaction."32

	Now Habermas's theory is intended precisely not to do this. For
Habermas, communicatively developed mutual understandings have a binding
effect precisely to the degree that they retain an element of non-strategic
rationality. Johnson has attempted to employ Habermas's account of
communicative action as a substitute for the "cheap talk" formulae of game
theorists, but he has attempted to do so in a way that domesticates the critical
capacity of communicative action. It is precisely the aspect of communicative
interaction which can bind interlocutors which Johnson abandons in his
subordination of communicative action to strategic action. When Johnson gets
rid of the critical edge of communicative action, he gets rid of what he needs to
save game theory from itself.

	What is instructive about Johnson's approach, however, is precisely its
recognition of the methodological inadequacies of instrumental accounts of the
rationality of social and political action, along with its inability to account for the
existence of social institutions which admittedly make strategic action possible,
but which themselves would be neither institutionally possible, nor coherently
explicable, if they were expected to operate entirely on a strategic basis
themselves. To reiterate Dryzek's expression here, at an epistemological level,
this inadequacy of strategic action-based accounts of the rationality of action
manifests itself in a "reflexive incoherence". In other words, the problem with
such theories of the rationality of action is that if they are true, and all action is
rational to the degree that it can be explained strategically, then this explanation
of the rationality of action must itself be a strategic ploy, in which case, such a
claim need not be taken seriously as anything other than an attempt to get
something extrinsic to this claim itself. Johnson's approach, on one hand,
attempts to subordinate the thing that is marginalized/negated by the
application of this definition to social action (i.e., communicative interaction) by
reducing the latter to a variety of cheap talk that somehow has a binding quality,
but it can have a binding quality, in reality, only if it is both rational and
qualitatively different (and hence irreducible) to instrumental rationality and its
more complex and sophisticated variants, such a game theory.

	What game theory does, and what marks it as an advance on one level,
particularly in Johnson's eyes, however, is that it acknowledges this
shortcoming. Game theory recognizes others and recognizes social institutions,
unlike parametric accounts of action. In fact, it makes sense for game theory to
do so, for if one is truly going to get ones way and be capable of manipulating
others to one's own advantage (however one conceives of this), then this level
of success will involve flushing out other individuals personal motivations and
figuring out what can be taken for granted as the accepted common sense in
different social contexts: One learns to "play the person" rather than the game
as such. In as much as game theory acknowledges the existence of others and
social institutions, it marks and advance over the atomistic methodologically
solipsistic fashion of more simple models of instrumental action. However, it
continues to operate within an account of rationality which leaves the
preconditions for its own sense unexplicated.

	What would make the preconditions more transparent? In short, what
would be needed would be an intersubjective move. This is precisely what
Habermas's theory of communicative action is intended to force its readers to
undertake. The criteria of comprehensiveness, especially, and of credibility
which are much prized by game theory, according to Johnson, would obviously
take a beating in this process. But the point to be made here, is that the claims
to comprehensiveness and "credibility" are attractive precisely because they
work within an identitarian model of knowledge which continues to retain the
formal structure_if not precise formulation_of what is to be accepted as valid
evidence as did the old positivist model of the "correspondence" theory of truth.
The "indeterminacy" to which Johnson points is a problem only so long as one
thinks that indeterminacy needs must be reduced to zero if possible. But this, in
turn, is tied to the notion of a set of alternatives that is defined by the polar
opposites of the "market" on one hand, and "hierarchy", on the other. I shall not
deal with the "market" here except to point out that it is conceived of as
operating without ever involving communicative interaction, at least not at an
immanent level. The idea of "hierarchy", on the other hand, is something that
seems inevitable if the anonymous, non-communicative forms of interaction
allowed (apparently) by the market are eliminated. Communicative action,
which might be conceived of as being able to provide a binding force on its
participants, offers an alternative to the anonymous actions of the market, but
this aspect of communicative action cannot be made sense of at all if it is
conceived of as a component of strategic action, as Johnson wants to argue. In
the absence of a market which would anonymously coordinate action, and in
the absence of communicative social interaction by means of which people
could be convinced to take particular courses of action because of the giving of
good reasons to do so, any form of coordinating social action other than the
market would necessarily be seen as coercive. Thus, the hierarchy/market
dichotomy arises.

	What alternative to "hierarchy" and the "market" can be offered? Clearly,
from my perspective, if a communicative action approach is adopted, this
dichotomy would turn out to be a largely false one, since alternatives to the
market appear to be hierarchical only to those who operate within a
methodologically solipsistic model of understanding, and to the degree that it
accomplishes what it sets out to do, the move to communicative action
accomplishes a move beyond methodological solipsism. However, it can be
thought, as Johnson does, that game theory might provide a way out of this
dichotomy, and RŽjean Landry's approach appears to bear this out as well.

	Landry is interested in rational choice-based explanations of policy
making and implementation. He classifies rational choice models into "rational
actor", "independent rational actor", and "institutional rational choice" models of
explanation. The first is essentially the same as Johnson's notion of
"parametric" instrumental action. It deals with individuals as isolated utility
maximizers. In the second, a market or similar social setting is assumed. This is
the point at which game theory begins to develop and the "prisoner's dilemma"
model of interaction gains its relevance. But as Landry argues,

		The interdependent rational actor model provides a good
theoretical tool in helping to think about complex strategic interaction that occur
in most policy issues. To that extent, it offers a better tool than the individual
rational actor mode. However, both type of models embody unsatisfactory
assumptions regarding [sic.] institutional context of policy-making...In the game
theory perspective, the institutional arrangements defining the decision making
situations are considered as exogenous factors, i.e., they are given and stable.
The purpose of institutional rational choice models is to tackle this problem of
underspecification [i.e., of the lack of a concrete and realistic treatment of actual
institutional contexts by rational choice and game theory] by incorporation
contributions from transaction cost theory and contract theory.33

	Johnson and Landry might well differ on the nature of the inadequacy of
game theory, but both recognize, like Dryzek, that it cannot provide an adequate
account of social institutions. What they also both recognize is that game theory
needs to move beyond the restrictions of its present paradigm of explanation.
Both also see the key to this in the placing of social agents in social contexts,
and both claim that a supplement of some sort is needed to correct the
problems they detect in the game-theoretic approach. Whereas Johnson thinks
that this might be done via a modified communicative action theory reading of
"cheap talk", hence taking care of problems of indeterminacy through a
discourse analysis, Landry wants to explore the possibility of providing a more
realistic account of social action via a more complex account the nature of the
indeterminacies which arise in policy making contexts and for which game
theory, in its present form, cannot account. The "contractual" variant of
institutional rational choice analysis Landry examines argues that "the action of
rational actors [can be] rendered compatible through contractual
arrangements," wherein society comes to be seen as a nexus of contractual
arrangements and the adequacy or inadequacy of various types of contractual
arrangements can be seen as providing the opportunity for free-riding.34 From
this perspective, government is needed to intervene in cases where private
contractual arrangements fail.35

	Landry's approach can provide a way of explaining when governmental
intervention might best be undertaken or not and therefore promises to be a
useful and potentially fascinating analytical tool. However, it does not solve the
real problem game theory has in relation to institutions, and that is how social
institutions can exist which are not part of the private contracting process while
still not moving beyond the micro, utility maximizing account of the rationality of
social action.

	The same can be said for the second of Landry's attempts to deal with
the institutional shortfall of rational choice theory; in this case, "transaction
theory." The key to this model is the idea that contractual arrangements are best
explained not as means by which individuals reduce the costs of transactions,
but rather as means by which individuals maximize their personal gains when
they do transact with one another. What is really at stake in what Landry is
doing, is the attempt to get beyond the zero-sum proclivities of more simplistic
rational choice-based accounts of interaction. However, problems still arise,
and are recognized as arising, by Landry, since contracts can never be
complete.36 In other words, like Johnson, Landry recognizes that the
acknowledgement of the social nature of interaction introduces a relatively high
degree of "indeterminism" and a lack of "comprehensibility" into explanation.
But unlike Johnson, who wants to account for how the social institutions
necessary to deal with these levels of indeterminacy without violating the basic
premises of the rational choice paradigm, Landry appears to take for granted
the existence of the institutions of government which perform these functions.

	What the questions Johnson and Landry raise share in common, despite
this not inconsiderable difference, is that in both cases they see the move from
the isolated rational actor model of explanation to that of a model of explanation
which places the social actor in a broader social context, as desirable and as
marking an improvement. In both cases, the greater the degree of
acknowledgement of the presence of other social actors and of shared social
understandings and institutions, the more adequate the explanation of social
and action can be said to be. But as Dryzek points out, none of this solves the
"reflexive incoherence" of these models of explanation, and one has to ask just
why it is that a recognition of the rationality of cooperative interaction is not
allowed.

	Now, of course, since Hume, we have had the idea of "enlightened self-
interest" to help us out of this problem: From this perspective, I help you now
because I assume that you will help me later, and this will be of benefit to us
both. But this is not cooperative interaction. This is merely clever and relatively
far-sighted strategic interaction. Cooperative interaction is more akin to what
Habermas describes as communicative interaction; or, at least, one could argue
that communicative interaction is the prerequisite for subsequent cooperation.
The ethic of cooperation, at its best, is one in which self-regard is not lacking,
but in which competition is not the incentive for the coordination of one's action
with that of someone else.

	The degree to which theorists of the rational choice school will go in
order to generate an account of cooperation that does not involve the
recognition of the other in the more full, hermeneutic sense I have in mind37 is
the work of Robert Axelrod, who virtually invents cooperation out of innumerably
iterated prisoner's dilemmas. What this accomplishes, in effect, is the conjuring
up of an account of cooperative interaction on the basis of socially imbedded
habit in which there is no need for either reflexive thought, nor for the
recognition of the other.38

	It is, then, a fair bit further between Frankfurt and Virginia or Rochester
than Johnson, in particular, would like to think. In his case, his "Frankfurt" is a
little bit like Disneyworld: Europe for the Americans, on American terms, and in
Florida. The simulacrum of the non-existent original, then, is the French
Eurodisney imitation of the American simulation of a Europe that occurs only in
America; and Johnson's attempt to appropriate the notion of communicative
action is apparently no more successful, when it comes to the "bottom line", than
the above mentioned theme park has been.

	What policy application can this paper's argument be seen to have? If the
Frankfurt School was right, and emancipation can only come about with the
diminution of instrumental rationality_or as in Habermas's case, with the
employment of instrumental rationality that is restricted to those spheres of life to
which it is most appropriate_but the market is viable only to the degree that
social interaction is rationalizable on instrumental terms, then the need to
sustain the viability of rational choice based accounts of the rationality of social
action is necessary ideologically, in order to sustain the appearance of the
suzerainty/hegemony of the market and market rationality. To allow that the
market itself is predicated upon prior social cooperation39, would be to allow
concomitantly that the priorities of the market ought best not be the priorities that
guide the fundamental concerns of the social policy agenda. As to the personal
motivations which make the suppression of this acknowledgement attractive, I
leave this question to the side.

1 I would like to thank Laurent Doubuzinskis for numerous discussions we have had concerning rational choice
and game theory approaches, and for his generosity in alerting me to relevant literature in this field. Clearly, the
opinions expressed here are my own.
2 John Dryzek, “How Far is it from Virginia to Rochester to Frankfurt? Public Choice as Critical Theory,” British
Journal of Political Science, volume 22, November 1992, pp.397-417; cf., John Dryzek Discursive Democracy
(Cambridge: Cambridge University Press, 1990).
3 See: James Johnson, “Habermas on Strategic and Communicative Action,” Political Theory, volume 19,
number 2, May, 1991, pp.181-201; James Johnson, “Is Talk Really Cheap?” American Political Science Review,
volume 87, number 1, March 1993, pp.74-86. My thanks to David Laycock for having brought this article to my
attention.
4 See: RŽjean Landry, “Rational Choice and Canadian Political Studies,” typescript provided to me by Laurent
Doubuzinskis.
5 Dryzek, BJPS. Actually, I owe the title of the paper at hand to a suggestion by Mike Howlett.
6 The allusions in the title are to the University of Rochester, Virginia Tech and Wilhelm Gšthe †niversitŠt and
the original Institute for Social Research in Frankfurt, the respective “homes” of rational choice theory and critical
theory, respectively.
7 Johnson, Political Theory; APSR.
8 And perhaps Laurent, if I understand his position properly.
9 To acknowledge this does not mean the abandonment of a rational choice position, but rather its Aufhebung.
10 My argument is that what is called for is an intersubjective move, but that the nature of this move renders it
unallowable from a rational choice perspective, because the criterion for theoretical adequacy, from a rational
choice perspective, remains moored at the level of an identitarian logic in which the move beyond the individual,
seen as a realm of evidential grounding, threatens to throw the appearance of certainty provided by a rational
choice based account of reality into jeopardy. While political arguments can be made against the rejection of
cooperation by rational choice based theories, (along with its embrace of a competitive model of social
interaction) the deeper reason that this style of theory has an appeal is that it supplies individuals who perceive
themselves_with some degree of justifiability_as isolated individuals with the assurance that even if what they
know may not be absolutely certain they can know with certainty what they do not know. The criteria of truth for
rational choice-based theories remains that of mathematics, whereas the measure of truth in social life can never
be this tidy. See Cornelius Castoriadis’s discussion on identity thinking and its roots in mathematics in, The
Imaginary Institution of Society, translated by Kathleen Blamey (Polity Press: Cambridge, 1987).
11 See: Adorno, Popper, et al., The Positivist Dispute in German Sociology.
12 JŸrgen Habermas, Knowledge and Human Interests, (Boston: Beacon Press, 1968).
13 JŸrgen Habermas, Theory of Communicative Action, two volumes, translated by Thomas McCarthy (Boston:
Beacon Press, 1984; 1987).
14 Dryzek, BJPS, p.398, my emphasis.
15 Dryzek, BJPS, p.401
16 Dryzek BJPS, p. 410
17 Dryzek BJPS, p.410. My point here would be that the kind of mutual recognition involved in the
intersubjective relations within this kind of discourse situation are the prerequisite for subsequent cooperative
interaction and form the basis for a substantive account of democracy that does not fall into Rousseau’s problem,
nor into Habermas’s excessively formal, neo-Kantian account of discourse.
18 Dryzek, BJPS, p.410.
19 Habermas, TCA II.
20 Dryzek points this out. BJPS
21 Johnson, Political Theory, p.194.
22 Johnson, APSR, p.74. My emphasis.
23 Johnson, APSR, p.75. Johnson would do well, then, to examine Habermas’s critical discussion of
Luhmann’s work on systems theory, which attempts to integrate elements of hermeneutic theories of meaning
into systems system.
24 Johnson, APSR, p.75.
25 Johnson, APSR.
26 Habermas, TCA I.
27 For instance, see the discussion of this in the Applebaum-HŽbert Report. See my, “The Applebaum-HŽbert
Report and the Internal Colonialization of Canadian Culture.” Canadian Journal of Social and Political
Theory/Canadian Conference for theÊArts Colloquium, Learned Societies, Vancouver, June 4, 1983.
28 Johnson, APSR
29 Johnson, APSR, p.77.
30 What Habermas can be criticized for in this connection, in my opinion, is his failure to tease out the
dialectical relation between communicative and strategic action, which lies at the heart of his critique’s challenge
to instrumental and strategic reason, although Johnson is correct to point out the ambiguities in Habermas’s
treatment of these issues. My contention, in this regard, is that if Habermas were to be more dialectical in the
explanation of his position, the types of criticisms mounted by Johnson would have less ground upon which to
rest.
31 Johnson, APSR, p.77.
32 Johnson, APSR, p.82.
33 RŽjean Landry, “Rational Choice and Canadian Policy Studies,” typescript, p.12.
34 Landry, pp.14-15.
35 Landry, p.17.
36 Landry, typescript, p.34.
37 See, for instance, Michael Theunissen, The Other: studies in the social ontology of Husserl, Heidegger,
Sartre, and Buber, translated by Christopher Macann with an introduction by Fred R. Dallmayr. (Cambridge,
Mass.: MIT Press, 1984).
38 Robert Axelrod, The Evolution of Cooperation, (New York: Basic Books, 1984).
39 I am not arguing that the market relies on collusion, but rather that at an aggregate level cooperative
interaction must exceed competitive interaction for the market to survive.