Rationalizing Capitalist Democracy: The Cold War Origins of Rational Choice Liberalism.

By S. M. Amadae. Chicago: University of Chicago Press, 2003. 408p. $59.00 cloth, $19.00 paper.

Often historians get accused of failing to see the forest for the trees. That is, they are taken to task for dwelling on places and names and dates for their own sake, without indicating what patterns these facts reveal. S. M. Amadae cannot be accused of this mistake. While she pays close attention to historical detail, she is eager to demonstrate that her collected facts tell a story. Unfortunately, this story is not nearly as coherent or self-evident as she suggests. Where Amadae sees a forest, I am afraid I can see only trees.

Amadae lays out the story she wishes to tell in her introduction: “This book is the story of the ideological war against communist and totalitarian forms of economic and political order. A gauntlet was thrown down by an earlier generation of scholars who sought to rescue capitalist democracy from the threat of authoritarian socialism. It was taken up after World War II by a new generation, who fought with tenacity, and won in such absolute terms that it is difficult for a present-day observer to grasp the scope of the victory that was won…. This book recounts the defeat of Marxism by rational choice liberalism: a philosophy of markets and democracy that was developed in part to anchor the foundations of American society during the Cold War” (pp. 1–3).

I am not sure how to interpret this grandiose claim. Amadae apparently believes that there are social scientists who 1) model social behavior mathematically under the assumption that people are rational; 2) are liberals; and 3) believe that the models they construct provide good reasons for being liberals. She further contends that the arguments put forth by these “rational choice liberals” defeated Marxism. This final claim seems very problematic. True, Marxism has been eclipsed, but that is because the Soviet bloc collapsed. Rational choice liberalism can hardly claim credit for this event.

But perhaps Amadae merely meant that rational choice liberalism defeated Marxism intellectually, by providing devastating responses to its criticisms of liberalism and thereby shoring up liberalism's intellectual foundations. Such an interpretation cannot save her argument. For if Marxism had generated philosophical criticisms of liberalism during the Cold War, Amadae never spells out what they were. Granted, she does in a prologue show that an “earlier generation of scholars”—Karl Popper, F. A. Hayek, and Joseph Schumpeter—“sought to rescue capitalist democracy from the threat of authoritarian socialism.” But as her own summaries of these philosophers' arguments make plain, none of them thought Marxism had powerful arguments in its favor, arguments that needed answers they could not provide. Rather, they were simply concerned about the brute fact that Soviet-style communism might someday encompass the entire world, regardless of the arguments against it. The threat to liberal democracy to which Amadae believes rational choice liberalism responded thus remains unclear.

Setting all of this aside, it is not even clear to me what “rational choice liberalism” means to the author. I assume it is something like what I described before—a body of work purporting to show that rational choice models provide philosophical support for liberalism. But her efforts to subsume some mathematical results under this rubric are quite contrived. She considers, for example, Arrow's Theorem, and social choice theory generally, to be clear examples of rational choice liberalism in action. Social choice theory, however, does not endeavor to model human behavior at all; instead, it asks what sorts of judgments about human welfare are possible, given various assumptions about individual preferences. It can be related to rational choice theory—via studies of mechanism design, for example—but it need not be. Amadae also makes an effort to show that Mancur Olson's Logic of Collective Action (1965) qualifies as a defense of liberalism (pp. 177–80). But this effort attempts to add a lot of intellectual baggage onto what is essentially a straightforward analytical result in a manner that is quite unconvincing.

Amadae is at her weakest, however, when she attempts to describe how rational choice theory (however defined) defeated its intellectual challengers (whatever they were). She makes it sound as if conclusions stated in mathematical language were intellectually irresistible. Nowhere is this more apparent than in her treatment of Arrow's Theorem. “Arrow's impossibility theorem,” writes Amadae, “is a theoretical masterpiece precisely because it covers extensive philosophical ground in an apparently incontestable fashion, both providing a basis for American political and economic liberalism while simultaneously undermining the alternative philosophies of communism, idealist democracy, and totalitarianism” (p. 87). That is one heck of an achievement. How did the theorem accomplish all this? Apparently, many philosophical questions relating to the foundations of democracy were contested hotly (by Marxists and others) in Arrow's day. “Arrow,” Amadae writes, “resolves many of the controversies among economists in the 1940s by weaving firm positions on those contentious issues into the fabric of his impossibility theorem” (p. 110). In other words, Amadae believes that these controversies can be considered solved because Arrow assumed solutions to them while specifying axioms for his theorem.

Axioms cannot solve problems. No matter how well specified they are, they require defense like any other supposition. But throughout most of her consideration of Arrow and his critics, Amadae treats axioms as somehow above rational criticism. In comparing Arrow's treatment of the problem of social choice with that offered by Edward McClennan, for example, she writes that “[u]nfortunately, since both systems are derived from axiomatized arguments, there is no way to definitively resolve the debate between the two polar positions since each is based on different underlying assumptions” (p. 270). Amadae acts as though the argument is over as soon as the axioms have been specified, when in actuality, the argument has only just begun at that point.

In the end, Rationalizing Capitalist Democracy is most successful at providing facts with which students of rational choice theory can tell their own stories about the history of the field. And there are plenty of facts here; Amadae has clearly done her homework. Her own efforts to tell a story with these facts, however, are simply not very successful.