Orders of the Day.

The Great Disruption: Human Nature and the Reconstitution of Social Order, by Francis Fukuyama, New York: The Free Press, 336 pages, $26.00

The shift from an industrial to an information era weakened the social bonds and common values holding people together in Western societies, argues Francis Fukuyama, producing what he calls the "Great Disruption." But he adds that "social order, once disrupted, tends to get remade again, and there are many indications that this is happening today."

This book is an extension of The End of History and the Last Man (1992), in which Fukuyama asserted the triumph of political democracy and market economies. Now he cautions that this triumph is not necessarily accompanied by corresponding moral and social development, and that there is a tendency for liberal democracies "to fall prey to excessive individualism." He documents a moral decay with statistics on rising levels of crime, declining fertility, increasing births out of wedlock, decreasing levels of trust, and the breakdown of the family. But he also notes that these trends have been reversed in recent years. The Great Disruption is just that: a temporary interruption on the way to an ever better future. As Fukuyama puts it, "We human beings are by nature designed to create moral rules and social order for ourselves."

Fukuyama's argument is buttressed by extensive data indicating recent reversals in the social indicators of moral decay and by an extensive reading of recent literature in sociology, political science, and economics on the formation of social norms. He also uses the hot new literature of evolutionary psychology to explore the genetic origins of these norms, though he is careful to argue that the particular forms these biological tendencies take is the province of culture rather than nature.

Here and there, Fukuyama is guilty of a lapse in understanding, as in his dismissal of"path dependence" as a "currently fashionable bit of jargon." But path dependence is an obvious fact of history, a consequence of the continuing impact of our cultural heritage. Indeed, anyone who has attempted to improve the performance of Third World countries becomes aware of the powerful influence of path dependence in constraining the choices available for reform. But overall, Fukuyama's argument is worthy of serious attention. I will concentrate on three essential elements of Fukuyama's argument: the source of social order; his appeal to the past to show that we have recovered from serious difficulties before; and the fundamental dilemmas of forecasting the future.

Regarding social order, Fukuyama writes, "The systematic study of how order, and thus social capital, can emerge in spontaneous and decentralized fashion is one of the most important intellectual developments of the late twentieth century." He correctly attributes the modern origins of this argument to F.A. Hayek, whose pioneering contributions to cognitive science, the study of cultural evolution, and the dynamics of social change put him in the forefront of the most creative scholars of the 20th century. But Hayek's views about the "spontaneity" of social order remain controversial. In their extreme form, they imply that all deliberate efforts to manipulate social order - social engineering - are doomed to failure because the complex nature of our cultural heritage makes a complete understanding of the human condition impossible.

Hayek was certainly correct that we have, at best, a very imperfect understanding of the human landscape, but "spontaneous" it is not. What distinguishes human evolution from the Darwinian model is the intentionality of the players. The mechanism of variation in evolutionary theory (mutation) is not informed by beliefs about eventual consequences. In contrast, human evolution is guided by the perceptions of the players; their choices (decisions) are made in the light of the theories the actors have, which provide expectations about outcomes. Thus, when Alan Greenspan persuades the Board of Governors of the Federal Reserve to raise interest rates, that action is based on a theory of the relationship between interest rates and changes in the overall price level.

Despite Fukuyama's assertion about the importance of cultural conditions, there are no decision makers in his framework. Ultimately, for him, the guiding determinant is the predisposition of human biology to solve the problems of collective action. He does provide anecdotal evidence drawn from a number of political scientists and economists on the formation of norms in specific contexts, but nowhere does it add up to a model o f the process of social change shaped by the deliberate efforts of the actors. We are left to speculate how the innate tendency for evolving cooperative solutions does in fact systematically resolve ongoing breakdowns in a society.

Yet it is the deliberate - and frequently misguided - efforts of human beings that determine the human condition through time. The complex interaction between the genetic architecture and the cultural conditioning of humans remains an important frontier of research. But the findings, however important, of the evolutionary psychologists with respect to the touchstones of their own field - the innate predisposition of humans for cooperation, the universal taboo against incest, Chomskian theories of language structure - do not yet take us very far toward an understanding of the enormous differences between the past and present in various societies. For example, the predisposition of humans to engage in cooperative activity, when combined with specific historical and cultural features, sometimes produces successful economic performance. At other times, however, it gives us results such as those we have been observing in the Balkans in recent years.

In a second argument - his appeal to the past - Fukuyama is optimistic: He argues that social disorder has been much worse in earlier eras, and that we have recovered from it. That is certainly correct, as is his fundamental argument that there is an innate predisposition of humans to attempt to create social order. But an exploration of the economic history of 10 millennia of human effort reveals not only success stories but also long eras of disorder, chaos, and failed efforts at creating viable societies.

In fact, disorder, stagnation, and the failure to develop have been more common than the reverse. One has only to observe the stagnation of Greece for the several millennia that followed the golden age of Athens, or the fate of the Western world after the demise of Rome, or the history of Egypt over millennia (to pick just a few random examples) to be convinced that the predisposition for cooperative behavior alone doesn't get us very far. And even after 10,000 years of development since the first economic revolution (the development of agriculture), a large percentage of the world's population still does not share in the material well-being of the developed world. Indeed, in substantial parts of the globe, disorder remains endemic. We do get it right occasionally, but we get it wrong, too. Nor is that a purely historical phenomenon that terminated with The End of History.

That brings us to the third issue, the fundamental dilemmas of forecasting. Fukuyama argues optimistically that not only have we gotten it right in the past, we will continue to do so in the future. If this were an ergodic world - that is, one whose fundamental underlying nature was constant - then once we understood that nature and developed the proper theory, we would get it right, today and in the future. But uncertainty is our inevitable lot because the world keeps on changing in novel ways. That is due in part to natural, physical causes, but it is primarily a consequence of human beings' altering the world and creating new conditions and new problems. That has been our lot ever since we diverged from other primates; with the development of language, symbolic representation, and the other accoutrements of civilization, the process of change has been accelerating.

Indeed, one result of our success in reducing the uncertainties arising from the physical environment is that we have created a vastly more complex human environment. It not only has few parallels with the past, it provides a whole new range of uncertainties as a result of the complexities of human interaction. The pace of change today is more rapid than at any time in our history. We are confronting novel problems that bear little resemblance to those we have encountered before.

Yet the beliefs we have are the product of past experience, and can serve as a useful guide to policy when the past and future are sufficiently alike. If one makes the crucial assumptions that those beliefs are more or less correct, and are held by those in a position to alter the institutional framework, then past experience can serve as a guide for future action. But when the change is novel and far from our past experience, we are going, more often than not, to get it wrong. We have before; we will again.

Douglass C. North is a professor of economics at Washington University, St. Louis. In 1993, he was awarded the Nobel Memorial Prize in Economic Science.