AUSTRIAN ECONOMICS ADDICT

F. A. Hayek—” The free market pricing mechanism has a double misfortune. It is not the product of human design, and the people guided by it usually do not know why they are made to do what they do.”

This video shows how spontaneous orders create complexity which can’t be duplicated by planning. Far more knowledge is utilized through this process, which is why voluntarily cooperation through free market capitalism has historically produced a higher standard of living for more people than central planning through socialism, communism, or mixed economies could have ever hoped to produce.

Hayek talks about morals, markets, and money, as well as laws, liberty, and language as being spontaneously ordered. If we look at language we can see that nobody wrote down the rules of English and people started speaking it. People started communicating with each other and when pattens emerged they were  written down as rules. When you bought your cell phone did they give you a book on the rules for texting, or did texting emerge spontaneously over time as people decided what codes to use, or not use, to communicate more efficiently.

Gaining insight into these kinds of orders, will allow us to better understand how free markets work. Hayek states the importance of knowing how markets work in this quote—“It has already been suggested that it is not necessary, for the working of this system, that anybody should understand it. But people are not likely to let it work if they do not understand it.”

This entry was posted on October 4, 2012 at 4:29 am and is filed under Econ. 201. You can subscribe via RSS 2.0 feed to this post's comments.

Tags: Economic planning, Free market, Friedrich Hayek, Spontaneous Order