AUSTRIAN ECONOMICS ADDICT

Spontaneous Order (Photo credit: KAZVorpal)

SPONTANEOUS ORDER CREATES COMPLEXITY.

For us to understand how free market capitalism works, we have to understand the concept of spontaneous order. In this video below titled, “The Lawless Streets of Hanoi, Vietnam”, the man filming the video doesn’t even understand what he is watching. He says,”There’s no traffic lights to be found and everybody pretty much does what they want……It’s mad chaos.” He’s used to seeing traffic centrally planned by signs, signals, or traffic cops, and because of this bias toward centrally planned order, he is incapable of seeing the complex order that is created by individuals voluntarily cooperating. Just because he can’t see a discernible pattern, doesn’t mean there isn’t a pattern. The reason he can’t see the complex order taking place right before his eyes, is because, how we think determines what we see.

SPONTANEOUS ORDER FROM SEEMING CHAOS.

Watch this video and look at the complex patterns that spontaneously evolve with no rules. No person or commission could create such a complex pattern, even if they could impose a million rules on the public.

THE RESULT OF SPONTANEOUS ORDER IS NOT KNOWN BY ANY OF THE ACTORS.

He and we, unknowingly, are victims of the world we were born into, as I have written about in a post titled, “We’re All Born In The Middle Of The Story“. The world we were born into has an appearance of top down planning. But a vast majority of existing institutions, from corporations to cities, were never planned by anyone, they evolved through a process of trial and error involving millions of people. Major cities in the U.S. are port cities on oceans, lakes, or rivers, because transportation by water was the most economical means of transportation years ago, and still is to this day. Trade routes sprang up along these water ways, and over time, cities like New York, Boston, Pittsburgh, Chicago, St. Louis, New Orleans, San Francisco, and Los Angeles, all port cities, spontaneously evolved. A corporation like Microsoft started in the garage of Bill Gates parents, and evolved into the big hierarchical corporation that we see today. All of these were created by bottom up spontaneous order.And eventually these cities, and corporations, become top down bureaucratic messes once they reach a certain size. Everybody thinks that when something gets big it has to be managed from the top down. Growth requires ever-increasing numbers of people, and when more people get involved, it becomes more difficult to agree on a single goal. This is where we have to understand that there doesn’t have to be a singular goal for a workable order to be produced. If each person is allowed to pursue his own interest, and voluntarily cooperate with others, inside a set of general rules, an order will be spontaneously created, which will produce a better outcome at a lower monetary and psychic cost, than could ever be hoped for under central planning.

THE FREE MARKET, IS SPONTANEOUS ORDER.

A free market economy is nothing more than a system of allowing individuals to make their own decisions on how they want to order their lives. Of course each individual is constrained by other individual’s desires, on the one hand, and the first rule of economics, scarcity, on the other.  How could one person, or a commission of people, possibly make plans for hundreds of millions of people. Each individual has different wants, needs, desires, and skill sets. Each individual values these things differently, and the same individual values the same thing differently, at different times and places. The example that Thomas Sowell gives is, a man will pay anything for a glass of water when he is dying of thirst in the desert, but when he’s home, he wouldn’t pay you a dime for a glass of water when he can get water from his tap. And the same man will pay someone to pump water out of his basement when it floods. By itself, the knowledge needed to know what each man values, makes it impossible to centrally plan for a population of a country the size of the U.S., but the amount of knowledge needed to coordinate the economic activity created by each individual’s values, makes it exponentially impossible.

CONCLUSION.

The freedom that evolved during Colonial America, and extends through today, is an example of spontaneous order. Government encroachment on our freedom started in earnest with the  progressive Wilson administration, and has increased with each passing decade. Spontaneous market forces are always in a battle with Government intervention, and market forces eventually win. Market forces brought down the Roman Empire, and the Soviet Union. The Soviet Union started as a centrally planned system, and the Roman Empire eventually became a central planned system, but both collapsed because they tried to fight economic forces instead of allowing them to work. Most of us don’t understand the power of our culture of freedom, it won’t die easily because it’s part of our DNA. As long as enough of us don’t exchange our birth right of freedom, for the Governments promise of security, we have a chance to prevail against this most recent assault on freedom, that’s been going on for the last decade.

Related article, Spontaneous Order More Complex Than Top Down Planning, by austrianaddict.com

Related article, Spontaneous Order Uses More Knowledge Than Central Planning, by austrianaddict.com

Related article, Spontaneous Order Demonstrated By Traffic With No Signals, by austrianaddict.com

This entry was posted on April 12, 2013 at 12:08 am and is filed under Econ. 101. You can subscribe via RSS 2.0 feed to this post's comments.

Tags: Complex Systems, Free market, Government Intervention, Market economy, Planned economy, Spontaneous Order