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An Eclectic Economist Explains Evidentiary Economics

Economics based on evidence rather than ideology and ignorance.

Spontaneous Order?

by Dr. Doug Cardell

Spontaneous order is a state in which a collection of independent entities operating in their best interests create an organized system without any central control. There are many examples of spontaneous order in nature and societies. Herd animals, the human body, and the free market are examples. Spontaneous order in the animal kingdom is evident in virtually all herding animals. The scientific interest in why animals, particularly prey animals, organize in herds has been a research subject in biology, physics, and psychology for more than 50 years. Scientists postulated that herding behavior might result from individual herd members' selfish motivation to reduce their own predation risk, even at the expense of other herd members. To accomplish this, the herd members might be competing for the safest places within the herd. Recently scientists have created computer models that seem to verify this hypothesis. These simulations indicate that herd members trying to reduce individual vulnerability tend to form tight-knit groups. This grouping behavior exists in a variety of species. Furthermore, these models demonstrate that the individual motivation to minimize predation risk leads to group actions, including constant movement within the herd. This continuous motion results in an equal sharing of predation risk among herd members, each acting in their best interests. These studies show that as herds form, the average risk decreases until achieving the minimum individual risk. After that, the average risk varies slightly, while individual member risk at any particular time varies dramatically, but the average individual risk remains constant. For example, imagine a herd of 50 or so animals. Due to terrain, wind direction, or lighting conditions, the herd is concerned about threats from the south—members of the herd on the south move around the pack to the north. Now the safest place in the pack, the center, has shifted to the north and exposes new members on the south side to greater risk, so they begin to move to the north, which moves the center again and exposes a new group of members. Because of these actions, every herd member spends the same amount of time in every position equalizing their risks across the herd. Of course, each member is pursuing their self-interest. Still, the result is equally shared risk without a leader to direct the action; the order is spontaneously generated. It is similar to how the human body or any complex organism functions. The conscious mind cannot regulate the mechanisms that allow complex living organisms to flourish. Instead, organisms' cells act in their best interest and do what they must to live, grow, and reproduce. Occasionally, the process goes wrong, as in cancer, when corrupted cells pursuing their best interests produce an undesirable result for the organism. Conscious effort, in the form of treatment, is required to control rogue cells pursuing their own best interests. One could ask if the organism would be better off under conscious control. However, imagine the extra brainpower required to directly manage the thirty-seven trillion cells in the human body. Consciously directing one cell every second would take one million one hundred forty-seven thousand years to give every cell each command. In addition, it is essential to note that the human body contains more foreign microbial cells than human body cells. Obviously, these foreign cells are beyond the control of the conscious mind. None of these alien or human cells are aware of the body as an organism. From the cells' point of view, the body is simply the environment in which it resides. From their vantage point, the human body is like any other complex ecosystem; it functions smoothly, without direction, with every system member acting in their best interests and adapting to changes and stresses imposed by other members. While squirrels are fundamental in planting new trees and bees are essential in pollinating plants, neither squirrels nor bees think of these actions as their jobs. To squirrels and bees, nuts and pollen are just food. In the context of economics, spontaneous order refers to the idea that the economy is a self-organizing system in which the actions of individuals and firms interacting in markets lead to the efficient allocation of resources and the spontaneous emergence of complex economic structures, such as prices, firms, and industries. As in the previous examples, economic systems work best when every system member pursues their self-interest. This pursuit is similar to the forgoing examples of cells, and squirrels and bees. The cells in your liver could not do their job as well if they had to think about how their actions affected brain cells or bone cells. Instead, they must devote themselves to doing what they do best—keeping your liver functioning. The squirrels in the forest have their hands full being squirrels, and they have neither the capacity nor the information to contemplate how their actions affect other wildlife. Similarly, bees do not consider how their actions affect birds and butterflies—they are too busy being bees. The undirected drive of what some think of as subordinate entities, like cells in the body or producers and consumers in an economy, to pursue their best interests is natural and ultimately beneficial. It explains why there is always a flourishing black market in countries that have tried central economic planning. These black markets are the ultimate proof that central planning is not what the citizens of a nation want or need. Producers and consumers want to be free to negotiate value and pursue their best interests and individual life choices in the manner that only free-market capitalism provides. Like the human body sometimes suffers from cancer, a corruption of cellular self-interest, the economic body sometimes suffers from similar corruption. In cancer, the brain must take control and seek treatment. That is similar to a legitimate role of government in preventing similar corruption in the economy. The free market is impressive because it can order an economy without direction. It is as correct and natural as anything in nature. The spontaneous order created by the combination of individual choices that make up the free market can order an economy in the best interests of the citizenry. No other economic system has ever provided greater good to more people. It is important to note that spontaneous order is not the same as anarchy. On the contrary, it is a natural order that arises from individuals' interactions without a central planner. Comparing centrally planned economies with spontaneously generated free markets has consistently produced the same results—free markets always produce greater economic benefits and higher living standards than planned economies. The evidence shows that a centrally planned economy cannot result in greater economic good than can be achieved by spontaneous order, as is created by the combination of individual choices that make up the free market.

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