Explore Freedom

Explore Freedom » Order without Design

FFF Articles

Order without Design

by

Perhaps the toughest thing that libertarians have to persuade nonlibertarians of is the existence of order that is undesigned. It is certainly a counterintuitive idea. So much of our everyday experience seems to teach us that where there is order, there is a designer working from a plan. That fact alone should counsel patience when we libertarians talk about our ideas with people unfamiliar with them. We are asking a lot.

Folks who have never encountered the notion of undesigned order are, understandably, incredulous. They constantly design plans regarding family, social, and business matters. They tend to associate lack of planning with disorder. They might sooner believe that a book will float in the air after the table on which it rests is removed than that order can be unplanned. That’s not an irrational response. It’s simply the common-sense reaction of someone unfamiliar with a complex idea. (And it goes to show that “common sense” is not always valid.)

The question, then, is how can we best communicate the idea to the uninitiated? I’m sure there is no single best way. But there can be no doubt that the idea of unplanned order should be raised early in any introduction of libertarianism. Without it, much of what we have to say will seem unrealistic. We have some advantages. Undesigned order is all around us; it is so ubiquitous that it blends in with the landscape. Thus we have many examples to point to that are well within people’s experience. We just have to help people to see them.

The most prominent example is the marketplace. It is a marvelously orderly thing. Yet no one designed it. The great libertarian Leonard Read ingeniously demonstrated the orderliness of the market with his famous “I, Pencil” essay. In that essay, he mused on the apparent simplicity of the pencil, so common, so inexpensive, yet so beyond the reach of any one person to construct. The wood, metal, rubber, graphite, and paint that go into a pencil originate from locations all around the world. Thousands of people — from lumberjacks to factory workers — helped make that pencil: people who do not know each other and will never meet. If you or I tried to make a pencil without them, it would be a sorry pencil indeed. How did they do it?

Let’s back up a step. It has long been pointed out that economics, if it can actually be said to have had a beginning, did not start with the question, Is there economic order? In other words, the first economists (and they go back before Adam Smith, as Alejandro Chafuen, Murray Rothbard, and others have taught us) did not set out to investigate whether there existed something that could be called economic order. It is hard to imagine the discipline of economics getting started that way. What would prompt someone to wonder whether there was order in economic life?

What happened was quite different. A few perceptive and inquisitive people noticed economic order and wondered how it happened. They saw that somehow every day “Paris is fed,” although no central authority planned for it. Economics was born as an attempt to solve that puzzle: the how , not the whether . Had there been no undesigned economic order, there would have been no economics. That fact suggests a satisfying irony: any economic theory that denies the existence of unplanned order is built on a self-contradiction and is thus self-refuting. The purpose of economics is to explain and describe that kind of order, not to discover it.

The newcomer to libertarianism should readily see, once it is pointed out, that the marketplace exhibits a large degree of order and yet is not centrally directed. He can begin with himself. No one ordered him to take the job he holds. No authority showed him where he fits into the grand scheme called the economic system. What led him to that job? Part of the decision, undoubtedly, was the financial reward. That is, he responded to signals from the price system. Employers don’t arbitrarily dictate wage rates. They are concerned with workers’ productivity and how much consumers are willing to pay for products. No employer can pay more to produce something than it will bring in the market. (Ignore temporary offers intended to familiarize consumers with a product.) Through their buying and their influence on prices, consumers indicate how much they are willing to reward workers for making a particular product. If workers can make more money doing something else, the price system is signaling that consumers would prefer that the workers take those jobs instead. (They of course are free not to listen.) Workers in jobs remote from consumer goods also receive signals from consumers, although they are harder to see. No one values the earlier stages of production for their own sake. Labor, machines, and raw materials have economic value only when they contribute to the production of consumer goods, which, in the end, is the purpose of the economic system. The wage of a miner of iron ore is ultimately determined by the consumer demand for things made from steel.

In a market economy, then, there is no authority assigning people to jobs, but there is order. Prices — and those who respond to and in turn influence them — produce that order. And prices are the result not of a Plan but rather of plans . Multitudes of consumers make personal plans and then venture into the marketplace to buy the things they need to carry out those plans. The vast orderly phenomenon we call the market is the product of those countless, ever-changing, and dovetailing plans. Since people wish to achieve their objectives, they have an incentive to correct their errors and coordinate their plans with others. Cooperation is the complement, not the antithesis, of competition.

All of this is what Adam Smith was getting at when he wrote that people act as if guided by an invisible hand. When people go about their business, they almost appear to be executing a grand scheme. But they are not, and they know it. Thus, we have a powerful prop for teaching undesigned order.

As an aside, Friedrich A. Hayek, who contributed so much to our understanding of this matter, often used the term “spontaneous order.” It should be obvious that Hayek did not mean that all action in the marketplace is spontaneous. Sometimes people make plans that stretch years into the future. What is spontaneous for Hayek is, again, the overall order that is, as the Scottish Enlightenment thinker Adam Ferguson put it, the product of “human action but not human design.”

The flip side of unplanned order is, as the great economist Ludwig von Mises titled one of his books, planned chaos. Mises pointed out that when central planners try to substitute their schemes for the spontaneous outcome of entrepreneurial and consumer planning, the result is disorder . The planners’ intrusive actions distort prices (if they don’t abolish the price system altogether) and cause false signals to be emitted to everyone. Instead of the price system’s guiding people toward satisfying themselves and others, it sends them on wild goose chases. In the extreme case, where prices are abolished, the planner is like a pilot flying in the dark without radar. He is utterly unable to calculate the best way to accomplish any economic purpose, because without money prices, the cost of disparate things (such as labor and machinery) cannot be compared. Under those circumstances, no rational planning can really occur. That is why Mises said that as an economic system, socialism is impossible.

One of the great ironies in human history is that well-meaning socialists thought they would substitute human intelligence for the “anarchy” of the marketplace. They ended up creating a system that was literally stupid, because one of the indispensable tools of human intelligence — calculation — was damaged or abolished.

Unplanned order is the key to understanding the importance of the market and, hence, its progenitor, freedom. Before people can decide that freedom is an unalloyed blessing, they will want to know that it does not lead to chaos and misery. The issue of order is paramount.

There is no guarantee that once someone understands unplanned order, he will become a libertarian. Other things — such as the fear of self-responsibility — hold some people back. But it is hard to believe that someone with no idea of unplanned order could ever find his way to libertarianism.

  • Categories
  • This post was written by:

    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.