Understanding Spontaneous Order

“Understanding Spontaneous Order by RYAN YOUNG on 4 APRIL HERE

“Spontaneous order is one of the most important concepts in the social sciences, and also one of the most maligned. It’s most closely associated with Friedrich Hayek, but it has roots going back to at least the 18th century English and Scottish Enlightenments. Thinkers like Bernard Mandeville, Edmund Burke, Adam Smith, and David Hume all used some kind of spontaneous order framework. They knew that not every design requires a designer.

Nobody designed languages, for example. They emerge and continually evolve on their own, with nobody deliberately directing the process. The economy is also a spontaneous order, even though most people think it has to be consciously directed. Nobody is in charge of food distribution for New York or Paris, and yet those great, farmless cities are still fed every day. It’s an everyday miracle if you think about it.

The reason that a lot of non-economists are skeptical or unaware of spontaneous order is that it’s a difficult concept for the human brain to comprehend. We’re not wired to.

Back in our hunter-gatherer days, the traits that evolutionary biologist Michael Shermer calls patternicity and agenticity had a great survival advantage. Find a pattern in everything, and know that some agent is probably behind it. There’s a rustle in the bush. A hungry tiger must be causing that rustle. Run. Hide. Survive.

Even if most rustles are false alarms, people with strong patternicity and agenticity tended to outlive their fellows who didn’t. We are their descendants, and our brains haven’t changed to match our new surroundings. We think that there are patterns and agents behind everything, even though there aren’t, really. We’re still looking for that tiger, but it isn’t there anymore. …

… Hayek has a well-deserved reputation as poor prose stylist. But he did come up with a very clear way to explain how spontaneous orders can emerge in everyday life:

The way in which footpaths are formed is such an instance. At first everyone will seek for himself what seems to him the best path. But the fact that such a path has been used once is likely to make it easier to traverse and therefore more likely to be used again; and thus gradually more and more clearly defined tracks arise and come to be used to the exclusion of other possible ways. Human movements through the region come to conform to a definite pattern which, although the result of deliberate decisions of many people, has yet not been consciously designed by anyone.

-F.A. Hayek, The Counter-Revolution of Science: Studies on the Abuse of Reason, pp. 70-71.

And when a regulator comes along and tries to design a straighter, more orderly path, the results will rarely be what he intends. In a way, you can blame his hubris on tigers.”

Comment
Ryan Young’s short piece on “spontaneous order” is neat. It’s not self-evident the tiger parable accounts for the phenomenon (not all early humans were vulnerable to tigers, especially where there was none in the African bush). However, we get his point.

I have long been dissatisfied with the word “spontaneous” as the description of non-designed processes. Maybe it is my limited imagination. I agree whole-heartedly with what the word describes; I just do not think it describes situations particularly well.

Such events produce behaviours and ideas (knowledge) about a form of response (‘avoid rustles in the bushes’), which is not planned or initiated by a directing individual, though elders pass knowledge onto children which those who react appropriately (‘run fast away from rustles’) survive to tell their children (as do those who ‘stand and fight and kill the lion’).

In short, I think another word might be better suited than “spontaneous”. Some do not run away or are insufficiently skilled or strong. Mainly, they die. For those who do, is the difference only that they act ”spontaneously”? Or is it that they are more fearful or remember what they were told by elders about dangers whereas those who are killed? Choice may be random; on leaving their night location next day they go left rather than right and nothing rustles in the bushes where they go.

In the case of the informal shorter path that appears to cross an open space instead of using the designed perimeter path prepared for the development, is the diagonal crossway “spontaneous”, or is it explained by people who see a shorter walk from their relative lethargy, or they are carrying heavy shopping bags, or similar such motive. This suggests an action following a motive driving the actor, and their deliberate, not mysteriously “spontaneous” or motiveless, action (and similarly for all those who take the short-cut).

The consequence of these actions, contrary to the intentions of the designer of the longer pathway, is unintentional – nobody intended the informal path to appear; it did appear though, despite the intention of the architects who designed the intended official, but unused path.

An unintended consequence of actions has a long history in economics. Adam Smith identified unintentional consequences in Wealth of Nations when he used the metaphor of “an invisible hand” of the additive affects of individuals who are so concerned with the security of their capital if they sent it abroad to invest domestically and thereby, in consequence, unintentionally add to domestic “revenue and output” (WN IV.ii.9: 456).

This is the famous “invisible hand” paragraph. The grammatical object of this particular metaphor is the “concern for his security” that leads the merchant to invest locally. His insecurity leads him to act in a certain manner. Is “spontaneous” an adequate description for his actions? I am not convinced that it is.

My search for a better word continues …

To Criticise Libertarianism, First Get Your Facts Right

“bgamall” writes in Hubpages from Reno.NV HERE:

This is a contentious piece by a politically-motivated person, and normally I would ignore such twaddle, but it struck me as a fine example of the dangers of running with similar-sounding words in an attempt to add authority to a poor argument about modern politics in the United States.

“Libertarianism: Just a Smoke Screen for Avarice and Racism”

“Spontaneous order is one of two major assumptions in Libertarian thought. The other is the necessity of voluntary relationships. The two are closely related and make assumptions that are simply not true. These assumptions lead to outright lies.

Spontaneous order was a concept developed by Adam Smith. He believed that order arises in society spontaneously through the invisible hand of self regulation. He cites the development of language, the market economy, and the development of law. Regarding law, judges were to find the law rather than make the law. The natural law was out their lurking about, and all one had to do was to find it!

Natural law is a concept that was popular with the rise of historic liberalism, which was similar to today's libertarianism. Libertarians count as fathers, John Locke and Adam Smith. Adam Smith did not say that benefits from government could not exist, but rather were not the best way to help the poor. George H. W. Bush's thousand points of light and the importance of charity would have been praised by Adam Smith.”

Comment
I have little sympathy for bgamall’s ‘thesis’, if the coherence of calling it a thesis could be applied to it.

On the facts that I know about, ‘spontaneous order’ was not an idea of Adam Smith’s – ‘unintended consequences’ is the nearest we get to it in Smith’s works, and even that notion included the possibility of dire consequences of an action and not just the possibility of only ‘benign’ consequences.

Natural Law philosophy pre-dated Adam Smith’s thinking, inventive as it was, and was brought to Scotland from Grotius and Pufendorf’s works in the 17th century, the latter books of Pufendorf being a rich source for the teaching of Moral Philosophy in Scottish Universities, especially at Glasgow under professors Carmichael and Hutcheson (Smith’s tutor), and his texts had wide circulation across much of Western Europe into the 19th century. John Locke, among others was influenced by Pufendorf on natural law.

The ‘invisible hand’ was never about ‘self regulation’, as firmly asserted by Bgamal; it was a metaphor used only twice by Adam Smith in his major Works, first in strict reference to landords feeding their serfs, slaves, and peasants from the produce of their lands. This was he case for many millennia since 110,000 year ago and arose from an absolute necessity. Nobody can labour without daily food, hence, no food, no labour, and its companion, no labour, no food (Moral Sentiments Book IV, 1759). The second reference to the IH metaphor (a widely used metaphor in the 17th-18th centuries by theologians, preachers, dramatists, poets, and novelists) by Smith was in strict reference to some, but not all merchants, who were risk averse to investing their capital abroad, and preferred, instead, to invest domestically, which had the unintended benefit of being a public benefit because their investment added to ‘domestic revenue and employment’ (Wealth Of Nations). Self Regulation was nowhere mentioned by Smith in his use of the IH metaphor (nor were markets, nor equilibrium, nor supply and demand, nor any of the other imaginative inventions of modern economists).

In Smith’s Works he was quite clear that the likely origins of “the division of labour, from which so many advantages are derived is not originally the effect of human wisdom, which foresees and intends the general opulence.” It is the unintentional consequences of human actions that had the important unintended effects that they had and have. And the outcome of human actions could lead to benign as well as destructive consequences, which is an important corollary of unintended consequences and needs to be remembered rather than brushed over in the idea (Hayek’s I believe) of ‘spontaneous order’.

Instead it is “the necessary, though very slow and gradual consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another. Whether this propensity be one of the original principles in human nature, of which no further account can be given, or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech is not our present subject to enquire” (WN I.ii.1: 25).

Bgmal links ‘spontaneous order’ and writes “many aspects of man's cruelty, greed, and racism have also been manifested by spontaneous disorder” thus creating an effect that appears to be a criticism of Libertarianism. But Smith is not guilty; his critique of mercantile political economy is all about the malign unintended consequences of sovereigns, legislators and those who influenced them. Acting to deal with a particular problem – seeking finance for the regular wars they engaged in, the state introduced tariffs to ‘protect domestic industries’ from the outflows of gold. By doing so they unintentionally undermined the domestic economy and distorted resource allocations, not always as intended, and antagonised suspicious neighbours, adding to the risks of war.

The Elizabethan Apprentices Act unintentionally lowered product quality, created troublesome local monopolies, raised prices, and undermined consumer choices; the Settlement Acts intended to localise poor relief, instead they restricted the movement of labour and localised poverty; the trade Guilds aimed to encourage local enterprise, stifled innovation and ended in ‘conspiracies against the public’, and the Cromwellian Navigation Acts intended to provide a strong navy for the defence of the islands of Britain, instead they instituted exploitative monopoly pricing of imports and exports sent to the North American colonies, distorting domestic capital allocation (eventually, leading to a Rebellion).

That some modern libertarians – and most modern economists – have many fallacious ideas about Adam Smith is not a valid reason to vilify libertarianism by distorting the substance of an argument based on misunderstanding Adam Smith’s work as well.

Bgamal has some ways to go before he articulates a valid case against Libertarian ideas. Selective quotations from individual Libertarians about race, religion, and business ethics, are never convincing of a congenital link between libertarianism and certain disreputable ideas and a political philosophy. Many leaders among social democrats and religious leaders in the 20th Century are on the record supporting Eugenics, many business leaders give financial support to Biblical ideas of the Earth’s age as only 6,000 years, and what they call ‘intelligent design’ (the direct opposite of Smithian ‘unintended consequences’), and some do business with quite appalling regimes. Neither side of this argument is ‘Lilly white’ (metaphor).

Stick to the content of libertarian arguments, not the tittle-tattle of the association of individuals.

A Fiction Expert Scholar Quotes the Invisible Hand As If It Were True

New Book: The 'Invisible Hand' and British Fiction 1818-1860
Adam Smith, Political Economy, and the Genre of Realism by Eleanor Courtemanche (HERE):

The blurb:

“Some economic ideas are too interesting to be left to economists. This book argues that Adam Smith’s metaphor of the ‘invisible hand’ – in which selfish economic actions are mysteriously transformed into aggregate social benefits in a capitalist economy – implies an entire spatial and temporal system in which the morality of any particular action can only be understood in the context of society as a whole. The ‘Invisible Hand’ and British Fiction argues that while political economists focused only on the optimistic outcomes of capitalist moral activity, Smith’s model of ironic morality also influenced the work of novelists including Austen, Dickens, Martineau, Thackeray, Gaskell, and Eliot. Their realist novels represent the reconciliation between individual ignorance and systemic overview as much less stable than the economic synthesis, using omniscient narrative voices, multiple perspectives, and humor to depict a wide variety of possible outcomes. Smith shares with the realists a vision of modern society that is structured around a fragile trust in the benefits of unintended consequences.”

Comment
This books apparently is based on a mythical idea that had no part in Adam Smith’s use of the metaphor of “an invisible hand’, namely that:

“Adam Smith’s metaphor of the ‘invisible hand’ – in which selfish economic actions are mysteriously transformed into aggregate social benefits in a capitalist economy.”

In no way did Smith say anything about “selfish economic actions”. Nor did he say these alleged actions were “mysteriously transformed into aggregate social benefits in a capitalist economy”. Markers are not ‘mysterious” as Smith shows in Books I and II of Wealth Of Nations. Markets are no invisible – price signals can be see; if they were invisible nobody would know about prices.

In fact he never said anything about “capitalist economies” (a word unknown to Smith – its first use was in English was1854 in a work of fiction The Newcomes by William Makepiece Thackerary (OED). Smith wrote about ‘the age of commerce’ not capitalism.

Eleanor Courtemanche is almost right in saying: “ Smith shares with the realists a vision of modern society that is structured around a fragile trust in the benefits of unintended consequences.”

There is nothing “fragile” about “unintended consequences”. A consequence is real, not “fragile”; it is whatever happens as a consequence of an action. Whether it is a benefit or not is something else entirely.

Adam Smith’s point in his single example in Wealth Of Nations was that those traders who preferred not to invest abroad (Europe or North America), because they perceived the risks of doing were too risky and who invested locally in Britain, added to the total domestic investment, which in consequence added to local revenues and to employment (the whole is the sum of its parts). This a benefit to employees and employers, particularly in the jobs created for the poorer majority. This was a quantitative benefit.

He said nothing about the qualitative benefits of each specific investment. As Britain at the time, and for decades afterwards, had an economy dominated by tariff protection and outright prohibitions, by other distortions caused by the Act of Apprentices, Trade Guilds, monopolies of many kinds, the Act of Settlement, Drawbacks and Bounties, and the Navigation Acts, it was not clear if domestic investment led to beneficial consequences for everybody in a general sense, and Smith certainly did not presume that it did (see his critique of mercantile laws in Book IV of Wealth Of Nations).

The claim that consequential outcomes were beneficial – even from “selfish acts” – is a wholly invented myth, wrongly attributed to Adam Smith in the 1950s onwards.

To Save Ourselves From Many A Blunder

Joseph Kranak writes the Skeptical Philosopher (‘comments on the history of ideas and on contemporary issues’) HERE:

“The perverse incentives and unintended consequences created by the welfare system in place should give us all the more pause, when considering something as extreme as eugenics, which is even more liable to create more perverse incentives and bigger unintended consequences. Government actions can have unintended consequences, which lead to further problems, necessitating further government actions, creating further problems and further responses. Sometimes government action can lead to a chain of action and response like some elaborate legal rube goldberg machine, such as the example that Adam Smith gives in the Wealth of Nations, when England closed down all the Catholic churches, which had been responsible for aiding the poor. Without someone to aid the poor anymore, the government forced parsonages to take care of the poor, leading to perverse incentives which the British government had to respond to, leading to more unintended consequences, until finally the poor were ultimately all but forbidden from traveling freely through England, which created huge disparities in labor availability (and thereby wages) from parsonage to parsonage.”

Comment
I shall ignore the eugenics part of this post.

The reference to the Adam Smith and the unintentional consequences of ‘well-meaning’ legislation is well made. If the promoters of legislation to solve this or another problem were to consider the potential consequences of their actions for their often worthy intentions, they would think again.

They only have to look at history for almost endless examples to influence that degree of modesty they lack.

One minor issue. It wasn’t the case that “England closed down all the Catholic churches, which had been responsible for aiding the poor”. It was the dissolution (and destruction) of the Monasteries, with their vast inherited wealth from lands left to him by Catholic families that created the problem:

“When by the destruction of monasteries the poor had been deprived of the charity of those religious houses, after some other ineffectual attempts for their relief, it was enacted by the 43d of Elizabeth, c. 2, that every parish should be bound to provide for its own poor; and that overseers of the poor should be annually appointed, who, with the churchwardens, should raise, by a parish rate, competent sums for this purpose.” (WN I.x.c.46: pp152-53; Edwin Canaan, ed, 1937: p 135-36)

It can take a long time to correct the unintended consequences of the wrong policies of governments.

The dissolution of the monasteries was ordered from 1564; the growing problem of the poor was still evident in mid-18th century, as Adam Smith noted in Wealth Of Nations (read the whole section referenced above).

This should cure even hardened ‘men of system’ from their well-meaning impulses to ‘improve’ the whole world with their whole-word solutions.