posting here instead of /r/economics because they're a bunch of neoliberal phaggots
http://www.economist.com/blogs/democracyinamerica/2014/09/hayek-and-libertarianismAMONG the "manifestly silly and occasionally harmful positions" espoused by libertarians, "the idea of spontaneous order might be the silliest and most harmful of all", says Damon Linker in a much-read post at the Week.
This took me by surprise. It's true that Friedrich Hayek, whom Mr Linker shamelessly abuses, is the most prominent 20th-century intellectual behind the concept of spontaneous order—the theory that systems, such as markets, naturally correct, and function best without human meddling. It's true that Hayek is commonly lumped in with libertarians. It's true that spontaneous order is an idea libertarians tend to promote. Yet spontaneous order is not a libertarian idea. Crystals, the organisation of neurons in your brain, the ecosystem of the Amazon basin, and the English language are all examples of spontaneous order. According to most non-theological cosmologies, the universe itself is a spontaneous order. We should be careful not to give libertarians too much credit.
What it means to say that an order is spontaneous is simply to say its stable macro-level patterns—those things that make a complex system a system, an instance of order rather than disorder or randomness—do not come about through design, planning or imposition, but arise instead from the interaction of micro-level elements operating according to certain basic principles or rules. The order that arises spontaneously from markets, whereby prices are allowed to fluctuate freely with supply and demand, is a natural wonder admired by libertarians and non-libertarians alike. The idea that the world sometimes works this way is neither silly or harmful. It's just a fact.
So what's in Mr Linker's craw? He writes:
Simply stated, the idea [of a spontaneous order] holds that when groups of individuals are left alone, without government oversight or regulation, they will spontaneously form a social and economic order that is superior in organization, efficiency, and the conveyance of information than an order arranged from the top down through centralized planning.
I detect at least three problems here. First, Mr Linker has got the idea of spontaneous order somehow tangled up with the idea of utopian anarchism. Second, Mr Linker seems unclear about the distinction between the unplanned development of norms or rules and the unplanned higher-order patterns that rule-bound behaviour can generate. Third, he suggests a false dichotomy between utopian anarchy and central planning.
Libertarian theorists of spontaneous order, such as Hayek, certainly do argue that central planners cannot hope to impose an economic order more attractive and beneficial than the order known to arise spontaneously from a well-functioning market system. They happen to be right about this. They do not, however, argue that when groups of individuals are left alone, innocent of all government, that the Chicago Mercantile Exchange will somehow pop into existence like a mushroom under a damp elm.
According to Adam Smith, Friedrich Hayek and everyone else who knows what he or she is talking about, well-functioning markets depend, inter alia, upon clear property rights and a judicial system that enforces agreements and resolve disputes. These institutions set the basic rules that govern the elements in the system (eg, you and me, in our capacity as buyers and sellers of goods, services, and labour) and account for its stable, higher-level emergent properties, such as allocative efficiency. The "rules of the game" determine the pattern or order that emerges when we, the players, play by those rules. The not-really-libertarian idea, if I may pursue the games metaphor, is that certain clear and simple rules can produce unpredictably complex and rewarding patterns of play. It's not that a bunch of random athletes dumped without instruction on a pitch will sooner or later spontaneously produce a gripping, well-ordered sporting spectacle. It's important not to confuse, as Mr Linker does, the process by which rules come about and the often surprising and complex patterns of activity those rules might bring about. So where do the micro-level rules that generate macro-level order originate?
Hayek argued that the rules that give rise to the higher-level order of the market are not the result of government planning—at least not initially. They emerge from a chancy process of socio-cultural evolution, and it's by no means bound to happen. Neither Adam Smith, he of "the invisible hand", nor Hayek believed that one can simply throw people together and the institutions of modern liberal capitalism will "spontaneously" appear. The puzzle of modern economic growth is a puzzle precisely because for millennia nothing like it ever got going and then suddenly it did get going with alarming and immensely beneficial consequences. Thinkers such as Smith and Hayek are so profoundly valuable because they have helped us to recognise the role these rules play, once chanced upon, in bringing about the wealth and well-being of the extended market order. Because these rules are of such enormous utility, Smith and Hayek implored governments to codify and enforce them. That is to say, they wanted government to oversee and regulate markets, as do libertarians who count on governments to enforce contracts and define, clarify and protect property rights.
Smith and Hayek resorted to the idea of a spontaneous order not to argue against the necessity of government, but to argue against mercantilism and the micromanagement of the economy, and to remind us that the patterns of behaviour that arise from the rules we impose through legislation often fail to match our best-laid plans. Smith's fat volumes on jurisprudence are not the work of man who believes public policy to be pointless, or that government rules are not necessary for prosperity. Hayek's magnum opus, "The Constitution of Liberty", is a work in favour of, among other things, a constitution. Reading Mr Linker, however, one gets the idea that the entire classical liberal tradition is an enterprise in state-smashing utopianism. You probably already know, as Mr Linker should know, that it's not.
State-smashing libertarians may be silly and they may be harmful. Some of them are enamoured with the idea of spontaneous order, it's true. But that's not an argument against spontaneous order any more than Hitler's vegetarianism is an argument against kale.
Basically, an excellent nonpartisan article by the economist explaining how people confuse free market capitalism with libertarian neckbeardedness. Governments acting as non interventionalist (for the most part) overseers and how regulation is entirely possible in this day and age
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