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I borrowed this phrase about spontaneous order from Thomas Paine, who used it in his essay, “Common Sense,” as have other more contemporary writers in economics, political science, and philosophy. To me, this phrase is quite remarkable because it captures the very essence of the free market.
As a starting point, let me first define what I mean by spontaneous order. It is the order that results from the many billions of decisions made every day by human beings around the world who make choices in buying goods and services in the marketplace.
The free market is continually changing throughout the day, and no one is capable of modeling it or rationalizing it in any manner or form. No one is capable of collecting all the required information, analyzing and interpreting it, and then making decisions based on it. By the time the technicians have completed their analysis, the supply and demand equations have changed randomly, and the free market has moved on. For example, a tropical storm wreaks havoc on Brazil’s coffee crop, blight destroys the grape harvest in France, or a forest fire devastates crops in California. Uncertainty and acts of God cannot be planned for or predicted, no matter how smart we think we are. And, these are only three unplanned for events. From another perspective, imagine what happens when fashion and lifestyle trends that go viral because of the Internet. These shifts in fashion and lifestyle are only one example of variables that affect the free market at a very discrete level.
The inability to make these calculations is at the very heart of why socialism or centralized planning does not work or cannot work, no matter how many computers we dedicate to the challenge. And, the use of artificial intelligence will not mitigate the problem either. Computers and artificial intelligence are a poor substitute for the widely-distributed decisions made by human beings every day. It is just that simple.
So, the next time one of your friends or colleagues tells you that we must adopt socialism as an economic system in our country, tell him or her about spontaneous order. It might even change their minds.