Order, Disorder, and Markets

Arnold Kling on spontaneous order:

One of the most important ideas of the late Nobel Laureate Friedrich Hayek was the concept of "spontaneous order." This can be a difficult concept to explain.

When spontaneous order exists, we take it for granted and make little effort to understand it. If your body is healthy, you do not need to think about how your muscles work, how your heart and brain function, or how your metabolic processes operate. You only notice it when order breaks down, and you are sick or in pain.

Similarly, when the economy is functioning properly, we do not notice all the behaviors that are required to make it work. We go to the supermarket and find grapes available, and we do not wonder why or how.

In theory a central grape distributor could be at work. A single entity could try to assemble all of the information that pertains to grape production and grape consumption. In addition, the grape-distribution czar would master all of the details of storage and transportation systems. Using this information, the czar would send instructions to all of the individuals involved in production, storage, and distribution, telling them what to do and where and when to do it.

In practice, there is no grape-distribution czar. Grapes make their way from distant lands to your neighborhood supermarket via a series of local decisions guided by prices and self-interest. No one person has all the information necessary to direct the distribution of grapes properly. But each participant, guided by prices, knows what to do. Their collective interaction results in grapes available at nearly all supermarkets nearly all the time. This is an example of spontaneous order.

Read the whole thing.

(HT Instapundit)