Spontaneous order

Posted by: lizwang on: November 11, 2008

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Spontaneous order is a term that describes the spontaneous emergence of order out of seeming chaos. It is also a social theory that describes the emergence of various kinds of social order from a combination of self-interested individuals who are not intentionally trying to create order. Supporters of the theory tend to believe that spontaneous order is superior to any kind of order that can be created by a plan or design.

The evolution of life on Earth, human language, rules of the road, and a free market economy have all been proposed as examples of systems which evolved through spontaneous order. Atheists and naturalists often point to the inherent "watch-like" precision of uncultivated ecosystems and to the universe itself as ultimate examples of this phenomenon, while creationists such as William Paley and deists believe that these intricate arrangements could not have arisen accidentally and must have been devised by a divine consciousness or "watchmaker".

Spontaneous order is also used as a synonym for any emergent behavior of which self-interested spontaneous order is just an instance.

According to Murray Rothbard, Chuang-tzu (369-c. 286 B.c.) was the first to work out the idea of spontaneous order, before Proudhon and Hayek. Chuang-tzu said, "Good order results spontaneously when things are let alone."  Proudhon said, "The notion of anarchy in politics is just as rational and positive as any other. It means that once industrial functions have taken over from political functions, then business transactions alone produce the social order." Proudhon’s position was that freedom is prerequisite for spontaneous order to take place. Hence his statement, liberty "is not the daughter but the mother of order."

The thinkers of the Scottish Enlightenment were the first to seriously develop and inquire into the idea of the market as a ‘spontaneous order’ (the "result of human action, but not the execution of any human design", as Adam Ferguson put it first).

The Austrian School of Economics, lead by Carl Menger, Ludwig von Mises and Friedrich Hayek, would later refine the concept and use it as a centerpiece in its social and economic thought.

Most Austrian School thinkers and other libertarian figures such as Milton Friedman concurred with Proudhon’s position mentioned above, although they supported the existence of a minimal state as essential to the maintenance of such an order.

Many advocates of laissez-faire economics, such as Friedrich von Hayek, have argued that market economies are creative of a spontaneous order – "a more efficient allocation of societal resources than any design could achieve." They further claim that this spontaneous order is superior to any order that can be designed by the human mind, due to the number and complexity of the factors involved. Thus, in capitalist economies sophisticated business networks are formed which produce and distribute goods and services throughout the economy. Their argument holds that the forces of supply and demand, the aggregated results of millions of individual decisions, are far too complex for any planning process to master, and that an apparently chaotic unregulated economy actually manages itself better than any human manager could. Supporters of the idea of spontaneous order hold that central planning results in more disorder, or a less efficient production and distribution of goods and services. This last point is illustrated in the concept of the invisible hand proposed by Adam Smith in The Wealth of Nations.

Advocates of planned economics, on the other hand, tend to be critical of the concept of spontaneous order. They argue for the creation of intentional economic plans as the end result of a long process that involves the input of millions of ordinary people, both producers and consumers. This data would then be processed by the planners, who form a network with the same degree of complexity as any market system, and, advocates argue, with the added benefit of self-awareness. Thus, the key advantage of a planned economy – according to its supporters – is that it is directed by human beings, rather than merely being constituted by human beings and their decentralized decisions, left undirected. Whether this economic self-awareness is truly a benefit, and whether, if it is, the market can also be said to be self-aware, are sources of further debate.

Keynesian economics, on the third hand, seeks a balance between the two previously mentioned tendencies. Keynesians argue that limited government intervention in the economy can improve upon the spontaneous order of the market by mitigating the negative externalities of the business cycle. They aim to achieve this limited intervention by, in a sense, having the state play the role of one more "self-interested" participant, spending money on things that will be categorized as public goods.

The concept of spontaneous order is closely related with modern game theory. As early as in the 40’s, historian Joahn Huizinga wrote that "in myth and ritual the great instinctive forces of civilized life have their origin: law and order, commerce and profit, craft and art, poetry, wisdom and science. All are rooted in the primeval soil of play". Following on this in his book The Fatal Conceit, Hayek notably wrote that "A game is indeed a clear instance of a process wherein obedience to common rules by elements pursuing different and even conflicting purposes results in overall order".

The bubble in dotcom and telecom stock prices in the late 1990s, which led to a flurry of corporate scandals in the United States in 2001-2003, led many observers to stress the importance of "transparency" as a condition of the efficient development of spontaneous order in the financial world. The idea is that a corporation cannot be a black box into which investors pour money in the hope of returns — they have to be able to see through the box, into the books and records of their company.

Advocates of broad application for the concept of spontaneous order have argued that the aforementioned corporate scandals could have been avoided through the alleged self-correcting tendencies of the private sector. This argument is centered on the actions of a private sector agency, the Financial Accounting Standards Board, who warned against certain practices that were distorting balance sheets and enabling a stock price bubble. As early as 1993, the FASB issued a rule that would have required corporations to count the value of employee stock options on their books as an expense – a rule that might by itself have done a good deal to moderate the still-then-forming bubble, according to its advocates. However, when the U.S. Congress held hearings and called the more conscientious accountants to the carpet, the FASB backed down from its initiative.

According to the advocates of spontaneous order, the FASB initiative could have been a successful example of spontaneous order in practice, leading to self-regulation in the private sector. They criticize the actions of Congress for ensuring an unregulated period of easy money in some industries, while also ensuring an eventual bursting of the bubble and consequent scandal.

Anarchists argue that the state is in fact an artificial creation of the ruling elite, and that true spontaneous order would arise if it was eliminated. In the anarchist view, such spontaneous order would involve the voluntary cooperation of individuals. According to the Oxford Dictionary of Sociology, "the work of many symbolic interactionists is largely compatible with the anarchist vision, since it harbours a view of society as spontaneous order."

Critics of anarchism essentially argue that the chaos created by the abolition of the state would not give rise to any spontaneous order, and/or would lead to a highly undesirable order, and/or that the spontaneity would lead in time back to a system of government.