With the turning of a new year, many make resolutions intended to improve their lives. Most of them involve rectifying perceived errors, mistakes and failings in people’s personal lives. But making resolutions to overcome mistakes in our understanding of society, and the policies they lead to, could also be very productive.
One such very costly mistake is the common view that market mechanisms reflect social chaos, rather than incomprehensible order, and the implied conclusion that coercive government policies can replace chaos with order, which exactly reverses reality.
One of the people who recognized this most clearly was Leonard Read, particularly in “Incomprehensible Order,” in his 1965 The Free Market and Its Enemy. So in service of those who would make New Year’s resolutions to improve social coordination, it is worth reviewing his insightful words:
“Most of us claim an affinity for freedom; but if given a choice between a freedom suspected of chaos and a regimentation assured of order, we would choose the regimentation. We instinctively fear and detest the opposite of order which is chaos, and for a good and compelling reason…Man’s existence requires a fairly dependable level of order.”
“[R]equired is an orderly social environment, so that man can know what to expect, within limits, from his fellow man…because of this he will pay almost any price — even his freedom — for certainty, for order. Indeed, when confronted with but a modicum of chaos, he will accept with alacrity numerous variations of the goose step, those constraints which appear to minimize uncertainties and thus give him the semblance of order.”
“Most of these ‘goose steps’ which appear as a relief from chaos, such as controls of prices, wages, rents, hours of labor, or ‘planned’ production and exchange…are, in fact, contrary to order. These rigidities are necessarily interferences with men’s choices and result in chaos.”
“The truth is that order and chaos in the economic realm are the reverse of what is generally supposed to be the case…order is actually born of disorder, for [millions of private decisions] do harmonize in the end…”
“Why not simply confess that these data are an order … which we do not comprehend? That we are unable to bring their order within our narrow purview?”
“The complex of creativities flowing through the minds of men…the ‘chaos’…If not aborted…result in order…But there is all too little of this faith and humility as it concerns the free market…as we witness millions of economic decisions made independently of each other, we will, if not perceptive, refer to them as chaotic; whereas, in fact, we are viewing an order the complexity of which cannot be brought within our limited grasp of things.”
“What we lightly pass over as chaos is but a reflection of our failure to comprehend …sensing only chaos in the complex data of the free and unfettered market…”
“But observe that one man’s orders, aimed at bringing about his singular idea of order, result in everyone else’s chaos…”
“Unfortunately, the chaos brought on by one-source decisions…is seldom thought of as chaos once the subjects have endured the oppression…for a short time…they come to think of their fetters as more a part of ordered than chaotic life.”
“The more a country’s economy is politically ordered or ‘planned,’ the more chaotic is production and exchange. Conversely, the freer the market…the more order there is in production and exchange.”
“The nature of the system prescribes the characteristics of the order and the chaos particular to it.”
“The free market…resting, as it does, on common consent, is consonant and in harmony with freely acting man. Dynanism…is…a characteristic of the free market. Order…exists only as this dynanism, showing forth peacefully and creatively finds unfrustrated expression. Any man-imposed goose step must breed chaos…”
“[W]henever we impose one-source decisions for millions of decisions made independently…we get chaos for our unintelligent pains. And it is axiomatic that freedom must disappear as we practice the error!”
“To illustrate the mysterious order of the free market, think of any one of millions of goods or services…forces too numerous ever to recount and which appear as chaos, but are, instead, incomprehensible order — miraculously combine to form the fantastic order…by which we live. Observe that the order of these is so perfect, their production and exchange and their demand and supply so nicely balanced, that we take them as much for granted as we do our next heart beat.”
“Now reflect on those goods and services no longer entrusted to the millions of economic decisions made independently of each other in a free market, but delegated instead to one-source governmental decisions as a way of bringing ‘order out of chaos’…Observe the imbalances and note that these are the only goods and services we ever argue about. By his method, we do not bring order out of chaos but, rather, chaos out of incomprehensible order! The very fact that these goods and services are now in a chaotic state is testimony in itself that incomprehensible order has been converted to chaos.”
“[B]ecause we differ from one another…human beings require freedom to express those needs and to satisfy them, individual by individual. The free market is an agency for the expression and sorting of these countless differences…whereby each may pursue his own proper interests without infringing upon or denying the nature and the interests of any other peaceful person. When alternatives have been sought…the result always has been some variation of the master-slave arrangement, with one man’s order bringing chaos into the lives of others.”
“[M]an generally seeks a static, motionless kind of order…while his nature calls for an order of the dynamic variety which, unless he is highly perceptive, he looks upon as chaos.”
“[F]reedom in the market, without which other freedoms are impossible, can exist only as creativities of the peaceful variety remain unrestrained. True, this calls for an order so complex that it gives the appearance of chaos; yet, it is order, however incomprehensible. “
“When we mistake incomprehensible order for chaos we leave ourselves open to… deceptions of the know-it-alls. These people, when they succeed in acquiring coercive power, impose restraints on the free flowing of creative energy. Yet, the free market works many of its wonders in spite of their meddling. Unaware of how little they know, they are led to believe that it is their restraints which account for the wonders; and because of this erroneous correlation, they claim credit for the accomplishments which take place despite their subversions…it is fatal if we believe their claims. For, if we do, we shall substitute their know-it-all-ness for the miraculous market; we shall look to them for our blessings and… [bear] a fearful penalty…”
Leonard Read recognized that the process that takes place in markets, which appears to many as chaotic, in fact represents a far more advanced and beneficial social order. It is an order that accommodates the almost infinite variety of our different abilities, circumstances and desires, without violating anyone’s right to themselves and what they own. No other mechanism has ever been discovered that can accomplish this peaceful, sophisticated and dynamic order.
Read saw that despite reality, people persist in viewing the order that arises from markets as if it was chaos, because it is beyond their understanding. As a result, they support a myriad of coercive government policies to impose order, which in fact disrupt order and replace it with chaos.
He also saw that if people would think carefully, they would recognize that the incomprehensible order of markets, precisely because it so vastly exceeds any one individual’s or group’s understanding, demonstrates why politically imposed “order” cannot work as well as what it overrides, despite ubiquitous violations of self-ownership.
Therefore, if you make resolutions, you might want to include one to follow Leonard Read’s example and expand your understanding of the incomprehensible order of markets and the all-too-comprehensible chaos government imposed “order” imposes in its place. Few things could do more to improve social coordination, and with it, our own lives.