While we’re at Tech Central Station, this great article by Pete Geddes on economic evolution deserves a read. Geddes hits on a theme that is a core component of my work — thinking of the economy as an organic system instead of as a mechanistic system.
Like biological systems, economic life evolves as people and organizations learn, respond, and innovate. Markets, like DNA-driven organisms, are highly efficient information-processing systems. The realization that prices transmit and process information was a great insight of the 20th century.
Geddes then goes on to discuss both Hayek’s insights on the use of knowledge in society (which is the inspiration for the name of this website), and Radford’s seminal article on the spontaneous order evolution of markets in concentration camps in WWII (Radford, R. A., “The Economic Organization of a Prisoner of War Camp,” Economica, 12 (1945), pp. 189-201). His conclusion is powerful:
No system equals the market in maximizing the conjunction of liberty and prosperity. To understand the value of markets we must recognize them as a natural process, not a political construct. They are mechanisms by which people can, without coercion, communicate and coordinate their actions.
Not only are markets a natural process and not a political construct (although they are underpinned, or not, by rules and institutions), they are also not a mechanistic engine, and we have to stop talking about them as such.