Russ Roberts And The Organic Economy

Lynne Kiesling

Yesterday Russ Roberts caught himself in a mechanistic metaphor for economic activity, talking about how the economy creates jobs as if the economy is a big machine.

Yet we know, and Russ explicitly corrects himself to say, that it’s individuals and the combinations of their interactions that leads to job growth:

It’s a standard way of thinking about the economy as an engine or machine that creates jobs the way a factory makes cars. The sentence conjures up an image of the economy as something over there, separate from the rest of us. When the economy is healthy, it creates jobs. When it’s unhealthy, it struggles to create jobs or worse, destroys jobs.

It’s a very misleading metaphor. Job creation is the result of millions of decisions made by millions of people pursuing dreams and profits. When the environment for pursuing those dreams encourages risk-taking, jobs get created as long as people want to work. When the environment discourages risk-taking, people who want to work may not find it as easily. …

Much [sic] of these misunderstandings come from our desire to believe that every phenomenon that exists must be the result of someone’s conscious desire that it exist. One of the greatest lessons from reading Hayek is that there are things that are the result of conscious action on our part, there are things that are not consciously designed and then there are things that are in between—phenomena where there is conscious planning by some individuals but no one individual or group consciously controls the full result.

Yes, precisely. It’s emergent order, order without design, order that occurs through the multiple interactions of multiple agents in complex systems.

This is why the economy is not a machine, it’s an ecosystem. It’s organic.