A Thought About Self-Organization

It has long seemed to me that one of the great leaps of imagination in intellectual history was the recognition that through the mechanism of the market, huge numbers of individuals making decisions based on limited information result in market-clearing prices and an orderly system of transactions. This is the first recognition as far as I know of a self-organizing system which produces order without central planning.

Of course, if you think about it, good markets are complex institutions. They include processes for resolution of disputes, ways to assure weights and measures are accurate, and processes to share information about buyers and about sellers.

True believers in markets seem to have no trouble in accepting the idea of socially evolved institutions that allow this kind of self organization. They seem not to recognize that some of the mechanisms that make markets work well are governmental or non-profit, such as judiciary systems, regulatory agencies, and consumer information organizations.

The evolution of market institutions has included not only commercial institutions but governmental and civil society institutions which work in harmony to order transactions. It should be no harder to accept the legitimate role of government and civil society than to accept the legitimate role of commerce. Yet many true believers seem unable to accept this obvious fact.