Archive for category: Economics

Chapter 6
Spontaneous Order
Daniel J. D’Amico
Introduction: What Is and What Is Not
a Spontaneous Order?
Merriam-Webster’s dictionary defines the word spontaneous as, “1. proceeding from
natural feeling or native tendency without external constraint, 2. arising from a momentary
impulse, 3. controlled and directed internally, 4. produced without being planted or without
human labor, 5. developing or occurring without apparent external influence, force, cause,
or treatment and 6. not apparently contrived or manipulated.”
Dictionary definitions and/or encyclopedic treatments of the fuller term spontaneous
order are more rare, as it is a more complicated and nuanced idea. It is also less widely
used in common parlance beyond the professional fields of social science and economics.
One well-researched and thorough survey,1 “The Tradition of Spontaneous Order,”
by political philosopher Norman Barry (1982), alludes to the apparent tension between
formal definitions, on the one hand, and the more detailed meanings implied throughout
the history of thought behind the longer terminology, on the other:
The simplest way of expressing the major thesis of the theory of spontaneous order is
to say that it is concerned with those regularities in society, or orders of events, which
are neither (1) the product of deliberate human contrivance (such as a statutory code
of law or a dirigiste economic plan) nor (2) akin to purely natural phenomena (such as
the weather, which exists quite independently of human intervention). While the words
conventional and natural refer, respectively, to these two regularities, the “third realm,”
that of social regularities, consists of those institutions and practices which are the result
of human action but not the result of some specific human intention. (7–8)2
1 See also Hamowy (1987).
2 Barry (1982, n. 2) cites Hayek (1967) and Ullman-Margalit (1978) as additional high-quality survey
sources on the history of thought surrounding spontaneous order theory. See also Barry (2008).
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Nobel laureate and Austrian economist F. A. Hayek is most often credited with coining
the particular phrasing spontaneous order, because much of his research program
was focused on elaborating and applying the idea.3 Drawing from Hungarian philosopher
Michael Polanyi’s idea of “polycentric order” (1951), Hayek’s earliest usage of the
fuller terminology is found amid his legal and political theories elaborated within The
Constitution of Liberty (1960). He writes: “When order is achieved among human beings
by allowing them to interact with each other on their own initiative—subject only to
the laws which uniformly apply to all of them—we have a system of spontaneous order
in society” (160). Here Hayek is not offering a full operational definition per se, but
the essence of the meaning of the term is fully intact, namely, that the functional and
desirable aspects of the systemwide patterns governing different individuals cannot be
attributed back to the preferences, interests, or intentions of any of those particular individuals.
The functional and orderly qualities of society develop and persist spontaneously
and distinctively from any of the interests that so happen to constitute it.
In later work,4 Hayek (1973) gives a more detailed exposition and definition of the
concept. First, he defines order more generally: “a state of affairs in which a multiplicity
of elements of various kinds are so related to each other that we may learn from our
acquaintance with some spatial or temporal part of the whole to form correct expectations
concerning the rest, or at least expectations which have a good chance of proving
correct” (36). He goes on to differentiate “made” or “designed orders,” which he terms
taxis, in contrast to cosmos, “unplanned” and or “grown” orders:
[A] spontaneous order or kosmos . . . [i]ts degree of complexity is not limited to what
a human mind can master. Its existence need not manifest itself to our senses but
may be based on purely abstract relations which we can only mentally reconstruct.
And not having been made it cannot legitimately be said to have a particular purpose,
although our awareness of its existence may be extremely important for our
successful pursuit of a great variety of different purposes. (38)
Herein Hayek reemphasizes the defining features of spontaneous orders. The patterned
nature of the order, in a way, helps the various actors within the system better fulfill
their separate goals, because it offers them some reliable predictability from which to
inform their plans. Though beneficial and, for some, even aesthetically preferable (Klein
and Osborn 2009), this orderliness was not historically intended or designed by any of
the individual actors that nonetheless constitute and contribute to it. Furthermore, no
individual could have possibly designed the orderly outcome, neither within the system
nor apart from the system. First, this is because the nature of the knowledge required
to successfully navigate and comprehend even partial facets of the system requires a
3 Boettke (1990), Petsoulas (2001), and Hunt and McNamara (2007) trace the inspirations,
development, applications, and criticisms of spontaneous order throughout Hayek’s work and beyond.
4 Jacobs (1997, n. 7) comments on Hayek’s stated motivations for drafting his later work Law,
Legislation and Liberty; he sought to complete and correct the substantive content of his earlier
expositions because he saw them as inadequate.
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direct participation within the system, which is often referred to as tacit5 and/or local6
knowledge (Hayek 1945). Second, the system’s degree of complexity simply surpasses
that which any individual mind could feasibly foresee.
Jacobs (1997; 1999; 2000) suggests that Polanyi’s (1941; 1951) use and understanding of
the term spontaneous preceded and arguably inspired Hayek’s, although Polanyi’s influential
role in the coinage or resurgence of spontaneous order theory is less appreciated.7
Jacobs (1997, 18) notes that Polanyi (1951) first makes explicit use of the full phrasing
spontaneous order and highlighted the phenomenon’s operation throughout a variety
of social contexts prior to Hayek’s (1960) use and later definitional treatments. Bladel
(2005, 23) counters Jacobs and emphasizes theoretical differences between Polanyi and
Hayek. He notes that Ropke (1937, 4–5), a colleague of Hayek’s, described the market
economy explicitly as a spontaneous order even before Polanyi’s use. Much of Jacobs’s
case rests on Polanyi’s uses of spontaneous apart from the fuller phrase spontaneous
order, and his apparent appreciation for the fuller meaning of the theory prior to the
explicit coinage of the complete phrase.8 Such a case can also be made for Hayek’s understanding
and use because his prior economic writings (1936; 1945; 1949a) arguably convey
a full understanding of the concept despite lacking the explicit terminological label.9
Such is similarly the case throughout the intellectual history of spontaneous order
theory more generally. Various thinkers, working on different subject matters, in different
contexts, nonetheless identified and attempted to explain the origins and operational
features of social orderings as unplanned and inherently complex phenomena.10
5 Polanyi (1958) first discusses and explains the relevance of tacit knowledge in social processes;
see Polanyi (1966). Lam (2000) and Collins (2010) are recent contributions explaining the role of tacit
knowledge in the production and maintenance of effective social institutions. On the meaning and
significance of tacit knowledge in Hayek’s work, see Oguz (2010).
6 Local knowledge is most often highlighted as a tool of effective managerial decision-making. Lavoie
(1985) first coined the term knowledge problem when referring to national economic decision-making
lacking tacit knowledge garnered through local-level perspectives and experiences. Ostrom (1990) and
Ostrom (2007) similarly emphasize knowledge problems endemic to centralized management schemes.
7 Polanyi applied spontaneous and cognates to one of these modes, writing variously of “spontaneous
ordering,” “spontaneously arising order,” “spontaneously attained order,” and “spontaneous mutual
adjustment” (1941, 432, 435). In this particular essay, however, he never used “spontaneous order” as
such, preferring “dynamic order,” “dynamic system,” and “dynamic forms of organization” (435). Polanyi
represented “dynamic order” as grounded on freedom and spontaneously emerging from mutual
adjustment of free actions (Jacobs 1997, 15).
8 Polanyi (1962; 1975) explicitly used the full term spontaneous order (Jacobs 1997, n. 6). Gray (1986)
and Cronk (1988) describe Polanyi’s treatment of spontaneous orders confined to the process of science.
Jacobs (1997, n. 11) disagrees. Hayek biographer Caldwell (2004, 294) remains agnostic on the debate
surrounding first use of the term.
9 Jacobs (1997, 1, nn. 1–3) cites Ross (1987), who traces Hayek’s use of the term spontaneous
throughout his early economic writings (Hayek 1936; 1945; 1949a). Barry (1982; 2008) also attributes
the coinage to Hayek. Jacobs (1997, 1, n. 4) cites Roche (1976), O’Brien (1994), Letwin (1977), Moldofsky
(1989), and Cubeddu (1993) as also attributing the term’s origin to Hayek.
10 Barry (2008, 485) notes that similar ideas of self-organization can be found in the writings of
ancient Chinese philosopher Chuang Tzu and sixteenth-century Jesuit priests from the school of
Salamanca. See also Smith (2006).
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Regardless of the term’s specific historical origins, three things are commonly and
rightly agreed on about the intellectual history of spontaneous order theory. First, the
substantive theoretical concepts implied by the term are now relatively well defined and
better understood than in previous decades. Namely, the functional features of society
are as such not because of the planned intentions of particular individuals, authoritative
decision makers, or any individual designers’ intentions. Rather, most social outcomes,
particularly functional and orderly processes, are more often and better understood
as the unplanned by-products of decentralized human interactions. The definition of
spontaneous orders is often well captured by the succinct but accurate description of
social institutions being “the result of human actions but not necessarily the product
of any particular human design.”11 Second, spontaneous order theory traces its origins
throughout a long and rich intellectual tradition. Most notably, the first renditions of
spontaneous order theory were forged amid the Scottish Enlightenment, the intellectual
tradition surrounding the political philosophy of liberalism, and the classical school of
economics.12 Last, in the wake of Hayek’s research and professional success, scientific
interest and appreciation for spontaneous order theory have revived and multiplied.
These latter points of agreement are not coincidental. It is not surprising that the historical
context of the Scottish Enlightenment happened to be the spawning ground of
spontaneous order theory. Nor is it serendipitous that the discipline of economic science
and the particular methodological tradition surrounding Hayek, the Austrian school of
economics, has been most responsible for harboring the greatest appreciation for spontaneous
order theory. Contemporary Austrian scholars continually perform applied
research to expand the relevant cases of observed spontaneous orders. This will be more
fully explained throughout this chapter.
With renewed attention to spontaneous order theory have also come new debates,
disagreement, and occasional obfuscation. Some are made explicitly uncomfortable
by the common use of the term spontaneous order. While it well differentiates from
intentionally designed social systems such as clubs (Buchanan 1965) or formal business
firms (Coase 1937), anxiety remains concerning the connotations of randomness
that the term spontaneous seems to imply, as if the functional features of a spontaneous
order occur through sheer luck or by happenstance. Again, refer to the definitions
from Merriam-Webster’s: “arising from a momentary impulse … developing or occurring
without apparent … cause.” Similar implications admittedly occur throughout the
term’s historic usage. For one example, the fuller quotation of Ferguson’s earliest description
reads: “Every step and every movement of the multitude, even in what are termed
enlightened ages, are made with equal blindness to the future; and nations stumble upon
11 Hayek (1967) adopted Enlightenment era political philosopher Adam Ferguson’s ([1767] 2001,
119) original description of social processes in this way by titling one of his own essays “The Results of
Human Action but Not of Human Design.”
12 Hayek (1967), Ullman-Margalit (1978), Barry (1982; 2008), Hamowy (1987), Otteson (2008),
Petsoulas (2001), and Smith (2006) trace spontaneous order theory throughout the Scottish
Enlightenment and especially in the works of Adam Smith.
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establishments, which are indeed the result of human action, but not the execution of
any human design” ([1767] 2001, 119; emphasis added). It is not unreasonable for writers
and thinkers to be dissatisfied with these connotations, just as describing evolutionary
processes as random or chaotic is a disservice and obfuscation to the procedural realities
of natural selection, adaptation, and genetic mutation that occur within biological and
other natural processes.
For some writers, the term emergent order is sometimes synonymously and at other
times preferably used for spontaneous order.13 Within its definition of emergence,
Merriam-Webster’s reprints material from the concise encyclopedia Britannica:
In the theory of evolution, the rise of a system that cannot be predicted or explained
from antecedent conditions. The British philosopher of science G. H. Lewes
(1817–78) distinguished between resultants and emergents—phenomena that are
predictable from their constituent parts (e.g., a physical mixture of sand and talcum
powder) and those that are not (e.g., a chemical compound such as salt, which looks
nothing like sodium or chlorine). The evolutionary account of life is a continuous
history marked by stages at which fundamentally new forms have appeared. Each
new mode of life, though grounded in the conditions of the previous stage, is intelligible
only in terms of its own ordering principle. These are thus cases of emergence.
In the philosophy of mind, the primary candidates for the status of emergent properties
are mental states and events.
An emergent phenomenon is the result of some complex causal procedure, meaning
that the outcome of said process cannot be inferred as a simple summation of its constituent
parts. Hence, emergence successfully refers to the unplanned but structurally
patterned characteristics of complex processes, and the term does so perhaps without
invoking connotations of serendipity or randomness, as the word spontaneous inappropriately
does. It is therefore not surprising that some writers opt to use emergent over
spontaneous, although such equivocation, especially regarding the topic of specifically
human-social processes, has significant analytical consequences.
13 In the plenary essay of the aptly titled journal Studies in Emergent Order, DiZerega (2008) writes,
“Hayek encapsulated the process he described by his term ‘spontaneous order.’ Today other terms
describing the same basic dynamics are in more common use, particularly ‘complex adaptive systems’ and
‘emergent orders’ ” (1; emphasis added). The paper proceeds to use the terms interchangeably, as do most
authors in the journal. Martin and Storr (2008) initially use the terms interchangeably but resolve upon
emergent over spontaneous. Lewis (2011, 171) cites Wagner (2010) as falsely conflating spontaneous and
emergent orders and neglecting to offer definitions. Wagner (2011) concedes this point.
The term stigmergy (Grasse 1982–1986; Beckers et al. 1994; Bonabeau 1999; Elliott 2006; Heylighen
2007; Marsh and Onof 2007; Christensen 2007 and 2008) has been coined to refer to features of certain
logistical traits of some social species and computer software platforms that allow various users to
simultaneously but separately contribute to products and outcomes distinctively more functional and
complex than any of the individuals’ particular actions. Ants secrete pheromones assisting them to
follow one another’s trail to and from food sources. Similarly, open-source software platforms such
as Wikipedia provide a logistical medium particularly convenient for complex collaboration among
dispersed individuals and groups without conscious or concerted collective action or agreement.
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First, spontaneous orders are not the inevitable result of chaotic or random processes.
Active substitution away from the term spontaneous in favor of emergence in part promotes
this confusion. Second, passive and or inadvertent equivocation blurs a more
nuanced and accurate distinction between these two concepts. The intellectual tradition
of spontaneous order theory possesses a unique connotation that is not necessarily
endemic in today’s parlance surrounding the use of the term emergence within the dedicated
fields of study on complexity, agent-based modeling, self-organizing processes, or
stigmergy.14 Conflating terms without attention to the distinct facets of those processes
that are rightly and uniquely spontaneous orders risks modeling such complex human
social phenomena inaccurately.
Finally, the distinctive use of spontaneous puts unique emphasis on the human features
of spontaneous orders relative to how the term emergence is more broadly used.
Following Hayek’s (1973) defining descriptions of spontaneous relative to planned
orders, he writes:
Most important, however, is the relation of a spontaneous order to the conception of
purpose. Since such an order has not been created by an outside agency, the order as
such also can have no purpose, although its existence may be very serviceable to the
individuals which move within such order. But in a different sense it may well be said
that the order rests on purposive action of its elements, when “purpose” would, of
course, mean nothing more than that their actions tend to secure the preservation or
restoration of that order. The use of “purposive” in this sense as a sort of “teleological
shorthand,” as it has been called by biologists, is unobjectionable so long as we do not
imply an awareness of purpose of the part of the elements, but mean merely that the
elements have acquired regularities of conduct conducive to the maintenance of the
order—presumable because those who did act in certain ways had within the resulting
order a better chance of survival than those who did not. In general, however, it
is preferable to avoid in this connection the term “purpose” and to speak instead of
“function.” (39)15
In short, the harmonization processes that occur amid interacting human agents are
distinct from those that occur between other types of agents, specifically because of the
greater range of subjective purposes sought by humans relative to nonhuman actors.
Again, spontaneous orders are identified by the distinction between the intentions of
14 DiZerega (2008) explains that various research fields attuned to emergent orders, such as
self-organizing systems and agent-based modeling, have arisen independently of the Smith-Hayek
tradition. Key examples of these parallel research streams include, but are not necessarily limited to, Ross
(1947) and Holland (1992). See also Harper and Lewis (2012) and the various research surveyed therein.
See also the comments and citations on stigmergy in note 13 above.
15 In reflecting on Barry’s survey, Buchanan (1982) affirms the a-purposivity of complex social
processes. “[T] he ‘order’ of the market emerges only from the process of voluntary exchanges among the
participating individuals. The ‘order’ is, itself, defined as the outcome of the process that generates it. The
‘it,’ the allocation-distribution result, does not, and cannot, exist independently of the trading process.
Absent this process, there is and can be no ‘order’ ” (7).
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the agents within the system and the seemingly functional but unintentional aspects of
the system writ large. In the course of acting to pursue personal interests, individuals
contribute to a general condition of social order. While the general conditions of the
social order complement various individual interests, such functionality occurs irrespective
of those interests. This gap of intentionality is precisely the reference point of
the spontaneous terminology. Such interactive purposivity cannot be said to occur amid
nonhuman orders.16
Insofar as emergence can also refer to complex outcomes of nonhuman processes,
equating spontaneous orders with emergence diminishes the focused need for unique
methodological considerations when investigating human social phenomena relative
to other natural-science subject matters. Natural sciences afford a larger and more
appropriate role of mathematical formalism and precise statistical forecasting. Such
techniques are more prone to error and misspecification when applied to human social
processes, because the potential diversity and conflict of subjective intentions is exponentially
greater.17 When spontaneous human social orders are treated as if they are no
different from nonhuman emergent orders, through applied public policies or strategic
initiatives for social change, significant unintended consequences may ensue and are in
many ways inevitable. Hayek ([1941] 1980) argues so boldly as to suggest that the historic
course of real contemporary social problems in the twentieth century were largely the
result of methodological failures within the professional social sciences to account for
the operational features of human society as they accord to spontaneous order theory.18
It is most appropriate for a handbook on Austrian economics to include a chapter
dedicated to spontaneous order, as the theory has played both a significant and an essential
role throughout the school’s intellectual history. One should also recognize inversely,
that were it a dedicated volume to the theory of spontaneous orders, there would need to
be a dedicated chapter, or several, on the Austrian tradition because of its emphasis on
the methodological challenges inherent in the investigation of human actions and complex
social processes.19 Once the idea of spontaneous social orders had been recognized
and somewhat fleshed out, society could be better seen to conform to some degree of
orderly pattern, wherein a variety of systematic relationships could be seen to hold and
therefore could also be scientifically investigated and objectively understood. This is to
say that spontaneous order theory was groundbreaking in that it provided a method to
16 Hamowy (1987, 40) summarizes Merton (1936) and Forbes (1954) as similarly conflating
spontaneous orders with the law of unintended consequences. Schneider (1967) recognizes the similarity
of spontaneous orders as exemplary of unintentionality but highlights their uniquely social functionality
and coordinative effects as essential to spontaneity’s meaning.
17 Hayek (1967, 25, n. 8) surveys Nagel (1961), von Neumann (1951), and von Bertalanffy (1952),
estimating the degree of complexity found in interactive biological processes relative to basic
physionatural operations to be many degrees of magnitude larger. In addition to a substantive difference
of type, Hayek explains that social processes still also possess exponentially larger degrees of complexity.
18 See also Boettke (1997), Mirowski (2002), and Beinhocker (2007), who trace the practical
consequences of methodological failures in professional economics. Huemer (2012) infers such social
complexity to support passivity over activist preferences and strategies for social change.
19 See Menger ([1883] 1985) and Mises ([1933] 1978) as classic examples.
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investigate human behaviors and social processes through objective science in a way
that was untenable before then. One could argue that with spontaneous order theory, the
Scottish Enlightenment in effect invented social science as a positive research program.
This chapter is a defense and explicit support for the terminology of spontaneous
order, properly understood. Although it is not a rejection of the term emergence in all
of its own uses. In other words, emergent and spontaneous have similar meanings, but
they are differentiable. They are neither totally exclusive nor oppositional ideas. They
have unique definitions with overlapping applications, but they still have separable and
nonsynonymous meanings. Simply put, “emergence refers to a broader domain of phenomena
than does spontaneous” (Wagner 2011, 217). In this vein, all spontaneous orders
possess emergent qualities, but not all emergent processes are necessarily spontaneous
orders. Figure 6.1 portrays a simplistic Venn diagram to visualize this distinction. A subset
area representing distinctive spontaneous orders is nested fully within a larger set of
emergent orders.
Spontaneous orders possess a unique feature relative to nonspontaneous emergent
orders, namely, the presence of multiple and likely conflicting human intentions that are
shaped subjectively by the unique preferences and choices of individuals. Spontaneous
orders proceed in ways that promote and contribute to human social coordination
and cooperation. The institutions that develop as a consequence of and facilitator to
human coordination and cooperation require unique methodological considerations to
understand their developmental and operational processes relative to the coordination
mechanisms that occur in nonhuman emergent orders. How do social scientists retain
positivity while describing and analyzing the behaviors of agents and groups who possess
normative preferences?
The next section specifies the definitional differences between emergent and spontaneous
orders by offering a conceptual framework to distinguish between the scientific
nature of the agent types of an orderly system and the degree of complexity derived
from those agents’ interactive behaviors. Examples are offered for each category. The
Humane Social Orders
Emergent Orders
Spontaneous
Orders
(Cosmos)
Organizations
(Taxis)
Non-human
Biological,
Physical, or
Chemical
Orders
Non-human Social
Orders
Figure 6.1 Spontaneous relative to emergent orders.
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necessary features for each type of social order to prove sustainable are identified. The
presence of purposeful human intention contributes to the development of distinctive
institutions in the human social realm unparalleled in complexity and coordinative
potential by any other subject matter throughout the natural sciences. Animals and
certainly inanimate objects do not communicate with languages as detailed or abstract
as those of humans. They do not truck, barter, and/or exchange goods and services and
hence possess no monetary currencies or market price exchange ratios. Many species
often do conform their behavioral patterns to social standards akin to moral norms or
even rules of law, although nonhuman actors do not reflect back on the desirability or
optimality of their orders, whereas humans do. And herein lie the determining factors
of society’s progression through coordination and cooperation or its destabilization
through discord and strife.
The following section surveys the intellectual history surrounding spontaneous order
theory in an attempt to complement and justify the framework laid out in the previous
section. Smith’s and Hayek’s research programs have been particularly influential
in shaping spontaneous order theory. As social scientists, both sought to develop
consistent models to account for processes of social change across varied institutional
realms—language, morality, legal and political norms, and economic development.
Both saw the phenomena of economic production as uniquely human and obviously
complex beyond the potential of human design. Both sought unique methodological
frameworks to cope with the distinct challenges of this subject matter; thus, they are
most recognized for significantly shaping the theoretical tradition. While economic science
provided the most ideal theoretical techniques for identifying and explaining the
operational features of spontaneous orders, several writers throughout the spontaneous
order tradition have noted the fate of harmonious social operation to rest on the
interplay between spontaneous processes of material prosperity with moral social and
cultural perceptions regarding the causes and consequences of prosperity and its associated
social changes.
Different Categories of Order
There is a need for a separable terminology when referring to complex human social
processes relative to similar orders found amid nonhuman agents and groups. This is
simply because the conditional factors of individual human choices are distinct from
those facing nonhuman conscious agents, comparable to how processes of nonhuman
conscious agents are significantly distinct in complexity from nonconscious objects. In
other words, the predictability of the order that develops amid a community of human
people is significantly more complex than that found amid a flock of birds or a school of
fish, in much the same way as the degree of complexity amid a flock of birds is significantly
greater than the patterns of operation amid balls on a billiard table. Billiard balls
do not act but are acted upon. Birds act but do not make distinctive plans and intentions
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apart from their biologically shaped instincts and needs for survival. While the difference
in agent type may be a matter of degree rather than type, the social experience of
humans is of a significant difference in type relative to nonhuman social contexts. By
interacting in an environment made up of intelligent and intentional interacting agents,
human social systems emerge and require institutional regularities, informational signals,
and enforcement mechanisms to help promote coordination and cooperation.
In all such cases, order can and does emerge, although the human condition allows
for the development of social institutions that are of both a greater degree of complexity
than and a distinctive type of complexity from those forms of coordination mechanisms
common amid nonhuman processes. In particular, human languages, legal and political
rules, commonly accepted moral norms of conduct, and decentralized economic
decision-making through the advanced division of labor and market price signals are
all uniquely human institutions considerably more complex than any of the behavioral
patterns found in nonhuman systems.
This section provides a framework to categorize different types of complex orderly
processes. Figure 6.1 first clarifies the degree of complexity demonstrated within different
types of orders by listing the relative number of conscious agents within an orderly
system. Separate rows are included for zero agents, one or few agents in relative harmony
to one another, and many competing agents. Second, a distinction is made regarding
the nature of the agents within the supposedly orderly phenomena. Biophysical
processes or nonhuman systems are differentiated from human ones. Each cell within
the body of the figure is labeled with its own letter, A through F, and will be explained
below. Processes within cells A, B, C, and F exhibit sufficient characteristics to warrant
the title of emergent orders, while only processes within cell F ought to be considered
spontaneous orders. Cells D and E are planned orders or examples of designed taxis, as
Hayek (1973) used the term.
Subject Type
Bio-physical Humane
Number of
Conscious
Agents
Zero A: sunflower seeds,
honeycomb, snail
shells, flower pedals
D: a garden, architecture,
interior design
One or few in harmony
to one another
B: schools of fish, flocks
of birds, ant colonies,
beehives
E: sports teams, business
firms, formal
organizations or clubs
Many potentially
competing against
one another
C: ecosystems, species
evolution, planetary
orbits
F: market prices,
commodity currencies,
the division of labor,
private property rights,
the common law
Figure 6.2 Classifications of order.
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Beginning in the upper left corner, cell A lists various examples of complex patterns
observed in the natural world. Such patterns conform to the basic definitional characteristics
of complex orders. The individual components of the orderly system have particular
features. A sunflower seed is a particular shape and size, as are the hexagons of a
honeycomb, the spirals of a snail shell, and the petals of a flower. When fitted together,
these noncomplicated parts generate a pattern with its own size, shape, and proportioned
characteristics distinctive from those features of its constituent parts. If one were
to view the individual components of the order apart from the order itself, it would be
difficult to foresee or predict the complex pattern.
Cell B is similarly focused on nonhuman complex orders, just as in cell A, but cell B
includes examples of processes that possess a greater degree of complexity than those
in cell A. This greater complexity is a function of the fact that the agents in the system,
while not human, are somewhat autonomous. They engage in their own unique behavioral
actions based on their own individual perceptions, influences, and stimuli. In
other words, there is a similar emergence of order amid the patterns of seeds on the face
of a sunflower and the orderly flow of ants within a colony’s mound, but there is a significant
difference between the two. Ants walk about in accordance to their own individual
actions. In the context of interacting with other ants, any individual ant faces a degree of
variability in the potential outcomes of its behavior unparalleled by the distribution of
seeds on the face of a sunflower.20
Orders within cell C demonstrate yet another level of complexity beyond those found
within cells A or B. Not only are the agents within cell C autonomous relative to one
another, but they are of various different species from one another, and as such they
are most often in conditions of conflict and or competition with one another regarding
food, territory, sexual mates, or all of the above. While planets and terrestrial objects
would not seem autonomous, their distinct properties of movement relative to one
another and interactive effects on others suffice to be included in cell C.
Interspecies competition is most common. Species exist as innate predators and/or
prey to one another. Interspecies coordination is also common but only as a function
of optimized interspecies competition. Different species contribute to the functioning
of a vibrant ecosystem in harmonic symbiosis with one another, but the health and
vitality of any nonhuman ecosystem depends on the relative success of some species
20 There remain different meaningful types of order found with cell B characteristics. First, lower
organisms such as slime molds and some social insects such as ant colonies and beehives perform
coordinated behaviors amid such large groups; some have inferred the collective unit itself as the more
relevant organism. Different types of agents, drones versus worker bees, for one example, operate more
akin to organs with specialized functions rather than independent agents themselves. Tullock (1994)
and Resnick (1994) describe the emergent qualities of social species. Seabright (2004) notices that social
species share much higher rates of genetic homogeneity relative to others. Equipped with biological
adaptations such as bio-determined divisions of labor and stigmergic mechanisms (see note 13 above),
lower organisms can form groups of hundreds of thousands of agents, whereas more intelligent species
maintain smaller group sizes. De Waal (1990) describes the proto-legal and moral norms evolved and
required to resolve conflict amid various ape species. Differences across social norms are primarily
shaped by biological factors such as gendered differences and sexual reproductive habits.
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126 Microeconomics
and/or populations over others (Forsyth and Miyata 1987). Foxes and rabbits have yet
to discover an institutional arrangement wherein both species may thrive without the
episodic predation of rabbits by foxes. Interspecies cooperation or symbiosis is not
impossible but is more rare and typically the result of unique evolutionary conditions.
Cell D is the first type of order listed within the human category and is also the first
nonemergent type of order surveyed thus far. Examples such as gardens, architecture,
and interior design are orderly insofar as they promote particular functions and purposes.
Good gardens are usually both aesthetic and conducive to the healthy growing
of the plants therein. But such orders are the result of direct planning insofar as they are
intelligently designed and constructed by a gardener; hence, they are not fully emergent.
Walking through a forest and stumbling upon a well-groomed garden, while the
observer could remark on the well-ordered nature of the garden, he would obviously not
infer that the garden had developed naturally without some intelligent designer.
That being said, a successful garden must operate within the natural parameters
beyond the gardener’s design or control. The gardener may desire to optimize the growing
and cultivation of a particular plant or crop, but his ability to do so will be determined
in part by his ability to identify, tap into, and harness the unplanned natural
conditions of his environment and the interactive conditions of the fauna he chooses
to plant.
Cell E is another nonemergent form of order, but it does express a degree of complexity
beyond those orders found within cell D. While cell D orders result from the application
of human intelligence imposed on nonhuman entities, cell E results from a singular
or unified human intention being imposed on and accepted by other human agents.
Firms, organizations, clubs, and formal governments are all orders with cell E characteristics.
21 Here again, the success or failure of the particular intention chosen by the order’s
designer will hinge on his ability to identify, tap into, and harness the unplanned and/or
emergent conditions operating within the population of individuals he has selected to
work with.
Now, fully within the realm of human social interaction, one could make a distinction
within cell E of voluntary versus coercive arrangements akin to Smith’s ([1776]
1904) distinction of “raping, pillaging and plundering” relative to “trucking, bartering
and exchanging.”22 The coercive arrangements like those conflicting interests across species
in cell D orders are zero sum, meaning that one agent gains at the others’ expense.
But unlike cell D orders, human agents have a significantly greater capacity to counterreact,
be it through foresight, evasion, and/or cooperative retaliation. Smith’s ([1759]
1790) comments on the personality types of “men of systems” bear relevance here:
The man of system, on the contrary, is apt to be very wise in his own conceit; and is
often so enamoured with the supposed beauty of his own ideal plan of government,
21 For thorough investigations of decision-making within the firm and formal organizational settings,
see Coase (1937) and Williamson (1981; 2002).
22 See also Oppenheimer ([1908] 2012).
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that he cannot suffer the smallest deviation from any part of it. He goes on to establish
it completely and in all its parts, without any regard either to the great interests,
or to the strong prejudices which may oppose it. He seems to imagine that he
can arrange the different members of a great society with as much ease as the hand
arranges the different pieces upon a chess-board. He does not consider that the
pieces upon the chess-board have no other principle of motion besides that which
the hand impresses upon them; but that, in the great chess-board of human society,
every single piece has a principle of motion of its own, altogether different from that
which the legislature might chuse to impress upon it. If those two principles coincide
and act in the same direction, the game of human society will go on easily and harmoniously,
and is very likely to be happy and successful. If they are opposite or different,
the game will go on miserably, and the society must be at all times in the highest
degree of disorder. (233–234).
Sustainable coercive relationships such as slavery or conscription required unique
enforcement technologies and costs. Over time, such balances of power endure gales of
creative destruction as changes in the conditional factors affecting the costs and benefits
of coercion alter its equilibrium conditions (Acemoglu and Robinson 2012). For one
example, the invention of the cotton gin radically increased the value of a marginal slave
worker but lowered the net demand for the quantity of slaves writ large.
In contrast, voluntary cooperation mechanisms are a uniquely human institutional
arrangement wherein multiple parties may benefit despite alternative, competing, and/
or conflicting interests. Private property rights, contracts, rules of law, arbitration, and
dispute resolution are all mechanisms to aid and facilitate the harmonization of the individual
designers’ intention with the surrounding conditions of environmental resources
and the ulterior motives of other human agents. Hence, again, we see that the relative
success of an individual plan is at least in part determined by its ability to nest compatibly
amid a broader condition of unplanned interactions (Koch 2007).
Last, cell F is reserved for spontaneous orders properly understood. Rather than
individual human actors within a system comporting their behaviors to a particularly
designed intention, each of the members of a spontaneous order pursues intentions of
his or her own accord. Here it is perhaps important to emphasize that all such behaviors
are not necessarily harmonious or without conflict. In fact, systemic disorder and
instability can be and often are stable outcomes for a variety of social contexts (Martin
and Storr 2008). Although the contributing conditional factors of such disorderly states
are similar to those that accommodate spontaneous order outcomes, the results of such
processes do not conform to Hayek’s proffered definition of order as providing predictable
reliability. Such disorderly states are also possible under cell B and cell C conditions.
Seabright (2004) and Beottke, Caceras, and Martin (2013) suggest in comparison that
the potentials and realities of conflicting disorderly states far surpass orderly alternatives;
hence, ordered outcomes are all the more demanding of account and explanation.
Although the potential for disorder is great and arguably surpasses that for order,
it has been theoretically (Demsetz 1967), historically (Ellickson 1991; Anderson and
Hill 2004), and even experimentally demonstrated (Kimbrough, Smith, and Wilson
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128 Microeconomics
2010) that human agents are inclined to conform their behaviors to not conflict with
other human agents to the extent that conflict is costly and or uncertain. Given humans’
greater capacity to impose costs amid conflict, this provides a greater incentive and
greater potential for coordination in cell F than in other cells. To the extent that agents
can recognize that their own plans may be better fulfilled under conditions of nonconflict
coordination, individuals will prefer conditions of peaceful coexistence relative to
conflict. Hence, cooperation and coordination in human societies without formal state
enforcement mechanisms are feasible in relatively smaller and homogeneous groups
(Landa 1994; Zerbe and Anderson 2001; Greif 2002; Dixit 2004; North, Wallis, and
Weingast 2009) but rarely observed in large-scale heterogeneous social orders.23
Agents may intentionally conform their behaviors to rules of conduct and/or institutional
patterns that explicitly signal nonthreatening intentions to others and accurately
communicate information regarding interpersonal behaviors so that individuals within
the system are best informed regarding how they may navigate action without conflict.
Such institutional participation inadvertently contributes to a social environment more
conducive to and accommodating for the fulfillment of ever greater and more diversely
selected plans and agents. Institutional mechanisms such as language, property rights,
contracts, rules of law, moral norms, market pricing mechanisms, and an advanced division
of labor, though not designed by any individual actor, crucially aid and assist the
plans of the participants within them because they funnel and churn knowledge more
systematically and effectively amid the members of the system.
The History of the Spontaneous
Order Tradition
Equivocation between emergent and spontaneous orders obfuscates the meaning
that theorists intended to convey throughout spontaneous order’s history of thought.
Although common parlance of spontaneity implies that the subject matter develops as
23 Samuelson (1964), McKenzie and Tullock ([1975] 2006), Landes and Posner (1975), and Cowen
(1992) all highlight public-good dilemmas surrounding the provisions of law, security, and punitive
enforcement. The positive externality conditions and high potential for free riding surrounding
law-enforcement services are presumably inherent and logistical, thus limiting the potential for
spontaneous order to sufficiently support large-scale heterogeneous networks of anonymous exchange.
In contrast, Friedman (1979) argues that multiple equilibriums are possible in alternative societies.
Benson (1992), D’Amico (2010), and Allen and Barzel (2011) trace criminal institutional changes and
consequences through legal history. Gambetta (1993), Kaminski (2004), Leeson (2008a), Leeson and
Skarbek (2010), and Skarbek (2010; 2011; 2012) explain functional punitive enforcements in criminal
networks wherein group interests are conveniently aligned against formal state enforcement by the
nature of their illicit intentions. Hoebel (1954) shows similarly for remote tribes. Leeson (2008b; 2009;
2014) and Benson (1989a; 1989b; 1990) argue that self-enforcing exchange is more durable than is
commonly recognized and at least possible in some larger heterogeneous cases.
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Spontaneous Order 129
if from nowhere and/or operates through random happenstance, spontaneous orders,
as described by their most noted contributors, are decidedly not the inevitable result of
chaotic interactions and/or serendipity. Spontaneous orders are instead the unintended
result of certain structural features inherent to the processes of human decision-making
and human interaction. Although they are unplanned, such phenomena are not random.
The history of thought specifically surrounding spontaneous order theory, stemming
most notably from Smith amid the Scottish Enlightenment, academically resurrected
by the research program of Hayek, and continued by the contemporary scholarship
associated with the modern Austrian school of economics highlights the unique methodological
considerations necessary for investigating and accurately understanding
human behaviors and complex social processes relative to subject matters more common
throughout other natural sciences. The tradition of scholarship most responsible
for developing the idea and terminology of spontaneous order theory has continuously
been an effort to conduct objective positive social science, given the realization that
human beings and human societies are more complicated subject matters and require
unique methodological considerations compared with other natural subjects. In short,
the process of coordinating human intentions contributes to the formation of institutions
and societal outcome patterns that require uniquely gauged methods in order to
accurately identify, understand, and/or compare objectively without systemic error or
unintended consequences.
Each of the theorists surveyed in this section highlights a particular facet of the spontaneous
ordering of economic production and material prosperity. The increased population,
density, and diversity afforded by material abundance often inspire subsequent
cultural, moral, and ideological change. This feeds back on the stability of economic
prosperity. The processes of individual perception, collective coordination, and reactive
cooperation of such sociological processes are a distinctively human process in need of
uniquely human, socially scientific, methodological considerations to accurately understand
and objectively assess. Contemporary research and parlance surrounding the
more general term emergence are less uniquely focused on distinctively human social
processes.
The idea of spontaneous social order was at first an inferred conclusion regarding the
essential causes of the conspicuous social changes surrounding Enlightenment writers
nested within the early stages of the industrial revolution. Spontaneous social ordering
through processes of interindividual interaction was, in effect, a basic alternative
hypothesis to the previous dominant theories that associated prosperity with the superior
foresight and/or divine rights of ruling authority. Having endured similar political
arrangements for relatively long periods of previous history, ruling intentions were
simply insufficient explanations for the distinct levels of prosperity, human population,
and social diversity all found more systematically throughout the developed world amid
industrialization than ever before. One could simply not proclaim to be a philosopher
dedicated to investigating and understanding human behavior and human society without
devoting significant attention to those unique features of the human social world
distinctive from all other times, places, and sectors of the natural world.
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130 Microeconomics
Though not a researched piece of formal social theory or political philosophy per se,
Bernard Mandeville’s lyrical fable The Grumbling Hive: or Knaves Turned Honest (1705)
was nonetheless one of the earliest presentations of the spontaneous order theory and
arguably was most responsible for first popularizing the idea throughout the eighteenth
century. The poem was quickly republished with additional commentary under
the modified title The Fable of the Bees: or Private Vices, Public Benefits ([1714] 1992).
Both publications gave rise to heated debate and provided significant theoretical inspiration
for subsequent theorists and classical liberals throughout the Enlightenment
period.
Mandeville’s poem remarkably conveyed a relatively complete essence of spontaneous
order theory as a hypothesis for explaining the causes and operations of complex
social order, namely, that the prosperous, functional, and generally peaceful welfare of
human society rests more on the unplanned processes of interacting human individuals
than they stem from the plans of ruling authorities or moral theorists. Mandeville’s
poem was even so bold as to allude to and explicate a nuanced model of socioinstitutional
interaction, in other words, how economic prosperity relates to society’s moral
and cultural qualities and vice versa.
Just as prosperity is not the planned result of authority, neither is the virtuous or
depraved character of society, or the general moral patterns of people within it, the
product of conscience philosophical reflection or explicitly planned moral campaigns.
In short, moral norms are themselves spontaneous orders, and individual moral beliefs
are developed within this context.
Mandeville’s narrative implied, first, that private vices did not necessarily contribute
to broader moral depravity, let alone any sort of material consequences, as many
at the time and arguably still today tend to presume. Such is evidenced merely by the
simultaneity of prosperity, increased opportunities for vice, and peaceable social functioning.
If self-interest, competition, consumption, and vice are so socially problematic,
then why amid the observed periods of the greatest increased opportunities and expressions
of these behaviors has society undoubtedly progressed materially, culturally, and
peaceably?
Thus every Part was full of vice,
Yet the whole Mass a Paradise;
Flatter’d in Peace and fear’d in Wars,
They were th’ Esteem of Foreigners,
And lavish of their Wealth and Lives,
The Balance of all other Hives. (Mandeville [1714] 1992, 24)
Second, the subtitle of the second publication refers to “Private Vices, Public
Benefits”; insofar as self-interested and competitive behaviors are contributors to social
order, supposed vice and vanity may be inevitable correlates to prosperity. The freedom
required to afford producers and innovators the environment to make and trade
goods and services will also provide the requisite freedom to accommodate and afford
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Spontaneous Order 131
a broader variety of civic behaviors, many of which will inevitably strike against previously
held moral sensibilities.
Finally, Mandeville implies a specific theory of culturally and ideologically driven
social change, hence the descriptor “grumbling” in his original title. Concerted moral
campaigns cannot refine their efforts solely to eliminate supposedly harmful vices without
also casting aspersion on the general behaviors of self-interested consumption,
profit seeking, and competition. Thus, they tend to throw the material progress baby out
with the unvirtuous bath water or kill the ornery goose that happens to lay golden eggs.
Here, Mandeville is significantly ahead of his time in recognizing that the maturing process
of cultural and moral evolution occurs in stride and is related to a society’s material
prosperity. Given Puritanism’s popularity and political influence at the time, it is not
surprising that Mandeville’s essay provoked such contention. In contrast to the social
harms invoked by moral crusades, regulators, and prohibitionists, vice appears marginally
welfare-productive.24
After Mandeville, Ferguson ([1767] 2001) is often credited with having first recognized
the concept of spontaneity when describing the functionality of legal and political
systems. His turn of phrase is frequently echoed to convey a succinct but essentially
accurate definition for spontaneous order theory:
Men in general, are sufficiently disposed to occupy themselves in forming projects
and schemes: But he who would scheme and project for others, will find an opponent
in every person who is disposed to scheme for himself. Like the winds that come we
know not whence, and blow whithersoever they list, the forms of society are derived
from an obscure and distant origin; they arise, long before the date of philosophy,
from the instincts, not from the speculations of men. The crowd of mankind, are
directed in their establishments and measures, by the circumstances in which they
are placed; and seldom are turned from their way, to follow the plan of any single
projector.
Every step and every movement of the multitude, even in what are termed enlightened
ages, are made with equal blindness to the future; and nations stumble upon
establishments, which are indeed the result of human action, but not the execution of
any human design. (119; emphasis added)
As Hamowy (1968, 257–258) explains, Ferguson, like Mandeville, also recognized the
correlation between material prosperity and the moral attitudes of society:
Many mechanical arts, indeed, require no capacity; they succeed best under a total
suppression of sentiment and reason; and ignorance is the mother of industry as
well as of superstition. Reflection and fancy are subject to err; but a habit of moving
the hand, or the foot, where the mind is least consulted, and where the workshop
may, without any great effort of imagination, be considered as an engine, the parts of
which are men. (Ferguson [1767] 2001, 182–183)
24 Such was coincidentally the similar intellectual setup and public reaction to Block (1976).
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132 Microeconomics
Ferguson also parallels Mandeville in his recognition that economic prosperity may
invoke cultural processes that are potentially self-defeating to prosperity. Specialized
populations in the division of labor may not afford the time or energy to comprehend
the operational features of the social system they live within, contribute to, and
benefit from.
But if many parts in the practice of every art, and in the detail of every department,
require no abilities, or actually tend to contract and to limit the views of the mind,
there are others which lead to general reflections, and to enlargement of thought.
Even in manufacture, the genius of the master, perhaps, is cultivated, while that of
the inferior workman lies waste. The statesman may have a wide comprehension of
human affairs, while the tools he employs are ignorant of the system in which they are
themselves combined. The general officer may be a great proficient in the knowledge
of war, while the soldier is confined to a few motions of the hand and the foot. …
The practitioner of every art and profession may afford matter of general speculation
to the man of science; and thinking itself, in this age of separations, may become
a peculiar craft. …
[T] he labourer, who toils that he may eat; the mechanic, whose art requires no
exertion of genius, are degraded by the object they pursue, and by the means they
employ to attain it. Professions requiring more knowledge and study; proceeding
on the exercise of fancy, and the love of perfection; leading to applause as well as to
profit, place the artist in a superior class, and bring him nearer to that station in which
men are supposed to be highest; because in it they are bound to no task; because they
are left to follow the disposition of the mind, and to take that part in society, to which
they are led by the sentiments of the heart, or by the calls of the public….
We look for elevation of sentiment, and liberality of mind, among those orders of
citizens, who, by their condition, and their fortunes, are relieved from sordid cares
and attentions. …
[Thus,] in every commercial state, notwithstanding any pretensions to equal
rights, the exaltation of a few must depress the many. (183–186).
Perhaps not coincidentally, just as Jacobs (1997; 1999; 2000) has inspired dispute regarding
whether Hayek or Polanyi originated the term spontaneous order, Hamowy (1968)
surveys Rae (1895), Carlyle (1910), and Oncken (1909), suggesting that the innovative
origins surrounding the idea of the division of labor was a point of personal conflict
and made accusations of quasi-plagiarism between Ferguson and Smith. Smith’s ([1776]
1904) opening sentences in the first chapter of his economic treatise define the division
of labor and cite it as the primary source for the greatest influence upon material
growth:
The greatest improvement in the productive powers of labour, and the greater part
of the skill, dexterity, and judgment with which it is any where directed, or applied,
seem to have been the effects of the division of labour.
The effects of the division of labour, in the general business of society, will be more
easily understood, by considering in what manner it operates in some particular
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manufactures. It is commonly supposed to be carried furthest in some very trifling
ones. (13)
Smith proceeds with applied descriptions of the specialized division of labor within a
pin factory, the decentralized production of a common woolen coat, and eventually the
inventory processes of corn houses as they operated in conjunction with various tax
codes under the corn laws.25 In all such cases, Smith highlights the self-regulating and
equilibrating results of profit-seeking market decision-making. Herein Smith’s initial
outlines of the classical model of the economy first took form.
Hamowy (1968, 259) suggests that Smith’s insights regarding the division of labor are
more limited to the economic sphere, compared with Ferguson’s more sociological, cultural,
and political applications. Smith ([1776] 1904) does address the cultural consequences
of expansions in the division of labor and the material progress it engenders:
In the progress of the division of labour, the employment of the far greater part of
those who live by labour, that is, of the great body of the people, comes to be confined
to a few very simple operations, frequently to one or two. But the understandings of
the greater part of men are necessarily formed by their ordinary employments. The
man whose whole life is spent in performing a few simple operations; of which the
effects too are, perhaps, always the same, or very nearly the same, has no occasion to
exert his understandings, or to exercise his invention in finding out expedients for
removing difficulties which never occur. He naturally loses, therefore, the habit of
such exertions, and generally becomes as stupid and ignorant as it is possible for a
human creature to become. The torpor of his mind renders him, not only incapable
of relishing or bearing a part in any rational conversation, but of conceiving any generous,
noble, or tender sentiment, and consequently of forming any just judgment
concerning many even of the ordinary duties of private life. (book V, chap. 1, part 3,
article 2)
While it is textually accurate to say that Smith’s observations regarding the causes and
consequences of the division of labor were relatively limited to the economic sphere
of human society, a wider review of his broader sample of writings demonstrates an
attempt to fully survey the totality of human social interaction by means of a unified
theory of human behavior and socioinstitutional operation. Spontaneous order was in
essence the mechanism of operation found throughout various social arenas, from language
to morality, economic production, and legal policies. In all applications, there is
an inevitable interplay between individual human actions via rational decision-making
on the one hand and the existence of structural institutional rules and incentives on
the other.
Again, Smith’s coining of the phrase “invisible hand,” when referring to the
self-organizing properties of buyers and sellers in the market economy, is commonly
inferred as synonymous with spontaneous order (Nozick 1974, 18–22; Ullman-Margalit
25 Leonard Read’s I, Pencil (1958) adopted this same pedagogical technique to great popular success.
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134 Microeconomics
1978) and most often referred to its centrally found location (Klein and Lucas
2011) within his most economically oriented work:
But the annual revenue of every society is always precisely equal to the exchangeable
value of the whole annual produce of its industry, or rather is precisely the same
thing with that exchangeable value. As every individual, therefore, endeavours as
much as he can both to employ his capital in the support of domestic industry, and so
to direct that industry that its produce may be of the greatest value; every individual
necessarily labours to render the annual revenue of the society as great as he can.
He generally, indeed, neither intends to promote the public interest, nor knows how
much he is promoting industry in such a manner as its produce may be of the greatest
value, he intends only his own gain, and he is in this, as in many other cases, led
by an invisible hand to promote an end which was no part of his intention. Nor is it
always the worse for the society that it was no part of it. By pursuing his own interest
he frequently promotes that of the society more effectually than when he really
intends to promote it. I have never known much good done by those who affected
to trade for the public good. It is an affectation, indeed, not very common among
merchants, and very few words need be employed in dissuading them from it. (Smith
[1776] 1904, 455–456)
However, as Hamowy (1986, 78) notes, Smith’s ([1759] 1790) earlier work on moral theory
also used the “invisible hand” phrase and generally comported to the same idea, that
the functional and harmonizing facets of cultural mores and social norms are more the
product of unplanned interindividual human behaviors than they are the direct result of
conscientious philosophical reflection:
They consume little more than the poor, and in spite of their natural selfishness and
rapacity, though they mean only their own conveniency, though the sole end which
they propose from the labours of all the thousands whom they employ, be the gratification
of their own vain and insatiable desires, they divide with the poor the produce
of all their improvements. They are led by an invisible hand to make nearly the same
distribution of the necessaries of life, which would have been made, had the earth
been divided into equal portions among all its inhabitants, and thus without intending
it, without knowing it, advance the interest of the society, and afford means to the
multiplication of the species. (184–185).
Hamowy (1986, 78) also refers to Macfie (1971) rightly noting that Smith’s ([1795]
1982) first mention of “invisible hand” is found in his “History of Astronomy,” probably
written but not published prior to Theory of Moral Sentiments:
For it may be observed, that in all Polytheistic religions, among savages, as well as
in the early ages of Heathen antiquity, it is the irregular events of nature only that
are ascribed to the agency and power of their gods. Fire burns, and water refreshes;
heavy bodies descend, and lighter substances fly upwards, by the necessity of their
own nature; nor was the invisible hand of Jupiter ever apprehended to the employed
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Spontaneous Order 135
in those matters. But thunder and lightning, storms and sunshine, those more irregular
events, were ascribed to his favour or his anger. Man, the only designing power
with which they were acquainted, never acts but either to stop, or to alter the course,
which natural events would take, if left to themselves. (vol. 3, section 3).
This chapter lacks the forum or expertise to definitively resolve such matters of historical
usage and/or creative authenticity among authors, although the context of
Smith’s initial use of “invisible hand” within his dedicated material on specifically
nonhuman subjects and scientific methodology does seem pertinent. In other
words, viewing the range of Smith’s applied subject matters, one sees an attempt to
develop a theory of human decision-making universally applicable in all variety of
social realms: political-legal, cultural-moral, and economic. Smith’s forays into nonhuman
natural sciences also appear to be explicit attempts to forge methodological
techniques capable of identifying and comprehending the operations of complex
systems. With both a theory of individual decision-making and a method for understanding
complex interaction in hand, Smith’s economic analysis hosted his most
systematic contributions to spontaneous order theory. The quantifiable nature of
market prices and material production provided analytical traction of spontaneous
order processes within the economic sectors more so than in other institutional arenas
despite their uniquely human identity, such as language, moral norms, or legal
processes.
It is not coincidental or unwarranted that Smith is given prominent attention for most
early and systematically identifying and developing the theory of spontaneous orders.26
It is arguably his particular attention and dedicated analysis of economic processes that
afforded him this vantage. Hence, it is within the tradition of economic science, and the
Austrian tradition’s unique attention to methodology therein, that the most significant
attention and insight regarding spontaneous order theory have stemmed from in the
wake of Smith.
Most notably, Carl Menger’s (1892) account of the spontaneous origins of monetary
currency from amid the incentives and procedural behaviors of agents within a barter
economy subsequently inspired the research programs of Austrian figureheads Ludwig
von Mises and Hayek. Mises’s ([1912] 1953) initial goal was to incorporate a theory of
money consistently into the broader model of individual decision-making and economic
production. Hayek (1945) in turn traced the communicative and epistemic value
conveyed by monetary prices in an exchange economy to promote material production
and social harmony.
Hayek’s initial definitions and applications of spontaneous order theory have been
sufficiently summarized above, although it is worth pointing out how significantly
his latter insights regarding social morality paralleled other enlightenment thinkers.
26 Hamowy (1986, 65) cites Kettler (1965), who notes that “Hume found Ferguson’s style both
unsystematic and inexact.”
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136 Microeconomics
Hayek (1941) lays out a detailed model of social change wherein social harmony and/
or systemic problems hinge critically on the presence of accurate methodologies
within the professional social sciences. His shorter essay, “Intellectuals and Socialism”
(1949b), proffers an account of the apparent animosity toward market processes popular
among professional intellectuals. In his final work, Hayek (1988) explicitly refers to
Mandeville’s insights regarding the sociological effects of prosperity. He outlines how
tensions arise among instinctive moral beliefs, designed moral beliefs, and evolved
moral beliefs.
Throughout the long and active history of thought surrounding spontaneous order
theory, a variety of key contextual factors were critical in shaping its substantive content
and applications. First, the historical conditions and knowledge of comparative social
environments provided thinkers in the tradition with the common vantage to recognize
the complex nature of material prosperity and social progress. All began from the
basic premise that advanced material production and social harmony conformed to a
sufficient degree of patterned operation so as to be investigated and understood scientifically.
In turn, these contributors shared a deep appreciation for gauging scientific methodology
to suit the needs of human social science.
Conclusion
In a way, spontaneous order theory is both the alpha and omega of a shared research
project in positive social science. With its discovery and elucidation, thinkers could
utilize the spontaneous order framework as a baseline for comparative institutional
analysis. Given the incentive structures of interacting individuals, their diverse interests,
and the resource constraints of a particular social context, theorists were left to
ask what moral, legal, political, and economic institutions are likely to evolve. How do
they compare with those real institutional attempts to manage social welfare by design?
Spontaneous order provides the ability to identify and diagnose natural social problems
apart from those social problems stemming from unintended consequences of
failed plans.
Spontaneous order is the omega of social science insofar as it became for many
of its key theorists the critical subject matter to continuously identify and comprehend
its procedural operation in all walks of human association. To understand
human action and human association essentially requires a keen recognition of
spontaneous orders in society and a thorough comprehension of how they operate.
Hence, the intellectual tradition stemming from Smith to Hayek and beyond has
been keenly focused on both tracking the institutional histories and operations of
spontaneous orders throughout social contexts and methodologically reflecting on
how best to identify and comprehend social meaning in a complex world of human
individuals.
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Spontaneous Order 137
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