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But not everyone knows what we mean. Someone unfamiliar with the natural regularities of free markets can find the idea of an unregulated economy terrifying. So it behooves market advocates to be capable of articulately explaining the concept of spontaneous market order—that is, order (to use Adam Ferguson’s felicitous phrase) that is the product of human action but not human design. This is counterintuitive, so it takes some patience to explain it.
Ends and Means
Order grows from market forces. But where do market forces come from? They are the result of human action. Individuals select ends and act to achieve them by adopting suitable means. Since means are scarce and ends are abundant, individuals economize in order to accomplish more rather than less. And they always seek to exchange lower values for higher values (as they see them) and never the other way around. In a world of scarcity, tradeoffs are unavoidable, so one aims to trade up rather than down. (One’s trading partner does the same.) The result of this, along with other features of human action, and the world at large is what we call market forces. But really, it is just men and women acting rationally in the world.
The natural social order greatly concerned Frédéric Bastiat, the nineteenth-century French liberal economist. In Economic Harmonies he analyzed that order, but did not feel he needed to prove its existence—he needed only to point it out. “Habit has so familiarized us with these phenomena that we never notice them until, so to speak, something sharply discordant and abnormal about them forces them to our attention,” he wrote.
. . . So ingenious, so powerful, then, is the social mechanism that every man, even the humblest, obtains in one day more satisfactions than he could produce for himself in several centuries. . . . We should be shutting our eyes to the facts if we refused to recognize that society cannot present such complicated combinations in which civil and criminal law play so little part without being subject to a prodigiously ingenious mechanism. This mechanism is the object of study of political economy. . . .
In truth, could all this have happened, could such extraordinary phenomena have occurred, unless there were in society a natural and wise order that operates without our knowledge?
This is the same lesson taught by FEE’s founder, Leonard Read, in I, Pencil.
Most people value order. Chaos is inimical to human flourishing. Thus those who fail to grasp that, as Bastiat’s contemporary Proudhon put it, liberty is the mother not the daughter of order will be tempted to favor state-imposed order. How ironic, since the state is the greatest creator of disorder of all.
Those of us who understand Bastiat’s teachings realize how urgent it is that others understand them, too.
This article originally appeared at The Freeman.