No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Two: Fundamentals of Economic Behavior 48 beneficial use of our differing skills and abilities. Atheists often like to point to the market as an example of unplanned evolution, while Christians see the opposite: people that succeed in the market over the long term only do so by following God’s command to serve others . Just as we serve others in non-market settings and receive eternal blessings, so too when we serve people in market settings, we often receive earthly blessings. This is only a qualified good result; we still live in a fallen world where some fallen people serve others’ fleshly desires, so that we see goods and services produced which do not honor God (the reader can undoubtedly think of many products produced that do not edify the purchaser). The unintended order (unintended by man, not necessarily by God) created by private individuals acting in their own self-interest is an example of emergent order . Emergent order arises as a result of individual decision makers acting to maximize their own interest, and creating a social order that was not part of their design. This is also routinely called spontaneous order, since the order is not planned but “spontaneously” occurs. I prefer the term “emergent” since the order is not truly spontaneous—it is the result of deliberate actions of many planners and emerges from their deliberate actions. Use of the term “emergent,” while not only more accurately conveying the meaning of the outcome, also avoids a naturalistic and evolutionary view of market processes. Just because an order is not centrally planned by humans does not mean it is not part of God’s broader plan, either through His permissive or His perfect will. Typically emergent order is a complex order that results from the combined effect of simpler acts; social orders tend to be this type order, with free markets perhaps the epitome. For example, the most effective way to get shoppers through the checkout line at a grocery store is for the shoppers to spread out equally across the available cashiers. No one has to tell them; it is in a shopper’s best interest to go to the shortest line. The result of getting all the customers through the checkout line as quickly as possible is not part of the individual’s plan—but that is the result. And of course, that is a very simple social order, one that perhaps could be centrally planned (although certainly not needed). But as the order gets more complex, and more individuals have to coordinate their plans, it becomes impossible for a central planner to direct the outcome. Individuals act with the specific knowledge they possess—knowledge of what Nobel Laureate F.A. Hayek called the knowledge of time and place, which is a type of knowledge that a central planner cannot have. The very specifics that an individual has to act on must be highly aggregated (added up) to present to a central planner; yet the process of aggregation would hide the very information of “time and place” that would need to be acted on. For example, a local entrepreneur might see the need for pink running shoes as a hot seller in Chicago, while another might see a glut of orange tennis shoes in Tampa. The central planner might see an aggregation of shoes demanded = shoes supplied , so he or she might continue with the current centrally directed plan. The fact that there is a glut of orange tennis shoes in Tampa and a shortage of pink shoes in Chicago is lost when the total is aggregated into the broader category of tennis shoes. emergent order: an order that emerges out of the actions of numerous individuals, the order of which is not likely to have been foreseen or intended by the individual actions