Perhaps the most important essay written by a social scientist in the 20th century was Nobel laureate Friedrich Hayek’s essay “The Use of Knowledge in Society.” Hayek’s central idea that useful knowledge is dispersed is still almost universally disregarded by policymakers and politicians and is too often disregarded by those who lead our organizations.
Hayek’s insights on knowledge are easier to understand in the context of his ideas on spontaneous order. Spontaneous order is not the product of deliberate design but rather is order that emerges through the interactions of individuals using dispersed knowledge.
For example, think of the amazing food distribution system that we have. A California farmer plants broccoli; a distributor ships the broccoli to Michigan in the winter; a supermarket purchases the broccoli from the distributor and stock the shelves; and nobody gave the orders. Societies that have tried to feed themselves through deliberate design have quickly run into the limits of deliberate design. Think of North Korea where millions of children suffer under severe malnutrition as their “supreme leaders” issue their “field guidance” and commands.
Yet, although we experience the positive impact of spontaneous order in the United States, by-and-by Americans are economically illiterate and often are enamored with the central planning solutions that politicians order.
Matt Ridley, in his brilliant book The Rational Optimist, offers a very accessible understanding of the applications of Hayek’s ideas. Indeed, his is a page turner, a rare can’t-put-it-down non-fiction book. In a recent exhilarating talk at the Manhattan Institute, Ridley offers a flavor of his own wisdom. Here is a sample:
All human achievements come from the networking of our minds, rather than from individual knowledge, talent, or skill.
I just do not see why trusting people not governments, encouraging collaboration not instruction, embracing innovation not order, and allowing collective intelligence rather than central planning is a reactionary philosophy.
In doing so, I find that the entire field of anthropology and archaeology needs Hayek badly. Their debates about what made human beings successful, and what caused the explosive take-off of human culture in the past 100,000 years, simply never include the insight of dispersed knowledge.
They are still looking for a miracle gene, or change in brain organization, that explains, like a deus ex machina, the human revolution. They are still looking inside human heads rather than between them.
I love that last quote. We continue to look for a great man to solve our societal problems. We continue to bear down and overanalyze our own problems. The solutions to both our personal and societal problems are often emergent and often only occur as we engage in an uncoerced social process that occurs between, and not inside, our heads.
As Ridley demonstrates, societies not only fail to progress but often regress when they do not understand that progress can only occur when individuals are free to innovate, specialize, and trade. In his book Borderless Economics, Robert Guest tells of visiting a library in Pyongyang, the capital of North Korea. There he found literally hundreds of volumes reportedly written by Kim Il-sung and his son Kim Jong-il. He asked the librarian if anyone read anything else. The librarian could not name a single example.
Admittedly, this is extreme; and in North Korea, the Kim’s dynasty doctrine of juche (self-reliance) has become literally a doctrine of mass murder as millions starve to death.
Yet millions in America entertain similar fantasies about self-sufficiency. They advocate trade barriers and they refuse to consider anyone’s opinion but their own and those they agree with. Some dream of an idyllic existence on a Vermont farm were all goods and services they buy are locally grown. Politicians, who should know better, such as Mitt Romney, promise to get tough with China. These advocates, of destructive policies, are free to live inside their heads and suffer the consequences. They should not be free to interfere with those who choose to value what goes on between heads.