Progress pill
Philosophical differences between political families

Spontaneous vs. constructed order

What's your Political Leaning?

Spontaneous vs. constructed order

  • Constructivism: a transpartisan consensus
  • Hayek's analysis of constructivism
  • Spontaneous order: organization from below
  • The knowledge problem
  • The free market as genuine regulation
  • Pro-business versus pro-market
  • The libertarian position
Another major fault line divides those who believe the political process is superior to the market process from those who hold the opposite view. The first group defends a constructed order, designed from the top down. The second defends a spontaneous order, emerging from the bottom up. This distinction is fundamental to understanding political sensibilities, and it places libertarians against virtually every other family.

Constructivism: a transpartisan consensus

Constructivism is not the monopoly of any single political camp. It unites centrists, conservatives, and socialists around a shared conviction: the superiority of the political process over the market process. For all these currents, the state is better equipped to organize society in a just and efficient manner. They privilege central planning, though to varying degrees depending on the family.
If we summarize constructivism in a single sentence: it is the belief that a central government can create, by force of law, a social order that is good for the greatest number.

Hayek's analysis of constructivism

To understand what is at stake, we can follow the analysis of Friedrich Hayek. Constructivists believe firmly that it is possible to build a society that conforms to their wishes and ideals. They consider deliberate, planned intervention necessary to shape society according to their vision, whether conservative or progressive.
Behind this belief lies an older assumption, traceable to Plato and his theory of the philosopher-king: the idea that certain men are better equipped to direct others and organize society. This is a fundamental belief in the superiority of some over others.
But Hayek shows that beyond this philosophical question, there is a practical impossibility.

Spontaneous order: organization from below

Spontaneous order is not an argument against organization. On the contrary, for Hayek, it is one of the most powerful engines of economic and social progress. It is defined as the product of the free interactions of individuals in society, resulting from human action but not from deliberate human design.
Rules, institutions, and practices that emerge spontaneously are not planned or imposed by a central authority. Consider the following examples:
Language: French, English, German, none of these were constructed in a bureau where intellectuals gathered to decide the rules of grammar and spelling. They are the fruit of a slow, organic organization built through historical interactions.
Social codes: morality, politeness, customs, these too are the product of spontaneous coordination that developed progressively through human interaction.
Commodity money: from shells to metals, gold emerged as the best money chosen by the market, not by any central authority, through experience, competition, and the subjective valuations of individuals.

The knowledge problem

Hayek's fundamental argument in favor of spontaneous order rests on the nature of information. In a 1945 article, The Use of Knowledge in Society, he wrote:
Knowledge never exists in a concentrated or integrated form, but only as dispersed fragments of incomplete and frequently contradictory knowledge possessed by all distinct individuals.
The market depends on information, but only distinct individuals can know what their needs are and what things cost. Value rests in subjective appreciation, in the minds of individuals. It cannot be decreed authoritatively or centrally. Value is subjective, which is why it is known only in a limited, fragmented, and local way.
It is the price system that allows millions of people who do not know each other to coordinate their knowledge and skills. In a free market, prices transmit information about the needs and competencies of each participant. They enable people to enter into relationships and exchange. These are, of course, market prices, established through voluntary negotiation between individuals.
The central planner, sitting in a ministry or office, has no knowledge of the true price of things because he is not engaged in interaction and exchange. Thus, any pretension to scientifically organizing society paradoxically aggravates problems rather than remedying them.
When the state fixes prices, because it knows only a small part of consumer preferences and local specificities, it provokes crises. Consider rent controls: when rents are capped, landlords find it unprofitable to offer their properties for rental, and housing shortages follow.

The free market as genuine regulation

For libertarians, the true regulation of society is not democracy (which has its uses as a mode of designating representatives) but first and foremost the free market.
The market serves three essential functions:
  1. Without a free market, there is no compass. Prices are reliable indicators for guiding economic and social decisions.
  2. The market reveals preferences. It is an optimal mechanism for discovering and aggregating authentic individual preferences. Prices reflect supply and demand.
  3. The market enables the full exercise of the right to decide. Actors can freely determine their own affairs according to their personal values. There is an ethical dimension here: letting each person be the actor of his own life and make his own choices.

Pro-business versus pro-market

It is important to distinguish clearly between pro-business and pro-market, two positions that are often confused.
Among socialists, centrists, and conservatives alike, one finds many pro-business politicians. For them, competition is an instrument of governance for achieving economic objectives. It is obtained through regulations that guarantee supposedly fair competition: anti-monopoly laws, sectoral and environmental norms. Stimulus plans and subsidies are justified by social consequences such as preventing job losses and recession. In the pro-business view, the market is fragile and needs the state to rescue it.
For pro-market advocates, competition is the natural result of free enterprise, which excludes the centralized power of the state. This implies deregulation (suppressing obstacles to freedom and regulations that constrain private property) and allowing businesses to fail, because failure allows the market to reorganize naturally and opens the field to more capable actors. If a business fails, it made poor choices and must bear the consequences.
The difference is significant. Pro-business advocates often seek an alliance with large corporations at the expense of smaller players. This is a capitalism of appearances that in reality considerably reduces freedom through its faith in constructivism and planning.

The libertarian position

In conclusion, libertarians find themselves somewhat alone against the other political families, all of which are constructivist. Libertarians hold that society organizes itself naturally through spontaneous mechanisms of coordination, and that voluntary cooperation remains superior to organized constraint, even when well-intentioned, for building a just and prosperous society.
The political class in general is not favorable to spontaneous order because it threatens their power. Whether you are a conservative, centrist, or socialist politician, you will tend to be hostile to spontaneous order and the market because you want to control affairs. But for libertarians, the true power to improve society lies not in political power but in the power of choice: free and voluntary exchange, the market.
Two aspects must be held together. Efficiency: free markets coordinate dispersed information better than centralized planning, as Hayek demonstrated. And justice: mutual consent respects human dignity more than coercion and constructivism ever can.
All of this, however, requires that rights and duties be clearly defined. The market may be a spontaneous process, but it must conform to law, particularly property rights, and it requires the non-intervention of the state in economic and social affairs. The state should confine itself to enforcing fundamental rights such as property rights and abstain from intervening in everything else.
Quiz
Quiz1/5
What is the key distinction between being pro-business and being pro-market?