Cosmos and Taxis

Presentation, 2008, Howard Baetjer Adapted from Barry Brownstein

Why We Need Order

 “Living as members of society and dependent for the satisfaction of most of our needs on various forms of co-operation with others, we depend for the effective pursuit of our aims clearly on the correspondence of the expectations concerning the actions of others on which our plans are based with what they will really do.” - Hayek

What Is a Paradigm?

 "...the basic way of perceiving, thinking and valuing...associated with a particular vision of reality. A dominant paradigm is seldom if ever stated explicitly; it exists as an unquestioned understanding" Willis Harmon  You can’t get out of your box until you recognize the box you are in.

Examine: The Belief that More Control  Leads to More Order Some believe that economic and social problems are solved by more controls.

 "If indignant reformers still complain of the chaos of economic affairs, insinuating a complete absence of order, this partly because they cannot conceive of an order which is not deliberately made, and partly because to them an order means something aiming at concrete purposes..."

How Do Spontaneous Orders Come About?

 “The first answer to which our anthropomorphic habits of thought almost inevitably lead us is that it must be due to the design of some thinking mind.“ Hayek

Chaos and Complexity

   Major paradigm shift in the natural sciences and social sciences: Previously, explanations of how the world works were cast in terms of Newtonian order and regularity. Systems moved in predictable ways.

Now, the emphasis is on the creative role of disorder and irregularity. Systems move in self-organizing ways with unexpected and unpredictable outcomes.

Accuracy of Weather Forecasts

   Meteorologists hoped increases in computing power would dramatically increase forecast accuracy Because weather is a complex system small changes in weather patterns can have big effects.

 Does a butterfly flapping its wings in China create a storm in Kansas? Next day accuracy 70%; 2 day accuracy 63%; 3 day accuracy 60%; 4 day accuracy 55%

Friedrich Hayek (1899-1992)

 Nobel Laureate, 1974, in Economics  130 articles, 25 books from technical economics to the philosophy of science  pioneer in Economics and Social and Organizational Learning  "It is unlikely that we will see the likes of such a wide-ranging scholar of the human sciences again."- Peter Boettke

Two Types of Order

 Cosmos - self-generating, endogenous, grown, spontaneous order, no specific purpose  Taxis - made, exogenous, constructed, artificial order, usually has a specific purpose

Characteristics of Spontaneous Orders

"Its existence need not manifest itself to our senses but may be based on purely abstract relations which we can only mentally reconstruct."

Characteristics of Spontaneous Orders

"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."

Characteristics of Spontaneous Orders

"Its degree of complexity is not limited to what the human mind can master.”

Complexity of Spontaneous Orders

"Thus by relying on the spontaneously ordering forces, we can extend the scope or range of the order which we may induce to form, precisely because its particular manifestation will depend on many more circumstances than can be known to us—and in the case of a social order, because such an order a mind performs.“ will utilize the separate knowledge of all its several members, without this knowledge ever being concentrated in a single mind, or being subject to those processes of deliberate coordination and adaptation which Hayek

Inverse complexity of rules and order  “Simple, clear purpose and principles give rise to complex, intelligent behavior. Complex rules and regulations give rise to simple, stupid behavior.” Dee Hock, founding CEO VISA

More Control Frequently Results in Less Order

   The Soviet Union had much control over food production and distribution  Yet the average Soviet citizen stood in line 40 hrs a week, Moscow stores had no fresh produce even in the summer and food rotted in the fields.

Similarly our own public school system at times is unable to provide even discipline and safety; falling quality.

Both are examples of “paradigm blindness” in that solutions offered are/were within the orthodoxy.

Advantages of Spontaneous Orders

 More complexity  More diversity  More flexibility  More innovation

CEO's On Spontaneous Order In The Firm

   "Complex human systems, whether societies or organizations, can only function properly by spontaneous order."- Charles Koch, CEO Koch Industries "We can't run 21st century society with 17 Founder and former CEO Visa International th century notions of organization".- Dee Hock, "Command and control organizations are not only archaic and increasingly irrelevant, they are a public menace, antithetical to the human spirit."- Dee Hock

The Internet

     Complexity beyond complete comprehension Almost infinite flexibility and adaptability No central authority making or enforcing anything but the simplest of rules (domain names, protocols etc.) No master plan for what businesses should operate on the net or new technologies Yet out of that ‘chaos’ comes a rich order

Why Are Markets Feared?

 " To the layman untrained in economics, the market economy presents a bewildering face. It consists of numerous individuals each intent on his own goals, giving no concern to the overall social implications of his pursuits. No central coordinating agency controls or even monitors the innumerable independent production and exchange decisions made by these countless individuals. It is no wonder that the market economy seems to be nothing but a jungle of clashing, discordant individual activities.“- Kirzner

Can We Improve Spontaneous Orders?

“There will be many aspects of it over which we possess no power at all, or which at least we shall not be able to alter without interfering with—and to that extent impeding —the forces producing the spontaneous order. Any desire we may have concerning the particular position of individual elements, or the relation between particular individuals or groups, could not be satisfied without upsetting the overall order.“ - Hayek

Examples of Spontaneous Order

      Language  Taxis: Esperanto anyone?

 Invented in 1887 by L. L. Zamenhof Science and technology Markets and economies Customs, culture, entertainment Law Ecosystems  Taxis: The Biosphere project

Firefox Takes Advantage of Spontaneous Order

     Mozilla allows access to source code for browser and allows modification of browser to meet individual and organizational needs.

Filters and incorporates best innovations “the Mozilla Foundation employs only a dozen or so programmers. But they are the tip of an iceberg of thousands of programmers who, via the open-source model, donate their time and brainpower” In a networked world open platforms win Other examples of open platforms   Apache web server software Linux operating system for Unix

Spontaneous Order in the Military

   Self-organization “does not mean that tank crews fly helicopters or that soldiers spontaneously decide to support Kurdish rebels against Baghdad” –Pascale “Never tell people how to do things, tell them what to do and they will surprise you with their ingenuity” General Patton “Combat units improvise and initiate but always within the larger structure of Commander’s intent.”