Does Anarchy Have A Bad Rap?


/"The Internet is the first thing that humanity has built that humanity doesn't understand, the largest experiment in anarchy that we have ever had." /Eric Schmid

The other day someone tried to cut in line at my local Starbucks and although it was probably unintentional, the sense of outrage from the other customers was palpable. It was as if customers had suffered a grievous personal blow, and it was not directed at their grande mocha cookie crumble frappuccino. Their sense of fairness had been violated. An unspoken customary rule about not cutting in line had been broken. However, as far as I know, neither the rule, nor the underpinning for this sense of fairness had ever been written down for customers to read. Yet despite this, Starbucks and the overwhelming majority of its customers, have a firm and justifiable expectation that everyone will wait in an orderly line until they are served. Even the line-jumper knew the rule and complied with it immediately once his faux pas was pointed out. Reflect for a moment on the fact that much of our life is governed by rules like this one, which are the result of human actions but not human design. Such rules are an example of what Nobel Prize winning economist Friedrich Hayek called a spontaneous order. In this context the word 'spontaneous' is trying to capture the fact that no one is in charge -- the order is organic or emergent, rather than directed or controlled.

Spontaneous orders are actually all around us in physical, biological and social systems, but the concept of a spontaneous order in the social realm is not intuitive because this type of order only emerges when people are left alone, and it's not obvious that good things happen when people are left to their own devices. A powerful example of a social spontaneous order is a market. For example, nobody brought about the PC revolution by human design. Entrepreneurs alert to the desires of consumers simply responded to market pricing signals telling them what was required, when it was needed and how urgently. The rest is history.

Similarly, Leonard Reed starts his delightful essay <> on the spontaneous order behind the making of the humble pencil with the sentence /"Not a single person on the face of this earth knows how to make a pencil."/ He points out that the wood alone requires individuals who know how to grow trees as well as harvest, cut and transport the timber. Then the graphite has to be mined by individuals who probably know very little about forestry. The same thing applies to the eraser and every other component that goes into making a pencil. In the end no one single person knows everything necessary to make a simple pencil. And yet, when all these individuals are finished with their work the result is a pencil, although no one told them what to do. There was no central authority ordering that so many trees be planted for pencil use, that so much timber be harvested, or that any one shipping company deliver the wood at a specific time to a specific location.This is a great essay <> to discuss with your children, as it's one of the best and easiest economics lessons they are likely to receive.

It's not just markets and morality that are examples of social spontaneous orders. It turns out that law, language, mores, customs, culture and even many institutions, are also examples of spontaneous order -- that is to say, they are the consequence of human actions but they were not brought into existence by human intention. Now it might be objected that, for example, most of our current laws have been codified into statutes through legislation, which is definitely /not/ an example of a spontaneous order. However, much of this legislation is simply a codification of the common law that evolved spontaneously from the settlement of actual disputes since Anglo-Saxon times. Most tort law, property law, contract law, commercial law and even criminal law evolved in this way. It was pure anarchy in the sense that no one organized it.

While most people associate anarchy with disorder, the literal meaning of the word is without a ruler or government (from the Greek anarkhia). It is as if we believe that in the absence of an order imposed on us from above there could only be disorder, a common but misleading assumption, as we have already seen. The degree to which the spontaneous order of markets can replace the top-down directed order of government is a strictly empirical matter but, to the extent that we rely on spontaneous order for most of what we find useful and meaningful in life, we are all anarchists now.

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Malcolm Greenhill CFP, MBA
Sterling Futures
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This was good. I enjoyed reading it. Thanks, Michael. I am wondering if the example given for personal good behavior without looming force would work with other than the current frappuccino crowd. I say "current" because that same crowd could behave differently under different circumstances. The example on standing in line behavior took me back to my childhood, and the Argentinian revolution against Juan Peron. Food, as all goods, was scarce, and lines of folks waiting to purchase a few basic necessities were everywhere. Fights were constant, some quite violent; police on horseback kept the crowd from complete violent meltdown at times. So, depends....