The greatest insight of the human mind

One of the greatest insights a thinking person will ever have is the recognition that spontaneity is often the best engine of a well ordered society. Yet, this is not what most people believe. The most common avenue of thought is that deliberate human design is necessary to achieve order in what we call “society.” We tend to use that word without much thought to its meaning, which is the aggregate of people living together in a more or less ordered community.

Our wise grandmothers may have often told us that it is best to let nature take its course, and so long as it the natural world we are talking about most of us think it’s wise advice. When it’s the ordering of society and government the human brain rebels against this wisdom. We tend to think things will go awry unless we guide everything in ways that seem to us as its proper direction. True believers in religion cannot accept that species have evolved on their own and so insist the taxonomic kingdom of plants and animals must necessarily be the product of an omniscient intelligent designer. To think otherwise, according to them, is to assign everything to random chance and chaos.

What is missing in that way of seeing the world is insight into how knowledge exists and accumulates in a society and how it can be accessed and used to make a better society.  The aggregate of knowledge in the world does not and cannot exist in one person’s brain or in the multiple brains of a committee of the smartest among us.  Such an accumulation of knowledge in one or a few brains is merely a subset of the universe of knowledge.  So, if one person or even a pretty large group of persons can never possess all the knowledge that exists and has accumulated, how can we ever use it?

Following our wise grandmother’s advice on allowing nature to take it course is a starting point to the use of knowledge in society. Free markets operate on the price system which has the ability to communicate information  to us that we could’nt get otherwise. This getting of knowledge is what allows a true society to exist as an aggregate of people living together in a more or less ordered community.

In his essay, The Use of Knowledge in Society (1945), Friedrich Hayek, said:


The marvel [of the price system] is that in a case like that of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause, tens of thousands of people whose identity could not be ascertained by months of investigation, are made to use the material or its products more sparingly; i.e., they move in the right direction. This is enough of a marvel even if, in a constantly changing world, not all will hit it off so perfectly that their profit rates will always be maintained at the same constant or “normal” level.

I have deliberately used the word “marvel” to shock the reader out of the complacency with which we often take the working of this mechanism for granted. I am convinced that if it were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind.

If we can agree that the economic problem of society is mainly one of rapid adaptation to changes in the particular circumstances of time and place, it would seem to follow that the ultimate decisions must be left to the people who are familiar with these circumstances, who know directly of the relevant changes and of the resources immediately available to meet them. We cannot expect that this problem will be solved by first communicating all this knowledge to a central board which, after integrating all knowledge, issues its orders. We must solve it by some form of decentralization.

The central planners in the Wisconsin Department of Transportation, like so many other state government agencies, is having a love affair roundabouts. The idea comes from England and parts of Europe where roundabouts have been in place for decades. The American verson of a rouundabout is quite different from the overseas ones, and they do not deliver anywhere near the smooth flow of traffic roundabouts are supposed to make possible.  As a result, most people hate the damn things.

That didn’t stop the Wisconsin DOT and today Wisconsin has the greatest number of roundabouts per person in the United States. That’s what central planning does. It makes people pay for and live with lots of stuff they neither need nor want. That is wasteful, and to use a word embraced by millennials, it’s unsustainable.