Emergence theory has been applied beyond the physical and biological sciences to the study of the formation and evolution of human institutions, including philosophy, science, engineering, economics, and the arts (including military arts), as well as such cultural institutions as education, religion, commerce, and law. The order and freedom of these latter are generally dependent on the supportive and regulative institutions of government, including its legislative, executive and judicial institutions. Beyond these there are the application of those supportive and regulative institutions to such fundamental emergent human relationships as family, business, and community.
What qualifies human social institutions as emergent? The answer is that many human institutions evolve spontaneously, i.e., without deliberate human planning and without human volitional intent to realize or evolve their nature. We shall discuss some of these in detail. But first it is essential to identify the fundamental distinction between outcomes that are man-made and outcomes that are man-caused.
The Man-Made vs The Man-Caused:
By man-made outcomes I mean (and this is its general meaning) those outcomes that are consciously intended, designed, planned, controlled, directed, and implemented through human thought and action. By man-cause outcomes I mean (and again this is the general meaning) outcomes that are not necessarily consciously intended, designed, planned, controlled or directed by man, but which nevertheless are the outcome of human action and thought, but thought and action that is not consciously directed at achieving that outcome.
Given these definitions, the emergence of social institutions are generally man-caused but not man-made. They emerge naturally as a result of human nature acting in a giving social context aiming to achieve desired outcomes, but not aiming towards the outcomes that emerge in spite of the aims of the humans acting in that social context.
Example 1: Emergence of The Free Market
The marketplace (a local or global, physical or virtual, place for trading through offering to purchase products and/or offering products for sale) is an example of such an emergent human social institution. Each individual in the market is aiming at his own best return for his trade. Each individual has his own standards as to what constitutes his best return. But no person is aiming at defining, creating, evolving or sustaining the market system itself. The market system is the emergent result of the concurrent actions of all participants.
Emergent Laws of the Free Market:
The market has many laws, none of which are created by its participants. One such law is the law of supply and demand. Another is the law of diminishing marginal utility.
Emergent Law of Supply and Demand
Let’s first look at the law of supply and demand. No buyer or seller of water is aware of the entire collection of current water traders but is only aware of the current market price of water. Yet at any moment in time, the supply (the volume of water the average supplier is willing to offer his water at a given price) of water will generally be just enough to meet the available demand (the volume of water the average buyer buyer is willing to purchase at a given price). Thus in a well-balanced market there are no widespread overages (excesses of supply) or widespread shortages (deficiency of supply).
But how is this ideal balance achieved if none is directly aiming at it? It is an emergent law that reflects the optimal state of the organized complexity that is the dynamic market forces operative at any point in time. We know that this is a law because we know that historically (and theoretically as well) any attempt to bypass the law of supply and demand by, for example, price fixing, will always result in excessive product shortages or excessive unsold inventory. Both of which will cause a general decline in the overall market value, and thus a loss to its participants.
Emergent Law of Diminishing Marginal Utility
Now let us turn to the law of diminishing marginal utility. This law states that the price at which a product will be purchased on average is based on the general willingness of the collective set of buyers to purchase an additional unit of that product, given its value to them at that moment in time. In general that incremental value and willingness will decline. For example, another bottle of water may be of minimal added value (marginal utility) to a person who already possesses a large supply that fully satisfies his needs at that point in time, and who therefore is not likely to buy another unit, or may be willing to buy that unit only at a lower price. Another person (living perhaps in a desert and having no water) will see an additional unit of water as having greater added value (marginal utility) and be willing to pay more for an additional bottle of water at that same point in time. But in both cases, as the demand for water is satisfied, each potential buyer will regard additional bottle of water as having less additional value (marginal utility) and will purchase less of that product over time. This law tells the producer that the demand for a product will generally decline as the marginal utility of that product naturally diminishes. This becomes one of the many factors that determine the price of a product at any moment in an economy, and thereby its supply. Yet none in the market is aiming at creating the law of diminishing marginal utility for any or all products in the marketplace. And yet this iron law inevitably emerges and cannot be bypassed.
Self-Ordering Emergent Processes Cannot be Directly Controlled
F. A. Hayek made the profound observation that we cannot control the processes that occur in in self-ordering (self-organizing) systems. We can only set up and or encourage situations where the self-ordering will naturally occur, and out of which we may reap its self-generated products:
For in fact we are able to bring about an ordering of the unknown only by causing it to order itself…This is for example what we do when we initiate processes that produce crystals or new chemical substances… In chemistry, and even more in biology, we must use self-ordering processes in an increasing measure; we can create the conditions under which they will operate, but we cannot determine what will happen to any particular element. Most synthetic chemical compounds are not ‘constructible’ in the sense that we can create them by placing the individual elements composing them in the appropriate places. All we can do is to induce their formation. – from F. A. Hayek, The Fatal Conceit: The Errors of Socialism, under the topic ‘Ordering the Unknown’, p. 83.
It is the failure to grasp this fact in the area of economics that causes the ultimate failure of any attempt to plan or control the market system. For the market system is a powerful example of spontaneous self-organized emergence in the domain of human action.
Marx’s Failure to Grasp the Market as Self-ordered Emergence
As an application of the foregoing principle, F. A. Hayek notes that Marxian economics represents, among it multiple errors, a failure to identify and grasp the principles of self-organization which underly the emergence of the market system.
Marxian economics is still today attempting to explain highly complex orders of interaction in terms of single causal effects like mechanical phenomena rather than as prototypes of those self-ordering processes which give us access to the explanation of highly complex phenomena. – from F. A. Hayek, The Fatal Conceit: The Errors of Socialism, Appendix B, The Complexity of Problems of Human Interaction, pp. 148-149.
Emergent Order Through Information, Action and Communication
A positive application of Hayek’s principle of limited control of self-ordered systems, and his observation that we can at best only encourage a desired general outcome by creating conditions under which they can optimally emerge, such as entrepreneurial investment into an ongoing or new enterprise. Hayek writes:
An individual who finds himself at some point in an extended order where only his immediate environment is known to him can apply this advice to his own situation. He may need to start by trying continuously to probe beyond the limits of what he can see, in order to establish and maintain the communication that creates and sustains the overall order. – from F. A. Hayek, The Fatal Conceit: The Errors of Socialism, under the topic ‘Ordering the Unknown’, p. 83.
Hayek repeatedly points out that for human institutions, such as the market, desired outcomes depend upon the continuous mining of information (i.e., personal knowledge) and the spontaneous generation and distribution of such information through multi-channeled communications between the millions of individuals within the complex global system. The result of this communication, decision-making, and local actions results in a material pattern resulting in a continuously expanding order of a continually evolving range of means of further plans and actions within that order (in this case: the extended order of the market).
Indeed, maintaining communication within the order requires that dispersed information be utilised by many different individuals, unknown to one another, in a way that allows the different knowledge of millions to form an exosomatic or material pattern. Every individual becomes a link in many chains of transmission through which he receives signals enabling him to adapt his plans to circumstances he does not know. The overall order thus becomes infinitely expansible, spontaneously supplying information about an increasing range of means without exclusively serving particular ends.
Copyright © 2012-2014 by bioperipatetic. Published on: September 15, 2014 @ 1:22 am
Latest revision on September 30, 2014 @ 2:13 am