An Asset That's a Liability
There Was Economy Before There Was Economics
JULY 01, 2000 by SHELDON RICHMAN
Filed Under : Spontaneous Order, Free Markets, Market Process
One of the things that make the free market (in Bastiat’s felicitous phrase) the “prodigiously ingenious mechanism” it is also makes it vulnerable to destruction: people don’t have to understand how it works. As long as they are free to pursue their own purposes in an environment where life and property are safe, the market will work. Participants do not need knowledge of, much less academic degrees in, economics. Economics is primarily a descriptive, or positive, science: economists study the consequences of what people do; people don’t carry out the instructions of economists. To put it another way, there was economy before there was economics.
It is good that the market works that way. If people had to understand the market process for it to work, there would be no market process. How would the first market have gotten started?
But it’s also unfortunate. Since people can accomplish their economic goals and even get rich without knowing economics, they have little incentive to understand the subject. (Much university economics does little to increase the incentive.) Such ignorance makes them susceptible to glittery notions that would scuttle the marketplace. Someone who has never contemplated the ingenious paradox of unplanned order is liable to think that all order is consciously arranged. That person won’t bridle at schemes to “improve” on the market because to him the matter will be a choice between two plans, rather than between planning and no planning.
This suggests that it is good for people to encounter the idea of unplanned order early in life. The idea is accessible to children as young as ten years old, if not younger. I spent 15 weeks this winter and spring teaching basic economics to homeschoolers, ages 11 to 16. Beginning with the elements of human action and going all the way to the Microsoft case, those kids were able to follow the subject, and what’s more, they enjoyed it. One of my most gratifying moments came midway in the course while I was discussing some aspect of the market. A girl in the front row riffled through her copious notes, raised her hand, and said, “It’s an unplanned order.”
I sleep a little better knowing that 20 kids who had not heard of Ludwig von Mises seven months ago now know who he is.
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