All Commentary
Monday, April 1, 1991

Knowledge-Processing, Spontaneous Order, and the Free Market

Dr. Petro is Director of The Institute for Law and Policy Analysis, Winston-Salem, North Carolina, and Trustee Emeritus of FEE.

I hope with this to spoil the fun they are having in the groves of academe with the ideas about , knowledge and “spontaneous order” that Friedrich Hayek has emphasized so much over the years. Even while agreeing that the ideas are interesting, I think they have become distracting. Knowledge is generally admired; academic freedom is rampant except where restrained by the dominantly leftist professoriate; and San Francisco, Paris, London, Berlin, Florence, and all points between are flooded with “spontaneity,” while lacking in decent order. Knowledge, information-flow, and “spontaneous order” are in no danger.

Your truly endangered species today is economic freedom. Intoxicated with joy over the breakdown of the Iron Curtain countries, we are paying too little attention to the restraints on economic activity burgeoning in the West. Yes, of course, free enterprise will continue to feed the people even as governments are killing it bit by bit. But killing is killing, and no human institution is indestructible. If discovery and spontaneity are in no danger, while economic freedom is threatened, common sense tells us to concentrate our resources where they are most needed.

Make no mistake about it. Free enterprise has never been in more danger in the West. Both here and abroad swollen bureaucracies are approaching critical bloat, absorbing enormous shares of national product while pushing for more authority to direct the rest. Legislatures, flouting constitutional restraints, devote themselves exclusively to confiscation and redistribution; they take wealth and freedom from the savers and producers and give them to the bureaucrats, the looters—the Greens, the reds, the blues—the ecology lobby, the big spenders, the regulators, the ever-active interventionists. Thus statism burgeons in the West while it disintegrates in the East. And even as we are drowning in debt our governments keep spending like drunken sailors, piling up ever-increasing deficits, and taxes, and funny money. It will be a miracle if we don’t run into big trouble.

It doesn’t seem right to be fiddling with knowledge-processing and spontaneous order while the free enterprise system is going up in smoke.

Certainly the more we know the better off we are, as a rule; and the more liberty we have to acquire and to disseminate knowledge, the more productive our society will be. No one except the Marxists has ever doubted this. But until lately center stage for Austrian libertarians has been occupied by total freedom, the freedom to act, freedom of which knowledge-processing is but a part, and which is better described as rational than as “spontaneous.”

Let us quit confusing the parts with the whole. A person is free when he owns himself and the fruits of his labor. For slavery is understood to be the condition in which one person and his labor are owned by another, involuntarily. Further, owning means the power of disposition. The free person is at liberty to consume what he owns, to exchange it with anyone willing to participate in the exchange, to preserve it if he can, to discard it if he wishes, to destroy it if he can do so without hurting anyone else, and to invest it. These incidents of the right of private property are what create a free society, the only setting in which a market economy is possible.

The Essence of the Market

So why all the preoccupation with the role of knowledge in the economy? It is but one feature of the market economy, and by no means “of the essence.” The essential feature of the market economy is not knowledge, its generation, or its • dissemination. If the market economy generates and distributes knowledge more efficiently than other systems do, and makes better use of it, that is because the market economy is the best way to organize human society, to get the most and the best out of human beings. Human beings flourish in freedom, and desiccate and deteriorate in slavery. For human beings, freedom is the optimizing institution. It fits us fine.

The heart of the matter is freedom, the freedom to act and to interact: to produce, to consume, to invest, to exchange, to work, to think, to communicate or to remain silent. With this unitary freedom we have a market economy; without it we don’t. It’s human action that counts. Knowledge is just a piece of the action.

How far would we get if there were only the freedom to think? How far if there were only the freedom to write? To speak? Imagine a society in which you could think, or speak, as you wished, but where you could not work at any job you could find, and your possessions were insecure, and you had no privilege of investment at will. What if you could say whatever you wanted, but you had to work where you were told to work, and you would be hanged if you offered what you owned for sale? Let us have an end of this exaggerated empha-sis upon the role of knowledge in the market. It is a fad, an academic fashion show. It is overkill. And a free society has no more to do with “spontaneous order,” either. More thought, and infinitely better thought, has gone into the development of the free society than has gone into all the other, failed, systems. Painful thought, hard work, excruciating rationality—these are our heritage, the heritage of the laborious West and of its current Oriental epigoni.

Of course every Austrian libertarian thrives on spontaneity, when it is disciplined by reason and moral restraint. But real, unplanned, genuine spontaneity is likely to do the market order in if we aren’t careful. This country, with all its faults, remains the closest thing to a market order that the world has ever known. It is seeing, though, that genuine spontaneity does not produce order; it produces chaos. We are in trouble because while we have spontaneity, we don’t have order, a fact that raises questions about the term “spontaneous order.”

Our educational and spiritual institutions are in shambles. Our kids are wayward, indolent, ignorant, addictive to a greater extent than I have encountered before, in life or in books. Our politicians, for the most part irresponsible, are strangling the right of private property and diminishing the competitiveness of the American economy in countless ways.

But is anyone threatening academic freedom or adolescent, or spiritual, or political spontaneity? I recommend that we direct less of our ratiocinative energies to “knowledge-processing” and to “spontaneous order,” whatever that self-contradictory term is supposed to mean, and more to the way that governments, trade unions, and the more freakish members of our society are limiting the freedom to act, to save, to invest, to produce. The current emphasis on knowledge and “spontaneous order” is a cop-out, or the tail wagging the dog, or both. Away with it. []

“The market process is coherent and indivisible. It is an indissoluble intertwinement of actions and reactions, of moves and countermoves.”

—Ludwig von Mises

Human Action

  • Sylvester Petro (1917–2007) was a professor of law and the author of several books on the history of labor policy in the United States, including The Labor Policy of a Free Society, The Kohler Strike, and The Kingsport Press Strike.
    As professsor and director of the Wake Forest University Institute of Law and Policy Analysis, he taught generations of students about the history of labor unions, while defending free association and free contract as essential to the free and prosperous commonwealth.