Richard Dawkins, Biological Complexity, and the Market

The complexity of the supply chains and market processes that make socks mundane to most people in the world today is nearly all unseen and, hence, unappreciated.

From page 130 of Richard Dawkins’s excellent 1995 book, River Out of Eden:

So, any new mutation is likely to have not just one effect but several. Though one of the effects may be beneficial, it is unlikely that more than one will be. This is simply because most mutational effects are bad. In addition to being a fact, this is to be expected in principle: if you start with a complicated working mechanism—like a radio, say—there are many more ways of making it worse than of making it better.

The importance of the principle to which Dawkins here refers cannot be overstated—and it applies across nearly all of existence, including human society. As complicated as is a radio, a jumbo jet, a horse, or a human body, human society is vastly more complex.

The complexity of the global economy is mind-boggling, and yet it works amazingly well—so well that we take it for granted.

Think of today’s global economy. In it, literally billions of people—each with unique preferences, talents, and knowledge—each makes countless decisions daily, mostly tiny, and mostly as adjustments in response to the flow of results of (“feedback” from) the on-going decision-making of others. The complexity of the global economy is mind-boggling, and yet it works amazingly well—so well that we take it for granted and notice only its failure to satisfy the ideal that we have in our heads.

Ponder the seemingly simple socks on your feet. You didn’t make them. You’d have no idea how to begin to make them. Who grew the cotton? Who shipped the cotton from farm to factory? Who insured these commercial enterprises? Who designed the socks? (Yes, they are designed, as you’ll notice if you examine them with some attention.) Who supplied the funds to enable the retailer to stock the socks before you voluntarily chose to purchase them? You did none of these things. No single person did more than a tiny fraction of these things. And yet there they are, on your feet. Socks. You barely give them a first thought, much less a second thought.

How much did you pay for your socks? A few dollars. If you paid for your pair of socks what is roughly today the average hourly wage of an ordinary American worker—$22—you have gotten for yourself a pretty upscale pair of socks. Still, for one hour of your work time, if you’re a typical American worker, you commanded some of the fruits of the minds and manual efforts of literally hundreds of millions of strangers from across the globe.

These terms too easily give us the impression that we can know enough about the phenomena to which they refer.

The complexity of the supply chains and market processes that make socks mundane to most people in the world today is nearly all unseen and, hence, unappreciated. We can and do talk about the likes of “the textile industry,” “the retail industry,” and “consumer demand.” But these terms too easily give us the impression that we can know enough about the phenomena to which they refer. We cannot. And so we easily become fatally conceited. We demand that government intervene in this way and that into—marketsput a tariff on this product, impose a minimum wage in that country, prevent price hikes for those commodities.

Ignored by the many people who clamor for simple and simplistic government ‘solutions’ to economic problems—some real, most imaginary—is the enormous complexity of the market processes into which they wish to intrude the heavy and awkward (and always grasping) hand of the state.

Let each person survey his or her immediate economic surroundings and, using his or her unique knowledge and perspective, adjust.

As with Dawkins’s radio, there are many more ways of making the economy worse than there are of making it better. Therefore, the wise course is to devolve decision-making down to as low as level as possible. Let each person survey his or her immediate economic surroundings and, using his or her unique knowledge and perspective, adjust. If that person adjusts in a mistaken way, the harm will be localized and he or she has a powerful incentive to get it right on subsequent tries. Private property and contract rights encourage this localized decision-making.

But state intervention is not localized; it’s systemic and large-scale. The chances that the state will get it right are slim; the unintended, unseen ill-consequences of such intervention are always almost certain to swamp whatever benefits such intervention brings.

Finally, note, however, this important difference between a radio and human society: the radio is the result both of human action and of human design. Someone designed, planned, and built (or arranged to be built) the radio. In contrast, no one designed, planned, or built human society. Society (and the economy which is part of society) is indeed the result of human action, but it emphatically is not the result of human design. This fact about society is yet one more reason why attempts to engineer society or the economy are destined to fail—and if the engineering attempt is massive, to fail calamitously.

Reprinted from Cafe Hayek