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The Spontaneity of Spontaneous Order

When we talk about spontaneous order, the adjective is trying to capture the fact that no one is in charge, controlling the economic system—the order we see around us is spontaneous, organic, emergent, rather than controlled, directed or managed.

I’ve never liked the word spontaneous in that context.  It captures the unplanned aspect but there’s an implication of suddenness and out of-the-blue that seems misleading.  Emergent order is a little better.  Hayek complains in the Fatal Conceit and elsewhere about our language not having phrases and words for things that are not directed or planned.

But I’ve been thinking lately about a different sense of the word spontaneous.  It’s the ability of the modern economy to deal with our spontaneity as economic actors.  (Notice how that sentence suggests the economy is doing something consciously to cope with our spontaneity.  Try and reword it to get rid of that implied management.  How about this: It’s how order re-emerges in the face of our spontaneity as economic actors.  Better.) 

We don’t have to submit our plans for the future in advance, be they plans of consumption, leisure, career and so on.  We are free to lead unscripted lives and the system responds to those spontaneous choices we make.  Thinking of order in this way gives a different meaning to the title, Free to Choose.  Freedom would be less appealing if when we chose, our choices couldn’t be implemented or only implemented at great cost or with great delay.  I’m free to eat meat or be a vegetarian.  I’m free to keep kosher or go macrobiotic.  But it would be a less powerful freedom if those choices meant waiting weeks or years for my food choices to be available.  Or if I suddenly decided to become a vegetarian, my grocery store would be unable to cope with my choice without a six month in advance notice.

So when I marvel that the extended order of human cooperation delivers (oops, there’s that implied intention/control thing) allows me to buy a dozen bagels for a brunch without having to call ahead, it’s so much more than that.  The greater marvel is that thousands or millions of us can make those changes and the system simply readjusts to our new desires.  Super Bowl Sunday comes and goes and pizza and hot dogs and hot dog rolls and beer flood our stores and restaurants in advance to keep us sated.  The prices don’t surge upward for those products, either.  The goods are even sometimes cheaper on that day as an inducement to come to the store. 

But that’s nothing.  The Super Bowl is at least predictable.  What happens when there’s an unanticipated, essentially spontaneous change of behavior?  What happens when millions of Americans decided they want more low-carb food and less of other stuff?  Suddenly, or nearly suddenly, groceries and menus are full of low-carb items.  The resources flow into those products and away from other suddenly less attractive options.  And the low-carb options aren’t a fortune.  They just show up (spontaneously?) as if they’d been produced and marketed and delivered for years.  Yes, they get improved as time passes.  But the first low-carb loaf of bread isn’t like the first fountain pen or first PDA with a big price premium.  It isn’t that pricey.

The weird part of this is that we teach our students that sudden, unanticipated changes in demand drive up prices in the short run as a way of signaling to economic actors where resources are most valued.  But have we exaggerated the importance of the price mechanism?  What evidence do we have that the actual prices rise very much in the face of large shifts in demand?  Have recent improvements in just-in-time inventory control and other logistical improvements made price changes less important so that the mere possibility of price increases is sufficient?  Do such changes differ by industry?  Do services respond differently from electronics goods?  These are questions economists should be examining.  Is anyone out there doing it?