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Spontaneous Order and the Market Process

Spontaneous Order and the Market Process. Steven Horwitz IHS: Morality, Capitalism & Freedom Summer 2010. Overview. Not all order is the product of design A. Smith & the Scottish Enlightenment Carl Menger and institutional evolution F. A. Hayek and the role of knowledge

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Spontaneous Order and the Market Process

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  1. Spontaneous Order and the Market Process Steven Horwitz IHS: Morality, Capitalism & Freedom Summer 2010

  2. Overview • Not all order is the product of design • A. Smith & the Scottish Enlightenment • Carl Menger and institutional evolution • F. A. Hayek and the role of knowledge • The market as a spontaneous order • Where does design begin and end? • Conflicting spontaneous orders

  3. The products of human action but not human design • The “invisible hand” • Scots – Smith, Hume, Ferguson • Beneficial unintended consequences • Cooperation in anonymity • This is the beginning of social science

  4. Carl Menger and the evolution of institutions • Subjectivism, marginalism, and methodological individualism • The “Mengerian question” • Organic vs. pragmatic • Compositive method • The evolution of money • From the division of labor to the division of knowledge

  5. Knowledge and spontaneous order • Spontaneous orders as epistemological ecologies • “Made” vs. “Spontaneous” • Economy vs. catallaxy • Unified vs. diverse purposes • Command vs. abstract rules • Self-interest and altruism

  6. Order in the market • The unplanned outcome of planned behavior • Prices as the central coordinator • Prices as knowledge surrogates • tacit vs. articulate knowledge • Spontaneous order, knowledge, complexity • why socialism fails • Competition as a discovery procedure

  7. Some critical issues • The line between designed and unplanned • Firms • Government • What happens when spontaneous orders with different values conflict? • Ecological systems, democracy, and science

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