Markets & Curing Spontaneous Disorders
Is the “invisible hand” always benign? Or can it be bad? Free-market fans love the idea that “spontaneous order” emerges from local decisions. But what prevents “spontaneous disorder”? Does prudence reliably trump profit? Disorderly superbug and climate change situations say no.
Adam Smith launched spontaneous-order thinking about markets. “The rich,” he said ”are led by an invisible hand to...without intending it, without knowing it, advance the interests of the society." Smith rightly separated intentions from effects, since markets aren’t simple systems. But today’s “markets in everything” crowd ignores a class of problems that local incentives can’t solve.
Tyler Cowen calls climate change “a problem we are failing to solve.” With other prominent economists he says clean-energy can’t work unless it’s as profitable as unclean energy. Sounds reasonable? Let’s translate: many economists think we can’t save the planet unless it’s profitable. Does that sound prudent?
Superbugs (antibiotic-resistant bacteria) are another example. Overuse of antibiotics contributes to 23,000 superbug deaths annually in America. Despite the fact that the more an antibiotic is used “the greater the likelihood that resistance to” it will develop, drug companies, and patients (requesting medically unneeded antibiotics), and doctors (routinely over-prescribing) have all abetted overuse. Leading the CDC to warn: "We’re in the post-antibiotic era." Profits before prudence again.
Partial superbug fixes fail. If anyone overuses, an avoidable risk of resistance continues. As with climate change, a self-defeating cycle operates: If not everyone switches to the known to be more prudent behavior, why should I? Problems like this need coordinated agreement, managed transitions, and enforcement. Otherwise, many will continue to benefit individually while making the collective situation worse. Cowen and company acknowledge, in effect, that free markets don’t coordinate like that.
Economists have labels for parts of these coordination problems—externalities, tragedy of the commons, property rights—but seem unable to assemble solutions. Externalities don’t fix themselves. And no property rights tweaking can fix the superbug or climate problems. No fence can separate your interests from the climate or bacterial commons.
Spontaneous-order thinking assumes that we wouldn’t voluntarily damage our own long-term interests. But many often do. Beyond the above, consider diet and money management. And imprudence is profitable. Markets—the most powerful social forces on earth—will “efficiently” and “rationally” create and exploit imprudence as much as they’re allowed.
Superbugs, climate change, and the tragedy of the commons are all Darwin’s Wedge scenarios, where individual incentives diverge from group goals. In such cases, the “invisible hand” makes mischief. When disorders arise we must seek fitting treatment, including if necessary, centrally administered cures. Free-marketeers, it’s time for your medicine.
Illustration by Julia Suits, The New Yorker Cartoonist & author of The Extraordinary Catalog of Peculiar Inventions.
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A disturbing interview given by a KGB defector in 1984 describes America of today and outlines four stages of mass brainwashing used by the KGB.
- Bezmenov described this process as "a great brainwashing" which has four basic stages.
- The first stage is called "demoralization" which takes from 15 to 20 years to achieve.
- According to the former KGB agent, that is the minimum number of years it takes to re-educate one generation of students that is normally exposed to the ideology of its country.
It's up to us humans to re-humanize our world. An economy that prioritizes growth and profits over humanity has led to digital platforms that "strip the topsoil" of human behavior, whole industries, and the planet, giving less and less back. And only we can save us.
- It's an all-hands-on-deck moment in the arc of civilization.
- Everyone has a choice: Do you want to try to earn enough money to insulate yourself from the world you're creating— or do you want to make the world a place you don't have to insulate yourself from?
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