Originally published by The Freeman: Ideas On Liberty, January 1965
My purpose in this essay is to throw some light on an important but obscure argument concerning the orderly nature of the free market economy. Unless the point is understood, the free economy stands in danger of extinction. But if the point is to be clarified, it must first be isolated from the general confusion that attends the fear of chaos and the desire for order.
Most of us claim an affinity for freedom; but if given a choice between a freedom suspected of chaos and a regimentation assured of order, we would choose the regimentation. We instinctively fear and detest the opposite of order which is chaos, and for a good and compelling reason: man cannot exist unless nearly everything in his life situation is orderly, that is, unless a vast majority of expectations can be taken for granted and counted on to materialize.
Man’s existence requires a fairly dependable level of order.
For example, man could not exist if he could not count on oxygen in the next volume of air he inhales or if he could not confidently expect Old Sol to rise on the morrow. Were there any doubt about the continual rhythm of these events, the doubt alone would do him in. Or let only minor mishaps intrude themselves into the autonomic nervous system—which, beyond conscious effort, controls heartbeats, breathing, glandular and countless other bodily activities—and man’s earthly days are over. Man is a nervous animal and one of the conditions of survival is a dependable, orderly sequence of things to come.
Nor need we limit our observations to the necessity for orderliness in nature or in man’s person; also required is an orderly social environment so that man can know what to expect, within limits, from his fellow men. Suppose, for instance, that no one could be counted on to keep his word, that promises were meaningless, that capriciousness in everything were the rule: buy a can of beans only to find it filled with mud; hire workers who refuse to work; contract one price and get charged a higher price; earn a livelihood that is subject to confiscation at anyone else’s pleasure; act peacefully but with no security of body and limb; and so on and on. Man can endure but little of this; he can’t cope with life at sixes and sevens, with many things in the realm of uncertainty. And because of this he will pay almost any price—even his freedom—for certainty, for order. Indeed, when confronted with but a modicum of chaos, he will accept with alacrity numerous variations of the goose step, those constraints which minimize uncertainties and thus give him the semblance of order.
But most of these “goose steps” which give a semblance of order such as controls of prices, wages, rents, hours of labor, or “planned” production and exchange—economic freezes, one might say—are not, in fact, order. On the contrary, these rigidities are examples of chaos and of interference with men’s choices and expectations.
“Where We Want to Be”
The truth is that order and chaos in the economic realm are the reverse of what is generally supposed to be the case. It is doubtful if anyone could more strikingly phrase this common confusion than was done by one of our country’s most powerful labor officials. He wrote:
Only a moron would believe that the millions of private economic decisions being made independently of each other will somehow harmonize in the end and bring us out where we want to be.’
If “where we want to be” is under a dictatorship, this statement about the market might make sense. Otherwise, this evidences an utter confusion as to the nature of man and the nature of the market. Analogous to the labor leader’s “millions of private economic decisions” are the “millions” of creative decisions within each human being, such as: 1,000,000,000,000,000,000,000,000,000 atoms of numerous configurations; some 30,000,000,000,000 cells; bone marrow producing 1,000,000,000 new red blood cells every 60 seconds; each kidney having some 5,000,000 complex glomeruli; a diencephalon, a portion of the brainstem that acts independently of consciousness; a cranium filled with nerve tissues having a seemingly unlimited supply of neuroblasts—unfinished nerve cells—which can, with conscious effort and other disciplines, be transformed into functioning neurons. Such enormous, utterly staggering phenomena of man’s composition—”fearfully and wonderfully made,” unfathomable to our finite minds—appears as chaos. These trillions upon trillions of data, about which we have but the dimmest notions, can easily tempt one to conclude: “Only a moron would believe that these will somehow harmonize in the end and bring us out where we want to be.”
These phenomena are not chaotic as they appear to be but, instead, are an order of creation we cannot comprehend. For they do harmonize and bring us out where we want to be: a human being, the most amazing example of order within our awareness.
Of Markets and Men
Order, I suspect, is never the product of chaos; it would seem that only order can beget order. And I firmly believe that this rule applies as much to the market as it does to man. True, we do not seriously question the point as it relates to man; we are so dumbfounded by the mystery of life that we readily concede that only God can make a tree—or a man. But there is all too little faith and humility as it concerns the market. Here, when we witness millions of economic decisions made independently of each other, we will, if not perceptive, call them chaos; whereas, in fact, we are viewing an order the complexity of which cannot be brought within our limited grasp. What we lightly pass off as chaos is but a reflection of our failure to comprehend.
Take only a casual look at our economic world. Visit Russia, Red China, Cuba, East Germany. Like our labor official and many of our educators and business “leaders,” these unfortunate people do not understand how millions of decisions made independently of each other could possibly harmonize in the end and bring about efficacious results; that is, their minds, deficient in awareness, sensing only chaos in the complex data of the free and unfettered market, proceed to bring “order” out of it. How? A Mr. Big takes over and substitutes his one-source decisions for the millions of decisions that would otherwise be made independently of each other. But observe that one man’s orders bring about everyone’s chaos, as deadening in the end as if he himself were to take over the forces that make him a human being. He can no more mastermind market data than he can the data of his own being, that is, without disaster.
A Housewife’s Nightmare
Unfortunately, the chaos brought on by one-source decisions—dictatorship—is seldom thought of as chaos once the subjects have endured it for a short time. Like wild animals placed in zoos—as soon as the shock of contrast is over—the subjects come to think of their fetters as more a part of ordered than chaotic life. But let an American housewife, for instance, accustomed as she is to an economy in which decisions are made more or less independently of each other—where the free market is approximated—awaken suddenly to a Russian, one-source decision situation: the larder bare, no telephone, no car, no taxi available, standing in line hours on end only to find a scrap of this or that for her family; freedom of expression, of writing, of religion denied; a suppression of desires, aspirations, ambitions. What a shock such a sudden contrast would evoke! Mrs. America would, indeed, be conscious of an unbelievable chaos; she would correctly conclude that a great deal of order had been removed from her life situation.
The more a country’s economy is politically ordered or “planned,” the more chaotic is production and exchange. Conversely, the freer the market—that is, the greater the extent that economic decisions are made independently of each other—the more order there is in production and exchange. Try making purchases in Havana and then try in Chicago or Keokuk. You will have little doubt as to where the order is. Or if it be argued that Cuba hasn’t had time to “make socialism work,” then compare experiences in Moscow with Hong Kong. Russia has been at it for nearly half a century! Also bear in mind that the chaos which is manifest in the Moscow market place must have its origin in chaos: a one-source-decision apparatus; that the order which is manifest in the Hong Kong market place must have its origin in order: millions of economic decisions made independently of each other.
The Nature of Things
Order is not necessarily characterized by things in a static, motionless relationship, as is so often thought. Take, for instance, heavenly bodies: motion in relation to one another is of their nature; they manifest order only when orbiting. Were they to behave contrary to their nature, that is, were their swift flight through the void to halt, cosmic chaos would result.
Now, reflect on neat rows of cemetery headstones. As distinguished from heavenly bodies, a static, motionless relationship of each to the others is of their nature.Were these headstones to go into motion or orbit, a behavior contrary to their nature, we would observe the contrary of order: chaos!
These observations are meant to suggest that it is the frustration of the nature of a thing that spells chaos—order consisting of what is in harmony with a thing’s nature. What is order in one instance might be chaos in another. The nature of the thing prescribes the characteristics of the order and the chaos peculiar to it.
The Nature of Man
Consider the nature of man. The Greek philosopher, Heraclitus, amusingly oversimplified it when he suggested that man is on earth as in an egg; that he cannot go on forever being a good egg; that he has to hatch or rot. Man’s nature, as distinguished from that of other animals, is to evolve, to emerge; it is to grow in consciousness, awareness, perception; it is to make strides as a rational animal and, eventually, to make choices with intelligent discrimination and, to some extent, to will his own actions. Men—potentially, at least—must be included in creative phenomena and any thwarting or frustration of this, his sensitive and spiritual nature, must induce chaos. The man-imposed goose step in its social, political, and economic versions—the headstone kind of static, motionless order—is the antithesis of any order that has to do with expanding consciousness.
Man, in the light of his destiny, is not a static organism. This is unthinkable. Furthermore, the free and unfettered market is but the unfrustrated economic manifestation of man’s creative, emerging, spiritual dynamism. Man enjoys freedom only if he be free to act. This is self-evident; it needs no proof. Thus, it follows that man can be free only if his peaceful, creative actions are not aborted. This is to say that man can be free to emerge in the direction of his destiny only if his market—economic expressions of men—be free. The free market, founded on economic decisions made independently of each other and resting, as it does, on common consent, is consonant and in harmony with freely acting man. Dynamism, in this context—moving, flowing, creative, kinetic energy—is as much a characteristic of the free market as it is of the individual human being, man and his market being but two parts of a whole: this dynamism is of the nature of each. Order in either case—man or his market—exists only as this dynamism, showing forth peacefully and creatively, finds unfrustrated expression. Any man-imposed goose step must breed chaos just as surely as if some human dictator were to stop the heavenly bodies in their orbits.
In the above I have tried to suggest that we must look to the nature of a thing to determine what is order and what is chaos. Whenever we impose the headstone variety of static, motionless order to man and his market, that is, whenever we substitute one-source decisions for millions of decisions made independently of each other, we get chaos for our unintelligent pains. And it is axiomatic that freedom must disappear as we practice the error!
The Miracle of the Market
To illustrate the mysterious order of the free market, think of any one of a million goods or services: corn flakes, atomizers, hats, automobiles, radios, TV sets, telephones, machine tools, computers, illumination, and so on, things that are left more or less to countless decisions made independently of each other. Millions upon millions of tiny think-of-thats, little creativities, individual acceptances and rejections, whims, likes and dislikes—forces too numerous ever to recount and which appear as chaos but are, instead, complex order—miraculously combine to form the fantastic order of these artifacts by which we live. Observe that the order of these is so perfect, their production and exchange and their demand and supply so nicely balanced, that we take them as much for granted as we do the air we breathe. Never a second thought! No argument! And, further, the very fact that an automobile, for instance, is an orderly mechanism is testimony in itself that it originated out of order, not out of chaos.
Now, reflect on those goods and services no longer entrusted to the millions of economic decisions made independently of each other in a free market but delegated instead to one-source governmental decision as a way of bringing “order” out of “chaos.” To cite a few: an ever-enlarging part of employment, many wages, prices, exchanges; a good deal of housing; wheat, tobacco, corn, cotton; more and more power and light; roads, education, money value, and others. Observe the imbalances and note that these are the only goods and services we ever argue about. By this method, we do not bring order out of chaos but, rather, chaos out of order! The very fact that these are in a chaotic state is testimony in itself that they have their origin in chaos.
One consequence of confusing order and chaos is a static market and its aftermath, a frustration of man’s nature, the free market being but the extension or manifestation of the free man. Damage cannot be done to the free market without an equal damage to man’s nature. When men are compelled to look to a one-source decision instead of to the individual decisions of men, man is robbed of his wholeness. Self-responsibility, the corollary of self-decision and the wellspring of man’s growth, gives way to cheap politics, mass plunder, pressure grouping, protectionism. Any time a society is organized in such a manner that a premium is put on the obeisance paid to political planners and when little, if any, reward attends integrity and self-reliance, the members of that society will tend more to rot than to hatch!
If human beings were meant to be ordered in such fashion as are the moving atoms in a molecule of motionless mineral, is it conceivable that any one man or organized group of men would be capable of planning and directing the lives and activities of all others? It is precisely because we differ from one another, because—as even the communists admit—each has his needs, that human beings require freedom to express those needs and to satisfy them, individual by individual. The free market affords a mechanism for the expression of these countless differences, in the bidding and asking prices, the voluntary buying and selling of scarce resources, whereby each may pursue his own proper interests without infringing upon or denying the nature and the interests of any other peaceful person. When alternatives have been sought to the open market, the result always has been some variation of the master-slave arrangement, with one man’s order bringing chaos into the lives of others.
Why the Confusion?
We are led to speculate on why this confusion about order and chaos. While there are few who put the case for the headstone variety of order as boldly and as honestly as the labor official, all who argue for and introduce rigidities into the market are up to the same mischief. Sadly, not a category of the population is exempt: teachers share heavily in the guilt as do preachers, business and civic leaders; indeed, were it said, “Let him who is without sin cast the first stone,” few rocks would fly.
When the error is as general as this one, the cause must lie very deep, indeed. Inspect this suspicion of mine and see if it makes sense. Man—most men—suffers a fearful contradiction. There is on the one hand his God-given nature: to be born on this earth, to grow and to emerge in consciousness; to age and, eventually, to depart this earth. This cosmic, evolutionary tug is a powerful force but not as a rule, a force about which man is sharply conscious. Then, on the other hand, there is man’s slight, budding ability to reason and choose—an ability still linked to an abysmal ignorance. Being but dimly aware of his natural destiny or how ignorant he is, man tends to ascribe to his reason an omniscience out of all proportion to what the facts warrant. Thus, man—most men—is confronted with two powerful commandments that are in conflict, one might say, at war with each other.
Man’s nature calls for a flexing, an improving use and a continuing growth of the faculties, regardless of how uncomfortable or painful this perpetual stretching may be. Then, in opposition, is his defective ability to reason which commands him to remove himself from the struggle, to get out of rather than into life, in a word, to seek ease.
That man’s “reasoning” is often a more powerful push than is the tug of his natural destiny is evidenced by his fear of earthly departure. Viewed rationally, it would seem that departing this earth is as congenial to man’s nature as being born. Both arrival and departure are but two parts of life’s equation; whatever has a beginning has a conclusion. Yet, note how general the fear is.
Afraid to Die—or Live
But now to my point: Not only is man—most men—fearful of that aspect of his nature which is his earthly demise, but he is equally fearful of that aspect of his nature which is life’s living! Observe the tendency to run away from problems, obstacles; the passion for wealth as a means of relief from employment; the yearning for security; the ambition to retire; and, specifically to my point, the dread of competition and the craving for protection. Man—most men—as a consequence of this “reasoning,” seeks a static, motionless kind of order—the headstone variety—while his nature calls for an order of the dynamic variety which man, unless perceptive, looks upon as chaos.
Competition—our attitude toward it—gets to the heart of the problem. It is the great antistatic force, the enemy of status; competition is the activating agent, the gyrator, so to speak, in man’s life and in his market; it keeps things whipped up, moving, changing, improving, always uncomfortable, sometimes painful, but, nonetheless, dynamic. A noncompetitive society is a monopolistic society. Competition is the ally of man’s natural destiny and, thus, it is the preservative of his freedom; without competition man’s market and man himself would fall into a state of lethargy; the static kind of order would prevail, in which freedom is impossible.
Be it noted that human beings, as if in response to their natural and evolutionary destiny, favor competition for everyone—except one person: self! As for self, “reason” takes command and seeks protection against the uneasiness competition imposes.
When everyone favors competition for me—except me—it would seem that the competitors have it, that protection for me would be impossible. But when we let government—organized police force—intervene in the market place, that is, in creative human actions, thus permitting government a power sway over and beyond keeping the peace, we provide a fatal flaw in the armor of freedom. It is called logrolling: “I’ll vote for your protection if you’ll vote for mine.” And, as protection spreads, competition correspondingly decreases, monopoly increases, and freedom diminishes. We achieve the headstone kind of order which, for man, is chaos.
We may never be able to mend the aforementioned flaw until we acquire a more rational view of competition—human dynamics—than we now have; not a more rational view of competition for others—this we possess—but for self. If I concede that competition is desirable for all others, how, rationally, can I make an exception of myself? It doesn’t make sense.
Keeping in mind man’s natural, evolutionary destiny, competition is as good for me as for anyone else. Admittedly, experience helps in being rational: About forty years ago my competitors ran me out of the wholesale produce business. I had to sell my home, furniture, car, everything to pay the creditors. Broke! A painful experience, indeed! But had it not been for competition, I would, no doubt, be in that business today. Not that there is anything wrong with being a wholesale produce merchant; it is that I did not belong in that role. Others were better fitted for it. And, important to me, I was led—not happily at first—to discover that there were other employments that better suited my aptitudes. Competition made ft possible for me to discover how best to allocate those few resources peculiar to my own person. Competition is at once the economizer and activator; it helps to keep us on the creative move and to find the niche appropriate to the distinctive abilities of each.
If the above reflections are at all valid, it is certain that individual freedom cannot exist among people whose main emphasis is on security, status, protection. Building fences (protectionism) ) against freedom in transactions (the free market) is of the same ill-suited order as rejecting those evolutionary forces which conspire to make improving human beings out of mankind. The fixations and rigidities implicit in status are of an order in which freedom is impossible.
Freedom exists only as her imperative is observed: all peaceful and creative actions unrestrained. True, this calls for an order so complex that it gives the appearance of chaos but, instead, it is only incomprehensible order; it is the order of a living tree, of emerging man, of creation going on before our eyes.
Freedom is a condition of all creation, including man’s share in it.
See The New York Times, June 30, 1962.
Leonard E. Read (1898-1983) was the founder of Foundation Economic Education, and the author of 29 works, including the classic parable “I, Pencil.”
Used with the permission of the Foundation for Economic Education.