Monday, December 11, 2006

Economics of Skating Rinks: Spontaneous Order

Undercover Economist Tim Harford writes in the Financial Times about skating rink economics:

"A skating rink has to be seen to be believed. Dozens of skaters hurtle around the ring while others, inexperienced, teeter precariously on sharp-bladed skates. Nobody has been checked for competence, there are no lanes, speed limits, rights-of-way or traffic signals. And yet the rink works perfectly, everybody skates around in the same direction and at their own pace, and little fingers and toes rarely get sliced off."

The skating rink is an example of what economist Friedrich Hayek called “spontaneous order,” the natural process of self-organization and order that often emerges spontaneously, without any central planning or control.

For example, think of the English language - who's in charge? Nobody. And yet it's organized very systematically without any central planning, because of spontaneous order. Think of the Internet - who's in charge? Nobody really, but think of how well-organized it is, because of spontaneous order.



At 12/11/2006 9:30 PM, Blogger Mark J. Perry said...

A hostile, but faithful daily reader of Carpe Diem writes by email:
"As for the internet being so well organized (presumably Your bunch lauds because no government), it is full of unrequested porn,unrequested advertisements ( many of which fraudulent) unrequested emails from hustlers preying on people looking for huge financial windfalls and resulting in financial losses because of their ignorant greed. If Hayek got a Nobel for this it demonstrates why economics is regarded so low and why 10 economists will have 11 opinions on virtually everything. Of course, Hayek never contemplated the internet and clearly it can be used as support for his theories. He also like many economists jumps from economics to other disciplines and in those areas he is but a person attempting to impose his own philosophy and prejudices on everything in society. Sociologists disagree with him as do scholars in other disciplines that he attempts to preempt. As I have told you over and over again: ECONOMICS is one of many TOOLS which can be of assistance in solving problems---repeat ONE of MANY TOOLS. If you can't comprehend this there is little hope for you other than as comic book writer."

Dear Hostile Reader:

Please read this article European Cities Do Away with Traffic Signs" as another example of spontaneous order. About the Internet, it's not perfect, but it is certainly incredibly well-organized and systematic without central control or central planning. And certainly more control or regulation would probably make the Internet LESS efficient overall, NOT more efficient. Same idea with the English language - it is incredibly efficient without any concious control.


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