Parents get hit with tough questions out of the blue on a daily basis, and I’m no exception. I’m also fairly inarticulate in my answers, and my explanation of the origin of money to two young children with finely tuned BS detectors went over about as well as an earlier explanation of how birds evolved from a certain class of dinosaurs. Thankfully, YouTube has plenty of videos to clarify the latter. It is fascinating how naturally we are predisposed to ‘intelligent design’ theories of everything around us. That includes not only the natural world, but also the social. The answers to “Who invented money?” and “who created birds?” are very similar, in the sense that the answer lies in a process of evolution over a period of time. No one invented money, no one invented language, no one invented prices, and no one coordinates the vast, richly intertwined kaleidic social world that ebbs, flows, and constantly changes. It coordinates itself without ever being aware of it. Or rather, the daily choices we make as we go about our lives contributes in unknown ways to that social organism, which then assimilates and transmits that data. But our choices are made based on data that comprises the choices of everyone else within the social web. This social world is an endless transmutation, emerging from and acting on a just few fundamental rules. There is nothing to measure or quantify. Money, raw liquidity in physical form, emerged as a result of the kaleidic evolution of collective choice. No one planned it, no one created it.
What economists study is choice made in the face of not merely scarcity, and not merely the data produced by the invisible social web that comprises all other choice-making actors, but also their own imagination of what the future holds. There is no ‘creation’, and can be no ‘Creator’ in social life, something that ‘socialists’ must urgently realize. Intelligent Design theories of economics culminate in the belief that the social sphere can be centrally planned. It can’t, as the entire 20th century attests to. Venezuela is currently providing laboratory conditions for how society rips itself apart when an authoritarian attempts to control it.
Kaleidic change is the fundamental characteristic of evolution, both in the natural world as well as in the social. This matters for proponents of liberty because the essence of libertarianism is an openness to all change that emerges from what Hayek dubbed the ‘spontaneous forces’. Whatever emerges from the collective voluntary, unrestrained actions of billions of people, we accept. We defend the process, not the outcomes.
That’s not quite what I relayed to my children.
