We Do Not Trust Ourselves

That entity which we call “a market” is not an entity at all. Markets are a collection of smaller entities engaged with each other. Markets are emergent processes. A coordinated pattern emerges from independent agents repeating relatively simple acts.

Take a stock exchange. There is a place, the trading floor, where brokers do their work. But the place is not “the market” we hear about in daily headlines. What we hear about is a convenient label describing the day’s action on the floor. And the acts which comprise the action are really simple, just cries of “buy” or “sell”.

The traders on the floor of the stock market create a spontaneous order. The day’s action can be described and understood as if it was designed according to a plan. There are patterns, and even though we do not know the precise motive for any single trade, we can make useful approximations about the patterns of trades.

This spontaneous order of free exchange is incompatible with a commanded order. A pattern designed by some authority is something different from an emergent market pattern. Yet they are often taken to be the product of the same process.

The authorities, the expert planners, seem to be lax in making a distinction. They focus on the trades being made over the motivations of the traders. Planners believe the best patterns come from the minds of experts. Emergent order is messy, hard to predict, and beyond control.

Experts earn credentials through years of talking with other experts. They follow a pattern of history, and in a sense may be held captive by it. It makes sense that an expert would be unlikely to trust the knowledge of someone who had not served and suffered in academia. The institutions which credential experts are inherently biased against spontaneous order. More simply, what college would teach that one doesn't need a diploma to be successful?

The academic credential mills also control debate. Professors are not just experts in some field, but experts who teach. When we become curious about an issue or concept, we seek information and perspective from the most tenured inhabitants of ivory towers. Listening to Joe the Plumber for insight on the best way to keep retirees out of poverty, for example, is quickly and snootily dismissed. Only the intelligentsia are qualified to determine policy. That’s what is meant by government of the people by the people and for the people, no?

The socially cultivated bias toward experts and against the wisdom distributed within the public leads us to discount our own experience. This applies to nearly every sphere of life in which government exerts control. So, it a universal.

Will Wilkinson, musing on financial regulation, offers this description:

I more and more believe the fundamental problem is a plain old-fashioned distrust of the possibility of self-equilibrating markets and a correlative deep-seated faith in the possibility of expert management. We are still having the free market versus central planning debate, and the market perspective has never made very strong inroads against the entrenched interests of financial dirigisme. So financial markets remain political down to their very foundations. The relevant elites find the prospect of giving that up completely terrifying. So the best our best and brightest can really do is wish aloud for a better breed of bureaucrats. This is completely pathetic, but the utter lack of confidence in the possibility of advanced financial markets without central planning leaves us precisely where we started.

The public doesn’t trust itself to solve big problems. The leading class doesn’t trust the public either. Any failure or hardship is never ascribed to bad plans or incompetent planners. Failure is always taken as a manifestation of human shortcomings which were not sufficiently moderated by the rule-makers.

The beauty of a spontaneous order is that it does not require omniscient oversight. There are no experts. Or, at least no coercive experts preserving their status by wedding the public to failed patterns. Rather than seeking saviors, the fastest way to overcome human shortcomings is to spread trust around.

Do not trust anyone with everything. Trust everyone. But not completely. And listen for wisdom from the faces in the crowd. There is an order emerging in the rabble.