Professors of Neoliberal Economics are just wowed by the markets. Here’s an example from Russell Roberts of George Mason University. There are several paragraphs about changes in language, traffic flows, and housing prices in DC compared with St. Louis. We don’t question these things, he says. They seem natural in the great scheme of things.
Economics is the study of such emergent phenomena, particularly when prices, monetary or non-monetary are involved. We call these phenomena “markets.”
That would be the first time anyone ever told me that there was a market in language or traffic congestion. And the idea that these are emergent phenomena is a perfect example of the way neoliberal economists work. They can’t make sense of the things they are supposed to understand, like the economy, so they adopt terms from other fields and pretend they are part of economics.
The term emergence has a long and interesting history, discussed in detail in a paper titled The Re-Emergence Of “Emergence”: A Venerable Concept In Search Of A Theory by Peter A. Corning, and published in the journal Complexity. It turns out that ideas like complexity, synergy and emergence actually mean something in the intellectual world. Let’s see how markets compare with Corning‘s description of emergence.
Markets are a place for buying and selling goods and services. They are essentially groups of transactions, organized to a greater or lesser extent. At the local farmers market, you buy, the grower sells. You buy stock on a stock exchange, your insurance agent sells you car insurance. If we took a snapshot, we could not predict what would happen next in any of these markets. Certainly you won’t be needing another car insurance policy in the near future, but maybe someone else will. Or not. There may be some predictability, but if there is, economists haven’t found it.
Peter Corning describes emergence in some detail. Let’s start with something that looks like emergence. Check out the video. It’s a demonstration of the Game of Life, a computer project. Lots of us practiced coding by making this run on our Commodore Vic-20s running 6502 machine code or our Mac SEs running TurboPascal (Ok, I admit that was me). It looks like something orderly emerges from the simple rules, especially in demonstrations like this, but I can say from personal experience that running random starting sets rarely produces anything of interest. Only a very few starting points produce those complex features we see in the video. Nevertheless, people often say that the patterns are emergent. I think Corning would call this an example of instruction-based emergence:
Living systems and human organizations are largely shaped by “instructions” (functional information) and by cybernetic control processes. They are not, for the most part, self-ordered; they are predominately organized by processes that are “purposeful” (teleonomic) in nature and that rely on “control information”.
Still, the Game of Life gives a pretty good example of how patterns can arise in systems operating with only a few simple rules.
At a completely different level, Corning says that many people think consciousness is an emergent phenomenon. If you don’t believe in a soul as the driver of the human experience, if you think we are just a collection of cells connected in complex ways and signaling each other with a variety of neurotransmitters, you have to think consciousness isn’t like the cells or the neurotransmitters.
So let’s take another example. Corning points out that water is the binding of two hydrogen atoms and one oxygen atom, with the resulting unit having quite different properties from the two constituents. At least theoretically we could define the water atom with quantum mechanics. But we really don’t think of water as an atom. The physical qualities that mark water as different from salt are only apparent once there are enough of them in the same place, sloshing around. I suppose we could use quantum mechanics to describe the way water sloshes, but that would be silly. There are much simpler and more useful ways to describe that level of complexity, chemistry, for example, or hydraulics.
In the same way, we could use chemistry to figure out how individual cells in our bodies act, theoretically, but the fact is that cells are a whole different kind of thing from the atoms and molecules that comprise them. So, in this way, some people think biology is an emergent from chemistry, and consciousness is emergent from our biology.
Russell tells us that markets are just like this.
Yet these decentralized, non-organized interactions result in prices, either monetary in the case of houses or non-monetary in the case of traffic, that have an orderliness to them in spite of their not being organized by any individual or even a group. That orderliness, that predictability, runs through our lives in ways we rarely appreciate.
Notice the slide from orderliness into predictability. Surely Russell hasn’t solved the stock market so that he can predict prices. But that isn’t enough.
Understanding the emergent phenomena economists call a market is the essence of the economic way of thinking. In contrast, the human brain seems more accustomed to what might be called the engineering way of thinking where human action and human design work together.
Apparently Russell hasn’t noticed that human design organizes all markets. At one level, markets are rule-bound, in roughly the same way as the Game of Life. You either buy or sell, or you don’t participate. And he hasn’t noticed that the rules that govern these markets are made by people who want to improve their outcomes at our expense. And he isn’t interested in the question of whether everyone is playing by the same rules. He just wants you to notice the brilliant pattern, and the compassionate hiring practices of Walmart, and he desperately doesn’t want you to demand that the government change the rules in ways that would inhibit the rich from exploiting you.