Right Reason

Of Cormorants and Emergence

 

 

The image of thousands of Scotora Cormorants nesting in the Bahrain desert off of the Persian Gulf is an image I can almost never not think of when talking about the phenomenon of emergence. With each nest being built beyond the pecking reach of a nearby nest, the nests are organized in a marvelous pattern, but that marvelous pattern can only be appreciated from a, forgive the metaphor, bird’s eye view. From the ground, one merely sees thousands of panting birds in their nests, but from the air, one can see that the nests are all organizes into a clear pattern:

 

  

 

However simple the pattern created by the Cormorants’ nests may be, it’s still there, and it’s an order that comes into view only once a spectator finds a perspective that can behold a sufficiently whole, so to speak, part of the order. Look at just a single nest, or just a handful, then the pattern simply won’t be there. The pattern only comes into view once we behold a sufficiently whole part of the pattern; hence the pattern emerges before our eyes. Daniel Klein argues along similar lines when he defines ‘emergence, emergent convention’ in Knowledge and Coordination: “Emergence implies that the emergent things come into view by their own force, as when baby sea turtles emerge from the sand” (Oxford University Press, 2012: 319). 

 

The Scotora Cormorants can help us to remember that emergence can never be appreciated from within; instead, a spectator must have some independence from it to appreciate the pattern that is emerging. Emergence is where reductionism fails to grab hold of reality. However much we may study the individual nest of an individual nesting Cormorant, we certainly learn something about their nesting behavior when we look at all of the nests taken together. In some way, therefore, the whole must be something more than the sum of parts. 

 

What is the Point of View of Economics?

 

 

Now anything that has a plurality of parts but is not just the sum of these, like a heap, but exists as a whole beyond its parts invariably has a cause.

-Aristotle, The Metaphysics

 

 

In his review of Gustave de Molinari’s Cours d’économie politique in the Home and Foreign Review 4, Lord Acton gives as good a starting point for the study of economics as I’ve seen elsewhere:

There is… no ground for the pretense that in order to maintain equilibrium between production and demand, we must employ the foresight of an army of administrators and surveyors, whose duty it should be to prescribe what every producer should provide, and consequently how much each consumer should enjoy. Inhabitants of our metropolis see every morning an ample but not excessive provision made for its 3,000,000,000 inhabitants, and this without any previous direction or settled plan; the utmost order and regularity result from the natural law of the supply and demand finding their equilibrium spontaneously; whereas we might look for chaos tenfold more chaotic than that of Balaclava, if the problems were left to the arrangement of administrators or directors of social labour and consumption. 

Here, Lord Acton captures which Lionel Robbins didn’t capture in his often repeated definition in An Essay on the Nature and Significance of Economic Science that economics is "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” In his attempt to conceptualize economics solely from the point of view of the economizing agent, Robbins allowed the emergent properties of society as a whole - those properties which cannot be understood in reference to any one acting agent in particular - to slip through his fingers.

 

‘Spontaneous order,’ and ‘emergence’ are deservedly frequently used words in economics. The market order which Lord Acton is pointing out above is indeed a spontaneous order which has emerged through the intertwined interactions of millions of human beings; in the words of Adam Ferguson, it is “the result of human action, but not the execution of any human design.” Strict adherence to Robbins’ definition of economics blinds our eyes to those properties of the market order because they are the outcome of not just one agent’s economizing behavior, but an entire society of economizing agents all interacting with one another. To understand the market order’s spontaneous and emergent qualities, we have to move beyond the point of view of one of the components of the system to the point of view of a spectator of the whole system. 

Indeed, from the point of view of a single economizing agent, the market order isn’t even really that much of an order. The Oxford American Dictionary’s first definition for ‘Order’ is  “the condition in which every part, unit, ect., is in its right place; tidiness (restored some semblance of order).” When we talk about something as an order, we presuppose the ability to perceive the interacting parts of that order, and choreography between those parts which makes that thing a genuine order. The point of view of a single person cannot capture whether every part of an economy is in its right position, and her eyes therefore cannot capture the greater choreography of the market which Lord Acton remarked on when he pointed out how the 3,000,000,000 inhabitants of London were all provided for. The components of the market order all functioned together to meet the demands of that great metropolis from the wheat fields of the Ukraine to the tea plantations of India. Looking at the market order from the point of view of one agent - as much of macroeconomics does with the device of the representative agent and Truman-Story economics - misses that overarching order.

 

There is a reason why common language tends to refer as the nexus of human economic activity as ‘the economy.’ To truly appreciate the wonder that is the economy, and how human beings have managed to create patterns of cooperation extending across the entire globe, we must go beyond the point of view of just a single component of that order, and to the point of view of a God-like spectator who can behold the entire order as a single functional whole. Robbins’ definition of economics as the study of the relationship between limitless ends and scarce means has no room for that overarching spectator, and therefore has no space for the perception of spontaneous order.  

By reducing all valid economic statements to statements about choosing agents, Robbins definition denies any attempt for there to be economic statements about the emergent properties of the market order which transcend the actions of any one agent.  Overall, it denies economics the ability to make statements about the functional order transcending the actions of a single agent, and thereby leaving the spontaneous and emergent qualities of the market order beyond the grasp of economics. On the other hand, starting from Lord Acton’s observation above ensures that economists will be focusing on what the market order is all about: A choreography without a choreographer extending across the entire world. 

Wonder and Inquiry

 

 

Wonder is the beginning of wisdom.

-Socrates, Theaetetus by Plato

 

The proper place to begin any inquiry is with wonder. Wonder is by far the most innocent and pure place to begin inquiry. When we begin inquiry with either a desire to solve a specific problem or to get a certain answer, our perspective is skewed by those desires. Inquiry can lead us anywhere, paradigms can change, and our priors can, nay will change in the course of inquiry. It is a journey which must be begun with the best mindset possible. When we are wedded with certain solutions and even certain problems, we cannot follow the inquiry where ever it may lead. 

 

The theme goes back to ancient times. Aristotle wrote about wonder as the start of philosophy in The Metaphysics:

For it is clear that this science is not productive also from the earthly history of philosophy. For it was because of wonder that men both now and originally began to philosophize. To begin with, they wondered at those puzzles that were to hand, such as about the affections of the moon and events connected with the sun and starts and about the origin of the universe. And the man is who is puzzled and amazer is thought to be ignorant (hence the lover of stories is, in a way, a lover of wisdom, since a story is comprised of wonders). And so, if men indeed began to philosophize to escape ignorance, it is clear that they pursued science for the sake of knowledge and not for any utility… So it is clear that we seek it for no other use but rather, as we say, as a man is for himself and not for another, so is this science the only one of the sciences that is free (982b).

 

The Origin of Species is a concrete example of wonder as the beginning of inquiry. Charles Darwin’s “theory of descent with modification; through variation and Natural Selection” was a response to his wonder at the orderliness of the biological world. That wonder was one of the clear motivations leading to his enquiry is manifest in the couple of sentences of The Origin of Species:

When on board H.M.S. Beagle, as naturalist, I was much struck with certain facts in the distribution of the organic beings inhabiting South America, and in the geological relations of the present to the past inhabitants of that continent. These facts, as will be seen in the latter chapters of this volume, seemed to throw some light on the origin of species - that mystery of mysteries, as it has been called by one of our greatest philosophers. On my return home, it occurred to me, in 1837, that something might perhaps be made out on this question by patiently accumulating and reflecting on all sorts of facts which could possibly have any bearing on it (Darwin 1876, 1). 

It was not out of a desire to augment man’s capability for domesticating animals nor a desire to justify certain intellectual priors that Charles Darwin set forth on figuring out that mystery of mysteries. Rather it was out of a desire to trace out the orderliness of the natural work - the orderly distribution of species across the planet and the seemingly orderly line of current species to those known only by their fossils - back to their causes that Darwin was stimulated to write. Darwin’s description of his own wonder also goes to show that the way we approach our inquiry influences our stylized facts. 

Charles Darwin even ended The Origin of Species on a note of wonder when he began the final paragraph with the sentence:

It is interest to contemplate a tangled bank, clothed with many plants of many kinds, and birds singing on the bushes, with various insects flitting about, and with worms crawling through the damp earth, and to reflect that these elaborately constructed forms, so different from each other, and dependent on each other in so complex a manner, have all been produced by laws acting upon us (Ibid, 429).

Overall, Darwin’s theory of descent with modification was a response to his wonder at the orderliness of the biological world. The project which he sets out in the book is largely about his own quest to still his own mind, and to answer questions which have their origin from his own wonder at the orderliness of the biological world.

 

That inquiry should begin with wonder is true for economics as it is for any other discipline. When the economist looks out the window, what he sees is an orderly commercial society. Despite disparate interests and selfish propensities, the mammals known as Homo sapiens have managed to work together and to cohere their interactions into something which is colloquially referred to singularly as ‘the economy.’ Across the entire world, human beings have managed to make themselves a part of an orderly division of labor which enables the anonymous cooperation of everyone within that order even though they have no clue that they are in cooperation. 

All of the people in Leonard Reed’s “I, Pencil” have no idea that they are cooperating together in order to produce a pencil, and yet they are. “I, Pencil” is the most powerful stylized fact which economists are faced with. Yes, there is such a thing as involuntary unemployment and yes things do go wrong, but all of that disorder cannot overwhelm the greater order of the market. Pencils get made despite all of the forces trying to disrupt their production. Sometimes more pencils can get produced than are needed and sometimes less pencils can be produced than are needed, but nevertheless there is a concatenate order to their production. A concatenate order which we should wonder at, and that astonishment should be our stimulus for doing economics. 

The Invisible Hand and Platonic Capitalism

The ancient stoics were of opinion, that as the world was governed by the all-ruling providence of a wise, powerful, and good God, every single event ought to be regarded as making a necessary plan of the universe, and as tending to promote the general order and happiness of the whole: that the vices and follies of mankind, therefore, made as necessary a part of this plan as their wisdom or their virtue; and by that eternal art which educes good from ill, were made to tend equally to the prosperity and perfection of the great system of nature.

-Adam Smith, The Theory of Moral Sentiments

 

The Arrow-Debreu model of general equilibrium as characterized by Gerard Debreu's Theory of Value is the basic organon for the study of society at large within most of modern economics. After all, equilibrium is the means by which most economists rigorously think about economic phenomena: If a shock divorces the actual price on the markets from the equilibrium, or natural price, then what are the mechanisms within the economy that will bring back the actual price on the market into identity with the equilibrium price? The Arrow-Debreu model, in turn, provides a logical proof for the existence of an equilibrium given certain assumptions about the state of the market, and thus is able to provide a means of mathematically thinking about equilibrium

The model, though, is a Walrasian box which traps the economy into an assumed state of equilibrium without any source of internal change. It is a frozen phantasmal state without even a narrative of how that state is attained. As a foil, general equilibrium models may be very useful in pointing out what we should pay attention to within the ever-changing economy before our eyes. There is nothing to be objected to as long as we keep in mind that a model is not a theoretical explanation of the world, but rather an interesting Gedankenexperiment that holds no necessary correspondence to the world. However, where we fall into error is when we assume that correspondence and that therefore a failure of this Gedankenexperiment requires a failure of the social mechanisms we are thinking about.

 

For the Arrow-Debreu model, one sin in particular is the inference that because there are no mechanisms bringing the Arrow-Debreu model to equilibrium and providing negative feedback to keep it there, that the real economy displays such behavior. Just because the Arrow-Debreu model is only in equilibrium by accident, design, or assumption does not mean that this is true for the world in general.

A clear example of this failure comes from a post on “The HBR Blog Network” by Jonathan Schelfer titled “There is No Invisible Hand.” Within that post, Schelfer argues that the unsuccessful search for invisible-hand mechanisms within general-equilibrium models points to the lack of such a force in the real economy:

Leon Walras, of the University of Lausanne in Switzerland, thought he had succeeded in 1874 with his Elements of Pure Economics, but economists concluded that he had fallen far short. Finally, in 1954, Kenneth Arrow, at Stanford, and Gerard Debreu, at the Cowles Commission at Yale,developed the canonical “general-equilibrium” model, for which they later won the Nobel Prize. Making assumptions to characterize competitive markets, they proved that there exists some set of prices that would balance supply and demand for all goods. However, no one ever showed that some invisible hand would actually move markets toward that level. It is just a situation that might balance supply and demand if by happenstance it occurred.

In 1960 Herbert Scarf of Yale showed that an Arrow-Debreu economy can cycle unstably. The picture steadily darkened. Seminal papers in the 1970s, one authored by Debreu, eliminated “any last forlorn hope,” as the MIT theorist Franklin Fisher says, of proving that markets would move an economy toward equilibrium. Frank Hahn, a prominent Cambridge University theorist, sums up the matter: “We have no good reason to suppose that there are forces which lead the economy to equilibrium.” 

In sum, the lack of any mechanisms leading the economy towards a state of order within the Arrow-Debreu model, as the argument goes, is evidence for believing that there are no such mechanisms within the world.

 

This is unsound reasoning, though. Just because the toy economies constructed by Arrow, Debreu, and similar theorists fail to show any asymptotic behavior towards any steady state does not mean there are actually no such mechanisms. What it really means is that there exist no such mechanisms in systems constructed along the lines of The Theory of Value. Many commentators on this subject including Samuel Bowles call these Walrasian models “Utopian Capitalism” in his Microeconomics which “like utopian socialism, illuminates ideal aspects of a system unrealizable in practice.” (Princeton University Press 2004, pg. 208)

I, however, prefer the term “Platonic Capitalism” since the interesting feature of these models are not that they are simply utopian, but that there are forms of human cooperation removed from reference to change much like the forms of the Platonic heavens. When an economy approximates the Arrow-Debreu model, it does so in a like manner as a triangle in nature approximates the form of a triangle forever removed from the world in those heavens.

To find fault in a triangle in nature because it does not look like a triangle outside of Euclid's Elements is as ridiculous as criticizing an economy because it cannot be identified with the general-equilibrium model in Debreu's Theory of Value. They are both limited to the black board, but from there they can provide both a foil and inspiration for thinking about the real instances of what they've modeled in the world.

 

Overall, that the Arrow-Debreu model of general equilibrium lacks an invisible hand to bring the economy towards equilibrium and a state of order does not mean that we should despair about the lack of such a mechanism within the actual economy. For one thing, despite its brilliance, the Arrow-Debreu model is just a model, and therein lies its brilliance; therefore there is no reason why the world must conform to it. It is a Gedankenexperiment. Nothing is necessarily within it said about the economy that we see before our eyes and thus the belief that because there are not endogenous mechanisms within that model for reaching equilibrium is not reason for despair.

Of Kings and Shipwrecks; Of Institutions and Order

 

“Men said openly that Christ and His saints slept.”

-The Anglo-Saxon Chronicle

 

 

What can happen when the political institutions that can ensure the rule of law can no longer pierce through the uncertain future, and when the fate of those institutions themselves come into question is displayed with violent force in the aftermath of the sinking of the White Ship in Anglo-Norman Britain. In November of 1120, the White Ship was supposed to bring King Henry I's seventeen year-old son and the rex designatus, William the Aetheling (“Aetheling” –ÆtÞling- being a traditional Anglo-Saxon title used by princes eligible to sit the throne), to England following after the King's own ship.

William was the hope for the future of the Anglo-Norman nation for his marriage with the daughter of the count of Anjou promised peace after generations of hostility between the Normans and Angevins, as the natives of Anjou were called, to a finish and William's interactions with King Louis VI of France promised peace between the Anglo-Norman realm and France.

 

King Henry I managed to secure a lot during his reign, including the establishment of one of the most professional governments in Western Europe since the fall of the Roman Empire. Nevertheless, when his heirs head was dashed upon the rocks of the Norman coast, so was the hope of a smooth, predictable transition of power after King Henry's inevitable death. This was a grave threat that jeapordized the prosperity of the realm, and could unravel it in a succession crisis if Henry I could not find a solution to it in his lifetime.

Despite a small retinue of illegitimate children, William the Aetheling was his only legitimate son, and his death brought upon his domain the shadow of a future succession crisis upon his death. Even though the desperate king tried to place his daughter, Matilda, a woman experienced in politics after being the consort to the Holy Roman Emperor though failing to provide him a male heir before his death, into the position of heir presumptive.

 

Despite Matilda’s political experience, the plan of a female ruler sitting the throne was one that the barons could not have much confidence in for reasons of culture. After all, the offices of a ruler was one of leading armies, sitting in judgment, and issuing royal proclamations; all of these duties were inextricably male within the context of Medieval European society and thus one for a king, not a queen.

With Matilda as his heirt, Henry I could never ensure the certainty of a smooth transition of power upon his death, and this in turn undermined the coordination of Anglo-Norman political institutions. Before the White Ship, William was the clear legal heir whom everyone could stand behind, and around whom the choreography of the Anglo-Norman political system could dance. That was not so with Matilda for there was simply not way of knowing whether he claim would be accepted by her lieges upon Henry I’s death, and so her accession of power was not a fact those lieges could rely on in the future. And so the barons had to wait for Henry I to die and to see if there would be a challenge to Matilda’s claim.

 

In the end, the concern and uncertainty was justified. It took but a month after King Henry's death for another noble, Stephen of Blois, Henry's nephew and Matilda's cousin, to install himself as king in Westminster, and for most of the local lords to rescind on their promises to the late king that the would accept Matilda as Queen, and to swear to King Stephen instead. Thus began the Anarchy, a civil war in England and Normandy fought between 1135 and 1153, though those who lived through it preferred to call it a much more poetic name: the Shipwreck.

 The Shipwreck lasted for just under two decades as forces loyal to King Stephen and forces loyal to Empress Matilda, her husband Geoffrey Plantagenet, Count of Anjoy, and finally her son Henry FitzEmpress, who would become the Duke of Normandy, vied for control of the Anglo-Norman crown. That the succession crisis was not solved within a short war, but continued over a period of two decades with two rival factions claiming the legitimate authority of kingship, with two separate centers of power being established centering around the courts of both Stephen and Matilda. There were now competing mints, systems of patronage, courts, and diplomacy within the Anglo-Norman realm, both of which claimed supremacy. This wreaked havoc in its political organization; as the author of the Anglo-Saxon Chronicle reported: “Men said openly that Christ and His saints slept.”

 

King Stephen, who had no proper claim to the throne under primogeniture, was unable to secure the loyalty of all the nominal vassals to the Anglo-Norman king. As the Anglo-Saxon Chronicle describes:

When the traitors saw that Stephen was a good-humoured, kindly, and easy-going man who inflicted no punishment, then they committed all manner of horrible crimes. They had done him homage and sworn oaths of fealty to him, but no one of their oaths was kept. They were all foresworn and their oaths broken.

The effects of this fracturing of royal authority within the realm meant that the plans for security could no longer be centralized through royal authority, and thus the institution that everyone expected to be able to coordinate plans for security could no longer function.

Instead, each baron had to plan for his own security, uncertain both about who were his enemies and about the outcome of the succession crisis that would determine who is their liege lord; that uncertainty was reflected in the plans each baron made for his own security. As the Anglo-Saxon Chronicle further records, continuing from the last quotation:

For every great man built him castles and held them against the king; and they filled the whole land with these castles. They sorely burdened the unhappy people of the country with forced labour on the castles; and when the castles were built, they filled them with devils and wicked men.

The widespread construction of castles, which would normally be regulated by the crown, across the English countryside was symptomatic to the decay of royal authority and the lack of coordination within the realm for the provision of security.

After all, a castle could provide a baron protection against a rogue lord's attacks into his territory and even protection if one of the royal pretenders marched through his territory. However, what they do not provide is the efficient provision of security for what could have been supplied with oaths, the determent that the promise of the king's justice provided within the realm, and the protection that royally organized forces provide against enemies without. That option, though, relied upon the coordination mechanisms that were now dysfunctional due to the protracted conflict between Stephen and Matilda.

 

Despite the proliferation of castles, violence intensified in the realm as foreign Flemish mercenaries prowled the countryside in devastating extended campaigns of attrition and as King David I of Scotland invaded the northern portions of England. The anonymous author of the Gesta Stephani recorded one instance of the brutality of the Anarchy:

(The king) set himself to lay waste that fair and delightful district, so full of good things, round Salisbury; they took and plundered everything they came upon, set fire to houses and churches, and, what was a more cruel and brutal sight, fired the crops that had been reaped and stacked over the fields, consumed and brought to nothing everything edible they found. They raged with this bestial cruelty especially round Malborough, they showed it very terribly round Devizes (where Empress Matilda had nominally set up her court), and they had in mind to do the same to their adversaries all around England.

The Anarchy gradually grew into a war of attrition between both Empress Matilda and King Stephen as neither could establish themselves as the single monarch through a clear victory, though both were willing to fight on.

The ravage of the countryside was not the only scourge brought upon the Anglo-Norman realm. Indeed, there was also the great legal uncertainty that hovered over the nation, uncertainty made worse by the feudal system of governance that relied on personal loyalties between lieges and their lord. This problem was displayed when Geoffrey Plantagenet, consort to Empress Matilda, took Rouen in 1144 and was recognized as the lawful Duke of Normandy. A legal consequence of this was that now Anglo-Norman barons in England with lands on both sides of the Channel were thrusted into the impossible position of having to pay fealty to two competing lords for their estates. Without being able to know what lord would reign in the coming years and whether the writs of Stephen or Geoffrey would be the law, the barons were paralyzed in the management of their estates because they would not know whose writs to base their decisions on. With the royal institutions of governance unable to create a certain future of royal succession, the legal question of to which lord lieges owed their allegiance to itself became uncertain thus further hurting to the rule of law since now there was not an abstract principle determining who was their liege lord, but each baron had to make an arbitrary decision between either Stephen or Geoffrey..

 

Eventually, Henry FitzEmpress, who was now claiming succession to kingship from his mother Matilda, launched an invasion of England in 1152 that lead to his army meeting that of King Stephen's at Malmesbury, where Henry laid siege to one of Stephen’s castles. However, tired of the drawn-out war, concerned that this battle would not bring an end to the Shipwreck just as earlier engagements had, and with no reward to fighting, neither pretender's army wanted to meet on the field. Instead, they forced Henry and Stephen to agree upon a ceasefire. After this ceasefire, Henry FitzEmpress was quickly able to gather many dukes behind him with the promise of good lordship, and after a circuit across England during which he held court in the countryside instead of setting out brigands to burn crops. By this end of his tour of England, Henry had established himself as a credible alternative king.

Finally, the Anarchy came to an end with a settlement at Wallingford, a small town along the Thames dangerously close to Stephen's center of power in Westminister. There, where once again both armies refused to fight and Henry and Stephen's lieges forced them to talk. After three months of negotiations, King Stephen agreed to adopt Duke Henry as his legal heir, and it was sealed with a kiss of peace within the Winchester Cathedral, symbolic because it was an important for past Anglo-Saxon kings and humorously it was where the remains of St. Swithun were interred, an Anglo-Saxon saint said to be able to restore broken eggs to entirety.

 

There was much work to be done to heal the war-weary Anglo-Norman realm, but the peace between the two competing kings meant that in the first time in two decades the line of royal succession was clear. Royal authority was finally unified and universal providing the basis for the return of the rule of law   

Of Law and Choreography

 

Mark what unvary'd laws preserve each state,
Laws wise as Nature, and as fixed as Fate.

-Alexander Pope 

 

The rule of law is a matter of institutions providing predictable constraints to human plans in the future which can form patterns of human action from those individual plans over both time and space. These institutions, inventions of human action, are able to conquer the dark forces of time and ignorance in order to provide those influenced by them certain factors that they can count on in the future. Thus the effect the rule of law has on the creation of patterns of human action brings into play that ubiquitous theme in the study of human society: coordination.

 

Coordination itself is a word that is often thrown around without much thought given to its implications for how we should think about human society, and frame our questions about it. Yes, economics, to take on of the most important disciplines studying human society, is often described as a coordination problem by its practitioners, but that focus on coordination rarely goes much further than talking about how human action is coordinated in dyadic exchange, and rarely is it pushed into an understanding about the understanding of how the ecology of human action, otherwise known as society, is created as a spontaneous, evolutionary order from the intentional actions of individual human beings. As Peter Boettke has noted in a recent post, “Econ 101 is What is Needed Most”: “Human purposes and plans permeate the analysis from start to finish.” Coordination, in turn, is a matter of the synchronization of those human purposes and plans together into a single, non-contradictory pattern of action across all members of society. It is this synchronization across individual plans of action, their intermingling and intermeshing across time, which creates coordination.

Indeed, the social ecology of human society can be poetically described as choreography without a choreographer. There is no omniscient and omnipotent choreographer determining the plans of each individual; rather, each dancer creates his own plans by his own free will, and those plans, especially within the bourgeoisie era, have created perhaps the most spectacular spontaneous order in the universe. There is no choreographer and yet there is still choreography. The primary force facilitating this possibility is that it more often than not serves the best interest of each dancer to maintain the choreography, as Ludwig von Mises would say there is a harmony of interests within the dance. There is no need for a choreographer for each within the grand dancer prefers to be within the order, capable of benefiting from its fruits, than outside of it. Thus harmony ensures made possible by the congruence of interests within it.

 

However, this harmony of interests, which Mises himself confined to an imaginary catallactic order, should not be overstated for the prisoner’s dilemma pervades human interactions within society. Even though it may generally be in everyone’s best interest to continue the dance, there will always be scenarios in which it will be in the best interest of an individual to defect from the dance for her own benefit despite the harm that would do for others. To alleviate the effects of the prisoner’s dilemma, institutions have emerged over the course of history to align the interests of the dancers with the continuation of the choreography. They do this by establishing rules of the game which help form human plans despite human ignorance and avarice, and so aiding to keep the choreography going despite the odds.

From this prospective, the best institutions are those that ensure the harmony of interests and ensure that the choreography is self-supporting. It has also happened that societies with more complex systems of social interaction are able to enjoy greater gains to cooperation (i.e. a higher productivity) because of the fruits of the division of labor. Furthermore, the spread of the habits and institutions that make these complex systems of social cooperation possible by either peaceful diffusion of culture or by belligerent hegemony has helped to ensure their survival.

 

The rule of law is one of the most important institutions that make the coordination of human intentions possible for it is the rule of law that defines the abstract codes of conduct that are enforced throughout society. Without it, the legal proscriptions that regulate criminal and illicit activities are a matter of uncertainty, and as a result people are not certain as to what will the consequences of their future plans will be. This is problematic because when human beings act, they do so in order to attain a better state of the world. Without being able to know the consequences of their actions, and so lacking confidence in the best strategy to attain the most desirable state of the world, people will not have well-formed future patterns of actions.

The coordination of human intentions is not merely a matter of synchronizing present actions, but synchronizing the plans people have for their future conduct. A perfect choreography would then imply perfect certainty as to the future actions of everyone in society; an equilibrium in which there is no incentive for anyone to change their plans for the future and in which everyone has perfectly planned (the use of the pluperfect tense is important since there is no real planning going on within equilibrium, but rather people plan up to it) their actions conditioned on the plans of everyone else. In Human Action, Mises called this perfectly harmonized choreography the evenly rotating economy.

 

The legal system which helps to ensure the rule of law is itself, like all other human institutions, choreography of its own. After all, it is a human institution necessitating the coordination of human behavior towards the end of ensuring that the legal institutions actually support the rule of law, which often they do not (an obvious statement perhaps, but one that deserves restatement for restatement's sake). Beholding this complex choreography of both getting people with their own so-often divergent interests to cooperate to ensure the rule of law, and ensuring that the laws being ensured are just gives proper perspective as to why unjust laws have been so prevalent in human history. Indeed, there are simply so many institutions that have to be gotten right, and so many opportunities for single individuals to undermine the system for their own interests that it takes time and a certain bit of luck for the right system to emerge that can provide both. The just legal system, with the rule of law being understood as a condition for such a thing, must then be capable synchronizing the future actions of its agents, and so create an integrated choreography between them to ensure justice.

For this to happen, the institutions that create that choreography must not victims of uncertainty, but instead must be able to provide rules of the game that people can have confidence in and rely on in creating their plans for the future. The servants of the government of the United States can count on Congress as being the supreme legislative body within the nation until they die, and they can count on the Supreme Court being the supreme judicial body able to provide a counter to any bill passed by Congress that contradicts the Constitution, which itself is a two-hundred-year old piece of paper that people can still treat as the ultimate source of legal justification in America. All of institutions help to provide a human-created path through time and ignorance in order to provide a stable foundation for the operation society in the future. Even though they may certainly always guarantee just outcomes, the Jim-Crow laws being a pertinent example, the American legal institutions do guarantee that there is a sturdy basis for future social interaction in the future.

 

Confidence in planning for the future is a sine qua non of the coordination of human action within society. Without that confidence, there can be no choreography because such an order relies on the dancers knowing where their fellow dancers will be lest mistakes happen and the choreography decays into chaos. The rule of law helps to ensure that those within society can have confidence in the abstract rules that help determine the consequences of future action, and so its existence is vital for the maintenance of spontaneous order within society.