Or you may have heard people talking about “emergence” as if it could explain complex, functional orders. People will say that the function of an ant colony emerges—as if, starting from ants that had been selected only to function as solitary individuals, the ants got together in a group for the first time and the ant colony popped right out. But ant colonies have been selected on as colonies by evolution. Optimization didn’t just magically happen when the ants came together.
I don’t think the point of stressing emergence is to explain via the conjuring of magic. The point is to counter the idea that something as simple and stupid as ants couldn’t possibly do something complex other than by magic. It’s people’s lack of appreciation for emergent behavior that is the problem. They see the simple but can’t understand how to get the complex out of it. They then believe that there must be some intelligent force behind the emergent behavior.
We are currently living through a crisis that is in large part due to this lack of appreciation for emergent behavior. Not only people in general but trained economists, even Nobel laureates like Paul Krugman, lack the imagination to understand the emergent behavior of free monetary systems. Lacking the belief that such systems could actually operate without some outside intelligence in control they set up central planning agencies like the Fed. Then like any central planning agency trying to control a market it will fail, precisely because the emergent behavior of the market is more powerful, more intelligent, in solving the problem of resource allocation than any committee.
Even with all the evidence staring them in the face they will still not grasp their mistake. It’s obvious to those who comprehend the emergent behavior that interest rates have been set way below market rates, for too long, and that is the cause of the current crisis. The committee made the mistake of thinking it could use general price signals directly to decide on the price signal for interest rates. Price stability, keeping inflation within certain bounds was believed to be the control metric to follow. Unfortunately “the market” was trying to deflate prices due to productivity increases caused by the Reagan/Thatcher revolution. Holding prices steady (to slight inflation) was contrary to market forces and therefore the wrong move.
Free markets are emergent behavior. It is quite amazing that complex coordination can operate on such simple principles without some central agency. The fact that it works better than any central agency could is even more amazing, to most people. Once you understand it then it’s not so amazing but it is very difficult to understand. Ben Bernanke doesn’t understand and Alan Greenspan didn’t understand before him. Emergent behavior is non-magic masquerading as magic.
So emergent behavior is a useful concept when you know what it’s about. It’s a bias checker.
I don’t think the point of stressing emergence is to explain via the conjuring of magic. The point is to counter the idea that something as simple and stupid as ants couldn’t possibly do something complex other than by magic. It’s people’s lack of appreciation for emergent behavior that is the problem. They see the simple but can’t understand how to get the complex out of it. They then believe that there must be some intelligent force behind the emergent behavior.
We are currently living through a crisis that is in large part due to this lack of appreciation for emergent behavior. Not only people in general but trained economists, even Nobel laureates like Paul Krugman, lack the imagination to understand the emergent behavior of free monetary systems. Lacking the belief that such systems could actually operate without some outside intelligence in control they set up central planning agencies like the Fed. Then like any central planning agency trying to control a market it will fail, precisely because the emergent behavior of the market is more powerful, more intelligent, in solving the problem of resource allocation than any committee.
Even with all the evidence staring them in the face they will still not grasp their mistake. It’s obvious to those who comprehend the emergent behavior that interest rates have been set way below market rates, for too long, and that is the cause of the current crisis. The committee made the mistake of thinking it could use general price signals directly to decide on the price signal for interest rates. Price stability, keeping inflation within certain bounds was believed to be the control metric to follow. Unfortunately “the market” was trying to deflate prices due to productivity increases caused by the Reagan/Thatcher revolution. Holding prices steady (to slight inflation) was contrary to market forces and therefore the wrong move.
Free markets are emergent behavior. It is quite amazing that complex coordination can operate on such simple principles without some central agency. The fact that it works better than any central agency could is even more amazing, to most people. Once you understand it then it’s not so amazing but it is very difficult to understand. Ben Bernanke doesn’t understand and Alan Greenspan didn’t understand before him. Emergent behavior is non-magic masquerading as magic.
So emergent behavior is a useful concept when you know what it’s about. It’s a bias checker.