ECON104: Principles of Austrian Economics II

Spontaneous order attempts to explain how human conventions and institutions emerge as the unintended consequences of the actions of a myriad of individuals, pointing to the limits of rationalism and the conscious shaping of social life. Watch this lecture to examine how spontaneous order is achieved through distributed knowledge on the market. In the video, Saifedean explores the concept of spontaneous order, focusing on the work of Friedrich Hayek and Vernon Smith.

Topics covered include:

• Distributed knowledge
• Rational constructivism and its shortcomings
• The important role spontaneous order fulfilled in the process of selection on the market

Key points

• Complex goods and even language are examples of things that emerge through spontaneous order
• Reason is good at providing variation but poor at selection, which is better left to ecological processes
• Spontaneous Order can be understood as orders and patterns that emerge out of human action and interaction, not through human designs