What markets are for

Kevin D. Williamson wrote a few years ago about the true function of markets, which is not “competition,” but something else:

Complex though it is, the iPhone is also a remarkably egalitarian device: The president of the United States uses one, as does the young Bengali immigrant who sold me my coffee this morning. But you can bet that her children do not attend schools as good as those that instruct the Obama daughters. The reason for that is politics: not liberal politics, not conservative politics, not bad politics, but politics per se. …

The problem of politics is the problem of knowledge. The superiority of market processes to political processes is not in origin moral but technical. The useful knowledge in any modern society is distributed rather than centralized — and, as Read intuited and as modern scholars of complexity studies confirm, there is no way to centralize it. Ludwig von Mises applied that insight specifically to the defects of planned economies — the famous “socialist calculation problem” — but it applies in varying degrees to all organizations and all bureaucracies, whether political, educational, religious, or corporate. Markets work for the same reason that the Internet works: They are not organizations, but disorganizations. More precisely, they are composed of countless (literally countless, blinking into and out of existence like subatomic particles) pockets of organization, their internal structures and relationships to one another in a constant state of flux. Market propositions are experimental propositions. Some, such as the iPhone and the No. 2 pencil, are wildly successful; others, such as New Coke or Clairol’s Touch of Yogurt Shampoo, are not. Products come and go, executives come and go, firms come and go.

Politics isn’t dynamic in the way that markets are. Politics is both centralized and nostalgic, which means a few people who claim to act on expert knowledge work to impose what are promised as systemic solutions. When other enterprises become too rigid or ineffective, they fade away. Yet:

A political establishment is a near-deathless thing: Even after the bitter campaign of 2012, voters returned essentially the same cast of characters to Washington, virtually ensuring the continuation of the policies with which some 90 percent of voters pronounced themselves dissatisfied. No death, no evolution. Outside of politics, human action is characterized by evolution and by learning. And what are we learning? How to take care of one another, which is the point of what we sometimes call capitalism. (Don’t tell Ayn Rand.)

As a civilization we evolve, but not all constituencies or groups within a culture evolve at the same rate. Some never do. Politics by its nature must be slow and deliberate and considered to be good at its function; the opposite of markets. Even the roots of positive change are misunderstood, especially what we call “free market capitalism:”

It is remarkable that we speak and think about commerce as though competitiveness were its most important feature. There is, as noted, a certain Darwinian aspect to economic competition — and of course we humans do compete over scarce resources. But what is remarkable about human action is not its competitiveness but its almost limitless cooperativeness. Competition is one of the ways in which we learn how best to cooperate with one another and thereby deal with the problem of complexity — it is a means to the end of social cooperation. Cooperation exists elsewhere in the animal kingdom, but human beings cooperate on a species-wide, planetary level, which is a relatively new development in our evolution, the consequences of which we have not yet fully appreciated.

So distribution is preferable over centralization, which is another way of saying that it would be better to have fifty different state governments with wide latitude over state-level decision making than one central government deciding vast national policy.

We want a culture closer to the people not only to make it more participatory, but also to avoid the political equivalents of “Touch of Yogurt” shampoo becoming our only nationally-approved haircare product.