“The Sources of Order and Disorder”: On Knowledge and Coordination
Studies in Emergent Order, Vol. 7, 2014
The twentieth century debate over the desirability of competing sources of order—broadly, authority or liberty—ended in a decisive victory for liberty. In Knowledge and Coordination: A Liberal Interpretation, Daniel Klein explains how social order is not built by central authorities. Rather, it emerges as the unintended consequence of people trucking, bartering, buying, and selling in an environment that admits maximum flexibility for entrepreneurs confronting novel situations. In such an environment, discovery is coordination-improving and wealth-creating. Introducing violence and substituting authority for exchange alters the discovery process and pushes entrepreneurial energies in directions that may create wealth subject to institutional constraints but that would have created even more wealth were it not for institutional hurdles.