Wednesday, September 14, 2005
From The Edge:
Let me begin by asking how it is that modern free market economies are as complex as they are, boasting amazingly elaborate production, distribution and communication systems? Go into almost any drug store and you can find your favourite candy bar. And what's true at the personal level is true at the industrial level. Somehow there are enough ball bearings and computer chips in just the right places in factories all over the country. The physical infrastructure and communication networks are also marvels of integrated complexity. Fuel supplies are, by and large, where they're needed. Email reaches you in Miami as well as in Milwaukee, not to mention Barcelona and Bangkok.
The natural question, discussed first by Adam Smith and later by Friedrich Hayek and Karl Popper among others, is who designed this marvel of complexity? Which commissar decreed the number of packets of dental floss for each retail outlet? The answer, of course, is that no economic god designed this system. It emerged and grew by itself. No one argues that all the components of the candy bar distribution system must have been put into place at once, or else there would be no Snickers at the corner store.
JOHN ALLEN PAULOS is a professor of mathematics at Temple University. His books include A Mathematician Plays the Stock Market and Innumeracy.
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