The Beauty of Discovery and Competition

October 22, 2018

To allow the pursuit of the largest amount of good for the greatest number of people, markets must be allowed to evolve. The evolutionary process is achieved through competition and discovery, two sides of the same market coin. The Mont Pelerin Society brilliantly intertwined these themes for the General Meeting this year in Gran Canaria.

The first session of the conference, a plenary with many distinguished speakers on the panel, encapsulated the dynamism and beauty of a bottom-up, spontaneous order, explaining how economies are too complex for any individual or group to control, whether a government or an army of bureaucrats.

The problems of order and knowledge mean that an economy must be an evolutionary system. Evolution creates order and knowledge without any central planning. The human action of pursuing your needs and interests by trading value you create for value others create is evolutionary. Your desires today are not the same as yesterday or last week or last year. As one learns and improves, one’s desires change. Evolution is a search algorithm for finding order.

Markets are great at scaling down projects that don’t work or get superseded. Why? People stop buying into them. Remember dial-up internet? Or leaded fuel? Steamboats? Through competition and discovery, more efficient ways of providing better goods and services are arrived upon and this improves all lives, especially those of the poorest. Mobile phones used to be the domain of only the most obscenely wealthy. Now you can buy a smartphone at a supermarket for a few hours work at minimum wage.

Governments are not good at scaling down projects that are failing. Vested interests, due to the concentrated benefits and distributed costs of many such projects, prevent the natural die-off of projects which destroy value, thus making us all poorer.

The iterative process of competition yields progressively better outcomes, but government programs and enterprises are rarely exposed to any competition. If we want better government, we need more diversity of governance options.

One speaker stated, “It is the sea herself who fashions the boats” as the boats whose design get destroyed by the unforgiving sea will rarely be rebuilt. The successful ventures that transport people and goods while keeping both safe will be pursued.

Diversity is a popular word today, with the promoters of diversity saying it gives us strength. I agree. We need many more diverse governance structures and regulatory structures in Australia to determine what model works best for us. A top-down, one size fits all model imposed on all businesses and individuals alike is a recipe for disaster.

Top-down solutions are popular, and it is unfortunate that this is so. When a problem is identified, you will easily be able to find a commentator, pundit or man on the street asking, “What is the government going to do about it?” Its hard to think about how large problems could be solved privately, and consequently since most people can’t identify a solution, they demand a public option that locks everyone into one behaviour. This constricts our evolutionary capacity to solve problems.

Top-down solutions are popular for voters because bottom-up initiatives are counter-intuitive.

The job of government should be to cultivate an environment where innovators and value creators are free to solve the world’s problems without top-down edicts, overbearing regulation and stifling bureaucracy. As Hayek said, the role of the government should be bottom-up “to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants”.

Economists have much to learn from evolutionary theory and consequently, politicians have much to learn about “how little they really know about what they imagine they can design.” It is brilliant to see the Mont Pelerin Society taking on this enormous challenge. If this conference was anything to go by, there are many passionate, erudite, and incredibly interesting individuals all aiming to make the world a better place through competition and discovery. Their success will be everyone’s success.

Llew Cross

Llew was our 2016 End-of-Year Scholar at the Centre for Policy Studies in London. Llew subsequently attended the 2017 ALS Friedman Conference in Sydney and the 2018 Mont Pelerin Society General Meeting in Gran Canaria, Spain.