Economics

Need to know

Brain Science Biology Psychology
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At the moment I’m reading the fascinating book about the brain, Incognito – The Secret Lives of the Brain by David Eagleman. One of the big takeaways for me so far is that the Extended Order, to continue briefly on the post from last week, could be seen as a mirror of our unconscious in the outside world. Our subconscious is a vast network of neurons and memories all stored away and relatively inaccessible to our comparatively limited conscious minds. It’s full of rules and regulations on how the body works, much as the Extender Order controls society with its rules and traditions.

The subconscious, and indeed the Extended Order, is so vast there is no way the conscious mind could ever hope to know all that goes on in there. Indeed, even our explicit memories, those we can access readily, tend to be locked up until we need them. And so the brain operates on a need to know basis. As matters arise in our daily life, so we tap into the stores of memories, both implicit (gut feelings) and explicit (autobiographic) memories.

All the time new contexts and situtions present themselves to us and we seek relevant information depending on what we want to know. Hayek argues that this is why trying to control trade/commerce/economics will always fail, as those put in control of trying to order such enterprises can never hope to know all things in all circumstances.

Always better to defer and decentralise to those that can specialiase in specific situations in specific circumstances in more local settings. Making arbitrary, central decisions that try to cover too many different circumstances will always be doomed to fail.

On the Extended Order

Board Empty Rule Instruction
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I keep waffling on about the Extended Order, but what on earth do I actually mean by that?

In my mind, following on from Hayek, who developed the idea extensively, the Extended Order is the laws, traditions and rules of society. More often than not these rules are deeply ingrained within us through our parents and family from birth, and we play by these rules primarily at a subconscious level.

This order is controlled by no-one; it could never be because it is vast and complex. Within it there are groups of often competing sets of beliefs; religion, trade, economics and politics all emerge within the extended order. I read recently that once a population reaches a million it starts to develop notions of religions. I’d say that you probably don’t need that many people for them to start figuring out how they can work and live together, and a fledgling extended order starts to develop.

As Hayek likes to point out, these rules and traditions exist develop somewhere between reason and instinct. By this he means that if we based the rules purely on reason or instinct alone, the logical and primal aspects of our brains would negate much of the positive good that comes from the extended order.

The extended order is irrational and evolutionary. As culture changes, so old ideas drop away and new ideas (that work) come to stay. It’s interesting to watch recent developments in regards to gender and feminism and multiculturalism, as people push and prod at our long held beliefs. Over time, the order will change to either accept these newer ideas, or they will drop away from lack of use as newer challenges come along.

Social Evolution

Gear Butterfly Gears Butterfly
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I’ve mentioned already my love for the sheer magic of the extended order – the traditions and unspoken rules that we all obey, from the grand to the minutiae of specialists. One of the most exciting things around this is the idea that society is constantly evolving, ever changing.

Adam Smith and the great Scottish economists of the 1700s understood this and their ideas around economic evolution were taken up by Darwin, who applied them to the natural sciences and introduced them to the mainstream.

I think social media is a great case in point that demonstrates this. Just the other week I was having a discussion with some colleagues at work, and one made a passing comment about, ‘those people who invented social media…’.

This clanged about in my brain, and travelling back on the train it struck me that no-one invented social media. Various companies developed websites for specific purposes (rating other people at college, new ways for taxi drivers to communicate), and over time these sites grew and morphed and the users drove them in unexpected directions as the companies themselves struggled to keep up and develop the sites while keeping them commercially viable. At no stage did anyone sit down and think, “I know, I’ll invent social media today and it will be one of the greatest developments of the Internet of the 21st century!”

This never, ever happens, because nearly always the good things in life evolve over time, shaped by many people, not just the people that invented them. This is why socialism will always be doomed to fail. The extended order can never be controlled or predicted by individual minds, the great planners of the world will never second guess society.

I think there is a key aspect of life that explains this, that I’ll explore tomorrow.