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Acton Commentary

Cosmos and taxis

    Many people cannot get the idea into their heads that society was not created and is not run by a single authority. Now someone objected to this idea once by saying that since God created everything, He is effectively the creator of society, as well.

    That is true in a sense, but one thing I have insisted on, along with the late Pope John Paul II, is that God made man a co-creator with him. This applies not only to creativity in the commonly understood sense (inventions, art, literature) but to society and the market, as well. Pope John Paul II held that we humans have self-possession and self-governance, which give us self-determination. Men are in control of their actions (assuming they are not slaves to their passions, public opinion, or something else), and therefore are responsible for those actions.

    This self-determination includes the setting up of institutions, usually occurring over long periods of time and resulting from trial and error. These institutions serve the function of human flourishing. For example, look at the way universities have evolved since the later middle ages. They began as monastic schools, gradually opened to others, developed into universities in major cities, and are now represented by the innumerable and diverse institutions we see today. Are they perfect? Of course not; nothing man does can be. But one cannot argue that they have not been centers of great learning and progress for the benefit of the human race.

    The same is true of the growth of markets. Agricultural inventions in the middle ages allowed more than minimal food to be grown, thus allowing people to travel. They traveled to the chief trading centers and brought back things never before available to people in the medieval non-coastal areas. They erected bazaars, where consumers visited and bought things that enhanced their quality of life. These turned into towns when the patterns of trade became habitual, and some towns eventually became cities.

    Austrian economist Friedrich Hayek used the Greek terms "cosmos" and "taxis" to describe the difference of worldview between those who see the spontaneous order of society and the market and those who do not. Cosmos indicates the self-governing order of things – like the universe. Did you know that the Andromeda galaxy and our Milky Way galaxy are on a collision course and there is nothing we can do about it? This is an example of cosmos in the area of space. Think of taxis in the sense of hailing a taxi cab, and then telling the driver where to take you. In the first instance, the cosmos is self-directing; in the latter, you are directing the cab.

    Society and the market conform to the cosmos rather than the taxis. Both are self-generating, a function of billions of interactions between thinking human beings all over the globe – and those interactions are based on the interactions yesterday, and those are based on the interactions on the day before that. No one controls this.

    This does not mean that large institutions can't influence society and the market, but control eludes even the most powerful forces. With respect to President-elect Obama's economic "stimulus" plan, for example, no one is really sure how the market is going to react to it. How did it react to the original issuing of money to free up loans? Well, Donald Trump put it this way the other day: "No matter what your credit rating or your track record, you still can't get a loan."

    The implications are clear. Those who say that they can fix this, that, or the other thing, in the market are blowing smoke. Even if they can influence things, this influence might not be for the better, because of the Law of Unintended Consequences, which is founded on the fact that people will act in their own perceived best interest, regardless of what a government program will try to accomplish.

    This is why it is better to let the economy deal with circumstances than to try to tweak it. It was constant meddling with the economy that caused the problems in the first place. More meddling can remedy the results of the original meddling only in the world of our dreams. 

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    William R. Luckey is professor of economics emeritus at Christendom College in Front Royal, Virginia. This commentary is excerpted and adapted from volume 24 in the Acton Institute’s Christian Social Thought Series, Wealth Creation: The Solution to Poverty, now available on Amazon.