Economists who have been advocates of entrepreneurism and free markets have been talking about self-organization for over three centuries. These most famously include Adam Smith, Ludwig von Mises, Frederick Hayek, and Murray Rothbard. These and others have used the terms self-organizing and the invisible hand to refer to the operations of the free market. This line of economists has attributed economic success to social features which tend to occur in countries with the most freedom.
In the general population, including most business leaders, self- organization and the invisible hand receive little credit. Many of those who espouse self-organization today are insufficiently aware of the conditions which have those systems be so effective and beneficial to society.
The benefits of self-organization occur within a social system based in a rule of law. That is, in particular, a system of laws that support integrity and prohibit fraud of all kinds. It also thrives only in a system that does not base laws and interference on individual cases. That is what a rule of law means. It means laws that are moral and apply to everyone equally.
Today’s social systems are far from this ideal. There are special deals and special favours granted by the system to special interest groups, or worse, favoured individuals or specific companies. There are many restraints on free trade within the country and between countries. Every one of these decreases the benefits of free markets to a free society. They provide barriers to free enterprise far beyond their direct impact. There are many unintended and unmeasured costs. One of these is the loss of principles of entrepreneurial enterprise.
I’ll have a piece on the nature of self-organizing systems in the blogs on the design of complex adaptive systems for organizational intelligence. This research has provided new insight into the rules of self-organization and gives us new understanding and methodologies of implementation that produce breakthrough results in organizations. For our purposes here, the mere idea of self organization can work wonders in small groups when natural leadership shows up. In larger groups and interactions between groups, self organization will not occur and survive spontaneously.
Self organization needs rules of behaviour and principles or attractors which influence agents, that is individuals, without undue restriction but nevertheless some restrictions. With the appropriate kinds of boundaries, guiding principles, focus and intelligent agents, the benefits of self-organization will appear and unpredictable positive results will occur.