Carl Menger, the founder of the Austrian approach to economics, was not the first or last thinker to see similarities between a society and a living organism, suggesting the existence of undesigned, spontaneous order. The names Adam Ferguson and Adam Smith, before Menger, and Herbert Spencer and F. A. Hayek, after Menger, come to mind.

Ferguson wrote in An Essay on the History of Civil Society (1767), “Every step and every movement of the multitude, even in what are termed enlightened ages, are made with equal blindness to the future; and nations stumble upon establishments, which are indeed the result of human action, but not the execution of any human design.” (Emphasis added.) 

The result of human action, but not human design. The importance of this idea cannot be overstated. More than a century after Ferguson’s book, Menger elaborated this unappreciated phenomenon in his Investigations into the Method of the Social Sciences (1883). 

Undesigned order may be the most counterintuitive idea around, but it is crucial to understanding how free societies work. Trump and his gang don’t get it. Observe that he thinks he knows when the Federal Reserve should cut interest rates or how national trade statistics should look. The price system, of which interest rates are a part, is generated, not by a central plan, but by the countless daily decisions of buyers, sellers, and abstainers acting according to their articulated, unarticulated, and even inarticulable personal information, know-how, preferences, and purposes. That “data” cannot be recorded in a central and accessible place for use by anyone, bureaucrats included. So attempts at conscious government planning will only muck up the price system, along with everything else. A bull in a china shop is an apt image.

If you don’t get this, you don’t get freedom. Unfortunately, unplanned order is, as noted, counterintuitive. People construct some order in their lives, so it’s natural to think that social order must have been designed by the government. That’s a mistake.

But it shouldn’t take much thought to overcome this incorrect intuition. After all, to use one of Menger’s cases, no one thinks everyday languages were consciously designed. (How’s Esperanto doing?) It’s only a short leap from language to other spontaneous orders: custom, law, markets, and money. Menger made a lasting contribution to this subject. (See Lawrence H. White’s Introduction in the Menger volume.)

Menger wrote (pp. 130ff):

The normal function and development of the unit of an organism are thus conditioned by those of its parts; the latter in turn are conditioned by the connection of the parts to form a higher unit; and finally the normal function and development of each single organ are conditioned by those of the remaining organs. 

We can make an observation similar in many respects in reference to a series of social phenomena in general and human economy in particular. Here, too, in numerous instances, phenomena present themselves to us, the parts of which are helpful in the preservation, the normal functioning, and the development of the unit, even conditioning these…. It is obvious that we have here a certain analogy between the nature and the function of natural organisms on the one hand and social structures on the other.

The same is true with respect to the origin of a series of social phenomena. Natural organisms almost without exception exhibit, when closely observed, a really admirable functionality of all parts with respect to the whole, a functionality which is not, however, the result of human calculation, but of a natural process. Similarly we can observe in numerous social institutions a strikingly apparent functionality with respect to the whole. But with closer consideration they still do not prove to be the result of an intention aimed at this purpose, i.e., the result of an agreement of members of society or of positive legislation. They, too, present themselves to us rather as “natural” products (in a certain sense), as unintended results of historical development.

Menger gave an example, for which he is justly famous:

One needs, e.g., only to think of the phenomenon of money, an institution which to so great a measure serves the welfare of society, and yet in most nations, by far, is by no means the result of an agreement directed at its establishment as a social institution, or of positive legislation, but is the unintended product of historical development. One needs only to think of law, of language, of the origin of markets, the origin of communities and of states, etc.

However, Menger warned that the analogy has limits:

Natural organisms are composed of elements which serve the function of the unit in a thoroughly mechanical way. They are the result of purely causal processes, of the mechanical play of natural forces. The so-called social organisms, on the contrary, simply cannot be viewed and interpreted as the product of purely mechanical force effects. They are, rather, the result of human efforts, the efforts of thinking, feeling, acting human beings. Thus, if we can speak at all of an “organic origin” of social structures, or, more correctly, of a part of these, this can merely refer to one circumstance. This is that some social phenomena are the results of a common will directed toward their establishment (agreement, positive legislation, etc.), while others are the unintended result of human efforts aimed at attaining essentially individual goals (the unintended results of these)…. In the second case social phenomena come about as the unintended result of individual human efforts (pursuing individual interests) without a common will directed toward their establishment. [Emphasis added.]

Menger was implying that the rough analogy between society and living organisms can in no way be used to justify ideologies that view society as the body (corpus) of an organism, with the state or strongman as the head. Since a society is distinguished from an organism by its separate conscious acting, choosing human beings, it follows that freedom is indispensable to the “health” of society, which cannot be conceived apart from the “health” of the individuals who comprise it.

Score another point for Carl Menger.