Gallowglass

Spontaneous Order

Lynne Kiesling has an interesting post up about "slugging" in the DC area; local "High Occupancy Vehicle" rules say that vehicles travelling on certain highways have to have three individuals inside, in order to limit congestion. This has led to a self-referential little social world in which people who would otherwise drive into work on their own, pick up strangers in order to meet the requirement. A whole informal social infrastructure has built up around this, with focal points (places where drivers know that they can find potential passengers and vice versa), informal rules and the like. I remember a friend telling me of similar arrangements that have sprung up in San Francisco. As Lynne says, this is a nice example of Hayekian spontaneous social order; however, I disagree when she describes this as evidence of "market processes in action." Sure, it's exchange - but as economic sociologists tell us, not all forms of exchange in the absence of the state are markets. More to the point - should we necessarily and always celebrate "spontaneous order" as providing superior results to more politicized forms of exchange, as libertarians would tell us? Apart from the fact that the example at hand, "slugging," happens in the shadow of state regulation, there are sound theoretical reasons to believe that spontaneous order can involve persistent, and substantial distributional inequalities. This is the main subject of a book by my friend, Jack Knight, Institutions and Social Conflict, which gives a nice game-theoretical illustration of the mechanisms whereby power inequalities between actors can lead to informal institutional rules that persistently skew distributional outcomes in favour of more powerful actors, even in the absence of the state, standard politics, or centralized bargaining. A cut-down version of the argument is available here in a paper that Jack and I have cowritten.