Lesson 9: Spontaneous Order - Intercollegiate Studies Institute

Lesson 9 Lesson 9: Spontaneous Order

Presented by: Dr. Tawni Ferrarini
Northern Michigan University

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Spontaneous Order and Creative Destruction

What enables you to merge your car into heavy traffic every day without causing an accident? Everyone gets a lane and adjusts their speed with no outside direction. This is a simple illustration of spontaneous order. It results from the voluntary activities of individuals and is not an order created by government. In this lesson we will explore its importance beyond the freeway.

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One of the marvels of the market economy is that millions of people can contribute to just one transaction, but everyone involved worked independently from you. Another is that your spontaneous actions and interactions influence price and quantity, in particular product or resource markets.
- True
- False

Entrepreneurs put reality checks on consumers who often want products at costs much lower than needed to produce.
- True
- False

Faced with entrepreneurs, businesses committed to conducting business the same way find themselves with relatively high costs of production, old fashioned modes of operation, and and obsolete technology.
- True
- False

Although the spontaneous order was not created for any particular individual objective, and in this sense cannot be said to serve a particular concrete objective, it can nonetheless contribute to the realization of a number of individual objectives which no one knows in their totality.

F. A. Hayek

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Can Order be Unplanned?

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The Invisible Hand - 60 Second Adventures in Economics (The Open University)

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James Gwartney et al., Common Sense Economics, pp. 64-78

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F.A. Hayek, “Competition as a Discovery Procedure," pp. 9-23

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Arthur Diamond, Jr., "Schumpeter's Creative Destruction: A Review of the Evidence," pp. 120-146

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Lesson 9 Lesson 9: Spontaneous Order

Spontaneous Order and Creative Destruction

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