Oddbean

Elon Musk: "America right now is a perfect example of what happens to a successful business when you hire all of the wrong people!" This. This fundamental, well-known, logical, and independently verifiable mistake is the essence of collectivism in any form: from communism to Nazism to totalitarian democracy (I use this redundant term for tactical reasons). All human suffering caused by the state ultimately stems from this crucial error: considering society as a whole as if it were an organization, and thus believing that good management of it makes it prosperous. In an organization (let's take Tesla as an example), there exists a unitary hierarchy of ends: all people working for that organization (the employees) work towards achieving that end (in this example, the production of electric cars). This end is set from the top: that is, by the owner of the organization (let's say Elon Musk) based on his subjective value scale. This system (the organization) is the only way things (from electric cars to musical concerts) can be successfully produced. It's the result of human action (the people working at Tesla) and human design from the top (management). An organization (any organization) operates within a society. However, despite being complementary, the two are structurally, fundamentally different. For a society to succeed (as much as it can), it must not be converted into an organization. If it is converted into an organization, society fails: either in absolute terms or in relation to what its prosperity could have been otherwise. The reason for this is scientific. If a society is not converted into an organization, then there is no unitary hierarchy of ends. Within non-arbitrary (logically deduced) ethical rules, everyone (including Tesla and Musk) can work towards their own ends and is not forced to work towards ends imposed by someone above: again, there is no owner of society who can impose that everyone living in it must work (in one form or another, to one degree or another) for the ends he imposes. The reason this produces success (in addition to freedom, non-arbitrarily defined) lies in the fact that economic value is subjective, not objective: when everyone can work without hindrance towards their own ends, value is created through free exchange (win-win) and communicated through prices. In this way, prices transmit information about scarcity (i.e., subjective value) that guides the successful economic process. Without this information, it would be like navigating in the dark without instruments or stars: economic failure of society would be inevitable. As an organisation, a free society is the product of human actions: in this case, individual exchanges. On the other hand, unlike an organisation, a free society is not the product of design by man at the top (by definition, there is no top). This fact often makes understanding a free society and a market economy difficult. Indeed, while everyone is familiar with organisations and the observable fact that they produce things, very few are familiar with the concept of spontaneous order and the non-observable but logically deducible fact that this is the necessary condition for widespread prosperity. Many people believe that, in the absence of management, society would descend into chaos: this is because, in the absence of management of a company, it would descend into chaos. However, it can be logically demonstrated that the opposite is true. If a society is converted (in one form or another) into an organization, then there exists a unitary hierarchy of ends. The rules within which humans (and companies) can act are necessarily arbitrary. Everyone must work (in one form or another, to one degree or another) towards ends imposed from above, not for their own ends. The more this happens, the more free exchange is hindered, and with it, the ability for prices to transmit information about scarcity, and thus subjective value. Value is destroyed. The more this happens, the more structural distortions are produced in the productive structure; society navigates in the dark and fails economically: either in absolute terms (e.g., the Soviet Union) or in relation to the success it could have had otherwise (e.g., today's USA). In conclusion (and apologizing to the reader who has made it this far for the length of this post), an organization (e.g., a company) thrives within a society. Despite being complementary, an organization (a positive order) and a free society (a spontaneous order) are fundamentally, objectively different. Due to this fundamental difference, their success comes from opposite approaches. For a company to succeed, it needs good management. For a society to succeed, it needs the absence of management: it only needs the defense of non-arbitrary (logically deduced) ethical rules. In other words, for a company to succeed, it must massively use the centralized knowledge of those at the top (especially knowledge related to value). Conversely, for a society to be prosperous, there must be no obstacle within it to the use of knowledge (especially related to value, including that of time) that is decentralized and dispersed among all individuals, constantly changing, intimate, and to which no central authority can ever access. #Bitcoin is also, amongst other things, a benign virus spreading the awareness of this mistake in ways economist cannot do. When awareness of this fundamental error is sufficiently widespread, prosperity will be inevitable and unstoppable.