On Invisible Hands and Intelligent Design: Must Classical Liberals also Embrace Darwinian Theory?

For years, critics have charged that classical liberals are inconsistent when they embrace the virtues of Adam Smith’s invisible hand in economics while doubting the power of Darwin’s invisible hand—namely, natural selection and random variation—in biology. The criticism has been leveled especially at those who sympathize with intelligent design—the idea that certain features of life and the universe are best explained as the result of intelligent agency rather than a blind and purposeless process. The most rigorous basis of this claim is economist F.A. Hayek’s justly famous argument against socialist economic planning and in a favor of what he calls the “spontaneous order” of the market.

Hayek’s argument, in brief, is that we know empirically that an exquisitely complex and efficient distribution of goods and services can and does emerge from the (presumably) self-interested actions of individual members producing, buying, and selling in a market without fixed prices, even though none of those members sought to create such an order. Contrary to untutored intuition, a central planner who sets prices and determines what and how many goods and services are produced and distributed in an economy cannot achieve such order. A central planner simply doesn’t have access to all the information necessary to determine prices and production quotas, and the like. The only way to determine the “right” price for a good or service is through the market itself, in which the competing subjective valuations of consumers meet the price freely agreed to by a seller.

No planner can determine the economic value of something before the fact, but we can all learn its economic value after the fact, through the market process that leads to a specific price. The price of a bottle of Evian tells me what I need to know about how scarce such bottles are and how much other people value them. If Greenpeace decides to target Evian, and fewer people want Evian, that fact will be reflected by a drop in the price. That price allows entrepreneurs to make decisions about where to invest scarce capital, and it tells producers how much Evian to produce (or bottle) compared to other things they could produce.

The price of a good or service in a free economy, then, is a little packet of information that tells us its economic value at that moment. It represents an underlying reality, not merely the arbitrary decision of a store clerk. A market does not just distribute goods and services. It is a highly decentralized system for gathering and disseminating information. The information is gathered through constant feedback mechanisms that incorporate the subjective valuations of the many agents in the system. It incorporates the discoveries made by entrepreneurs, producers, and consumers. This leads to specific prices for the goods and services of interest. The price is the embedded information. As long as the price is made public, the information will be disseminated. This is an iterative and intricately networked process, so it is continually being adjusted as conditions change.

What emerges, according to Hayek, is a “spontaneous order” more complex and efficient for distributing goods, services, and capital, than any order that could be intentionally devised by human planners. A spontaneous order, by Hayek’s reckoning, emerges in systems too complex to have been designed. To justify this notion of spontaneous order, he argues that we already know that “order” can emerge from “chaos” in cosmology, physics, origin-of-life studies, and evolutionary biology. The spontaneous order of the market is simply another example of this pervasive phenomenon.

Hayek’s argument, then, seems to indict not just socialist planning, but teleological thinking in general.

Does the argument work? Only in part. His basic argument against socialist planning is quite persuasive, since no ordinary human planner could possibly have access in real time to all the constantly changing subjective judgments of millions of people in a market. Hence, for distributing goods and services, a market is vastly superior to central planning. But the market order is not an example of order emerging from chaos (indeed, there is no such example, either in natural science or economics). It is an order that emerges under certain orderly initial conditions—basic rule of law, property rights, and free exchanges among human agents. Moreover, God, if he wanted to, clearly could plan a market, since he would have access to the relevant judgments of all its participants. In fact, even a smart but non-omniscient telepath could plan an economy. So the market order is not, by definition, an order that could not be designed. Since neither God or a really smart telepath is likely to apply for the job of central planner, no one needs to worry. In ordinary human experience, however, Hayek’s contention that the market order will outperform the economic planning of mundane human beings still stands.

What this means is that Hayek’s argument against socialist planning, removed from his questionable auxiliary claims about the nature of spontaneous order, is perfectly compatible with a traditional doctrine of providence and so, a fortiori, with a generic concept of intelligent design. Free market advocates, therefore, may have doubts about Darwinian Theory without suffering any cognitive dissonance.

What still needs to be undertaken, however, is a thorough integration of Hayek’s central insights with a Christian and teleological understanding of reality. How should we understand the market order in light of Christian anthropology? Does the Christian view of the human person cast additional light on the valid core of Hayek’s argument? Does it provide additional reasons from preferring a market economy to a command economy? If a market is made up of beings created in the image of the Creator, what does the emergence of the market order tell us about God’s providential ordering of the world? These are just a few of the questions worth exploring, once we realize that there is no conflict between Hayek’s core argument against socialist planning, and a teleological view of reality.

To learn more about the contributions of Darwinian Evolution and Classical Liberalism: Theories in Tension (Lexington Books, 2013), click here for a fuller discussion at the EPS website. Readers are also encouraged to take advantage of a 30% discount when purchased through Rowman and Littlefield’s website(Lex30Auth14 – this discount expires 12/31/2014).