Clearly, planning is a terrible way to assemble the puzzle. A far better way is to let the puzzle assemble itself.
Sounds odd. But what if each puzzle piece came equipped with a monitor that provides feedback on how likely it is that connecting at such-and-such an angle with this or that other piece would be a step on the way to creating a larger, meaningful, and beautiful picture? What if, for example, each piece beeps whenever it connects productively with another piece—that is, when ever it connects with another piece in a way that contributes toward making the eventual final outcome a beautiful picture? And what if the volume of each beep were determined by how likely it is that any particular connection of two pieces will help in producing a beautiful overall outcome? The more likely any particular connection is to work toward a successful overall out come, the louder the beep.
Now, finally, imagine each of these billion puzzle pieces having a mind of its own, as well the ability to move by itself. Each piece loves hearing these beeps—and the louder the beep, the happier the piece.
This puzzle—strange as it seems—will assemble itself into a configuration that results in a meaningful and beautiful picture. It will self-assemble in this way without any of the individual pieces intending to contribute to this outcome.
Each individual piece is motivated only to connect with other pieces in ways that produce the loudest beeps. Opportunities to connect that result in no beeps will be avoided in favour of opportunities that produce at least soft beeps. And opportunities to connect that produce soft beeps will be rejected in favour of opportunities to connect that produce loud beeps.
As long as the loudness of the beeps corresponds to ways of connecting that result in a meaningful, beautiful picture, such a picture will be produced without any person (or any puzzle piece) intending to produce it. This puzzle will “self-organize” into a beautiful whole that is far greater than the sum of the intentions of the individual pieces.
Of course, no real-world jigsaw puzzle has pieces that move on their own in search of beeping sounds. But carry this puzzle analogy over to the real-world economy. Each owner of private property has incentives to use his or her property in ways that produce the greatest return—the “loudest beeps,” if you will. The landowner can connect with tractor manufacturers and farm workers to grow corn, or with architects and construction workers to erect a building on the land. The option he chooses is the one that screams most loudly to him “Choose me! I’ll make the greatest contribution to your wealth!”
Likewise for the individual worker who owns only his own labour services. He will combine his labour with the labour and assets of those other private-property owners who promise him the largest return on his work effort—that is, who promise him the highest pay.
With each private-property owner seeking only the highest returns on the use of his or her property, an overall economic order is brought about as each owner directs his property toward those uses that pay the highest prices. Similarly, consumers seeking only to get as much satisfaction as they can from spending their income avoid inefficient suppliers (whose prices are relatively high) and patronize efficient suppliers (whose prices are relatively low). Inefficient suppliers either increase their efficiency or switch to other lines of production. Efficiency is improved and a complex pattern of productive uses of resources emerges (as Hayek said) spontaneously.
This order—this overall outcome—is intended by no one. It is spontaneous.
And because this unintended, spontaneous outcome emerges from the self-interested actions of owners of private property, each of these owners is made better off. No one is forced to do business with those whom he’d prefer to avoid, and—being free to take advantage of any and all existing opportunities— each person chooses those available opportunities that improve his lot in life by the greatest degree.
One of Hayek’s deepest insights is that the signals received by private- property owners on how best to use their property come chiefly in the form of prices—the prices of some options relative to the prices of others. A worker offered $30 per hour for his labour time by factory X and $25 per hour by factory Y will likely choose to work for factory X because factory X pays relatively more than does factory Y.
Similarly, customers who offer to pay $50 per unit for the output of the factory are more likely to acquire that output than are customers who offer only $45.
Responding to prices in this way doesn’t produce heaven on earth. But it does encourage millions of people to interact peacefully with each other in ways that are mutually beneficial.
No person, no council, no committee, no congress, no parliament plans this successful overall economic outcome. And that’s a beautiful picture, one that shows that we can have economic prosperity without giving enormous power to government officials—officials who, being human, will always be tempted to abuse such power.