Extended order
Encyclopedia
Extended order is an economics
and sociology
concept introduced by Friedrich August von Hayek
in his book The Fatal Conceit
. It is a description of what happens when a system embraces specialization
and trade
and "constitutes an information gathering process, able to call up, and put to use, widely dispersed information
that no central planning agency, let alone any individual, could know as a whole, possess or control.” The result is an interconnected web where people can benefit from the actions and knowledge of those they don't know. This is possible and efficient because a proper legal
framework replaces trust, which is only practical in small circles of people who know each other socially. The extended order is at the heart of Friedrich Hayek
's thesis, in The Fatal Conceit
, where he argues that "our civilization depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleading, known as capitalism
.”
The adoption of these practices, by these groups, “increased their access to valuable information of all sorts, & enabled them to be 'fruitful, and multiply, and replenish the earth, and subdue it' (Genesis 1:28). This process is perhaps the least appreciated facet of human evolution.”
The extended order's formation “required individuals to change their ‘natural’ or instinctual’ responses to others, something strongly resisted", whereas any & all "constraints on the practices of the small group, it must be emphasized & repeated, are hated.” This is because man “knows so many objects that seem desirable but for which he is not permitted to grasp, and he cannot see how other beneficial features of his environment depend on the discipline to which he is forced to submit – a discipline forbidding him to reach out for these same appealing objects. Disliking these constraints so much, we can hardly be said to have selected them; rather, these constraints selected us: they enabled us to survive.”
The evolutionary process of the extended order can be stimulated by increases in individual freedom and has even realized some of its greatest advances during times of anarachy, however it can (and quite often has throughout history) been hindered by government constraint, as Friedrich Hayek says, "Protection of several property, not the direction of its use by government, laid the foundations for the growth of the dense network of exchange of services that shaped the extended order." The extended order is "not a creation of man's reason but a distinct second endowment conferred on him by cultural evolution."
Not being genetically transferred, the continuing cultural evolution of the extended order requires teaching & passing on to each new generation the prevailing traditions, customs, morality & rules. This cultural evolutionary requirement was also analyzed by Will
& Ariel Durant
who stated that "Civilization is not inherited; it has to be learned and earned by each generation anew; if the transmission should be interrupted for one century, civilization would die, and we should be savages again."
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
and sociology
Sociology
Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—which uses various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity...
concept introduced by Friedrich August von Hayek
Friedrich Hayek
Friedrich August Hayek CH , born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought...
in his book The Fatal Conceit
The Fatal Conceit
The Fatal Conceit: The Errors of Socialism is a non-fiction book written by the economist and political philosopher Friedrich Hayek and edited by William Warren Bartley.-Main thesis and arguments:...
. It is a description of what happens when a system embraces specialization
Specialization (functional)
Specialization is the separation of tasks within a system. In a multicellular creature, cells are specialized for functions such as bone construction or oxygen transport. In capitalist societies, individual workers specialize for functions such as building construction or gasoline transport...
and trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
and "constitutes an information gathering process, able to call up, and put to use, widely dispersed information
Dispersed knowledge
In economics, dispersed knowledge is information that is dispersed throughout the marketplace, and is not in the hands of any single agent. All agents in the market have imperfect knowledge; however, they all have a good indicator of everyone else's knowledge and intentions, and that is the...
that no central planning agency, let alone any individual, could know as a whole, possess or control.” The result is an interconnected web where people can benefit from the actions and knowledge of those they don't know. This is possible and efficient because a proper legal
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
framework replaces trust, which is only practical in small circles of people who know each other socially. The extended order is at the heart of Friedrich Hayek
Friedrich Hayek
Friedrich August Hayek CH , born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought...
's thesis, in The Fatal Conceit
The Fatal Conceit
The Fatal Conceit: The Errors of Socialism is a non-fiction book written by the economist and political philosopher Friedrich Hayek and edited by William Warren Bartley.-Main thesis and arguments:...
, where he argues that "our civilization depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleading, known as capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
.”
Development & Evolution of The Extended Order
The Extended order "is a framework of institutions – economic, legal, and moral – into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood in the sense of which we understand how the things that we manufacture function.” This "order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional & largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection – the comparative increase in population & wealth – of those groups that happened to follow them.”The adoption of these practices, by these groups, “increased their access to valuable information of all sorts, & enabled them to be 'fruitful, and multiply, and replenish the earth, and subdue it' (Genesis 1:28). This process is perhaps the least appreciated facet of human evolution.”
The extended order's formation “required individuals to change their ‘natural’ or instinctual’ responses to others, something strongly resisted", whereas any & all "constraints on the practices of the small group, it must be emphasized & repeated, are hated.” This is because man “knows so many objects that seem desirable but for which he is not permitted to grasp, and he cannot see how other beneficial features of his environment depend on the discipline to which he is forced to submit – a discipline forbidding him to reach out for these same appealing objects. Disliking these constraints so much, we can hardly be said to have selected them; rather, these constraints selected us: they enabled us to survive.”
The evolutionary process of the extended order can be stimulated by increases in individual freedom and has even realized some of its greatest advances during times of anarachy, however it can (and quite often has throughout history) been hindered by government constraint, as Friedrich Hayek says, "Protection of several property, not the direction of its use by government, laid the foundations for the growth of the dense network of exchange of services that shaped the extended order." The extended order is "not a creation of man's reason but a distinct second endowment conferred on him by cultural evolution."
Not being genetically transferred, the continuing cultural evolution of the extended order requires teaching & passing on to each new generation the prevailing traditions, customs, morality & rules. This cultural evolutionary requirement was also analyzed by Will
Will Durant
William James Durant was a prolific American writer, historian, and philosopher. He is best known for The Story of Civilization, 11 volumes written in collaboration with his wife Ariel Durant and published between 1935 and 1975...
& Ariel Durant
Ariel Durant
Ariel Durant was the co-author of The Story of Civilization.-Biography:Durant was born in Proskurov as Chaya Kaufman to Ethel Appel Kaufman and Joseph Kaufman. The family emigrated to the United States in 1901. She met her future husband, Will Durant, while a student at Ferrer Modern School in...
who stated that "Civilization is not inherited; it has to be learned and earned by each generation anew; if the transmission should be interrupted for one century, civilization would die, and we should be savages again."