Author: Steven J. Cernak
How do you tie together evolution, the wave, and market prices? As Neil Chilson explains in his brilliant little book, Getting Out of Control, all are examples of emergent order. While Chilson is a former FTC leader, this book is not just for antitrust and consumer protection lawyers and economists but for anyone trying to understand what they can, and cannot and should not, control.
The book is about more than policy and certainly more than antitrust policy. It explores many ways in which emergent order can play a role in your life, both personal and professional. After all, the subtitle is “Emergent Leadership in a Complex World.” So parts of the book read like a self-help or leadership book.
Those parts might be the least interesting, at least to many of us. There is nothing objectionable in those sections but there also did not seem to be many new insights from viewing familiar issues through an emergent-order lens. For example, Chilson describes how changing your habits can change you and your actions and how changing your environment can help change your habits: “If you want to stop eating sugar, don’t visit candy stores.”
But that advice does not seem much different than the directions that many of us have received in various six sigma or other corporate efficiency seminars. Many of mine while at General Motors were based on lessons learned from the Toyota Production System applied to the white-collar office. There, changing the environment might mean putting yellow taping around the stapler on the table next to the copier to develop the habit of returning it to the same place every time. Good advice that all of us, whether in the workplace a few weeks or decades, need to hear periodically, but not particularly new.
Chilson’s policy discussions, however, do offer fresh and necessary takes on policy issues, like antitrust and other economic regulation, that are especially important today. He starts by defining emergent order and distinguishing it from both randomness and designed order. Here, emergent order is the complex behavior of a system created by the interactions of many smaller components following simpler rules with no central control. To illustrate the differences among the three types, he uses various actions of a crowd at a sporting event.
As an example of emergent order, consider “the wave” at a large sports stadium — I will use the University of Michigan football stadium. The system, that is, the attendees, engage in the complex behavior of creating the coordinated, observable pattern of a wave moving around the stadium. No central authority controls the wave — some group of students, though not always the same one, tries to start it at different points in the game — and the small components, each fan, follows the simple rule of standing at about the right time. The wave peters out as enough fans grow disinterested.
An example of randomness would be the fans entering the stadium. As Chilson notes, “you would be hard pressed to predict when any particular fan would arrive and take their seat” (although, at Michigan Stadium, a safe prediction is that fans named Cernak will be in their seats at the one hour to kickoff announcement). Designed order, on the other hand, would be if placards are handed out that, “when everyone holds them up, spell out ‘GO TEAM’ [or a Block M] across the entire stadium.”
Chilson builds on those definitions and examples to examine “the classic economic example of emergent order,” the price system. From these concepts, he derives principles for anyone dealing with emergent order, such as: expect complicated results even from simple actions; push decisions down to those actors with important local information; and be humble.
While the book is not overly technical or academic, its points are well-supported with quotes and “greatest hits” from top economists like Adam Smith, F.A. Hayek and his knowledge problem, Ronald Coase and his theory of the firm, and Elinor Ostrom. Chilson even interviews Russ Roberts, who has been popularizing emergent order on his EconTalk podcast for years. (Surprisingly, there does not seem to be a reference to Roberts’s It’s a Wonderful Loaf, an ode to the magic and beauty of emergent order that I suggest to all my antitrust students.)
Specifically on antitrust and other regulatory matters, Chilson has high praise for his former boss at the Federal Trade Commission, former long-time Commissioner and Acting Chairman Maureen Ohlhausen. She frequently spoke about the need for the FTC to exhibit “regulatory humility,” a position that I have supported in the past. Chilson also seems to channel Edmund Burke in advocating for a common law approach to policy decisions, rather than some elaborate rulemaking, as the many cases decided with specific and local knowledge in the past end up embodying wisdom that should be respected now and in the future.
Perhaps most importantly, Chilson emphatically declares that the knowledge problem does not mean that regulators know nothing, and regulatory humility does not mean they should do nothing. Yes, regulators should be humble about what they really know and can accomplish; however, unlike many commentators critical of the latest government regulatory action, Chilson does not imply or assume that no action is the best course. He even takes on two very thorny policy questions — privacy and content moderation — and offers up actions for a regulator to consider to improve the status quo.
As an employee at the FTC headquarters for several years, Chilson often walked past the two Man Controlling Trade statues outside the building. Given that much of what the FTC regulates exhibits traits of emergent order, the symbolism of those statues might not be helpful. “Understanding what can be controlled, what cannot be controlled, and what side effects might occur will enable government to focus its resources where they can make the most positive difference.” Chilson’s lessons seem to be lost on antitrust leadership in the US intent on regulating the economy through rulemaking as well as EU leaders insisting on a single phone charging cord. This book on emergent order could not come at a better time.