Swarm Order

What do you get when you cross planned order with emergent order?

Leif Smith, who publishes Freeorder, said he had coined the term Freeorder to describe “the harmonious balance between planned order and spontaneous evolution in free societies,” which artist-entrepreneurs create. Smith wondered what F. A. Hayek would have thought about the term, so asked an AI trained in Hayek’s writings. Turns out AI-Hayek liked Smith’s term and what it represents, including the cluster concept: design+cosmos+quest. Smith’s note inspired me to return to a related distinction in Hayek, a third possible category of order between cosmos and taxis.

If you’re a fan of F. A. Hayek, the distinction between cosmos and taxis is one you probably learned soon after you first uttered the words “spontaneous order.” 

It’s not an easy distinction to grasp. And if the distinction is entirely new to you,

1. Cosmos: This term is derived from the Greek word for "order." In Hayek's framework, a cosmos refers to a spontaneous or evolved order. It is an order that emerges from the independent actions of many individuals, without being designed by a single mind or a central authority. The market economy, with its complex web of voluntary exchanges and its price system, is an example of a cosmos. Another example would be the evolution of languages, where no central authority dictates the rules, yet an order emerges over time.

2. Taxis: This term comes from the Greek word for "made" or "arranged." In contrast to cosmos, a taxis refers to a planned and constructed order, or an organization resulting from human design. An example of this would be a corporation or a central government with a specific hierarchy and structure.

Now that you get it, you realize that if more people got it, they’d see why the price system works and the planned economy does not. And they’d see why it’s easier for someone to design a company than a country.

That’s fine as far as it goes. But is something missing?

To repeat, cosmos is an unplanned or “emergent” order. Taxis is a planned order. According to Hayek, what distinguishes these two forms of order is that cosmos relies on impartial rules, and taxis relies heavily on goals, plans, and commands.

Emergent orders (cosmos) have no purposes (goals or aims) per se. Only the people and organizations who make up the extended order have a purpose, and each purpose will likely be distinct from one person to the next and from one organization to the next. 

On the other hand, planned orders (taxis) do have purposes: Sell tee-shirts at a profit might be one such purpose. Find a cure for breast cancer might be another. So while a planned order might have such a purpose, an emergent order does not.

Those with certain purposes normally design an organization to carry out their purposes. Often they also carry out the planning and commanding. A founder and CEO may very well plan and command with the purpose of selling shirts. But Hayek observed that humans run into trouble when they try to assign society some purpose, then proceed to plan as if the right sorts of people can implement it. (See my critique of Evonomics, for example.)

The extended order emerges. It cannot be planned.

The rules that provide a basis for cosmos and taxis differ, respectively. Hayek might have anticipated where we’re going with all this when in Law, Legislation and Liberty (vol. 1), he wrote:

Every organization in which the members are not mere tools of the organizer will determine by commands only the function to be performed by each member, the purposes to be achieved, and certain general aspects of the methods to be employed, and will leave the detail to be decided by the individuals on the basis of their respective knowledge and skills.

Hayek might have simply left it there. But he didn’t. 

Does the master go too far with the following?

Rules of organizations are thus subsidiary to commands, filling in the gaps left by the commands. Such rules will be different for the different members of the organization according to the different rules which have been assigned to them, and they will have to be interpreted in light of the purposes determined by the commands. Without the assignment of a function and the determination of the ends to be pursued by particular commands, the bare abstract rule would not be sufficient to tell each individual what he must do.

This description is true for many organizations. It turns out, there are rules of organization that are not subsidiary to commands, yet suffice to help an organization thrive. 

Yes, there’s cosmos. Yes, there is taxis. But is there something in between? 

Some forms of organization have distinct purposes—that is, they have goals or aims—but they don't use central plans, commands, or directives at all. At companies like Holacracy or Morning Star, purpose and “command” are one in the same. These new organizational forms are structured more like neural networks or profitable hives. 

Why hives?

Despite unfortunate terms like “queen” and “worker,” hives are distributed, non-hierarchical systems. As writer Steven Johnson writes:

The great bulk of ant information-processing relies on the chemical compounds of pheromones, also known as semiochemicals for the way they create a functional sign system among the ants. Ants secrete a finite number of chemicals from their rectal and sternal glands—and occasionally regurgitate recently digested food—as a means of communicating with other ants. Those chemical signals [rules] turn out to be the key to understanding swarm logic.

As with ants and bees, there are no managers, no directors, no assignments from above. Planning, as such, is carried out in highly localized fashion by ad hoc teams operating according to their commitment to a “mission” (read: purpose). 

Recall that in this interview, Paul Green, Jr., said of his self-managed company:

At Morning Star, there are no titles; there’s no structural hierarchy. Each colleague comes into the enterprise with the same set of rights as any other colleague. Each colleague commits to a Personal Commercial Mission when they come aboard and, further, commits to what we call “Total Responsibility”—essentially, they agree that they are totally responsible for the success of the entire enterprise. 

When pressed further about Morning Star operating in some sort of organizational “anarchy,” Green replies:

I guess it is anarchy in the sense that there’s no structural chain of command or hierarchy—no “government” of sorts. But it would be a mistake to assume that it’s disordered or without structure. On the contrary, it’s very ordered, and there is structure. The difference is in how we arrive at order and structure. It’s not through some sort of centralized command-and-control hierarchy; it’s a group of individuals developing order through a social network of sorts—perhaps you could call it “spontaneous order”—based on circumstances and needs.

But according to Hayek, planned orders can happen within emergent order, but not the other way around. 

The socialist economist Yanis Varoufakis enjoyed some viral love by going somewhat against Hayekian orthodoxy regarding cosmos and taxis. In a post about his former employer, Valve, he wrote:

Hayek’s argument that markets protect us from serfdom (i.e. from authoritarian hierarchies) is weakened substantially by the fact that he has precious little to say about corporate serfdom; about the hierarchies that millions must submit to (when working for Wal-Mart or Microsoft for instance) in order to make a living or to get a chance to unfold their talents.

“Swarm intelligence,” “crowdsourcing,” “peer-to-peer companies,” and other tech-enabled trends seem to land squarely in between cosmos and taxis.

These organizational forms have distinct goals but don’t prescribe any means of reaching said goals. A mission or purpose may be more than a “bare abstract rule,” but it is certainly less than a concrete plan implemented through command-and-control directives.

These swarm forms can’t be considered cosmic orders (cosmos) because they rely on purposive behavior to form. (For example: “Create high-quality tomato-based products for customers” or “Collaborate to solve problem X.”) But they can’t be planned orders, either, because there is no formal management hierarchy and no one issuing commands within these organizations.

Yet these orders have emergent properties, even though the agents that make them up share a purpose. Indeed, no executive or planner can determine how a problem will get solved through crowdsourcing, nor can any one person at a bossless organization replace peer collaboration with directives. 

These new organizations throw a wrench in Frederick Taylor’s ideal factory firm with its master managers and workers as cogs. They also challenge—or at least stretch—Coase’s theory of the firm. Coase thought more or less that firms would arrange hierarchically because it’s too costly to organize them like a market. But now those costs are coming down. I reckon Coase was right about transaction costs then and now. The transaction costs are changing, not Coase’s theory.

What makes things somewhat more perplexing is that these different forms of order can be nested within—and sometimes dependent upon—the extended order (cosmos). (The totality of which is what Leif Smith calls Freeorder.) For example, if we crowdsource a solution to a biochemistry problem or collaborate in a bossless organization, it may be that neither activity is likely to crop up in North Korea, though it might certainly happen in North Carolina and Northern California. 

So if they’re neither cosmos nor taxis, what should we call these forms of organization?

I think we can safely call them something like smínos, following Hayek’s use of the Greek terms. Smínos (Σμ?νος) means “swarm” or “flock.”  

This term may not be perfect. It may be that we need new words for yet other additions. Or it may be that “swarm” doesn’t satisfy our sense that humans are not operating on such strict algorithms as bees, ants, and birds and that our agency makes our form of swarm intelligence something more peculiar. Fair enough. But I would like tentatively to propose a new category of order.

What if we start seeing more and more of these swarm orders forming in the private sector? If we start looking for ways to let orders emerge within our organizations, people may see what’s possible without formal authorities and central planners—and they may like what they see.

As the venerable economist Lynne Kiesling writes at Knowledge Problem: “The desire for fully-specified, legalistic, control-oriented regulation leads to this type of primitive, planned order.” Such a primitive form of organization does not just take its toll on the potential value achievable through open collaboration. But in strictly planned orders, adds Kiesling, “minds wither and atrophy, increasing the primitive and simplistic nature of the resulting order.” 

On the other hand:

Rules that allow for the challenge and application of individual creativity and personal knowledge make for more robust institutions, and enable minds to thrive in an order that is complex beyond their understanding, without their having to understand its entirety. Thus relinquishing the base desire to control and manage is crucial to wellbeing, growth, and living together in civil society.

Most of us agree we want a condition of well-being, growth, and civil society.

So now the question becomes: How do we move closer to it?

Once executives begin to see the power of decentralization inside their own organizations, the broader lessons of Freeorder may follow much more easily. In other words, implementing good rules and being less autocratic in our businesses is a great way to start making change.

We may not only find such change profitable, but good.

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A version of this article first appeared at FEE.org.