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F.A. Hayek suggested that the confusion, errors, and fallacies abundant
in the social sciences, especially in economics, might be dispelled if
“economy” were reserved to describe the deliberate arrangement
of resources and that “catallaxy” be used to describe the market,
the intricate web of relations that connect economies.1
Today it has become customary to refer to this web as the local, national,
and even world “economy”. The value of using catallaxy instead
would be to clearly differentiate between economies proper and their interrelation
with one another.
Elimination of this confusion would prevent attempts to impose organizational
structures and goals appropriate to an economy onto an order that is fundamentally
different, and one for which such structures and goals are both inappropriate
and inapplicable.
Such usage is consistent with etymology. The Oxford Dictionary tells us
“economy” is derived from the Greek oikonomia, from oikonomos,
which was formed by linking oikos (house) and nomos, from nemo (manage).
Economics, then, literally means “household management”, a term
appropriate to describe households, business firms, and even armies, as
they are all organizations designed to achieve certain ends.2 An economy
is a taxis: an order created by deliberate arrangement.
“Catallactics”, Hayek says on the other hand, “was derived
from the Greek verb katallattein (or katallasein) which meant, significantly,
not only ‘to exchange’ but also ‘to admit into the community’
and ‘to change from enemy into friend’.3”
Someone who studies the market process would be called a catallactist
rather than an economist.
The catallaxy is a spontaneous order, for which the Greeks had another
word: kosmos. Oxford defines cosmos as, “The universe as an ordered
whole; an ordered system of ideas, etc.; the sum total of experience.”
“Catallaxy” and “cosmos” are synonyms for this self-organizing
and self-regulating system, although “catallaxy” is more specific
to human affairs, especially to market phenomena.
“Cosmos” is the root for felicitous and reputable words that
accurately describe a society which fully embodies the universal goals
of modern man: namely, one in which there is order, individual sovereignty,
self-actualization, justice, tolerance, mercy, peace, reason, fair-mindedness,
prosperity, equalitarianism, and optimism--a humanitarian or humanistic
order.
Such a society is a cosmopolity and its citizens are cosmopolites. These
people, according to Oxford, would be “citizens of the world who
are free from national attachments and prejudices.”
That society and its members, then, would be cosmopolitan: a venerable
word enjoying long-standing use to describe every center of culture, science,
trade, and liberty throughout history. Such people once were the “liberals”.
One might hope that members of all parties today would cultivate a view
of the market and of society as a catallactic system whose forms and rules
are endogenously generated through the teleocratic action of the individual
participants, and that the order, which is spontaneously generated and
which is the necessary result of individuals directing their own affairs,
is only impaired by our various clever schemes to coercively improve it.
Were modern man to learn the cosmos is not a taxis, he might not only
overcome alienation from his fellows, but find communion with the natural
order itself.
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