It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.
Adam Smith, Wealth of Nations.
Most people would agree - unless they're too busy idolizing Steve Jobs, Bill Gates, and Elon Musk et al to carve prophets out of them ¯_(ツ)_/¯ - that we humans are i) imperfect, and ii) not perfectible. And yet, despite our imperfections, we have managed not only to survive but to flourish, constructing functioning systems of societal, moral, and economic order. How on earth did we pull that off?
It occurred to me that the answer lies in your dinner plate from last night. Yes, your humble plate played host to a peculiar gathering of strangers - both in space and time. None of the guests knew each other. None had any inkling about you, the gracious host. No one coordinated the party. Even you were unaware. And yet, everybody showed up, and they keep showing up like clockwork.
What an awkward party!
So, take a moment to peruse the list of attendees:
- Some individuals decided to cultivate chickpeas.
- Others opted for the noble pursuit of olive trees.
- A few daring souls dedicated themselves to buckwheat farming.
- And there were those who took on the fragrant challenge of growing mint.
- Let's not forget the enterprising folks who specialized in seed production for the farmers ^^
- A handful of individuals embraced the lifestyle as cattle farmers.
- Some intrepid souls pursued the art of yeast fermentation.
- And there were those who delved into the world of yogurt-making.
- Meanwhile, a brave few took it upon themselves to construct dams.
- Others labored to lay intricate irrigation lines.
- And a select group dared to string power lines across the land.
- Then, some diligent souls went forth to gather these bountiful produce.
- ... (I surrender, the list goes on and on...)
- Eventually, the responsibility fell upon someone to transport these goods.
- Yet another group took up the noble art of cooking.
- And of course, someone had the honor of serving.
- Last but not least, there was you, dear reader, who made the ultimate decision: to eat.
No individual among this motley crew knew each other. No individual set out to create your plate specifically. They were all driven by their own personal ambitions. But together, their collective actions brought forth your plate. It arose from a continuous, nonlinear, complex, and yes, even chaotic process.
If Adam Smith were here to witness your plate, he would likely suggest that individuals, through an ongoing process of trial and error, develop successful rules of behavior and institutions that give rise to societal and economic systems of order, eventually culminating in the creation of your plate. It's a lot to digest. So, let's circle back to where we began.
We are imperfect, and so are our decisions.
The essence of Smith's worldview, as I comprehend it, lies not in eradicating our imperfections in decision-making, but in minimizing the impact of our imperfections on the system as a whole. The aim is to ensure that no individual's flaws pose a systemic risk. This is achieved through a decentralized decision-making process where every individual autonomously participates in decision-making.
Centralized systems, on the other hand, turn their noses up at human imperfections. They find human imperfections distasteful. Instead, they focus on eliminating them by either striving to make every individual perfect - an impossible feat, mind you - or by suppressing individual free will, effectively making decisions for everyone en masse. Ironically, as decision-making becomes more centralized, the system itself grows more fragile. In the name of minimizing individuals' imperfections, centralized systems end up maximizing systemic risk.
The universe doesn't cease its relentless onslaught of entropy just because a system is more decentralized. Unintended systemic risks are bound to arise regardless. However, when faced with extreme shocks, decentralized systems are more robust - and anti-fragile (re: Taleb) if they benefit from the shock - compared to their centralized counterparts.
Our individual decisions may be flawed and inherently imperfect. Yet, collectively, we continue to create wonders through autonomous decision-making. And that, my friend, is the captivating beauty of decentralization.