One of the things that captures our imagination is the question “Where was life born? Where did organic evolution begin?” That opened our eyes to a variety of things that we found useful for thinking about the origins and evolution of markets, because, essentially, what Einstein and even Darwin have told us is that the universe can be a sort of mindless vacuum.
It can be very overwhelming. The universe itself doesn’t produce life—that is essentially what Darwin said; life, on the contrary, is produced in enclosures. The universe is too big. The second law of thermodynamics, which is probably the clearest law in physics, actually says that the universe is gradually deteriorating into disorder; it’s decaying.
The only places where you can put life and get organization going, get complexity into place, Darwin said, were small places. He talked about “warm little ponds.” Probably life, he said in a letter to a friend, was born in a warm little pond. Somewhere along the line somebody said, “It may have been, actually, not a warm little pond; it could have been an oily bubble on the shallow waters of the ocean.”
Somebody else says, “No, maybe it could have been cracks in the subterranean rock or geothermal vents on the sea floor.” Even Aristotle ventured into that field. He had two hypotheses, which didn’t actually work out. He said that fleas were born in accidental pockets of dirty laundry and that mice were born, probably, in little heaps of wheat. But the common idea was that the beginning of life requires small spaces. In other words, humanity or life requires degrees of concentration. We see it from an enclosure, from a smaller place, and that’s how we put it together.
This inspired us to think of the origins of markets differently, that you catch the market from a smaller enclosure. You catch the market from something more encapsulated. That is why we have dedicated a lot of our time in recent years at my organization, the Institute for Liberty and Democracy, to exploring the role of enterprise: What is the role of enterprise for understanding a market, and can you actually understand the market unless you have an enterprise with certain specific characteristics that allow you to bring an enormous amount of apparently disorderly information and be able to select from it what you actually need to be able to use the information in the market adequately and produce prosperity?
Excerpts from my lecture is Economic Freedom for Everyone? [0]