Emergent Phenomena in Economics and Physics

The way I characterized Austrian economics as reducing everything down to individual action is kind of funny. One might call it "reductionist." In physics there are some people who use this word too, and they use it pejoratively. The funny thing is that insights they have obtained about the character of a mighty chunk of the physical world are eerily similar to Hayek's insights about markets, and the terminology is similar too.

The physics bit is about how a mess of complicated interacting components can spontaneously exhibit large scale order that looks as if it were (i) composed of a bunch of coherent larger objects, and (ii) organized according to elegant rules about how those larger objects behave. The problem is just that these larger objects don't exist except as slavishly repeated patterns of behavior of the underlying components, and the elegant rules don't seem to have anything to do with the rules actually governing the components.

If the components are atoms, and the larger objects are waves in a crystal lattice, you get the slavish conformity of ice always having the same specific heat. If the components are people, and the larger objects are dairy markets, you get the price of milk in Idaho slavishly imitating the price of milk in Manhattan (or vice versa). At any rate, emergent physics and emergent economics are pregnant ideas.