Creating Consensus vs Imposing Consensus

Market-driven decision making and government-driven (or collective) decision making both have this in common: they determine a consensus.  However, the methods each use are radically different.  One is peaceful and the other is not.

Market-driven consensus (that is, the consensus that arises from individual actions within a society) is based off of voluntary interaction.  No interaction takes place unless both parties benefit and agree to the conditions.  If a third party is affected, they can interject themselves into the process in order to protect themselves.  In this method, people are generally made better off and the resulting consensus is highly desirable by all involved (since they all had a hand in creating it).  This is the “spontaneous order” that arises, the outcome guided by an invisible hand.

Conversely, government-driven consensus (that is, the consensus that arises from the political process) is based off of force, either explicit (eg the War on Drugs) or implicit (“pay or taxes or go to jail!”).  In this case, consensus is imposed rather than discovered.  The consensus is pre-determined, either from a single point of view (such as in an autocracy) or from the most broadly-appealing points of view (such as in a democracy). In an imposed consensus environment, there is a limited likelihood that the consensus is best for all involved since it is not determined by individual actions but imposed from the top-down.  FA Hayek’s famous Uses of Knowledge in Society talk shows us that, even under the best set of assumptions, the necessary information to make an informed decision cannot possibly be collected an analyzed to any meaningful extent in this process.  It is most likely the consensus imposed will reflect those who are closest to the politician’s ear, rather than the actual consensus of society.

Even if both methods of consensus reached the same point, the market-driven method is preferable.  It has a distinct advantage over government-driven consensus in that it is able to quickly adjust to new information, new inputs.  government-driven consensus is very difficult to change, and in fact, can be openly hostile to change even when the information all points in a single direction.

Take, for example, climate change.  There is an extraordinarily strong consensus among scientists that climate change is happening and human activity may be a major cause of it.  Market-driven consensus has already occurred and people are changing their behavior: alternative-energy vehicles, fracking, cleaner-burning energy sources, and the like.  In the mean time, government-driven consensus continues to flounder.  There have been summit after summit after summit and no government has been able to get any kind of change to happen, despite the fact they all agree something must happen.

Market-driven consensus allows for each person to react to the stimuli surrounding him and make the appropriate decisions.  This, in turn, leads to a large consensus that is discovered in society.  It is like an organism with millions of sensory organs, each processing information in its little area of the world.  Conversely, government-driven consensus is imposed.  It is a consensus determined via limited sensory organ data.  It is like an organism who has no senses whatsoever but on its feet.

Information is power, and the more information that is put in means the more powerful, the more accurate, the consensus will be.