Why free markets? Why am I prejudiced toward emergent order vs imposed order in economic matters? Why is my default position against government involvement? Why do I invoke such a high standard before justifying active government involvement in the economy?
Because the presumption of competence that is prevalent throughout a free society should be applied to economics as well. The American civil legal system and the concept of Justice, at least in theory, have presumptions of competence built in. Parties may contract with one another, with only the need for an arbitrator if there is a disagreement or fraudulent behavior. They don’t need government to direct their contracts; each party is assumed to understand the deal.
Other freedoms are the same way: the freedom of speech presumes that the speaker is competent and that his audience is capable of choosing whether or not to listen. Freedom of religion presumes each person is capable of finding their own belief system (or not). Freedom of press assumes each reader is competent to understand ideas. Freedom to marry presumes each person is competent in choosing a life-partner.
Economics is the same. When two people complete a transaction, the presumption of competence is with both: each person trades knowing, to the best of his ability, how to improve his situation.
What about externalities? Externalities may require necessary government involvement, but the presumption of competency still stands. People in groups are quite clever. The market institution does an amazing job channeling resources to reducing all costs, not just private costs. A presumption of competence allows the market institution to work.
Unfortunately, most economic policies (especially the interventionist ones) rely on a presumption of incompetence. Tariffs, punitive taxes, many kinds of regulations, et cetera all contain a presumption of incompetence: these regulations must be passed because at least one party (typically the consumer) is incompetent for one reason or another to make his/her own choices.* The justification is usually “the consumer can’t act in his own best interest.”
I defer to the emergent order because of the knowledge problem. Without overwhelming evidence to the contrary, the presumption of competence on the parts of the actors (and incomplete information on the part of the observer) should be observed.
*A potential objection an interventionist might raise is that these regulations are necessary because of a lack of information on the part of consumer. For example, FDA regulations and testing are necessary because otherwise firms will just try to pass off placebos or post biased results. However, prima facie this justification doesn’t make sense for an interventionist policy, rather than an advisory policy.