|St. Lawrence Institute|
for the Advancement of Learning
F. A. Hayek, in Law, Legislation, and Liberty, Volume 2, The Mirage of Social Justice, suggested that the confusion, errors, and fallacies abundant in the social sciences, especially in economics, might be dispelled if "economy" were reserved to describe the deliberate arrangement of resources, and that "catallaxy" be used to describe the market, the intricate web of relations that connect economies.
Today, it has become customary to refer to this web as the local, national, and even world "economy." The value of using "catallaxy" instead would be to clearly differentiate between economies proper and their interrelation with one another.
Elimination of this confusion would prevent attempts to impose organizational structures and goals appropriate to an economy onto an order that is fundamentally different, and one for which such structures and goals are both inappropriate and inapplicable.
Such usage is consistent with etymology. The Oxford Dictionary tell us "economy" is derived from the Greek oikonomia, from oikonomos, formed by linking oikos (house) and nomos, from nemo (manage). Economics, then, literally means "household management," a term appropriate to describe households and business firms, as they are all organizations designed to achieve certain ends.
"Catallactics," Hayek says on the other hand, "was derived from the Greek verb katallatein (or katallasein) which meant, significantly, not only `to exchange' but also `to admit into the community' and `to change from enemy into friend'." Someone who studies the market process would be called a "catalactist" rather than an "economist."
The catallaxy is a spontaneous order, for which the Greeks had another word: kosmos. Oxford defines "cosmos" as "the universe as an ordered whole; an ordered system of ideas, etc; the sum total of experience." "Catallaxy" and "cosmos" are synonyms for this self-organizing and self-regulating system, although catallaxy is more specific to human affairs, especially to market phenomena.
"Cosmos" is the root for felicitous and reputable words that accurately describe a society that fully embodies the universal goals of modern man: namely, one in which there is order, individual sovereignty, self-actualization, justice, tolerance, mercy, peace, reason, fair-mindedness, prosperity, equalitarianism, and optimism -- a humanitarian or humanistic order.
Such a society is a cosmopolity and its citizens are cosmopolites. These people, according to Oxford, would be "citizens of the world who are free from national attachments and prejudices." Such a society and its members, then, would be cosmopolitan -- a venerable word that has longstanding use describing every centre of culture, science, and trade throughout history.
One might hope that members of all parties today would cultivate a view of the market and of society as a catallactic system whose forms and rules are endogenously generated through the teleocratic action of the individual participants, and that the order, which is spontaneously generated and the necessary result of individuals directing their own affairs, is only impaired by our various clever schemes to coercively improve it. Modern Man might not only overcome alienation from his fellows, but find communion with the natural order itself.