Spontaneous Order in the form of Long-term Profits

Written by Jonathan on April 21st, 2009

Koch’s MBM “purposeful action” creates the base for how companies can maximize their own long-term value similar to Hayek’s system of spontaneous order that maximizes choices. MBM principles guide actions rather than forcefully enforce them. Businesses capacity to create long-term profits is the result of “human action but not human design” just like spontaneous order. As Koch puts it “we know a business is being guided by an effective vision to the extent it creates profit over the long term”. He also mentions that “history has shown that an organization is continually profitable is satisfying people’s needs”. Even though the future is uncertain, companies need to do their homework to identify which products or new ventures might be profitable in the future so they can invest intelligently just like Hayek’s description of experimental discovery. In the same way a government can enforce property rights and beneficial rules that allow for the well functioning of a market system an organization must have a vision that makes possible the identification of how and where it can create the greatest long-term value.

Jonathan

 

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