Wright State University economist Evan Osborne delivers a powerful counter to that assumption in his book Self-Regulation and Human Progress. He makes the case that human action is subject to control through voluntary market processes and that such regulation is nearly always more conducive to innovation and harmony than is control dictated by some authority figure or group. He writes:

There is substantial historical reason to believe, as I seek to demonstrate, that as society becomes more complex, the inadequacies of political regulation, and therefore the need for self-regulation, actually grow. But if instead it is political regulation that grows, existing problems fail to be addressed effectively, generating more anger and in turn more political regulation.

Replacing order from above / Peering far back into human history, Osborne finds that people generally looked to their rulers for order. Labor was assigned to people, for example, rather than having a competitive labor market where individuals could seek the best compensation for their talents. The idea of control from above became ingrained; it was a long time before people began to consider anything other than government regulation of their lives. For that reason, economic progress was dormant for much of human history.

In time, however, some individuals began to think for themselves, contemplating the world and how life might be improved. Those people thought scientifically and wanted to communicate with each other. The scientific method arose spontaneously out of their exchanges, unhindered by governmental dictates. The whole enterprise of science grew through self-regulation and certainly would have suffered if rulers had managed to regulate it.

An important contributor to scientific progress was England’s Royal Society of London for Improving Natural Knowledge (chartered by King Charles II but not under the crown’s control). Scientists of the day (mid-17th century) decided that experiments done privately had to be conducted again in front of an audience of Society members in order for the findings to be accepted. Hence the Society’s motto, Nullius in Verba (“Take nobody’s word for it”). Osborne writes, “Under such conditions, experimentation became in the eyes of the scientific community as close to an unbiased feedback system as has so far been imagined.” From England, the scientific method, a marvelously self-regulating system, spread worldwide.

Equally important was the concept that speech did not need, and indeed should not have, government regulation. In 16th and 17th century Europe, the heads of the Church and national monarchs were particularly concerned with what people read once Gutenberg’s press made the production of written material inexpensive. Naturally, they didn’t want tracts or books that were in any way heretical or treasonous in circulation, and punished those who defied their restrictions. It was widely accepted that religious and secular officials were entitled to do this.

The case for the right of free communication appeared first in England with John Milton’s Aeropagitica. In it, he argued for an almost complete freedom of press and speech and showed why systems of state licensing of printers were undesirable. Summarizing Milton, Osborne writes, “Speakers who must answer to a possibly critical audience, in true self-regulating style, would always get closer to truth than their censors will.”

Intellectuals in the Netherlands, France, the German states, and other nations took up Milton’s arguments. For example, in Denmark, Johann Struensee, the king’s personal physician, was appointed royal adviser in 1770. A “wild-eyed child of the Enlightenment” as Osborne describes him, Struensee issued a number of decrees to liberalize Danish law, including complete freedom of the press. Arguments for freedom of communication captured the minds of thinkers throughout Europe and North America. The Virginia Declaration of Rights in 1776, for example, included freedom of the press.

John Stuart Mill’s On Liberty made such an overwhelming case for freedom of speech that by the closing decades of the 19th century the idea that governments should regulate communications was in such disrepute that it survived in only a few backward domains such as Russia and the Ottoman Empire.

Economic self-regulation / But what about the socio-economic aspects of life? Early in human history, they too were heavily controlled by religious and secular authorities. Eventually, however, the idea developed that we could rely on self-regulation in the socio-economic realm.

Osborne traces the earliest expressions of a free market philosophy to India. He writes, “The idea that rulers can merely improve the commercial environment, but the welfare of the people ultimately is achieved by merchants and farmers on their own, without any particular guidance from those rulers, was found in ancient thought there.”

Most of Europe resisted self-regulatory ideas until the 16th century. At the University of Salamanca in Spain, however, scholars began to question the beliefs that supported top-down regulation of commerce, such as the concept of the “just price.” Those scholars argued the just price should simply be whatever price was agreed to by both seller and buyer.

From Spain, the free market concepts drifted northward into France, the Netherlands, and England. Frenchman Richard Cantillon set forth the fundamental concepts of price equilibrium and the coordination of resources to produce the most desired goods in his Essai sur la nature du commerce. The Dutchman Bernard Mandeville, in his Fable of the Bees: Or, Private Vices, Publick Benefits, anticipated Adam Smith in arguing that the pursuit of self-interest is conducive to prosperity for all. And of course, Smith systematically explained why nearly all political interference with production and commerce would be counterproductive from the standpoint of public welfare.

Against social Darwinism / These ideas were developed further by philosophers Herbert Spencer in England and William Graham Sumner in the United States. Both opposed coercive government at home and internationally — that is, imperialism. They maintained that a minimalist state led to economic and moral progress. Osborne defends Spencer and Sumner against the calumny that their philosophy boiled down to saying that the poor deserve their lot in life.

All-powerful governments would tolerate no opposition while attempting to create perfect humans for the perfect state.

Of course, opponents of the self-regulated economy made its alleged unfairness the central thrust of their case for a large, if not omnipotent, government to regulate the economy, redistribute income, protect consumers, provide for old age, care for medical needs, and so on. The American intellectual Richard Hofstadter, for example, denounced what he saw as the cruelty of the free market. It was he who coined the pejorative term “social Darwinism” to turn people away from the government minimalism of Smith and other liberals.

Osborne devotes two chapters to responding to attacks on the idea that self-regulation is preferable to political regulation. Some critics argued that the self-regulating mechanisms were often inadequate (what we now term “market failures”) and therefore state intervention was needed to ensure a just society. Others said that society had to be entirely transformed, eliminating private property and competition. Osborne notes the irony in the fact that skepticism about free markets was itself “generated through self-regulating communication — not just reaction to the seeming excesses of the industrial age, but from the incentives public intellectuals have to say something counterintuitive.”

In the 18th century, a number of starry-eyed opponents of free-market societies founded socialist communities, believing that people would flock to their more humane, property-less mode of living. Those communities were perfectly consistent with the self-regulation concept, but their almost universal failure convinced opponents of laissez-faire that the social changes they thought necessary had to be imposed by government. Thus grew political movements for wage and hour regulation, safety legislation, progressive income taxation, and much more.

An outgrowth of this backlash against self-regulating societies, Osborne writes, was nationalism. He observes that while monarchs had occasionally extended the reach of the state into socio-economic concerns,

it takes national leaders to ask (and claim to know how to answer) such questions as “How should French schools be run?” or, “How should the German economy be managed?” Chancellors and parliaments ask those questions; kings and queens seldom did.

Using their power to regulate away the supposed horrors of industrial capitalism, leaders sought to create a tribal loyalty to the nation. The worst consequences of that were wars far bloodier than any before.

The other prong of the counter-reaction against the liberal, self-regulating polity was totalitarianism. All-powerful governments would tolerate no opposition while attempting to create perfect humans for the perfect state. Dissent would be taken as a sign of mental illness to be “treated” with re-education camps — or a bullet to the head. Our author wants us to compare that with the free, self-regulating society that leaves people alone to make their own choices.

In the end, Osborne impresses upon the reader that there is inevitably a tradeoff between increasing government regulation and decreasing private-sector innovation and problem solving. “Imagine if all the bile spent over the last several decades in arguing over how to alter political provision of health care had instead been spent as energy improving it from below,” he writes. Thomas Sowell likes to point out that people who have “cosmic visions” usually can’t be bothered to contemplate the world as it actually exists, with marginal gains and losses; Osborne’s book makes that clear to anyone with an open mind. Self-regulation does not result in utopia, but it does far more to promote progress than does reliance on political regulation.