Self Organization (autopoiesis)

Human systems — those in which humans play a decision-making role — have the distinct characteristic of self organization. Understanding this characteristic helps us understand economic systems.

The process of self-organization plays an extremely important role in complex adaptive (or living) systems. Some times known as autopoiesis, we will examine this process in more detail because it also applies to free markets.

Chilean biologists Humberto Maturana and Francisco Varela introduced the term autopoiesis in 1973 to describe the process of self-creation seen in biology. Organizational theorists have adopted the term to refer to the process whereby an organization produces itself.

An autopoietic organization is an autonomous and self-maintaining unity which contains component-producing processes. The components interact recursively to generate the same structure that produced them. An autopoietic system operates with no apparent exogenous inputs and outputs. A cell, an organism, and a corporation each provides an example of an autopoietic system.

An economy represents a larger autopoietic system. Acting humans continually reproduce the components of the system bringing about evolutionary processes similar to those found in biology.

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

Henry Hazlitt
Economics in One Lesson