Convention, Social Order, and the Two Coordinations

The word “coordination” has two meanings, and these meanings are often conflated. One meaning, associated with Thomas Schelling, is seen in situations like choosing whether to drive on the left or the right; the drivers must coordinate to each other’s behavior. The other meaning, associated with Friedrich Hayek, means that a concatenation of activities is arranged so as to produce good results. Along with the Schelling sense of coordination comes the notion of convention, such as driving on the right. Some conventions are consciously designed; others emerge without design (or are “emergent”). Along with the Hayek sense of coordination comes the notion of social order. Some social orders, such as the skeleton of activities within the firm or within the hypothetical socialist economy, are consciously planned. Other social orders, such as the catallaxy of the free society, function without central planning (or are “spontaneous”). Distinguishing between the two coordinations (and, in parallel fashion, between convention and social order) clarifies thinking and resolves some confusions that have arisen in discussions of “coordination” and “spontaneous order.” The key distinctions are discussed in the context of the thought of, on the one hand, Menger, Schelling, David Lewis, and the recent path-dependence theorists, and, on the other hand, Smith, Hayek, Polanyi, Coase, and the modern Austrian economists. The paper concludes with a typology that encompasses the several distinctions. JEL classification: A1.