In other words, the vision of the world reflected in modern macroeconomic
models, leaves out aspects of the economy which seem to be central
to understanding how it functions and evolves. Indeed, the problem
that intrigues many people when they first come to economics is that of
explaining how the myriad of disparate individual economic activities
come to be coordinated. A modern economy is composed of millions of
agents who interact directly and indirectly with each other. Each of them
knows a great deal about the activities they are engaged in and a lot about
the people whom they interact with on a regular basis. They interact
intensively and directly with some individuals and less often and more
indirectly with others. They have a great deal of very local information
but know much less about the behaviour of the whole economy, other
than through some summary statistics. Yet, despite the fact that most of
the individuals in the system are not aware of each other’s existence, their
activities collectively are remarkably coordinated. The questions that we
should be asking are, first, how is it that all these individuals, each of them
with specific information and abilities, organize themselves, for most of
the time, in a consistent and relatively predictable way? This is the question
of ‘self-organization’, one which was central to Hayek’s thinking
(see Hayek 1945).