Freedom comes from social trust, social trust comes from order.

Formal rules are only necessary when there is a lack of social trust. When people trust each other, there is no need for an impartial mediators such as law and bureaucracy, as social norms . When I lend money to a friend, I do not make him sign a contract, because I know he will pay me back. Evolutionist X outlines this more thoroughly.

Social trust is built through repeated positive interactions. If I’ve lent $10 to a friend before and he paid me back, I’d consider lending him $20 at later time. If he has a repeated history of paying me back and spotting me when I needed a loan, I may even lend him $1000 if he needed.

I would probably not loan $10 to someone I had never met. But, if I’ve loaned to many friends (and they’ve reciprocated) within a social circle over the years and was always paid back, and I met someone new within that social circle at dinner and they forgot their wallet, I’d likely be willing to spot him $20 for dinner. By being part of the social circle he has inherited that social trust.

Social trust is destroyed through negative interactions. If just once my friend stiffed me, I’d probably never loan to him again; it’s possible I may no longer remain his friend. I’d also be less willing to loan to other friends in the future. If I was stiffed a few times, I’d probably never loan again.

Social trust builds on itself. If I loan to a friend, he’s likely to loan to me in the future, and I in turn am then even more willing to loan to him in the future, and upwards rides the virtuous cycle. Likewise, social distrust spirals downwards. If my friends stiffs me, I refuse to loan to someone else, who in turn refuses to loan to me, which in turn makes me even less likely to loan to others, and downwards spirals the vicious circle.

Eventually, the virtuous cycle results in a social norm of lending and repaying. The vicious circle results in no social norm of lending and repaying arising. Rather, if someone ones to borrow money, legally enforced contract loans become necessary. The vicious cycle leads to law and regulation. It also leads to much higher transactions costs. In the virtuous cycle, a $1000 loan requires little more than politely asking a friend or two and providing an explanation. A $10 loan requires nothing more than a “can you spot me til payday?” In the viscious circle, a $1000 loan requires lawyers, banks, contracts, insurance, and interest. A $10 loan is impossible because the extra costs would be worth more than the loan itself.

Those first few interactions are critical. If my first interactions are positive, the virtuous cycle will build itself and will naturally continue. Once I’m caught up in the virtuous cycle with strong social norms, even the occasional defector will be regarded as a bad apple rather than representative of the group. Only a critical mass of defections will destroy the cycle. On the other hand, if my first few interaction are negative, the vicious circle will start to decay. Once I’m trapped in the vicious circle, the positive interactions will be seen as the unrepresentative outliers. It is nigh impossible to rebuild a virtuous cycle as a critical mass of non-defectors will rarely build up as others defect on them.

Because of this, it is necessary to stop natural defectors from destroying those initial interactions. Order is what prevents defectors from defecting. If a potential defector knows he will be punished should he defect, he will not defect and will not start a viscous circle. In the loan example, if someone knows there is a social norm of shunning by the group for refusing to pay back a loan, they will likely not defect.

Because there is order in the group, we can freely loan. There is no need for laws or regulations regarding loans because we know the social norms will enforce repayment, and these social norms were originally built by the maintenance of order.

We can also see order builds upon itself. The social norm of punishing defectors, leads the the social trust virtuous cycle, which leads to the creation of the social norm of repayment.

If freedom is your goal, order will break down; if order is your goal, freedom will naturally result.

As we can see above, freedom is the natural result of order. Social norms lead to social trust which leads to further social norms which frees us from regulation and bureaucracy.

We can start this order with law as well. If the authority emplaces an authoritarian initial law that harshly punishes stiffing on a loan, people know defectors will be punished and will be willing to engage in those initial positive interactions, even with people they don’t know. The virtuous cycle builds upon this initial law.

In this situation a man’s handshake becomes his bond. When a man’s handshake is his bond, there is no need for contracts, there is no need for lawyers and no need for regulations on the minutiae of contract law. Social norms enforce the spirit of the agreement and there is freedom in loan-giving.

On the other hand, if that initial law against stiffing on a loan is not put into place, people can not trust that defectors outside their close social circles will be punished. So defectors defect. With no social norms people turn to written, enforceable contracts. As they write contracts, they will realize the letter of the agreement is enforced, the spirit is not. This leads to the necessity of lawyers to ensure the letter is correct and the need for detailed regulations to define every aspect of lending contract. With no social norm enforcing the spirit of the law, people will learn to manipulate the letter. In order to prevent the injustices of those manipulating the letter of the law, further regulations will be introduced to prevent manipulation. This will result in a bureaucracy to create these regulations, which will itself be manipulated, and so on down the vicious cycle, as more regulations are placed upon more regulations. Order and freedom break down, replaced by the letter of the law and regulation.

Order is freedom, chaos is tyranny.

As above, we see that order leads to freedom. In a ordered community, strong social norms make intrusive, detailed regulation or bureaucracy unnecessary. The social norms uphold themselves while allowing freedom.

On the other hand, where there is no order, where there is chaos, laws and regulations become necessary. If you can’t trust your neighbour not to defect, not to violate the spirit of any agreements, you need laws and regulations to enforce agreements make up for the lack of social trust.

Increased regulation is a sign that your community is becoming more chaotic and more disordered. Increased tyranny is a result of disorder.

As well, tyranny creates chaos. As shown, as regulations increase the letter of the law and of the agreement becomes more important than the spirit. When the letter become more important, people stop simply not defecting. Instead, people try to defect as much as possible on the spirit while still holding to the letter. Trust breaks down, and chaos reigns.

Increased regulation leads to more chaos, which leads to more regulation. Tyranny is not order, tyranny is chaos and chaos is tyranny.

Order is freedom.

If you desire freedom, order should be your primary goal.