At the core of all life, cognition, and organisation lies the principle of holarchy — a recursive, self-organising structure where each entity (or holon) is both a self-sufficient whole and a part of a larger system. Unlike hierarchical structures that enforce rigid top-down control, holarchies operate through distributed decision-making and emergent order, which leads naturally to the economic principles championed by the Austrian school.
The Four Quadrants: A Self-Organising Economic Order
The four-quadrant holon model lays out an organisational framework that mirrors the decentralised nature of spontaneous market order. The quadrants emerge from two fundamental dichotomies: collective vs. individual and class vs. instance. These create a self-organising system where decision-making is local, responsive, and knowledge-driven, akin to the Austrian view of catallactics — the study of exchange between rational actors.
- Top-Left (Cultural Evolution): The repository of shared knowledge, norms, and heuristics that guide voluntary interactions over time.
- Top-Right (Market Coordination): The emergent patterns of trade, competition, and exchange that form without central planning.
- Bottom-Left (Development & Adaptation): The ongoing self-improvement and specialisation of agents, much like Mises’ concept of dynamic entrepreneurial calculation.
- Bottom-Right (Action & Production): The real-time manifestation of economic activity, where individual actors make choices based on their subjective valuations.
The diagonal feedback loops connecting these quadrants reflect the fundamental processes of selection and variation, the core of both biological evolution and free-market economies
Why Mainstream Economics Gets It Wrong
Mainstream economic models, rooted in top-down equilibrium theory, assume that knowledge and resource allocation can be centralised. This contradicts the holonic and Austrian principle of distributed intelligence, where each agent operates with localised knowledge and adapts in real time.
Just as central planning fails due to the knowledge problem (Hayek), rigid economic models fail because they do not account for the self-organising nature of market actors. The holarchy model inherently solves this by structuring decision-making diagonally, allowing organic adaptation rather than artificial control
Taoism and the Self-Regulating Order
The Taoist concept of the bāguà (eight trigrams) mirrors the holonic quadrants, showing that this organisational pattern is not an arbitrary construct but a fundamental truth of reality. Taoism recognises that the universe flows through dynamic equilibrium and spontaneous order, much like the free market when left unimpeded
Both holarchy and Austrian economics reject rigid external impositions and instead embrace self-organising harmony. Just as the Tao guides nature without coercion, a true economy flourishes when individuals are free to discover and act on their own knowledge.
Conclusion: Harmony and Spontaneous Order
The principles of holarchy, Austrian economics, and Taoism all converge on a singular truth: reality organises itself from both the bottom up and the top down. The diagonal feedback loops of holarchy ensure local agency, adaptive learning, and decentralised coordination, making Austrian principles the only economic framework that aligns with the fundamental structure of consciousness and reality.
The choice is simple: do we embrace the emergent, self-regulating patterns of life, or continue imposing broken models that fight against the natural order?