Why Aren’t We Grateful for the Free Market?

In A Handbook for Constructive Living David Reynolds observes:

I am wearing clothes others made for me, eating food others grew and prepared for me, using tools others designed and fabricated and taught me how to use, speaking words others defined and explained. The list goes on and on. Any verb I can think of—sleep, play tennis, drive, lecture, watch, bathe—can be followed by a phrase attributing the action to some supporting role by others. There is nothing I do that is thanks to my own efforts alone.

Without the efforts of others we would perish. Our modern economy depends upon specialization where each is able to use their talents and interests, without central guidance, in order to serve others.

In his book The Rational Optimist, Matt Ridley contrasts our modern life with the life of Louis XIV in order to demonstrate how exchange and specialization are essential for our modern standard of living. He writes:

Louis XIV’s dining arrangements were way beyond your reach. And yet consider this. The cornucopia that greets you as you enter the supermarket dwarfs anything that Louis XIV ever experienced…

You employ no tailor, but you can browse the Internet and instantly order from an almost infinite range of excellent affordable clothes of cotton, silk, linen, wool and nylon made up for you in factories all over Asia. You have no carriage, but you can buy a ticket which will summon the services of a skilled pilot of a budget airline to fly you to one of hundreds of destinations that Louis never dreamed of seeing. You have no woodcutters to bring you logs for the fire, but the operators of gas rigs in Russia are clamoring to bring you clean central heating. You have no wick-trimming footman, but your light switch gives you the instant and brilliant produce of hard-working people at a grid of distant…power stations. You have no runner to send messages, but even now a repairman is climbing a mobile phone mast somewhere in the world to make sure it’s working properly just in case you need to call that cell.

Yet, collectively, we seem to have little understanding that our welfare depends upon the billions of transactions that occur every day, without direction, between people who are guided by their own motives and needs. Every day millions of people, without any central commands and often with very little knowledge of who will benefit by their efforts, work with enthusiasm and ingenuity; and in the end, they serve others.

So why aren’t people grateful for this miracle that makes their standard of living possible? Nassim Taleb, writing in a recent Wall Street Journal column, gives a pointer:

We are victims of the post-Enlightenment view that the world functions like a sophisticated machine, to be understood like a textbook engineering problem and run by wonks. In other words, like a home appliance, not like the human body. If this were so, our institutions would have no self-healing properties and would need someone to run and micromanage them, to protect their safety, because they cannot survive on their own.

In other words, even though our quality of life depends upon politicians getting out of the way of the decisions made by others, many now share the false belief that politicians are in control—and should be in control—of processes that are far greater than themselves. Of course, this belief is nonsensical; a centrally planned economy, such as North Korea, instantly becomes a subsistence economy as mutually beneficial transactions are throttled down to the level that the puny minds of the decision-makers can understand and control.

A centrally planned economy is like a centrally planned body: it doesn’t work very well. Just imagine taking a walk and trying to plan and monitor which foot goes in front of the other foot. Just imagine trying to monitor and plan how many breaths you should take a minute or how your arms should swing. You would instantly become a clumsy and exhausted fool.

But, our false beliefs are alive and well. We believe our standard of living is a function of micromanagement by policy wonks and politicians. We stop noticing the miracle of the free market that is before our eyes daily. David Reynolds observes, “It takes energy and struggle to ignore how much we receive and how little we return to the world. But we grow used to the investment in deceit as we grow older. Ignoring and lying helps us feel better about ourselves.”

Millions cheer and are grateful for President Obama, while few cheer and are grateful for the free market. Thanksgiving is a good time to reflect on where our gratitude should really be placed.

 

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