Capitalism cannot just be summed up as voluntary acts of transaction in which both sides believe they have received the greater value.
What markets enable, then, is extensive networks of cooperation. Indeed, the networks can become so vast that it might be literally impossible to know or trace them all. Adam Smith claimed – in the eighteenth century – that an attempt to trace out all the links in even a single chain of cooperation “exceeds all computation.”
-Prof James Otteson (Seven Deadly Economic Sins)
And it can’t just be summed up by that most important economic discovery of Price Point (that both sums up all the activities involved in the supply side and “greases” those voluntary acts), but the simple statement:
May I serve you?
Think about it – someone who has something to sell to you is SERVING you – offering something of value that would enhance your life in some manner: clothes and other personal items, household goods, transportation, electronics. Without that attitude, even when made in their own self-interest, everything falls apart. All those networks of Spontaneous Order would vanish.
Most of these Notable Quotes come from Cafe Hayek; it is their logo above. I’ve embiggened it a bit to better show it off, but I’m betting that most of our younger readers have no clue what it is.
I’m old enough, however, to know what it is right away.
Waiters in finer dining establishments would come to your table, wearing a shirt and tie, with a towel over their arm at the ready to clean up any messes at your table (admitted: ofttimes just for show). In an old-fashioned way, they intended to SERVE you, in all manners particular for that kind of transaction, and to make that transaction as pleasant and (for us) memorable as possible. One doesn’t find that in most restaurants much anymore – and I think that’s too bad.
Prof. Don Boudreaux adds the more academic take of the “networks” mentioned by Otteson for amplification:
Very often the simplest of intellectual points are of realities profoundly important yet very easily missed. The Smithian-Hayekian point made above by Otteson is one such point.
I call this point “Smithian-Hayekian,” but it is a point that is understood and accepted by all competent economists – indeed, by all people who think with competence about the economy or about society. And its importance cannot be over-emphasized.
If a list were to be made of the top five most significant errors made by people who propose economic or social policies, on that list would surely be some entry such as this: “Failure to appreciate just how inconceivably complex is the economy and society.” Too many people mistake the end results that they see – the rising money price of propane, the department store filled with goods bearing labels reading “Made in China,” the neighbor who loses her job because her employer downsized, the fall in mortgage interest rates – without seeing the vast, swirling, dense, and inconceivably complex economic forces that give rise to each of these, and billions of other, economic phenomena. Too many people think that by forcibly pushing or pulling on the observed phenomena – pushing or pulling on one of the more visible nodes of a massive, globe-spanning web interconnections – the observed phenomena will change in the way that the pusher or puller desires without any other significant consequences.
People do not understand the incredible interconnectedness of countless suppliers with each other and with consumers. This interconnectedness is inseparable from the competitive processes that make available to the masses today’s great variety of affordable goods and services.
The unseen parts of market processes that give rise to the goods, services, and other economic phenomena that are visible on the economy’s surface are magnitudes more vast, relative to the surface phenomena, than is the unseen part of any iceberg relative to the ice that is visible on the ocean’s surface.
How many of you actually think of everything necessary for those things you own to come into being. For most of us, that is never. It struck me last night while waiting for our pick-up pizza to be ready (think about everything that must be done before you can do that!); we went to the just-opened Harbor Freight Tools store in town.
No, I’m not a tool guy – you never want to put a hammer, screwdriver, and saw in my hands at the same time, but TMEW wanted to go in.
In case of outages, I keep one of them in every room of the house. I started this when I first spotted them in Lowe’s (red and with individual LEDs instead of that LED ribbon.
Ninety-nine cents each – 20% of what I paid at Lowes for pretty much the same thing. But imagine the cooperation needed (that “network” mentioned above) to get all the parts created and assembled? And in this case, shipped from China, shipped across the continental US, and organized in that store? Ninety-nine cents???
Capitalism – solving problems by serving others.
Socialism / Communism can’t do that – not even close.
(H/T: Cafe Hayek)