History has shown that voluntary economic trade between individuals, without the “guiding” Hand of the Government, has lifted billions out of poverty and onto the road of a higher standard of living at lower costs and higher quality compared to when markets were controlled by others and such decisions were made beforehand.
Although Adam Smith is today often regarded as a “conservative” figure, he in fact attacked many of the dominant ideas and interests of his own times. Moreover, the idea of a spontaneously self-equilibrating system – the market economy – first developed by the Physiocrats and later made part of the tradition of classical economics by Adam Smith, represented a radically new departure, not only in analysis of social causation but also in seeing a reduced role for political, intellectual, or other elites as guides or controllers of the masses. -Thomas Sowell (Basic Economics)
But look at that last part – “a reduced role.”
Those that held such positions must have hated that they were getting cut out of the middle and no longer got their “cut of the pie” even if was just the satisfaction that their decisions were “for the betterment of all”. Such hubris! Such thinking is limited, self-avowing, and self-interested in one way or another.
It’s that limiting part that is the most important, however, as while it may reduce “friction” for some transaction, it completely closes off entire sectors of commerce from even being thought of. In short, it limits innovation. Items like the microprocessor, the revolutionary iPod (at the time), personal computers, the shipping container, affordable cars, non-stick pans, clothes washing machines, floor vacuums, bike helmets; heck, even the “in house toilet”. Some interesting, some mundane but none, I believe, could have been developed if even just a small cadre of people were controlling the marketplace.
No, the innovational idea by Smith recognized that it was the Individual, looking out for their own self-interest in trying to make life better for themselves and their families by serving others with new and varied products that made their lives better, were the key to the marketplace.
It is at our own economic peril that we ditch this ever-so-important insight.
(H/T: Cafe Hayek)