Monday, July 9, 2007

Families and Free Markets

The Bastiat Society's argument states that the free market is the best way to organize large numbers of individuals in a productive and just society. Why large numbers? Because humans organize successfully on a smaller scale in a variety of other ways. Families for example.

As any parent can tell you, the relationship between parent and child is a long way from being organized on a market basis. Being a baby is the one time in your life you can be fat, bald, toothless, unemployed and incontinent, and everyone thinks you’re cute. Try getting away with it when you’re fifty.

As a kid gets older, he regularly takes more out of the parent-child relationship than he puts into it. Parenting is a one-way drain of the parents’ time, money, and energy. If an employee acted like your kid, you’d fire him. If your business partner acted like your kid, you’d sue him. If a kid who isn’t your kid acted like your kid, you’d kick him out of your house.

We tolerate our own kid for twenty years – or more. Construct a balance sheet of the advantages and disadvantages of having a kid. You’ll find that in return for paying for his room, board, clothes, education and entertainment, all you’ll get is love. Yet, it seems to be enough. That is the power of love.

But when we attempt to expand such one-way, sacrificial, and emotionally intense relationships to larger numbers of people, they quickly break down. Humans can work effectively with just a handful of these kinds of relationships, and no more. At some critical point, the nature of additional relationships must change if they are going to work at all.

Markets are a powerful way of coordinating an infinitely large number of new relationships. Unlike small scale relationships, markets do not require unilateral sacrifice. They do not require the intense emotional commitment of families. They allow individuals to trade for mutual benefit, using the smallest bits of information about the other individuals involved. Market relationships actually save time, create wealth, and conserve energy.

When you buy something from a vendor, you save time because you don’t have to make it, distribute it, or stock it. When you buy something for sale, you trade a less desirable possession (money) for a more desirable possession (the thing purchased), thereby creating a net social positive (a satisfied buyer and a satisfied seller). Finally, when you buy something, you conserve your energy for the same reason you save time. All this occurs without violence.

Human nature is consistent with both kinds of organization, in their proper context. Small scale organization produces families. Large scale organization produces civilizations. A free market produces the most prosperous, peaceful, and just civilization of all.

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