Wednesday, January 7, 2009

Designer Goods

Business people can achieve fabulous success without ever thinking about the larger economic process at work. Indeed, that process is so large and so complex that no one can  completely understand it. The best we can do is work to understand a small part of it, and then trade that understanding to make a living.

Anti-capitalists argue that such bottom-up, piecemeal improvement is too slow. They believe that we can make the world a better place by designing society from the top down, according to a master plan of virtue, goodness, and harmony. Such sentiments sound virtuous. In reality, they make impossible demands on human nature and human knowledge.

First, social master plans require individuals to deny their most powerful motivation: self-interest. Asking people who can't stick to a diet to stick to a social master plan makes as much sense as asking them not to go to the bathroom.

Second, social master plans require somebody, somewhere to know everything that is going on, and to know what is going to happen next. Even Al Gore can't do that. 

Rather than spend precious time, energy and money trying to run perfect plans with perfect people equipped with perfect knowledge, shouldn't we spend that time, energy and money trying to get the best results out of imperfect people who actually know very little, who face an uncertain future, and who are motivated primarily by self-interest?

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