Wednesday, November 25, 2009

Giving Thanks for Capitalism, The Invisible Hand, the Miracle of the Free Market and No Turkey Czars

Like in previous years, you probably didn't call your local supermarket ahead of time and order your Thanksgiving turkey this year. Why not? Because you automatically assumed that a turkey would be there when you showed up, and it probably was there when you showed up "unannounced" at the grocery store to select your bird.

The reason your Thanksgiving turkey was waiting for you without an advance order? Because of "spontaneous order," "self-interest," and the "invisible hand" of the free market - "the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many." And even if your turkey appeared in your local grocery stores only because of the "selfishness" or "corporate greed" of thousands of turkey farmers, truckers, and supermarket owners who are complete strangers to you and your family, it's still part of the miracle of the marketplace where "individually selfish decisions lead to collectively efficient outcomes."

In a 2003 Boston Globe column titled "Giving Thanks for the Invisible Hand" Jeff Jacoby explains below why he is thankful for the miracle of the invisible hand that makes affordable turkeys automatically available so efficiently at Thanksgiving:

The activities of countless people over the course of many months had to be intricately choreographed and precisely timed, so that when you showed up to buy a fresh Thanksgiving turkey, there would be one -- or more likely, a few dozen -- waiting. The level of coordination that was required to pull it off is mind-boggling. But what is even more mind-boggling is this: No one coordinated it.

No turkey czar sat in a command post somewhere, consulting a master plan and issuing orders. No one forced people to cooperate for your benefit. And yet they did cooperate. When you arrived at the supermarket, your turkey was there. You didn't have to do anything but show up to buy it. If that isn't a miracle, what should we call it?

Adam Smith called it "the invisible hand" -- the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend. No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy *is* planned, the more it is plagued by shortages, dislocation, and failure.

It is commonplace to speak of seeing God's signature in the intricacy of a spider's web or the animation of a beehive. But they pale in comparison to the kaleidoscopic energy and productivity of the free market. If it is a blessing from Heaven when seeds are transformed into grain, how much more of a blessing is it when our private, voluntary exchanges are transformed - without our ever intending it - into prosperity, innovation, and growth?

18 Comments:

At 11/25/2009 10:23 AM, Anonymous gettingrational said...

In 1620 the Pilgrims landed at Plymouth Rock and settled into an uneven rugged fight for survival from starvation. Three years later capitalism was introduced into Plymouth Colony and the Pilgrims never starved again. Governor William Bradford abolished the communal system with the decision that each family would have their own land and keep what they produce.

Freedom and Capitalism = prosperity is the equation started by the Pilgrims for the U.S.

 
At 11/25/2009 11:02 AM, Blogger James Fraasch said...

Terrific reminder of what the truly free market can do.

While were on the topic of turkey...

I am thankful for finding this blog and someone who shares a passion for economics/free markets as much as I do.

Many thanks.

 
At 11/25/2009 11:02 AM, Anonymous Benny "Tell It Like It Is" Man said...

And our Founding Fathers detested standing armies, and wrote into our Constitution rules prohibiting any funding for armies beyond two years, and also gave to citizens only the right to bear arms and form militias.
The current permanently mobilized mercenary force -- one that costs $1 million a year to put a single soldiers into combat, in foreign entanglements-- is contrary to the intent of the US Constitution and the intent of our Founding Fathers.
George Mason, who of George Mason U. where Dr. Perry learned his brand of economics, actually wanted a provision in the Constitution outlawing a permanent military.
Instead, we got the 2nd amendment and ban on permanent funding of a military.
Happy Thanksgiving, and let's get back to real free enterprise, real free markets, and the US Constitution!
And remember--more than one-half of federal income taxes are eaten up by defense and agriculture departments.
The huge entitlement programs are financed by payroll taxes.
You want an income tax cut? So do I!
Cut military and ag spending in half.

 
At 11/25/2009 11:09 AM, Blogger W.E. Heasley, CLU, LUTCF said...

Possibly Free Enterprise will develop a very, very Large Fork.

The Large Fork can be transported to the World’s Largest Turkey aka Washington D.C.

The Large Fork can be deployed and used to poke WDC to see if its done yet.

If the poke produces a Squeal, then its really pork and WDC is not done yet.

 
At 11/25/2009 11:31 AM, Blogger Smoky Mountain Hiker said...

Mark - great post and great blog.

I also pray that free market capitalism will continue, despite our current political circumstances.

Jeff

 
At 11/25/2009 11:37 AM, Blogger bobble said...

don't be silly, agriculture is heavily subsidized and regulated by the federal government. the cornerstone of the government program is corn, the main ingredient in turkey farming,

 
At 11/25/2009 11:41 AM, Anonymous TheDude said...

Benny .....,
The next time you read the U.S. Constitution look at Section 8 - Powers of Congress and their duty to maintain a Navy.

The U.S. Navy has provided a presence world wide to spread and maintain freedoms. Look at all the beautiful women freed from feudal socieites over the last couple of centuries.

Stay vigilant and abide.

 
At 11/25/2009 11:52 AM, Anonymous Steve said...

Happy Thanksgiving, we have much to be thankful for.

 
At 11/25/2009 12:28 PM, Anonymous Benny Truthman said...

A Navy to protect our shores and shipping rights.

Aside from a few punks off the coast of Somalia, no one is closing down shipping lanes.

A few packs of hunter-killer subs, and a few nuke-armed subs, is all the military deterrent we would need. No one is going to invade the USA. There is no nation-state that even wants to invade the USA.
If that time comes, then we should mobilize then. Like WWII.

Fighting a few punk terrorists does not require a Navy with 11 aircraft carrier strike forces. This is wasteful. Indeed, even our full complement of military forces appears unable to prevail on Afghanistan--on the other side of the globe from us.
Ths is lunacy.

Foreign Affairs magazine, oh 30 years ago, had an article on all all-sub Navy. Fascinating reading.

You want lower income taxes? I do.
Most income taxes are consumed by DoD and DoA. Fight waste where it looms large.

Pat Buchanan, Ron Paul and others are waking up. I hope other right-wingers do. Ossified lard+ patronage=US military and Department of Agriculture.

We should clean our own house first.

I also think other federal agencies should be whacked.

For that matter, whack those entitlement programs funded by payroll atxes, such as SS and Medicare.

But the truth is, our income taxes are largely eaten up by programs supported by a deeply corrupted R-Party.

How corrupt is the R-Party? The energy program they came up with is ethanol. A huge expansion under Bush. Ethanol is a loser, subsidized--another farm subsidy in drag!

Vote for Ron Paul.

Happy T-day and read the US Constitution. You will be surprised.

 
At 11/25/2009 1:50 PM, Blogger rufus said...

BTW, your Thanksgiving Dinner cost 4% Less this year, than last.

 
At 11/25/2009 3:47 PM, Blogger OA said...

bobble said...
don't be silly, agriculture is heavily subsidized and regulated by the federal government. the cornerstone of the government program is corn, the main ingredient in turkey farming,

But it's capitalists that take advantage of whatever subsidized products and other government provided things that are available. The interstate highway system helped commerce because it helped businesses and people move things around more easily. Take away those people freely taking advantage and all you'd have is nice government roads.

Take capitalists out of agriculture and there'd be huge imbalances in supply and demand.

 
At 11/25/2009 3:59 PM, Anonymous Anonymous said...

I'm thankful for Mark Perry!

 
At 11/25/2009 4:14 PM, Anonymous DrTorch said...

Silly, silly exaggeration.

Oh, it's true no "one" coordinated it all. But that doesn't mean there were "invisible hands" and no coordination at all.

Your supermarket had managers and buyers making decisions on how many turkeys to buy, and from whom.

Turkey farmers have negotiated contracts months ago, thus enabling them to take the risk of investing in livestock, feed, innoculations, etc.

And truck dispatchers are always alert to find good drivers.

And in the end, your supermarket will likely be overstocked, or in a few cases, understocked.

Could a "turkey czar" have pulled this off? Maybe w/ a good census count of demographics.

There is coordination in this whole thing. It's not some mystical "invisible hand." But even in something so simple as a holiday meal, it's best not to be left with just one individual calling the shots. Too much information, too many details to coordinate.

 
At 11/25/2009 4:22 PM, Blogger juandos said...

Don't worry about pseudo Benny's blather, its all about looking for love in all the wrong places...

Thanks gettingrational for posting a link to that Steve Malanga commentary...

Per his usual style, its good stuff...

Need a chuckle, try this YouTube clip out: A Very Special Thanksgiving Message from Reason.tv

(link courtesy of Instapundit)

 
At 11/26/2009 9:06 AM, Blogger JimJinNJ said...

Dr. Torch-
you said"
Silly, silly exaggeration.

Oh, it's true no "one" coordinated it all. But that doesn't mean there were "invisible hands" and no coordination at all.

Your supermarket had managers and buyers making decisions on how many turkeys to buy, and from whom.

Turkey farmers have negotiated contracts,,,,,"

The invisible hand is metaphor for exactly what you just described. The point is there is no overarching authority demanding or even planning what you describe. Think first, write second. Also, read The Spider and the Starfish.

 
At 11/26/2009 10:39 AM, Blogger bob wright said...

JimJinNJ:
My thoughts exactly.

Dr. Torch said:

"Could a "turkey czar" have pulled this off? Maybe w/ a good census count of demographics."

The key word in this statement being "maybe."

Why do we speculate about the "maybe" of central planning when free markets have been successfully providing products and services sans the central planning for centuries?

There are plentiful examples of failed central planning and yet the desire and search for nirvana continues.

Central planning hasn't provided enough H1N1 vaccinations this year and yet somehow it can put a turkey in every pot.

P.T. Barnum was right.

 
At 11/26/2009 4:42 PM, Blogger QT said...

Isn't this backwards...it appears that you have "czar turkeys" not "turkey czars"?

Have a great thanksgiving, guys.

 
At 11/26/2009 4:50 PM, Blogger QT said...

gettingrational,

Thanks for a great link.

 

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