Wednesday, November 23, 2011

Giving Thanks for Capitalism, The Invisible Hand, The Miracle of the 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 your local 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 commercial 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" (featured in Greg Mankiw's ecomomics textbook) 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 far-flung men and women 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?"



At 11/23/2011 10:58 AM, Blogger Don said...


At 11/23/2011 12:16 PM, Blogger morganovich said...

conversely, if you want a turkey shortage, turkey czar is the was to go.

a quick look at recent venezeulan food policies tells you all you need to know there.

At 11/23/2011 12:49 PM, Blogger Buddy R Pacifico said...

Did the U.S. ever have a time when there was not a market price for turkeys?

Yes, the Office of Price Administration set the price of Turkeys during WWII -- via the Emergency Price Control Act of 1942.

Was a market price extablished for turkeys during WWII anyway?

M.Krause and Bros. of New York City decides to tie chicken parts with its turkey sales. So, the price was not based solely on turkey but included chicken feet etc.

M. Krause and Bros. received only one rr carload of turkey in 1943 v. the usual 143. The Office of Price Administration took M. Krause and Brothers to the U.S. Supremme Court and lost, because of M. Krause was not solely making a market in turkeys.

At 11/23/2011 1:01 PM, Blogger Buddy R Pacifico said...

Here is the U.S. Supreme Court ruling on M. Krause & Bros. v United States. They took this to the Supremes, because of lower court rulings of setting market prices on turkey with chicken parts.

Happy Turkey Day and thanks.

At 11/23/2011 1:24 PM, Blogger arbitrage789 said...

Turkey Czar...

I'll have to think about that one.

At 11/24/2011 8:08 AM, Blogger Zachriel said...

Amazingly, the Obama Administration allows a free market in turkeys, as its success undermines the atheist, socialist, muslim agenda.

By the way, did you know that turkeys are regulated by the Food and Drug Administration? The first step on the road to government control of the food supply! Muhaha!


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