Natural economics

Free markets are so vibrant, dynamic and adventuresome. They encourage improvisation and reward enterprise. Commerce arises naturally: every single person is instinctively an economist- all people understand money and the need for it. They all understand how much work it takes to earn a certain sum of money, and what that money buys. And they understand differences in wages for differences in work, and differences in price. Cost-benefit analysis is at the heart of all human actions- its just that most people don’t explicitly realize that they are making those calculations.

Now think about the activities that governments carry out- interventions, legislation, spending money taken by force, arguing and lobbying over how to spend it and then wasting it. The people just sit back in their houses and watch the news to find out what the government is fiddling with today- and what the effect will be on the money in their pockets. Places where institutions rather than individuals are the primary economic actors are static places, passive places, unresponsive and unrewarding. Socialism is boring people doing boring things in a bored country. It is the most unnatural and hideous construct in the world.

The free market economist F. von Hayek was very right when he wrote that people can never recognize the true value of free markets whilst they are employees in business organizations. In such continuous environments, they would never have the incentive to protect and celebrate enterprise. They stay in the hierarchy and carry out routine jobs and turn their attention to other things- the house they live in, the car they drive, the school they send their children to, the number of different benefits they are "entitled" to. And the cost of these activities is controlled and dominated by the government- the government sets the tax rates for mort-gage-tax relief, interest rates, petrol taxes and so on. And so the population and the government implicitly cooperate- they share the same goals- the government wants their votes and the public wants the government to be nice to them financially. People do not ask themselves whether the same services could be better provide by markets rather than institutions- the coercion from political governments is legitimized and therefore accepted.

In sum then, we can see how the activities surrounding earning and spending money are understood by and central to the lives of every individual. We can see that socialism is a political philosophy that belonged to the outmoded organized world in which people were told what to do, when and how. We can see that free markets are naturally-occurring in places where entrepreneurs are active and where employees and enforcers do not predominate.

 

Author: Simon Buckingham

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