Jewish World Review Sept. 8, 2010 / 29 Elul, 5770
I, Market Economy
By Jonah Goldberg
http://www.JewishWorldReview.com | No one in the world knows how to make the newspaper you are holding (and, if you're reading this on your phone, computer, iPad or Kindle, no one knows how to make those things either).
Even the best editor in the world has no clue how to make a printing press or the ink, or how to operate a communications satellite.
This is hardly a new insight. In 1958,
The pencil tells the story of its own creation. The wood comes from
To make a long story short, the simple act of collecting and combining the ingredients of a pencil involves the cooperation of thousands of experts in dozens of fields, from engineering and mining to chemistry and commodity trading. I suppose it's possible for someone to master all of the knowledge and expertise to make a pencil all by themselves, but why would they?
The lessons one can draw from this fact are humbling. For starters, any healthy civilization, never mind any healthy economy, involves unfathomably vast amounts of harmonious cooperation.
These days there's a lot of buzz about something called "cloud computing." In brief, this is a new way of organizing computer technology so that most of the data storage and number crunching doesn't actually take place in your own computer. Rather, everyone plugs into the computational equivalent of the electrical grid.
Do a Nexis search and you'll find hundreds of articles insisting that this is a "revolutionary" advance in information organization. And in one sense, that's obviously true. But in another this is simply an acceleration of how civilization has always worked. The information stored in an encyclopedia or textbook is a form of cloud computing. So is the expertise stored in your weatherman's head. So are the intangible but no less real lessons accumulated over generations of trial and error and contained in everything from the alphabet to the U.S. Constitution to my daughter's second-grade curriculum.
More relevant, the modern market economy is the greatest communal enterprise ever undertaken in the history of humanity.
The latest proof of Hayek's insight can be found not only in the economic winter that goes by the label "recovery summer," but in the crown jewel of the stimulus known as "cash for clunkers," which subsidized car purchases that would have happened anyway. That's a major reason the auto industry just had its worst August in 27 years. Meanwhile, lower-income buyers are seeing used-car prices soar thanks to the artificial scarcity created by destroying perfectly good "clunkers."
But that's a small point in the grand scheme of things. According to progressives, the financial crisis discredited "market fundamentalism" and created a burning need for a more cooperative society where "we're all in it together." It's an ancient argument, with many noble intentions behind it. But it rests on a misunderstanding of one simple, astounding, irrefutable fact. The market economy is cooperative, and more successfully so than any alternative system ever conceived of, never mind put into practice. Admittedly it doesn't feel that way, which is why everyone wants to find a better replacement for it. But they never will, for the same reason no one can make a pencil.
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