The Virtues, Complexity, and Limits of Markets

Abstract

Imagine walking into a pizza parlor, then buying a slice of pizza. You acquire that slice of pizza in exchange for some amount of your labor, let's say fifteen minutes worth. There is something altogether amazing about this mundane event. Part of what is amazing is precisely how mundane this event is. It is hard not to take it for granted. Yet, if you were on your own, truly on your own, you would not be able to produce a slice of pizza in a lifetime. You could not get started. (Getting started would involve, say, building a smelter and mining iron ore to make an oven. You would presumably need at least a shovel to do that, but if you truly were on your own, and had not yet begun to mine the iron to make it, where would the shovel come from, if not from trade?) We owe virtually all of our ability—all of our positive freedom—to the opportunity to trade. In turn, we owe almost everything to the division of labor that trade makes possible. The division of labor, Adam Smith noted so eloquently, makes each one of us thousands of times more productive in concert than we otherwise would have been. If anything, Smith was understating his point.

Citation

Schmidtz, D. (2007), "The Virtues, Complexity, and Limits of Markets", Samuels, W.J., Biddle, J.E. and Emmett, R.B. (Ed.) A Research Annual (Research in the History of Economic Thought and Methodology, Vol. 25 Part 1), Emerald Group Publishing Limited, Leeds, pp. 25-32. https://doi.org/10.1016/S0743-4154(06)25003-X