THE MYSTERIES OF THE MARKET: Keywords: Greed and American communism, Pope Leo XIV, Business Administration Ethics, Marketing the free market, Socialist Catholic Bishops, Liberation Theology, empathy, market economy,  Adam Smith and the Invisible Hand, good intentions and the economy, the spontaneous orders.

BARTER - The oldest form of commerce, a market without money

III

THE MYSTERIES OF THE MARKET

A meditation about forgotten lessons of American Exceptionalism

By Xuan Quen Santos

THE THIRD MYSTERY

DEVOTED TO SERVE OTHERS

 

FROM GREED TO LOVING YOUR NEIGHBOR

                “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”  This is Adam Smith’s controversial passage in “The Wealth of Nations…” that I discussed in previous pages. I hope I convinced you that the accusation levied against the merchants about being greedy is in error. If we go to market to buy, it means we sold (acted as the merchants) beforehand, by either exchanging our products or our labor for money, in order to be able to and buy. We would all be greedy, either as consumers or as producers. I suggested that the use of the word greedy may be the error as we all act purposively in our self-interest. What Smith demonstrates is that there is nothing wrong. 

What is the common interest of the butcher, the brewer and the baker? They all want to have income in order to satisfy their families’ needs and wants. They produce in order to be able to consume. They have the same motives as consumers. Merchants want to sell, and consumers want to buy, all act in order to satisfy their objectives.

Bartering in ancient art. Two traders from ancient Industan

SELF-INTEREST IN THE MARKET LEADS TO SYMPATHY

One of the first questions the merchants in Smith’s famous example have already answered is what to produce. One sells meat, another sells beer and the other sells bread. But in order to organize what to do with the least risk, they would like to know what their customers prefer. What kind of meat and which cuts would sell best? What types of beer to make and how much? At what time should the bread be ready? The more information they fin about their customers’ preferences, the more sales they will be able to make. In order to better satisfy their self-interest, their initial attitude has turned into a genuine interest to satisfy their customers wants and desires. To know your customers is a manifestation of the “sympathy” sentiment identified by Adam Smith. Gradually, the smart merchant learns that to do better in his business (to satisfy his self-interest) it is a good idea to know  what his customers want and then serve their interests. To get what he wants, he must anticipate what his clients want.

IN MORE THAN ONE WAY, THE MARKET IS A SCHOOL OF MORALITY

A great number of the ancient laws in all major cultures are directly related to the activities that take place in the market. Be honest, use the right units of measure, serve your customer as you would want him to treat you, charge fair prices, offer good quality… The reputation in the market of a merchant among his peers (competitors), suppliers and customers is eventually his most important asset. It is called credibility, origin of the word credit and the services that develop in the market for the benefit of everyone involved. Nobody is saying that there are not dishonest merchants, but the market would not work if they were all dishonest. Those do not last long in business. Dealing with dishonesty is not a function of the market; that is one of the few and very important functions that justify the political system under the name of justice.

Bartering grains and milled rice in Mesopotamia

EDUCATION ABOUT THE MARKET IS UPSIDE DOWN

The careers in business administration, finance and accounting, among others, are all part of economic science. Those are the applied disciplines. They help businesses run efficiently by optimizing the use of resources. Another related specialty is marketing. One key aspect of it is market research; finding out all we can that is relevant to our possible clients. Another aspect studies the competition and their products, including prices. For the final stage of the selling process, there are other career paths in marketing and merchandising. These include product design and development, design of packaging and displays, and even a careful selection of names and brands. The result is a vibrant market moved by competition in search of lower costs and better quality, constant innovation, and attention to the customer’s needs and wants. Real entrepreneurs go as far as risking all they have when they have thought about a new product of service that does not yet exist, but they have enough confidence and gumption they believe they can convince future customers that they have always wanted it even if they did not know about. Of course, nine out of ten of those efforts miss their objective. The exceptional new product transforms the market.

The academic situation in many colleges is now a paradox. On one hand, the undergraduate and graduate programs in all the careers related to business administration are very popular. Are the students there because they are “greedy”? Or, they just want a better future and a happy life? On the other hand, the programs in economics are teaching anti-market ideas, political management of the market, or outright destructive concepts that reduce the possibilities of improving the well-being and wealth of the community. The tragedy is that the teachers of the economics departments are usually the teachers of the courses in economics in the business administration departments.

It is in these classrooms that the Invisible Hand is mocked and turned into the fallacy of “the straw-man”, filled with intentional distortions and then beat up to a pulp. It is in these classrooms where “greed” is said to be the basis of the market’s activities and entrepreneurial innovators are called “robber barons”, “two percenters” and “greedy billionaires”. Students are told that rich people are the oppressors and poor people the oppressed. A recent survey by the online publication Market Watch found that Karl Marx's books are popular in American colleges. He is the most assigned author in economics courses in U. S. colleges, with his works appearing in more than 3,000 syllabi. “The Communist Manifesto” is required reading among the top ten lists of courses in the Ivy League institutions and top-ranked public colleges.

Blessing of the "liberating" killing guns by Catholic priests

The same ideas of how to spread poverty around the world filtered into the Christian seminaries disguised as “Liberation Theology”. The study of poverty is not necessary. Humanity was born poor. There is no mystery in poverty. The mystery is how to create wealth, but what they are being sold as “the preferential option for the poor” by way of promoting political interventions in the free operation of the market will only reduce the opportunities to get out of poverty.

Merchants like those in Adam Smith’s example, and all the other sellers in the world, devote a considerable amount of their time and resources to understand their customers in order to serve them better. Is it because they are greedy? As a consumer, even if you believe that is the case, does it really matter to you? Are you not also being greedy to ask for a discount in price? Do you realize there are many jobs that could be labelled “professional buyers”, meaning professional customers? What do you think a supply-chain is? The merchants that do not take care of their customers are quickly out of the market.

Trading in colonial times, European goods for pelts hunted by Indians

EVERYBODY WANTS TO SELL SOMETHING

Before there was money, the market was different. THERE WERE NO BUYERS, EVERYBODY WAS SELLING.

From ancient times to about 3.5 millennia ago, the actions of the participants in the market are described in the English language with the words “trucking” and “bartering”. These old words just mean that people were trading some things for other things. The farmer would exchange his fresh produce for the weaver’s cloth. The weaver would exchange some more cloth for a cobbler’s sandals or belts. Another farmer would exchange cheese for a stool from the carpenter. A woodcutter would trade his firewood for fresh produce and cheese. The brewer also ran an inn, so he exchanged his beer for bread, fresh produce, meat, and other vittles available in the market. And so on…

Trading in the frontier in the early days. The General Store bartered

There are several mysteries in what I have described. By the way, bartering still goes on today in a few remote and isolated parts of the world. One mystery is the discovery that we can’t ascertain any distinction between buyers and sellers. Another is finding a solution for a pig farmer that goes to the market to buy sandals, a blanket, and a tankard of beer and all he has is his live pig Napoleon. I could say they were all selling, while you could see that they were all buying. We would both be correct, but it would be better if we stuck to the old words. They were all bartering.