THE MYSTERIES OF THE MARKET: Keywords: Shopping and Freedom, American communism, Mamdani, market ethics, empathy, justice, market economy,  Adam Smith and the Invisible Hand, free to choose, a school of morality, good intentions and the economy, Say's Law, barter and money.

Does buying increase your happiness?

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THE MYSTERIES OF THE MARKET

A meditation about forgotten lessons of American Exceptionalism

By Xuan Quen Santos 

THE FIFTH MISTERY 

WE  ARE  ALL  SELLERS

 

EVERYBODY SELLS

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 blacksmith made tools and weapons he could trade with everybody. 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…

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. It also happens in jails and prisons, and in what have become known as the informal, the underground, and the dark economies.  The WW II stories described POW camps of how prisoners create their own system of commerce by bartering cigarettes or Hershey bars for food, or other privileges; they have been featured in many movies. It has become increasingly popular as the formal economy is overburdened with taxes, regulations and corruption. Many working in gigs operate in the informal economy. It is also not out of the ordinary for a dentist to barter his expertise with his lawyer to solve a legal problem; the services exchanged become “invisible” to the tax man. It is also common to find bartering in the “dark” illegal markets of illicit drugs and human trafficking. Politician’s quid-pro-quo is the darkest example because of the implications it has for the public welfare as it destroys the neutral political system. Do you remember NJ US Dem Senator Bob Menendez? He was convicted for accepting bribes in gold bars, and a fancy car for his wife in exchange for his political influence. You are no doubt familiar with the many rumors about how former House Speaker Nancy Pelosi, CA US Dem Rep, retires from her nearly four-decade career with an estimated net worth of $ 300 million and $130million in stock profits. Did all of that originate in her incomparable foresight of the stock market futures? Did it originate in her advanced knowledge of legislation that would affect specific IPOS or big government contracts or providers?

Gold, from dust to coins, bullion and bar: money with commodity value

There is one characteristic of all the previous examples of barter or trucking. Money was not used to buy to pay or sell to receive. The ancient operations of primitive economies did not use money because it did not exist yet. About 3.5 millennia go, money appeared in many ancient markets, and its use has been spreading, although its form has mutated as technology has introduced innovative ways to pay for transactions. At this time, most of the money used are EFTs (Electronic Fund Transactions), but we still use paper orders to our banks to pay for us (Checks), bills of paper guaranteed by a government, coinage in different metals and denominations, and even gold and silver bars. In the inverse order, beginning with precious metals, the history of money spans 3,500 years of human civilization. They were preceded by the use of gold and silver nuggets, pretty shells, beads of semi-precious stones such as jade and turquoise, arrow points, dry grains of cereals, and even cocoa beans.

Money: from commodity, to metals, to paper, to EFTs, and now?
Trading through barter does not use money

Forget for a moment your own experiences with money and what you know of its history. Think about bartering. Imagine you have collected mushrooms from the forest and on the way to your camp you encounter someone that has caught some fish. The fisher also sees that you have fresh mushrooms in your basket. It could happen that simultaneously you saw the opportunity to diversify your diet. To make it short, after a little chit-chat, both of you end up with some mushrooms and some fish.

Coins and bills, not for much longer

The mystery is the discovery that we can’t ascertain who is buying and who is selling. There is no distinction between the actions of buyers and sellers. If we go back to the examples listed on the introductory paragraph, 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.

EVERYBODY WANTS TO SELL SOMETHING

Before there was money, the market would seem to us it was different. Commerce is always a two way street, and everybody going to trade has something to sell, or has already sold something in order to trade. THERE WERE NO BUYERS as we think of them now. Everybody was selling something in order to obtain what they wanted or needed in exchange. This is a fundamental Law of the Market; there is no way around it. If you want something that someone else has, you have to offer something in exchange. This is a human trait that we have learned that it does two things differently from our “state of nature” or “Law of The Jungle”. We have not used violence or trickery, and each one of us has received something more valuable to you than what you gave in exchange. Both parties agreed voluntarily to exchange what they had. Of course, sometimes we can make mistakes in judging what we would receive, or we did not have enough information. There is also the condition commonly known as “buyers remorse” that impulsive people suffer when they did not carefully assessed the exchange they were about to do.

What explains any and all exchanges in the market is known as “Say’s Law”, in honor of Jean Baptiste Say, a French pioneer economist that translated and annotated Adam Smith’s work. It can be simply stated thus: “To participate in the benefits of the market, all you have to do is offer something in exchange for what you want”. The admission ticket is something of value to others. It can be something you created, you made, you grew, you found, you owned, or it can be your labor or other type of personal service. Every one of the participants is offering something first.

There are other important elements that are an integral part of any and all market trades:

a)     All the transactions are voluntary. That is, free of coercion or compulsion. The participants are free to choose whether to trade or not to trade. We have discussed this aspect of the inherent moral structure of the free market that makes it ethical.

b)          All the transactions are the result of giving something considered less valuable in exchange for something more valuable. In any voluntary transaction, both parties gain. If this were not the case, they would not exchange because it would result in a loss. This can only happen because the value is a personal and different judgment of the subjects making the decisions. Value judgments are “subjective”; there is no value in the object per se, other that what people assign in each circumstance. What is the nature of the benefit?

c)      What people exchange voluntarily in the market seeking to obtain a benefit is their property. This is a “should” condition that does not happen all the time. Thieves also sell in the market what they have stollen. When they do, don’t they usually sell at a “bargain” price, undervaluing what they are trying to sell as fast as they can? Would owners undervalue their property when trading, or would they try to get as much as they can for it?

                IN ANY VOLUNTARY TRANSACTION BOTH PARTIES GAIN

                All our human actions are motivated by a desire to improve our present condition, that is, to pass from the present state of satisfaction to a better one. Keep track of the synonyms. I just added gain and benefit. We had discussed self-interest before. People that are only judging others and not themselves call it the ugly “greed”. Because I am discussing the American system of liberty, I will go back to the Declaration of Independence and use a reference to our “pursuit of happiness”. We don’t go to the market searching for all forms of personal happiness, but we can certainly find many things that we could obtain by offering something in exchange that would give us happiness. So, for the rest of this argument I will use the following: In any voluntary transaction in the market, both seller and buyer increase their happiness. Had they not expected it, they would not have traded. If they decided not to trade, they would still be happy they avoided the loss that would have resulted. What they had offered to trade was more valuable to them than what they would have received.

Stores do not sell stuff. They sell happiness!

                MEASURING HAPPINESS IS A MYSTERY

                Although it is clear that both exchanging parties increase their happiness, there is no way to measure how much each one felt. It is also impossible to determine if they were equally happy, which is unlikely. Both valuations were personal and different, and it would be absurd to think both would be worried about whether or not they had experienced less or more happiness than the other or feel envy for their different levels of satisfaction.

                Of course, there is always somebody that insists that science can measure anything and will think of a way. Some medical experts have come close. The article “Why Retail Therapy Makes you feel Happier”, published by the Health Cleveland Clinic in 2024, reports that… “Dopamine, serotonin and endorphins are just a few of the chemicals our brain releases when we engage in behaviors like shopping. This response is the reward center of our brain's way of urging us to keep doing things it sees as necessary for our survival — and the survival of our species.”  Soon the merchants will start advertising, “Come and get your high on happiness, come shop with us”, “Our shoes are on sale, buy them and you will survive happier”. The trend is called “therapy shopping” or “retail therapy”.

                “Whoever said money can’t buy happiness didn’t know where to shop.”

Shopping stimulates the chemicals in your brain and give you a rush of happiness