The benevolence of the free market
By Dakotah Chmiel
The great economist Adam Smith wrote this commonly quoted excerpt from his famous work, Wealth of Nations, "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."
This passage eloquently expresses the most basic tenets of free-market capitalism - despite the fact that nearly everyone in the market works for nothing but their own self-interest and personal gain, others benefit from it. People want their dinner, so they naturally search for - using Smith's example - meat, bread, and beer of the highest quality and lowest price. The butchers, brewers, and bakers, in turn, seek to provide their meat, bread, and beer at better quality and lower prices than others so that the consumers will choose them instead of a competing butcher, brewer, or baker to give their money to. The hungry people benefit from this because they can buy the best possible quality meat, bread, and beer possible at the lowest price possible. These are obviously good results for everyone and yet, as Smith stated, each person is only looking out for themselves.
In this way, people with nothing but self-interest in mind can actually benefit the entirety of society. This is similar to the relationship between animals and their ecosystem. Creatures compete for the resources they need by adapting to the environment and the competition from other creatures in the short term, and in the long term, evolving better capabilities to live in their environment and deal with competition. Predators and prey alike participate in this ongoing natural cat-and-mouse game, which keeps the ecosystem as a whole balanced and healthy, which all creatures benefit from. The environment may change, and creatures that do not compete effectively enough may die out, but as the process of evolution in predators and prey goes on simultaneously, the former will always have food, and the latter will not suffer from such problems as disease and starvation resulting from overpopulation.
Likewise, in a free-market society, businesses may die out if they do not effectively compete with others, which actually benefits the market as a whole. Thus, free-market capitalism is much like taking the highly effective processes of constant improvement of systems of the natural world, and bringing them to the civilized world. And in the capitalist economy, these processes can work even better than in nature, as they are intelligently and innovatively carried out by human beings.
This point of view may seem like common sense to people today, but at the time of the release of Wealth of Nations in 1776, the British government regulated the market and commerce to a great degree. At that time, the ideas of Adam Smith were somewhat new. Later, during the Industrial Revolution - one of the defining moments of economics - Britain would handle its economy in an entirely new way: laissez-faire. This different policy, where the government would not intervene in the market, proved to be enormously economically effective, as Smith predicted.
Smith said that the butcher, the brewer, and the baker don't provide your dinner out of benevolence, but out of self-interest alone. And yet, as the businesses and people in a capitalist free-market society all work towards their self-centered goals, the incentive of performing better and spending smarter benefit society as a whole through the innovations developed to accomplish those goals. Therefore, it could be said that, despite the motivations of each part of a capitalist free-market society, the system as a whole is, in fact, benevolent.
Dakotah Chmiel is an AP high school student. This is his first contribution to Enter Stage Right. © Dakotah Chmiel