Common Sense Economics: What Everyone Needs to Know about Wealth and Prosperity
In a modern economy, the cooperation that comes from self-interest directed by the invisible hand of market prices is truly amazing. The next time you sit down to a nice dinner, think about all the people who helped make it possible. It is unlikely that any of them – from the farmer to the truck driver to the grocer – was motivated by concern that you have an enjoyable meal at the lowest possible cost. Market prices, however, brought their interests into harmony with yours. Farmers who raise the best beef or turkeys receive higher prices, truck drivers and grocers earn more money if their products are delivered fresh and in good condition to the consumer, and so on, always using the low-cost means to do so.
Literally tens of thousands of people, most of whom we will never meet, make contributions that help each of us consume a bundle of goods that is far greater than what we could produce for ourselves. Moreover, the invisible hand works so quietly and automatically that the order, cooperation and availability of a vast array of goods and services are largely taken for granted. Even though underappreciated, the combination of self-interest and the invisible hand is nonetheless a powerful force for economic progress.
- When a person, for instance, produces a box that will carry your food from the producer to your grocery store, do you think the box maker cares about you? Do you think she would make a better box if she did?
- If all our productive activity was only used by people we care about, what effect would it have on our standard of living?
- An economist once said that love is so rare, that we should only rely upon it for the most important things, leaving the rest to the market and the invisible hand. What do you think some of those “most important things” might be, that aren’t properly served by market forces?
This reading is an excerpt from Certell’s Common Sense Economics eBook. Certell offers curriculum materials and eBooks free of charge for students and teachers. Click here to download the Common Sense Economics Materials.
18, Sept. 2018, Picture of Cow in a pasture of other Cows grazing, [Digital Image]. Retrieved from <google.com>.