Alexander C. Cartwright’ 13 – Opinion Editor & Dylan DelliSanti ’14 – Opinion Columnist
Christopher Turpin’s recent opinion piece, “The Libertarian Ideology is a Joke,” actually made a rather stunning case for a libertarian ideology. In his opinion piece he claimed that: “people are not infinitely smart or wise,” “man is fallible”, “we need laws,” and he implied that governments are often willing to sacrifice trade relationships for war. We must take these claims as a given, for they are, in reality, true. However, Mr. Turpin has reached very different conclusions, than the libertarians, given these facts.
Mr. Turpin claims “people are not infinitely smart or wise.” We certainly agree. Man does not have perfect knowledge. He does not, nor can he possibly, know everything there is to know in the world. In fact, in 1945, Nobel laureate economist F.A. Hayek published “The Use of Knowledge in Society.” Hayek argues that each individual possess only a small fraction of all the information that exists in society. This is called circumstantial knowledge, and one of the keys to the success of any societal arrangement is how well it can turn this circumstantial knowledge into an efficient allocation of resources. The free market is able to do this through the pricing mechanism. Hayek calls prices “incentives wrapped in knowledge” since they communicate marginal values and provide signals for good profit-maximizing entrepreneurs. Not only is it impossible for us to “centrally plan” the use of all knowledge, but we don’t need to. Our collective knowledge, when coordinated through prices, can do more than any single individual.
Each morning when we take out our pencils to practice drawing supply and demand graphs before Economics class, we benefit from the efforts of the millions of people that made the pencil, yet we have no idea how to produce one. The pencil has wood that was cut down with a chainsaw, designed by an engineer, powered by gasoline, which was made via crude oil, which was extracted from the ground. The pencil also has a rubber eraser that was farmed, imported, sold…we could literally continue this process without end. Even though the number of people contributing to making one simple no. 2 pencil is essentially uncountable, we need not centralize knowledge and coordinate everything between them because all these resources are allocated via a spontaneous order: the product of human action, but not human design. You are right Mr. Turpin, no one can know it all, which is why we need free markets.
Mr. Turpin also claims that man is fallible and makes mistakes, which is true as well. Mr. Turpin asks what will happen when people believe they are acting in their own interests, when really they are not- they will learn! The Spontaneous order emerges stronger. In 1985 Coca-Cola changed its drink formula and introduced “New Coke.” Despite successful field research, once “New Coke” hit the market, sales dropped. Even former Cuban dictator and avid Coke drinker, Fidel Castro, criticized the formula change (ironically, he blamed it on “capitalist decadence). However, hard working, profit maximizing, entrepreneurial, ( and “selfish”- for Mr. Turpin’s sake), Coca-Cola executives resurrected the original Coca-Cola formula, which left us with the Coca-cola Classic we now have today. Sometimes innovations are good and sometimes they simply are not, but without the market, we simply cannot know. You are right Mr. Turpin, people will make mistakes, which is why we need free-markets, so that we can distinguish successes from failures.
Perhaps the most drastic misconception that leads Mr. Turpin astray is his understanding that “Economists study markets, not people.” Quite simply, the people are the market. Separating the market from people is impossible. Thus, a study of the market is a study of people. One cannot exist independently of the other. The most basic textbook definitions of Economics define it as the “study of how humans produce, consume, and distribute,” or the “study of how humans allocate scarce resources.” Mr. Turpin is correct in his analysis that markets will provide for whatever one desires, so long as entrepreneurs can make a profit doing it. However, simply because markets will provide goods and services that some might call “immoral” is not a case against markets. The free-market is a mechanism for allocating scarce resources. It is not a system we use to distinguish what is good and bad for one’s soul.
For the sake of argument, we will accept Mr. Turpin’s claim that “people aren’t always smart,” which is why we need government. However, if people aren’t always smart how do we know who the dumb one here is? The burden of proof is on you Mr. Turpin. As far as we are concerned, Liberty is the default.