September 13, 1995
Think about shopping for food. In effect each of us tells our supermarket: “I'm not going to tell you when I'm coming to shop. I'm not going to tell you how much and what I'm going to buy. When I do shop, you'd better have what I want, or I'm going to fire you by taking my business elsewhere.” That's a tall, uncompromising order, but it's filled so routinely that we think it nothing. If you think it's nothing, contemplate shopping in the former Soviet Union, a nation with the genius to compete with us in space and weaponry but a nation that couldn't hold a candle to our supermarkets.
The average American supermarket stocks over twenty thousand different items. Who arranges all that? What's necessary to have those items on the shelves? Who and how many people are involved? The answer's easy: Nobody knows. The process defies comprehension. “C'mon, Williams,” you say, “it's easy. The manager goes to a wholesaler and buys what he needs.” If you think that's all there is, you trivialize the miracle.
Pretend Congress appointed you U.S. Supermarket Czar charged with making all the arrangements for Americans to have just one of those twenty thousand items—bananas. How will you get people in Costa Rica, some of whom may not like Americans, to work hard to grow, harvest, and ship bananas? What are all the arrangements necessary for the shipping crates? Do you know how to make a chain saw or axe to chop down trees for the wood to build crates? What's necessary to mine iron ore so as to make nails and wires for the crate? Then we have to keep in mind that the bananas have to get from Costa Rica to the supermarket. That means ships and trucks are needed. What do you know about truck and ship building and navigation?
There are literally millions upon millions of inputs and people cooperating with one another to get just one of those twenty thousand items to your supermarket. Somehow these inputs show up to do their job at the right time and right place, as if, to use Adam Smith's phrase, they are “guided by an invisible hand.” All that good effort occurs without love and caring. The Costa Rican farmer, the crate manufacturer, and the ship captain don't give a hoot about you but you have the bananas as if they did.
The coordination that makes all those other items available at your supermarket is nothing short of a miracle. To think that one human being, or a group of humans, can possess the knowledge and information to accomplish the task is the height of human arrogance and conceit. That knowledge and information is widely dispersed across society in bits and pieces. That's why top-down central planning always produces disappointments, shortages, and bottlenecks. The banana czar might have remembered everything except a compass and the banana boat is lost at sea. Think back to the 70s during our government-sponsored energy crisis. Our energy czar had some parts of our country awash with gasoline and home heating oil while other parts were dry. Better yet, how would we like our groceries to be delivered by the same people who deliver our mail?
The forces behind all that coordination and cooperation that put those twenty thousand items in your supermarket are three simple things: prices, private property, and human lust for more. That's the beauty and simple magic of markets.