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Quotation of the Day…

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… is from page 4 of the 1999 Liberty Fund edition of James M. Buchanan’s and Gordon Tullock’s seminal 1962 book, The Calculus of Consent [2]:

In a genuine sense, economic theory is also a theory of collective choice, and, as such, provides us with an explanation of how separate individual interests are reconciled through the mechanism of trade or exchange. Indeed, when individual interests are assumed to be identical, the main body of economic theory vanishes. If all men were equal interest and in endowment, natural or artificial, there would be no organized economic activity to explain…. Economic theory thus explains why men co-operate through trade. They do so because they are different.

DBx: What distinguishes humans from other animals? The conventional answer is big brains and language. We do indeed have unusually large brains relative to our body size (although the size of the human brain relative to human body weight [3] isn’t that much more impressive than is this ratio in chimpanzees, and hardly at all greater than that for Dusky dolphins). And while other animals communicate with each other, including – as we humans chiefly do – by manipulating airwaves, our language is truly more complex than any known in other species (or so goes my pedestrian understanding).

But there’s another candidate for ’vitally important uniquely human trait’: It’s what Adam Smith called [4] “the propensity to truck, barter, and exchange one thing for another.” Note that Smith was explicit that this propensity is “in human nature,” one likely owing, Smith says, to “the faculties of reason and speech.” So reason, speech, and trade are interconnected, no doubt each enhancing the other over time.

Our trade with each other is off-the-charts unusual. Matt Ridley – in his recent podcast with Juliette Sellgren (available here [5]) – claims that our success as a species can be chalked up to trade. He’s correct. Every distinctly human achievement is the result of trade. Many of these are obviously the results of extensive trade (or, rather, ‘obviously’ to those not blinded by hostility to bourgeois activities) – for example, the pencil [6]; Paris being daily fed [7], our daily bread [8], supermarkets [9], affordable automobiles [10], all the countless goods and services that are “Made on Earth [11].”

But even human achievements that are not obviously the results of trade are the results of trade. The achievements of ancient Athens [12]. Bach’s, Beethoven’s, and the Beatles’ timeless music [13]. Pure science itself requires the leisure, the communications tools, and extensive physical facilities and scientific devices the ample supply of which requires markets and trade and the accompanying specialization. Indeed, the full bellies, widespread literacy, and electronic devices that make possible the expression today by so many people of contempt for trade, commerce, and market-tested innovation are the results of trade, commerce, and market-tested innovation.

The kind, frequency, and extensiveness of human trade make human trade categorically different from any of the simple exchanges that members of some other species are observed to make with each other. Extensive trade is uniquely human; it features exchanges with countless strangers across space and time. Such trade is the natural foundation of modern human society. To obstruct and interfere with trade is to obstruct and interfere with a core part of human nature. It’s akin, say, to a bossy and well-armed spider issuing commands to ignorant or cowardly other spiders that they stop spinning webs as large and as complex as they are naturally prone to spin.

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