“We denizens of modernity overestimate ourselves. As individuals, we are not close to being as intelligent, as reasonable, or as capable as we suppose ourselves to be” – that’s the opening paragraph of my latest column for AIER. Here’s more:
Our overestimation of our abilities is understandable. Every day of our lives we see automobiles whiz by, hear jetliners soar overhead, and enjoy the convenience and cleanliness of indoor plumbing, electrification, and artificial lighting. When we pause to notice, we marvel at antibiotics and other blessings of modern medicine, and rejoice at the abundance available in supermarkets and from online merchants. Literacy rates are very high. Even routine space travel might become a thing within the next decade or two.
What an impressive species we are!
We today are indeed impressive as a species (at least compared to every other species that we know). But what’s impressive isn’t so much our individual intelligence and abilities. What’s impressive is our ability to share knowledge across time and space in ways that leverage the modest and diverse talents of each of us into magnificent outcomes that not even the most intelligent of us could have designed or can now fully comprehend.
From the mundane pencil to the James Webb Space Telescope – from your buying a meal prepared at a local restaurant to your buying an automobile manufactured in Japan – the goods, services, and experiences that distinguish us from our ancestors are products of incredibly complex patterns of human cooperation.
This cooperation ‘works’ in part because it doesn’t require that any one person know more than can be known by the typical human being. Each of us possesses our own unique bits of knowledge that we are prompted to combine with the unique bits of knowledge of other individuals. If the incentives are ‘correct,’ this cooperation builds institutions and material processes that yield the abundance that we moderns take for granted. Someone who knows how to explore for iron ore agrees to cooperate – as an employee, as a business partner, or in some other contractual manner – with someone who knows how to smelt the ore. Someone else then joins the cooperative effort by purchasing the iron and turning it into patio furniture. A retailer then cooperates with both the furniture producer and consumers by increasing the convenience for the producer to sell, and for consumers to purchase, the furniture.
The important details of these opportunities are unknowable to anyone not on the spot.
All along the way there are countless other cooperators – truck drivers, insurance agents, financial intermediaries, accountants, lawyers, and the multitude of individuals whose efforts were required to build the electricity-transmission infrastructure. And on and on and on.
Each individual is led to cooperate productively because each individual receives signals that reliably (although never perfectly) both (1) reveal what are the best uses of that person’s time and resources, and (2) incite that person to seize those particular opportunities. By far the most important of these signals is market prices.