To
exchange for greater benefit is as natural to humans as any innate
bodily function. Exchange needn't be taught or explicated. No
inculcation need occur. It just happens. A kindergartener exchanges
his juice box for another kindergartener's cupcake. Because of
inequality of wants -- one values the juice box more than the cupcake;
the other values the cupcake more than the juice box -- voilà: value is
created.
No one needed to "regulate" or instigate the exchange between the kindergarteners; each arrived at his own value for the items up for exchange, determined his utility for each item, determined the rate of exchange. Most important, each determined the course of action that would improve his situation.
Markets arise in kindergarten lunchrooms, corporate boardrooms, grocery stores -- anywhere people congregate. For markets aren't specific places; they are processes that people engage to elevate their welfare.
Welfare is best raised when people are most free to exchange without interference; only you know what's best for you. Despite what positivist economists -- notably Irving Fisher -- might lead you to believe, utility is impossible to measure. Utility is implied when an exchange occurs, but only the individuals involved in the exchange know the magnitude of the utility. Perhaps the one kindergartener would have accepted half a cupcake for the full juice box, while the other kindergartener would have offered two cupcakes for the juice box. We simply cannot know the extent to which each valued the exchange, but we do know that value was created because an exchange freely occurred.
No one needed to "regulate" or instigate the exchange between the kindergarteners; each arrived at his own value for the items up for exchange, determined his utility for each item, determined the rate of exchange. Most important, each determined the course of action that would improve his situation.
Markets arise in kindergarten lunchrooms, corporate boardrooms, grocery stores -- anywhere people congregate. For markets aren't specific places; they are processes that people engage to elevate their welfare.
Welfare is best raised when people are most free to exchange without interference; only you know what's best for you. Despite what positivist economists -- notably Irving Fisher -- might lead you to believe, utility is impossible to measure. Utility is implied when an exchange occurs, but only the individuals involved in the exchange know the magnitude of the utility. Perhaps the one kindergartener would have accepted half a cupcake for the full juice box, while the other kindergartener would have offered two cupcakes for the juice box. We simply cannot know the extent to which each valued the exchange, but we do know that value was created because an exchange freely occurred.
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