Halloween and its Candy Economy
Dale Steinrich once wrote that Halloween has a socialist tenor because menacing figures
arrive at your door uninvited, demand your property and threaten to perform an unspecified
trick.
If you don't fork over, that's the way government works in a nutshell.
And yet for overall kid excitement, Halloween seems to surpass Christmas, at least from
and what I can observe.
The kids spend months preparing their costumes and thrill to every detail of the ceremony
– pumpkins, scary things, and, of course, candy.
For the children too, there is the attractive fact that parents are not all that happy about
Halloween with its goblins, gore and gluttony.
But a deeper lesson to be drawn is that there is also an economic dimension to Halloween
– something that goes far beyond simply demanding property with menaces, however light-hearted.
Unlike at Christmas, where kids must only be good little citizens all year in order
to be showered with gifts from their beneficent guardians, at Halloween, kids must actually
work in real time for their candy.
Because there is no taboo in place about trading once proceeds, the kids also have a chance
to participate in genuine market experiences.
For starters, they work hard on their costumes, under the very real expectations that those
who hand out candy tend to be more generous to those with better costumes.
Nor is the labour done there, for it clearly continues with the long walk around the neighbourhood
with the prospect that each house visited will yield a gain of only one or two candies
at most.
This in itself forms an interesting feature of the ritual, since all of these same kids
have lots of candy back at home that is being given out to other kids even as they tramp
through the cold October evening.
What could be the point of seeking out abroad what you already have at home?
There are two reasons.
First, though the kids may not consciously recognise it, they surely appreciate the candy
more if it represents something they have to go seek out for themselves.
And second, by mixing their labor with the process of candy acquisition, they have a
greater sense that the candy partakes of qualities of duly earned private property.
No child really believes that the bowls of candy at home really belong to him or her,
but by contrast, the candy that the child collects from the neighborhood is said to
be his or hers exclusively, even if mom or dad still oversees the overall patterns of
distribution.
The candy you collect is yours, a product of your own efforts, and nothing can quite
replace that feeling of merited ownership.
And yet the real thrill is far from over.
What children truly adore about Halloween is what takes place after the candy has been
brought back to home base, the trading.
Here is where the excitement begins.
No child can fully control what he or she is given, so it is up to that child to make exchanges
with others in order to obtain what he or she really wants and to do so in a strategic
manner so that overall wealth is enhanced.
This process of trading began at our house at 8pm and lasted for about 30 minutes, at
which point the children concluded that they had come as close as was possible to what
what they wanted most, and so there was no more trading left to do.
During the 30 minutes of active haggling, nine kids sat around the dining room table
and participated in a hectic, yet orderly, if complex, interchange, bearing a good deal
of resemblance to a Wall Street trading floor.
Some traders shot up and shouted prices, deals, proposals, results, changes in preferences,
new resource discoveries.
The traders remained quiet and moved with great subtlety and surprise.
The more strategic the plan, the more impressed the other kids were by it.
It was fascinating to watch as the trading began slowly and as the first barter relationships
began to form.
One for one, two for one, three packages of nerds for one popcorn ball, two snickers for
for One Candy Necklace, a Blow Pop for Two Pieces of Caramel, and so on.
All children brought to the table their own subjective sense of what was valuable, a sense
which was strongly influenced by the corresponding opinions of the other players, but one which
also added to it a degree of prediction concerning just how the subjective values of others would
stack up.
It wasn't long before barter relationships, even those involving three or four simultaneous
Transactions did not suffice.
What those around the table needed were some means to achieve indirect exchange.
They needed to hit upon a good which everyone would desire to possess because of its more
certain onward marketability among all the other kids.
This entity did not need to be highly valued from the outset by everyone present.
What the kids only needed to notice was that there was something which a sufficient number
The number of their group tended to want more than any other competing candy on offer.
It was a short step from there, said the dawning of a realization that would occur to one or
two kids.
These would then try to acquire that particular candy, not to consume it themselves, but to
use it, to trade it for whatever other candy they really wanted to enjoy.
As more and more of the participants copied them, this one candy would come to play a
a role in more and more indirect exchanges. Child A would accept it from Child B for
a less desired kind of candy and would instantly swap it again with Child C, who happened to
have the goodie he or she really preferred, but who wouldn't have wanted any of A's
originally proffered treats. In this way, this one candy would come to possess a quality
In general, money, whatever specific form it takes, tends to have a high value per unit
of weight, and yet it should be split into units small enough to cope with any scale
of exchange.
It should ideally have a fixed supply.
Above all, it must be the one thing most readily accepted in settlement of a trade, because
As the acceptor knows, it is something which can – with the highest available degree
of certainty – be used to facilitate additional future trades.
There is no way to know ahead of time what will fulfil this role, only the market process
itself will reveal this choice.
In our house, the popcorn ball would not work, since there were only four of them, and these
were not divisible into smaller units.
The Twizzlers did not pass the test, because only one child had any knowledge of what they
tasted like, and hence no one else had any concept of their value.
Though this problem might seem an intractable one, as it happened, it only took a few minutes
for everyone to discover what would become money for the evening – a micro-size three-musketeers
bar.
Before people realized the true measure of its usefulness, a three-musketeer bar would
trade for as little as a smarty package, but then it began to rise in value, selling for
the smarty and a tootsie roll.
Once it became clear that the three-musketeer was the commodity of the most use in exchange,
it didn't matter whether you actually liked it or not.
You were happy to trade the candies you didn't much care for in order to obtain a three-musketeer,
simply because this could then be traded again for something which really did make your mouth
Once the Three Musketeer became money, its own value was seen to rise as a consequence.
What was occurring was that this extra property of tradeability was being added to the underlying
demand for it as a consumption item.
Indeed, by the end of the session, this value reached such a height that it became an instant
legend as, at its peak, one solitary three-musketeer changed hands for no less than three tootsie rolls and a tootsie pop.
Once this money was settled upon, it became much easier to price such candies as Reese's and Kit Kat's, which had previously had an illiquid and uncertain market.
Now, they began to sell for one-half and one-quarter of a three-musketeer, despite the fact that
they had started out with much of the same intrinsic value as a snack item.
From there on, their prices hovered within a narrow trading range roughly comparable
to that of a small tootsie roll, while Snickers did slightly better than all of them.
Extreme scarcity led to very high prices, anything up to four three-musketeers in the
In the case of Jolly Rancher Hard Candy, Skittles, too, were highly prized and sold for as many
as five Three Musketeers.
Reese's Inside Out sold at a premium over the plain variety.
However, showing that scarcity is not just a numerical concept, the parents of all these
kids had long discouraged gum chewing, so despite the gum's similar rarity, no one
wanted it.
In fact, the price quickly fell to zero, where it was eventually given away free to the one
child who was permitted to chew it.
Thankfully, for the future of civilization, even that child soon lost interest in it.
Interestingly, the advent of money also encouraged the kids to think beyond the immediate trading
round.
Instead, they began to acquire a surplus to be saved for successive rounds, where it was
hoped better terms might be on offer.
The kids soon adopted different strategies.
Some started saving – hoarding – three musketeers to trade them in at the end of
the trading session, speculating that the goods' price of three musketeers would continually
rise.
Others would acquire this valuable thing solely in order to consume it.
This money, after all, originated as a consumable good, and so it remained.
But mostly, this was the satisfying part for those anxious to observe the entrepreneurial
discovery of money.
Kids would acquire three musketeers solely to facilitate other exchanges.
Outside observers of a Misesian bent imagined the following.
Let's say someone arrived at the scene and threw down 100 three musketeers on the table.
All kids know precisely what would happen.
The price of three musketeers would tumble.
Each one would purchase far less than it had before.
This inflation might be so extreme that three musketeers might even cease to be money.
The good everyone wants to acquire in order to acquire other goods and some other candy
might take its place instead.
Imagine the chaos that would ensue as the kids came loudly to bewail their recent exchanges
of worthwhile candy for this now devalued commodity.
Imagine the loss of innocents as they saw honest bargains frustrated and vowed to be
more cautious of extending their trust upon the market.
Imagine the general loss as trading once more became scattered and choices were again restricted
as the idea of money fell into disrepute.
But fortunately, no Halloween bogeyman from the Federal Reserve candy factory came to
ruin their game, so the kids could remain free to trust in the soundness of their candy
The Unit
At last, the kids became exhausted by this frenzy, and the market closed.
Not because someone sounded a bell, but simply because, in general, everyone came to see
that each was as satisfied as they were likely to be with what they had.
This was the Misesian plain state of rest.
In Mises's words,
"...people keep on exchanging on the market until no further exchange is possible, because
no party expects any further improvement of its own conditions from a new act of exchange.
The potential buyers consider the prices asked by the potential sellers unsatisfactory and
vice versa.
No more transactions take place."
Once the trading had ended, the status of the three musketeers promptly reverted to
to that of a purely consumable item, since the end of the trading game signalled the
loss of their monetary properties, leaving them just a plain candy, much like any other.
Some kids left with a far lesser quantity of candy than when they first arrived, but
that did not prevent them feeling far wealthier, because now what they owned was a much closer
approximation to their ideal mix.
As for the other kids, well, they were astounded to discover that their own bags were far heavier
than before, that they too felt wealthier, and that nobody was complaining to mom about
that fact.
Indeed all children left the table with smiles and happiness, each feeling as if he or she
had gotten a great deal.
What a stunning achievement!
After all, the available physical resources were unchanged, nor had anyone planned or
policed the trading.
It had all happened spontaneously.
One was left wondering at the true magic of that Halloween, namely at the transforming
effect of something as simple as the opportunity for free exchange, for the chance to derive
mutual benefit from the difference in tastes between individuals.
And this, at least, Halloween, was all about treats.
And despite what the opponents of the exchange economy will tell you, there was no trick
about it anywhere you looked.