A Society of Mutual Benefactors
Checking out at the grocery store the other day, I paid for my sack of rolls.
The checkout person handed me my bag.
Thank you, I said.
You're welcome, she replied.
I walked away with a sense that something was wrong.
To check out, people usually say, you're welcome, and nothing else?
Not usually.
Usually they say, thank you, same as the customer says. Remember, we're talking about the American
South, land of politeness here. I was left with an inchoate sense of, hey, I did something for you,
too. When do we say, you're welcome? We say that when we give a gift, a good or service to a person,
without receiving anything in return. For example, I might hold a door for a person, that person says,
Thank you, and I say, you're welcome.
Another time might be at a birthday party when the recipient of a gift expresses thanks.
These are one-way examples of benefaction.
We are giving, but not necessarily getting anything tangible in return.
What makes the case of the commercial exchange different?
Why do both parties say thank you?
It's because each side gives a gift to the other.
When I bought those rolls, this is precisely what happened.
I saw rolls available, and I decided that rolls were worth more to me than the two dollars
I had in my pocket.
From the store's point of view, the two dollars was worth more than the rolls being
given.
Both parties walk away with a sense of being better off than they were before the exchange
took place.
The checkout person is there to facilitate this exchange and speak as a proxy for the
interests of the store.
The store was receiving a gift of money, more highly valued than the rolls, and I was receiving
the rolls, more highly valued from my point of view than the $2 I gave up to get them.
This is the essence of exchange and the core magic of what happens millions, billions, trillions
of times every day, all over the world.
It happens in every single economic exchange that is undertaken by virtue of human choice.
Of Sides Benefit Each side is a benefactor to the other side.
This system of mutual benefaction, unrelenting and universal, leads to betterment all around.
It increases the sense of personal welfare, which is to say, it increases social welfare,
when everyone is involved in the activity.
To be sure, a person might change his mind later.
I might arrive home with my roles and discover that I'm out of butter, and that I would
I might decide to drop bread from my diet.
I might conclude that rolls are really not that tasty.
All these things can happen.
Such is the nature of the universe, that the future is uncertain and human beings are inclined
to be fickle.
But at least at the time of the exchange, I believed I was better off, else I would
not have made the exchange in the first place.
I walked away with a sense of gain.
The store owners had the same sense of gain.
We both expect to gain, which is enough to recommend the exchange system, since no social
system can guarantee a happy outcome for every action.
Now, if all of this seems obvious and not even worth pointing out, consider that most
philosophers in the history of the world have missed this point.
Aristotle, for example, reflected at length in his Nicomachean Ethics on the issue of
economic exchange, but he started with the assumption that exchange takes place when
valuation is equal or commensurate.
But what about cases in which it seems obviously incommensurate, such as when highly valued
and rare physician services are traded for something widely available like corn?
Gold believed that the existence of money serves to somehow equalize the exchange and
make it happen, when it should be apparent that money itself is only a good introduced
to make exchange more convenient.
The problem he faced was his initial premise that economic exchange is based on the equal
value of items in the exchange.
This is just wrong.
If two people value goods equally, an exchange would never take place, since no individual
People could be made better off than before.
If exchange is based on equal value, people are merely wasting time engaging in it at
all.
Exchange in the real world is based on unequal valuations of goods and expectation of being
made better off.
It is a matter of two people who give each other gifts in their own self-interest.
The discovery of the correct theory of exchange had to wait until the late Middle Ages, when
And the followers of St. Thomas Aquinas saw the logic for the first time.
They saw that economic exchange was mutually beneficial, with each party to the exchange
seeing an increase in personal welfare, subjectively perceived.
Therefore the action of exchange, on its own, becomes a means of increasing the well-being
of all people.
Even if there is no new physical property available, no new innovations, no new productivity,
Health can be increased by the mere fact of exchange-based human associations.
As with many postulates of economics, this seems very obvious once you see it, but it
is evidently not obvious at all.
In fact, I've observed that many people's underappreciation of the contribution of the
market order is rooted in the perception that buying and selling stuff really amounts to
nothing wonderful at all.
It is just a swirl of churning and burning for the sake of nothing in particular.
Society could easily do away with it, and be no worse off.
I have a hard time figuring out what people who believe this are thinking.
Let's say that I proposed abolishing gift-giving, wouldn't it be obvious that society would
be worse off if I got my way?
We would no longer enjoy the material manifestation of the appreciation of others, and we would
would all be denied the chance to show others our appreciation of them.
Well, if it is true, as I've argued, that an economic exchange is a two-way gift, an
instance of mutual benefaction that is pervasive throughout society, it becomes clear that
society would be completely sunk without as many opportunities as possible for economic
exchange.
Anyone who champions the well-being of society should especially celebrate commercial centers,
Stock markets, international trade and every sector in which money changes hands in exchange
for assets or goods.
It means nothing more than that people are finding ways to help each other get by and
thrive.
As 16th century Spanish theologian Bartolomé de Albenuz, known mostly for his opposition
to Slavery, wrote,
Buying and selling is the nerve of human life that sustains the universe.
By means of buying and selling, the world is united, joining distant lands and nations,
people of different languages, laws and ways of life.
If it were not for these contracts, some would lack the goods that others have in abundance,
and they would not be able to share the goods that they have in access with those countries
where they are scarce.
However, if we do not quite see the underlying logic of exchange and how it works to help
everyone, it is easy to underappreciate what market trading means to society.
This is a tendency in the circles that discuss issues of social justice.
The market is rarely given the credit it deserves for helping humanity improve its lot – in
fact, the market is nothing but the cooperative interaction of humanity in improving the common
wheel.
The fallacy of value equivalence in exchange has been refuted for some 500 years, and yet
it keeps reappearing.
Economics is one of those sciences that require careful thought.
It can't be quickly intuited from a handful of moral postulates – it must be studied
and understood with deductive tools and patient delineation of a wide range of concepts.
It is because of this that economics as a science was so late in developing, but it
is not too late for us to understand.
The understanding of economics leads to a direct appreciation of the contribution of
free markets to the well-being of all.
If you read something that seems to disparage the market economy, it is more likely that
a fallacy such as the above is at the root.
At some point today, you will undoubtedly exchange in some economic exchange.
Use the opportunity to reflect on what a glorious dynamic underlies it.
You can say, thank you.
The person who takes your money can say, thank you.
Such opportunities account for most of the peace and prosperity we enjoy.
This Side of Heaven