My last post brought to mind an analogy.

When people try to discredit the "anarchy" of an unregulated free market, often they will bring up such examples as traffic cops, and point out that we need "controls" to make sure things flow smoothly. Or those with an interest in even more control will point to sports or the military and argue for the need for a "coach" or "general".

However, as it is the Christmas season, and many, many people are out shopping, let me offer a different analogy. Wal-Mart.

Your average Wal-Mart probably sees tens of thousands, maybe hundreds of thousands of customers in December. Each one of them wants to pick up certain items, but has coordinated this mission with no one else. In addition, hundreds of employees want to make sure that people can get into the store, buy things, and get out with a minimum of fuss. Yet they too have coordinated with none of the customers.

Now, granted, there is some local, voluntary coordination. The employees are all coordinated to a degree, though still having a great deal of autonomy in the specifics of how they handle things. And groups of shoppers, such as families, might have some coordination, but overall it is simple "chaos", yet every shopper gets into the store, finds their purchases, makes substitutions for items they can't find, and gets out without any mishap. Some even come in with no specific purchase in mind, yet manage to find items and purchase them without disasters occurring.

The reason is obvious, and is the same reason the free market works. Each customer and each employee knows what he wants. He goes about taking care of his concerns, assigning priorities based on his needs and wants. As a result, each person feels the system pretty closely matches their desires, as the most urgently felt needs are generally satisfied first. Any outside attempts to "prioritize" for efficiency would, at best, produce the same results, but most likely would simply leave some less satisfied than before. The individual pursuit of their own desires tends to produce optimal results for each person.

Obviously, the system has drawbacks, much as the free market system is not perfect. But, also like the free market system, the alternatives are much, much worse. Rationing, lotteries for scarce items, arbitrary assigned shopping times, and so on would leave shoppers less satisfied than the present system. Granted, after a particularly bad day shopping, some may be willing to try them, just as the shortcomings of capitalism leave people ready to try alternatives, but in the end the imperfect system we have is the best possible system, despite its flaws.

POSTSCRIPT

Wal-Mart is not  a perfect example, as the selfish pursuit of each shopper's desire does not help any other shopper achieve his goals. There is the overlap of shopper goals with store employee goals, but that does not quite capture the magic of the free market, where even the most selfish, self-centered, uncaring desires tend to satisfy the needs of others, as the route to wealth is through meeting the greatest needs of the greatest number.

Still, it seems a good example of total chaos that works better than any alternative.

POSTSCRIPT II

One of my comments in the post above brings up a question that has always confused me. Critics of the free market always fault it for not being perfect, they point out small imperfections, the occasional major failing, and they say that proves the free market does not work. However, they admit to even greater faults in the systems they propose to replace it, refusing to hold these imperfections against the alternatives. So, why is the free market required to be perfect, while authoritarian solutions can continually fail yet suffer no criticism?

POSTSCRIPT III

And, having asked the question above, I have a question for liberals and conservatives alike. Both are pretty universal in dismissing the gold standard as "antiquated" and "flawed", though they ignore the fact that the current fiat currency system has problems far greater than any we suffered during the periods we used commodity money. They argue that the gold standard "creates" monetary problems, yet ignore the fact that leaving the gold standard has not resolved these problems, and they have, in fact, become far worse. (Carter era inflation? Our current mess?)

Even if we ignore the fact that centralized banking, whether de jure after the Federal Reserve was formed, or de facto under the many state controlled banking schemes of much of the 19th century, caused most of the monetary problems blamed on gold, even granting that gold was somehow responsible for all problems before 1934, has paper money performed any better? Has allowing the politicians to print worthless paper and force us to pretend this Monopoly money has value made us any safer or wealthier?

So, what precisely is so unstable or imperfect about the gold standard? Or so wonderful about the substitute? (I know why politicians lover being freed from the shackles of a money they cannot print, and the spending discipline it would require, but why do the rest of us think that is a good idea?)

NOTE: To any readers who caught this story early enough: yes, I did invert "de facto" and "de jure". I do know what the terms mean, but I was paying too little attention while writing and managed to flip the two. I have corrected the text now.