My last post pointed out to me one of the great strengths of the free market, that it not only accepts that man may be imperfect, but it even works in such a way that his most base desires drive the system tot he best possible outcomes.

This is in contrast to communism and all other government controlled systems. After all, whenever someone points out the excesses of Stalin or Mao, what are the two defenses? Either "that was not TRUE communism", or "that was just because the wrong man was in charge". In other words, even the proponents of communism admit that their system depends entirely on having the right people running things, and the wrong leaders or wrong plans can turn the system into a nightmare. Of course, there is an even better argument, that their system requires an amount of information simply unavailable to humans to function, but even without that argument, they admit themselves that theirs is a system demanding perfect leaders.

Of course, some make the same argument about capitalism, arguing that the "excesses" of some demand "oversight" or regulation, but that is a misunderstanding. The brilliance of capitalism is that it does not require such controls, instead channeling even the most undignified emotions into productive ends. The system does need to police against explicit theft, force and fraud, but other than those minimal protections of individual rights, and a mechanism to enforce mutual agreements, the system needs no regulation against the more base emotions.

By its very design, the free market ensures the greed of its members will produce the greatest benefit for the greatest number. While another system, such as communism, requires that workers "sacrifice" and dedicate themselves to helping others, unreliable emotions upon which to base a system, capitalism ensures that each citizen's desires will drive him to fulfill the desires of others.

The solution is simple. So long as I cannot steal or defraud, my only recourse is to provide something to others that they want. And the more money I want, the more people I must serve, or the more urgent the desire I must satisfy. In other words, to get rich, I must provide as much satisfaction to others as possible. In other words, my selfish desires are tied to what amounts to altruistic ends. I serve my fellow man not out of the goodness of my heart, but out of desire for my own pleasure, which is a far more reliable basis for a system.

Nor does the brilliance end there. Though many claim employers will exploit employees,t he truth is, without any interference by the state, I will treat my workers as fairly as I can. Without the artificial unemployment created by mandatory unions, unemployment insurance, welfare, inflation and other interventions, employees will have little trouble finding employment, so, to keep the best employees, I will have to pay them close to what they are worth. Of course I will try to pay them as little as possible, but if I pay too little another employer will see the disparity, offer them more money and still make a profit. So I will try to pay them less than the added value they bring to my production, but not so little that they will be poached. In the end, that works out to paying them pretty close to the total amount of value they add, which seems a good, objective definition of a fair wage.

In addition, I will maintain a relatively safe working environment. Without an endless pool of unemployed labor I will want to maintain my laborers in decent condition. Even in low skill jobs, there is still some improvement with experience, so I will likewise want to keep those employees who have gained work experience and are familiar with the environment. Finally, as proven employees with good habits are worth slightly more than unknown workers, I will prefer to maintain  a pool of known workers I can trust to show up and do their job. As a result, I will keep the workplace safe and clean, at least to a reasonable degree, depending on the specific industry. Though I might be able to save some money by cutting corners, usually the cost in hiring, training, and just testing out new workers is greater than the savings from an unfit workplace, so I will maintain reasonable safety. (There were times early in the industrial revolution where costs were higher and the level of "acceptable" was much lower. But with our modern wealth the costs of modest safety are virtually zero, making it unlikely workplaces will be unsafe simply for the cost savings.)

Now some will argue that unscrupulous employers could form cartels and collude to underpay workers, or, if not nationwide, maybe in isolated markets or in specific industries. However, that is unlikely. If a specific industry did so, it would simply spell the end of that industry, as labor can be changed between industries, and if conditions are abusive enough, even those with a lot time invested in a specific skill set will change to avoid the abusive conditions.

Likewise, even in an isolated region, it would be hard to maintain a cartel to exploit labor. Not only could the workers leave, should conditions become bad enough, but the excessively high profits caused by low wages would eventually attract attention and outside investors would enter the market, offer slightly higher wages and still make above market profits. Eventually, such pressures would level out the wages.

So the only possible cartel would be all employers in the market creating below market wages in every field. Obviously, organizing absolutely every employer to collude to keep wages low is absurd. But even if you could, it would take only one to break with the agreement to have it fall apart. Even if they didn't, an outsider, seeing the high profits, could open their own shop and pay higher wages, still make a great profit, and destroy the system. There simply is no way to maintain such below market wages.

I could go on, but it should be obvious by now that the system is exactly what I said, a brilliant way to channel human imperfections into socially beneficial ends. And the real beauty of it, the genus of the free market is, unlike most system with incentives, rules, managers, and so on, it requires nothing to work. The beauty is the minimalism. Once we have police to prevent force, theft and fraud, and courts to settle civil disagreements and enforce contracts, we can just walk away and let the system manage itself.

I know people frown upon those who find evidence of G-d in natural laws, but I must say, the brilliant way the free market, of itself, channels man's worst instincts to the benefit of his fellow man seems to me a sign of a divine hand at work. But even if you doubt its divine origin, you must admit it is a much more elegant solution than all the clumsy autocratic solutions that have been proposed throughout the ages.