If you have ever lived in DC, or other commuter cities, you may be aware of the Park & Ride system. In the DC area this system includes an interesting feature where drivers, anxious to utilize the high occupancy vehicle (HOV) lane, pass by the park and ride lots and pick passengers up to meet the three occupant minimum. The passengers are already pre-sorted by destination, as they stand in a line waiting for drivers to pick them up and drop them off at the predetermined destinations. For those that do this daily it feels routine and ordinary. Yet, if you explain this to the uninitiated, that you essentially ride to and from work with a complete stranger, either to gain access to the HOV or to avoid driving and parking your self, they have a look of surprise, concern or at times even horror. Yet, this is essentially what we do everyday, all the time. It is part of the social trust that builds within communities and societies that have free market systems.
I am not the first to say this, nor will I be the last, but it cannot be overstated how the free market encourages individuals to foster and demonstrate trust in their fellow man. This may be described as a positive externality, and it is pretty apparent that it outweighs the negative externalities that arise from the relatively few bad actors. However, most these bad actors, such as those that discriminate against others and refuse business, pay a fee for refusing to engage in market transactions with those they dislike. The trust is often hard to observe because we are not aware of how it has accumulated and how it has lowered the friction necessary to for us to daily interact with complete strangers and exchange goods and services.
Yet, consider an average day, in which, thousands of such exchanges take place without any incident. An individual may purchase any number of items in the course of a day, exchange money and receive an item or service, all under no special supervision with complete and total strangers. In some circumstances an attempt at conversation may take take place to the delight or horror of those involved.
Participating in markets conditions us to these strange daily interactions and the aggregate benefit is greater social trust and a generally more peaceful society. Conversely, substituting politics and government tends to erode social trust, due largely to the nature of government and politics, which is force and the threat of force and an adversarial process to obtain control of government. Increasing the role of politics and government, especially in place of markets, will encourage segments of society to become isolated and alienated.
There is also dignity in market participation. Walter Williams has eloquently described this process as follows, “Say that you hire me to mow your lawn and afterwards you pay me $30. What I have earned might be thought of as certificates of performance, i.e. proof that I served you. With these certificates of performance in hand, I visit my grocer and demand 3 pounds of steak and a six-pack of beer that my fellow man produced. In effect, the grocer asks, “Williams, you’re demanding that your fellow man, as ranchers and brewers, serve you; what did you do in turn to serve your fellow man?” I say, “I mowed my fellow man’s lawn.” The grocer says, “Prove it!” That’s when I hand over my certificates of performance — the $30.” This daily process of evidencing service given and exchanged has resulted in less social tension, and an ability to daily interact with complete strangers.
Others have expanded on this argument, Professor Nathan Oman has released a book titled, The Dignity of Commerce. This is an expansion on a law review article he penned, in both he argues that markets and contracts reflect human dignity. As Oman summarized, “the process of market exchange inculcates a set of virtues that makes us into more peaceful, tolerant, decent human beings.” If market participation does reflect human dignity than we should not be too surprised that as we engage in the social interactions of the market we gain, especially as the long term trend, an increase of social trust, less friction, and greater respect for each other.
When we allocate market processes to government we should expect friction to build. Allowing freedom to interact, creatively and to our mutual benefit, results in a society that becomes, to our benefit, stranger everyday.
James Devereaux is an attorney. Feel free to comment. Views expressed are not a reflection of employers or other affiliates.