Some 250 years ago, the Scottish economist Adam Smith wrote a sentence that became famous: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."
In other words: the baker doesn't sell you bread out of pure kindness. And you don't buy it to make him happy. Each of you gets something out of it. And that's exactly why it works.
The story of Buddy and Lina
The school Christmas market is coming up. Buddy and Lina each have two hours to make things to sell.
- Buddy is a good baker: he makes 12 biscuits an hour, but only 3 bracelets.
- Lina is good with her hands: she makes 6 bracelets an hour, but only 4 biscuits.
Each on their own (one hour of biscuits, one hour of bracelets): Buddy has 12 biscuits and 3 bracelets, Lina 4 biscuits and 6 bracelets. Together: 16 biscuits and 9 bracelets.
Each does what they do best: Buddy bakes 24 biscuits, Lina makes 12 bracelets. Then they swap freely: 10 biscuits for 5 bracelets.
- Buddy now has 14 biscuits and 5 bracelets (instead of 12 and 3).
- Lina has 10 biscuits and 7 bracelets (instead of 4 and 6).
Nobody worked harder. Nobody took anything from the other. And yet both are richer. That's the magic of specialisation and exchange, which Adam Smith was one of the first to describe.
The secret: everyone can say no
What makes this exchange good is that nobody is forced. If Lina thinks the offer is unfair, she says no and keeps her bracelets. If Buddy doesn't fancy it, he keeps his biscuits. An exchange only happens if both think they'll gain from it.
The American philosopher Robert Nozick stressed this idea: when people freely exchange what belongs to them, without deceit and without force, the outcome is fair, even if one ends up with more than the other. The market is nothing more than millions of small, voluntary "yeses".
What this teaches a child
- To get what I want, I have to offer something the other person wants. It's the best school of empathy.
- I have the right to say no, and so does the other person. A "no" is respected.
- You don't have to be good at everything. Everyone has their talents; exchange lets us benefit from other people's.
Try this tonight with your child
Play the talent market as a family. Everyone writes on a slip of paper one thing they're good at (making pancakes, fixing a toy, telling a story) and one thing they'd like to receive. Then propose swaps: "I'll do you a drawing if you plait my hair." Golden rule: anyone can say no. At the end, ask: "Is everyone happy? Why?"
Read also: Why water is free and diamonds cost a fortune
Further reading
- Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London: W. Strahan & T. Cadell.
- Nozick, R. (1974). Anarchy, State, and Utopia. New York: Basic Books.
Teach them the power of a freely given "yes". Join the Mangosteen Buddy waitlist: Book 1 of the comic is free, and the first 500 families get their first year of Premium on us (worth CHF 150). Save my place