Society has a tendency to overlook just how complicated the world we live in is. Just take something simple like being able to listen to a song on your phone. For this service to be available there needs to be an artist willing to make the music, a sound engineer willing to record the music, a producer willing to mix together these recordings, a record company willing to distribute the recordings, a music streaming service willing to supply those recordings, a technology company to make a device the streaming service can be used on, and customers willing to buy the service, and employers willing to pay these customers so they can afford the service.
When you consider all of this, it’s actually a miracle that anything gets done. The world we live in is a very complicated, intricate, and interlinked ecosystem. Yet everything still manages to function because everyone seems to do their own individual job. What is so amazing about this is that the majority of the people in the world do this willingly, without needing to be told to do so. Fair enough, a lot of the people don’t like doing their job, but they still do it. In economics this is referred to as the power of the invisible hand.
The concept of the invisible hand has its route in the work of the father of economics, Adam Smith. Smith uses this image of an invisible hand to show the societal benefits that arise out of individuals acting in their own self-interest, and provides this quote which has become the most famous quote in the field of economics.
“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” – Adam Smith, 1776
What Smith is trying to say here is that the reason the butcher provides us with food to eat is not because he is worried that we are hungry, but because he knows we will provide him with money in exchange for the food. So by us acting in our own self-interest and buying food when we are hungry, and the butcher acting in his own self-interest and providing food to people in exchange for money, everyone gains from doing what is in their own self-interest. This may seem like a simple idea, but it is crucial to the functioning of our entire economy, voluntary exchange is the very foundation which capitalism is built on.
So the reason I can listen to music is not because Spotify want me to listen to it. It’s because Spotify want money and I want music, so I provide them with what they want and they provide me with what I want and everyone is better off. So everyone in society gets what they need not because people are generous, but because people are selfish.
By Daragh O’Leary