Teamwork is pretty important in determining success in competitive team sports. Eight 90 pound weaklings can beat an equal number of rowers with the power of a Mike Tyson in a regatta, if the former work together and the latter row at cross purposes. Even an excellent 3-point shooter such as Stephen Curry will not take that shot if there is an uncovered team mate hanging around the basket. Why not? By passing the ball, he can increase the expected value of the shot. I don’t care what middle name his parents gave him; his real basketball name is Stephen Teamwork Curry. It is the same in football. If there is an end standing by the goal line, all alone, and the quarterback sees him but runs with the ball anyway … why even talk about that? This would never happen, if there is even a modicum of teamwork instilled by the coach. Suppose one runner in a mile relay race refuses to pass the baton on to the next runner; what happens to its chance of winning? That is pretty obvious.
But this sort of teamwork is really underwhelming, compared to that which is exhibited in markets every day. How many athletes does it take to row that boat? A lousy eight. How many basketball players on one team can be running up and down the floor at any given time? A mere five. Football? A pitiful eleven. The members of a relay race? A trivial number: four.
In very sharp contrast, how many people can cooperate with each other in an economy? Pretty much as many as the population size. In the world, a bit over seven billion! That’s billion, in case you’re not paying attention. How about in the United States? Somewhere in the neighborhood of virtually all of us, some 350 million.
Take one more example of teamwork: the symphony orchestra. It has typically 100 or more members. When they play those sixty-fourth notes, all together, with not one musician out of tune or not exactly on time, it is almost a miracle. But, again, even this pales into insignificance when compared to what occurs in the economy. As it does in the operating room, when almost a dozen doctors and nurses work together in unison on a patient.
It is not just in sheer numbers that economics has it all over any of these other cooperative endeavors. In addition, the business world, at least under a regime of economic freedom, has no leader, no central authority, no organizer. In contrast, the orchestra has a conductor, all sports teams have a coach or manager, the operating room has a chief physician, the head chef runs the commercial kitchen, etc. Yes, it cannot be denied, the business firm has a chief executive officer, and there is of course cooperation within the company (or it would soon go bankrupt), but that is not the type of teamwork we are now discussing. Here, we are focusing on cooperation between businesses, not within each of them.
How does this work? It is simple: prices and profit and loss. Let us suppose that the ideal allocation of resources in the production of peas and carrots is 50% each. But right now, an economy features 60% of the former and only 40% of the latter. There are too many peas; there is a surplus of them. So their prices will fall, and profits earned from producing them will decrease. There are too few carrots; the opposite will occur in that market. The price of Bugs Bunny’s favorite foodstuff will rise, and with that change, profits in that field will also increase. Adam Smith’s “invisible hand” will now kick in. Farmers, importers, will be led by it to bring to market more carrots and fewer peas. If there are 90% of peas and only 10% of carrots, instead of slight price and profit alterations, these will be far more radical. Investors will be far more heavily motivated to coordinate with consumer desires than before.
The trouble is, this process is widely condemned as profiteering, price gouging, dog-eat-dog capitalism. However, this institution is responsible for allocating peas and carrots, and everything else under the sun, in rough conformity to consumer desires. This is teamwork at its best, with millions, nay, billions, of team members, and without any central direction at all. It truly deserves the honorific bestowed upon it by Ronald Reagan: “the magic of the market.” It is why advanced relatively free economies enjoy a level of prosperity which would be unobtainable from any other economic system.
It is the rare non-economist who can appreciate the level of collaboration that occurs under free enterprise. Rather, they wallow in economic illiteracy, blaming profiteering, price changes, the very market signals that allow for economic teamwork.
Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans and is co-author of An Austro-Libertarian Critique of Public Choice (with Thomas DiLorenzo).