Teamwork is very important in determining success in competitive team sports. Eight 90 pound weaklings can beat an equal number of rowers with the strength of Mike Tyson in a regatta, if the former work together and the latter row cross purposes. Even a great 3-point shooter like Stephen Curry won’t take that shot if there’s an uncovered teammate 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 her parents gave her; His real basketball name is Stephen Curry. So is football. If the end is standing next to the goal line, alone, and the quarterback sees him but runs with the ball anyway … why talk about it? This will never happen, if there is even a modicum of teamwork performed by the coach. Suppose a runner in a mile relay race refuses to pass the baton to the next runner; What will be the probability of winning? That’s pretty obvious.
But this kind of teamwork is really uncomfortable, compared to what is displayed in the market every day. How many athletes does that boat row take? It’s eight o’clock. How many basketball players on a team can roam the floor at any given time? Only five people. Football? A pathetic XI. Members of the relay race? A trivial number: four.
In very sharp contrast, how many people can cooperate with each other economically? Much higher as the population size. A little more than seven billion in the world! that billion, if you’re not paying attention. How about the United States? Somewhere in the neighborhood of virtually all of us, some 350 million.
Take another example of teamwork: the symphony orchestra. It usually has 100 or more members. When they play those sixty-four notes, together, a musician out of tune or out of time, it’s almost a miracle. But, again, even that pales in comparison to what happens in the economy. It takes place in the operating room, when about a dozen doctors and nurses work together on a patient.
It is not just in sheer numbers that the economy rests on all these other cooperative efforts. Furthermore, the business world, at least under the 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 manages the commercial kitchen, and so on. Yes, it cannot be denied, business organizations have a chief executive. There is cooperation between the officers, and of course the company (or it would soon go bankrupt), but not the teamwork we are discussing now. Here, we are focusing on collaboration in Business, no in Everyone of them.
How does it work? It’s simple: price and profit and loss. Let us assume that the ideal allocation of resources to the production of peas and carrots is each 50%. But right now, an economy features 60% of the former and only 40% of the latter. There are many peas; They have a surplus. So their prices will fall, and the profits earned from their production will fall. There are very few carrots; The opposite happens in that market. The price of Bugs Bunny’s favorite food will increase and with that change, so will the profits in that area. Adam Smith’s “Invisible Hand” will now enter. Farmers, importers, will be led to bring more carrots and fewer peas to market. If there were 90% peas and only 10% carrots instead of small price and profit changes, it would be much more radical. Investors will be more motivated than ever to align with consumer desires.
This process is widely condemned as profiteering, price gouging, dog-eat-dog capitalism. However, this organization is responsible for allocating peas and carrots, and everything else under the sun, roughly in line with the customer’s wishes. It’s teamwork In his prime, millions, not billions, with team members, and with no central direction. It truly deserves the honor given to it by Ronald Reagan: “The magic of the market.” This is why developed relatively free economies enjoy a level of prosperity that would be unattainable from any other economic system.
It is the rare non-economist who can appreciate the level of cooperation that underlies free enterprise. Rather, they blame economic illiteracy, profiteering, price volatility, the very market signals that allow for economic collusion.
Walter E. Block is Harold E. Worth Distinguished Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans and co-author (with Thomas DiLorenzo) of An Austro-Libertarian Critique of Public Choice.