Adam Smith is a hero to me because I see him as the first cultural economist. He was the first to note the curious connection between private interests and cultural interests. Individuals and businesses seeking to advance their own self-interests, and operating within the structure of a highly competitive market system, would miraculously promote the cultural best interest as well as the economic best interest at the same time. It began to prove out that as the individuals and businesses were allowed the freedom to choose their own options as to what they felt would be best for them, lo and behold, all the people of the culture began ending up better off. That was definitely an unintended consequence, but a welcomed and marvelous happening.
As we learned earlier, Adam Smith explained this simultaneous phenomenon as being guided by an invisible hand. We even see it in action today as businesses seek to build new and improved products to increase profits. Those enhanced products, like computer applications, smart phones, and industrial robots, increase the culture’s well-being. Those businesses use the least costly combination of natural and human resources because in doing so it is in their own best interests. To do otherwise would put their enterprises in jeopardy. But the company’s use of scarce resources in the most cost-effective ways benefits the culture as a whole, and frees up precious resources to produce even additional goods and services that the culture wants.
We have discovered that self-interest is different than greed. The freedom to pursue self- interest becomes the greatest method known to mankind to manage the billions and billions of individual small decisions of people seeking to better employ their resources and labor in ways other people find helpful. The socialist’s government model of centralized decision making could never come even close to determining the most correct and efficient answer to the billions of everyday decisions open to individuals and cultures.
The leaders of the fresh, new American experiment of 1776 seemed to get an intuitive glance into the possibilities of liberty and free enterprise, even though a lot of the good results were admittedly unintended and were only realized as the experiment unfolded over time.
The new Americans were God fearing and were determined to acknowledge and honor the principles of his economic system as well as principles of kindness, justice, and righteousness in their culture and adopted economy. And, over time, their traditions, institutions, and dreams for the future began to materialize. As they were free to pursue the free enterprise model, they began to experience true freedom for themselves:
· Built- in Efficiency: The new economic system encouraged the efficient use of resources and guided the new Americans into production of goods and services most wanted and needed by the citizens. They were encouraged to develop and adopt the most efficient techniques in utilizing their resources for production and consumption in the new country.
· Built- in Incentives: The free enterprise economic system promoted the acquisition of new skills and trades, gave people reason to work hard and be frugal in their lifestyles, and made it profitable for them to be innovative in solving their cultural and economic challenges. By assuming calculated risks and being innovative, they began to realize higher incomes and the creation of new opportunities of employment for fellow citizens. Many times the reward for those advances translated into higher standards of living.
· Built- in Freedom: The major reward for the pursuit of the free enterprise system flowing from the experiment of 1776 was the realization of personal freedom. The alternative economic systems of centralized government lacked in efficiency, incentives, and most of all freedom. The new system emboldened economic activity without coercion or undue interference, subject only to the penalties and rewards built into the economic system itself.
The unintended consequences set into motion as a result of the determined pursuit of freedom of economic and cultural choice were nothing less than astounding. Nothing else compares historically with the results of the American experiment of 1776. The system thrives on freedom and liberty. The multitudes of quiet and persistent cultural and economic entrepreneurs flowing out from that experiment have absolutely altered the history of this world.
The chances of the experiment ever happening again are very slim, indeed. It will never happen again the same way, for certain. But even were the restart button ever to be pushed again in the future, and we are slammed back into the dark ages,desperately groping for a new period of enlightenment, there is verifiable evidence recorded in history that once upon a time there lived upon the face of the planet earth a people whose hearts burned within them to experience a cultural and economic phenomenon. Here the people were willing to pay the price of personal responsibility to cultivate with kindness, justice, and righteousness an economic and cultural system that honored liberty and freedom and personal integrity.
As for the rest of my own life, I fully intend to spend all my energies and creativity for as many days as I have left, on countering the wrong headed thinking of those individuals who would gladly trade the security, growth, and sustainability of the free enterprise economic system for a short-term rush of political expediency through deficit spending, vote buying, and economic redistribution. I want to expand our economic thinking into the possibilities of abundance, choice, and accomplishment, rather than the fear driven model of scarcity, choice, and cost. I want to cast my lot with those who believe that our brightest days are just ahead as we whole-heartedly pursue the secrets of the riches that are yet unknown to us but there for our discovery and use on this earth.
But whatever happens in the future, I choose, as other thankful citizens have chosen,to pledge my allegiance to the grand and glorious experiment of 1776, and to honor those who stood for what they believed and lived to experience the extravagant results and even the goodness of the unintended consequences. We actually had the occasion to experience a cultural and economic life where we were all . . . Better-Off.
(Research ideas from Dr. Jackson’s new writing project on Cultural Economics)
© Dr. James W. Jackson
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