I was standing motionless in one of those one-stop drug stores that sells everything from hair brushes to screwdrivers to sports drinks, in addition to offering prescription drug services. I was at the aisle dedicated to seasonal items. At this aisle, it’s scary monsters and witches in October, plastic turkeys and leafy decorations in November, hearts and chocolate in February, and beach balls and flip flops in May.
This was the day following Christmas. Employees were busy taking off the shelves stockings, lights, nutcracker dolls, tensil for trees, and myriad items about Santa and his reindeers. They were putting them in boxes to make way for the next thing, whatever it is.
Many things about the scene delighted me and caused me to reflect on the magic of the market. It is a management decision to move so quickly on this task since shelf space is scarce and their past sales figures indicate that there is nothing to be gained by leaving all this stuff out. It was time to move on to the next thing.
But look how much of this there is leftover! In an ideal world, one constructed according to strict scientific principles, there would be no surplus of Christmas decorations. Everything would be gone, the market perfectly cleared. Alas, the real world doesn’t work that way. This store was shipped too much to sell but they probably still managed to make a profit on what they did sell. You build in error into the profit-and-loss calculation.
How can they know in advance precisely how much to make available to the consumer? They cannot. The decision about what to buy in order to sell is a speculation. It requires looking at past data, anticipating changes in buying habits and demographics, discerning through intuition and as much evidence as is available, and making a judgement as a kind of leap into the dark.
Maybe some of this can be saved to sell again next year, but maybe not. Much of it has to find some other home, some other market. It can be put into bargain bins for a few days but at some point, old Christmas stuff in January can’t be sold at any price. It represents a kind of waste for the company, living evidence of the impossibility of perfectly predicting the future.
But the inability of the human mind to know with perfect accuracy everything there is to know about future conditions does not stop people from having to make the guess in any case. Merchantcraft must move relentlessly forward from the realm of the known past into the space of the unknown. Uncertainty is the universal condition in which commerce necessarily takes place. Every day and in every way, you leap from from the known light of the past into the unknown dimness of the future.
This is not some kind of system that society adopts. It is a universal condition, a built-in feature of the world, which never stops changing and always pushes forward without sure answers.
Does this sound rather scary? For most people it is. We have a hard enough time navigating this condition when our property is not on the line and when our livelihoods are not at stake.
But there is one class of people who take this a step further and exercise special courage in light of the uncertainty of the future: they are called entrepreneurs. These are the people who take it upon themselves to make judgments based on their own insightfulness, about how future conditions and the place of an enterprise in adapting to and changing those conditions.
Entrepreneurship is not limited to inventory decisions. It reaches deeply into the entire production process itself. It pervades the whole of the economic structure of our society and our lives.
Take a look at any of the gifts you received this Christmas. Of course we take it for granted that such a thing as, for example, a package of hair-curling tubes just exists for people to buy and use. But there is nothing about the world that guarantees that.
Someone had to think of the idea, assess its economic viability, invest the resources to make such things come into being, manufacture them in some quantity out of materials made by business that face similarly uncertain conditions, get them to the wholesalers and then the retailers, and put them on the shelves in a way that make them compelling to consumers.
This whole process begins a very long time before the final sale. At every stage, there is uncertainty about the outcome. And who determines the outcome? The one shopper who is meandering through the store aisle and has his or her eye drawn to it, and then finally decides to exchange some of amount of property for this product on the supposition that doing so is mutually beneficial. There are no guarantees. The entire process hinges on the vicissitudes of the human volition of the consumer class. It is for this group that the entire apparatus exists.
And consider that despite the overwhelming presence of government in our lives, government itself has nearly nothing to do with this decision-making process. No bureaucrat orders Walgreens to offer Christmas items or take them down. No agency requires that anyone sells any seasonal items at all. These are tasks taken on by enterprises themselves, all in the interest of pleasing you and me.
Despite high taxation (that can only harm profitability and make business more difficult), regulation (that can only restrict the range of action of the entrepreneurial class), and monetary manipulation (that distorts the structures of production with interest-rate mis-signaling), it still comes down to the capacity of the entrepreneurial class to act with insight, courage, and derring-do.
The great magic of the marketplace is its capacity to take a seemingly regrettable feature of the world — faced with the future we can only look through the glass darkly — and turn it into a playground of risk and fun, a template for creativity, productivity, and humanitarian social service in the interests of everyone.
For it is this very uncertainty that provides the tableau for the achievement of that thing that everyone seeks in this world of pervasive scarcity: progress toward the achievement of material abundance and universal absence of want.
There is no feature of our world that could not benefit from this mighty creator of value. Those sectors that have been somehow cordoned off from entrepreneurial competition — think of education, security services, health care, roads, the administration of justice — have suffered and failed to keep up with the progress of history. They could all be massively improved by the incentives and signals that cause the average drug store to be a better paragon of progress.
And so it is with the whole project of human liberty itself. We need entrepreneurship. We need the commercial ethos. We need a direct relationship between producer and consumer. The project of building a freer society needs the creativity and discipline that only the profit-and-loss system can fully provide. And that’s precisely why I got behind Praxis. That’s also why I’ve thrown myself so fully into making the online world of Liberty.me. I want to see how entrepreneurship can yield innovations even this this sector.
These were my thoughts as I stood staring at these workers putting things in boxes. Finally a worker took note of my presence and wondered why I was standing there with my mouth open.
“May I help you, sir?” she said.
You have already. You do every day.