“The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.” ~ Adam Smith[i]
In 1979, two economists, Milton and Rose D. Friedman, wrote the classic economics treatise, Free to Choose. This book was one of the most influential works to form my thoughts relative to free markets as well as a deep intrigue for their role in our society. Chapter one of the book is entitled “The Power of the Market.” What a fitting title for such a pervasive force in free enterprise economies across the globe! Markets are some of the most intriguing and amazing forces in the world today. Adam Smith, an 18th Century economist at the University of Glasgow, Scotland, in his 1776 treatise, The Wealth of Nations, likened the free market to an “invisible hand.” He chose this hyperbolic reference because of the unique ability of the free market to bring “just the right product, to just the right place, at just the right price,” that would provide consumers affordable products to meet their insatiable needs, while enabling suppliers an opportunity to earn a profit from their zeal to bring useful products and services to the marketplace.
Although I tend to be a bit obsessive and compulsive when it comes to my intrigue for observing markets, I invite all readers of this blog to observe the free market at work during their next grocery shopping trip. Check out all of the tens of thousands of products offered by the modern grocery store. It simply amazes me how, just like Adam Smith’s invisible hand, the market brings such a plethora of wonderful products to consumers in our economy. If a consumer desires blue corn chips, mango salsa, organic dog food, or almond butter, the market has brought all of these products to us. Indeed, some of these products may come and go as consumers’ tastes and styles change; nonetheless, the market provides precisely the products the consumers desire, and at the time and price they are willing to pay. No wonder the Friedmans (1979) adopted the nomenclature, “the power of the market!” Indeed, this is an appropriate and fitting phrase to describe this force in our economy today.
My interest in markets has its roots in my childhood, when my mother would take me grocery shopping. There was always something uniquely intriguing about all of those products, their prices, and how these items from all over the country ended up in my neighborhood grocery store. Little did I know then that it was the power of the market. Today, my belief is that helping business students at the DeVoe School of Business understand markets is one of the most important aspects of their business education. For it is markets in which suppliers and demanders (consumers) come together to meet consumer needs while providing an opportunity for wise and timely suppliers to earn a profit—even if it is only in the short term; for, ultimately, markets become saturated with suppliers with similar intentions to earn a profit, only to result in a “competitive scrum,”[ii] in which no one is profitable and the “race to the bottom” ensues. I invite all readers of this blog to observe the marketplace more keenly, and I am certain you will be as intrigued with them as I am…the power of the market is real and just as alive today as it was in 1776 in Adam Smith’s day.
[i] Smith, Adam. (n.d.). Retrieved from https://www.brainyquote.com/quotes/authors/a/adam_smith.html
[ii] Scrum (n): A framework within which people can address complex adaptive problems, while productively and creatively delivering products of the highest possible value. Definition sourced from: Scrum. (n.d.). Retrieved February 2, from Demix: http://demix4.cloudaccess.net/best-practices/scrum.html