Exploring Adam Smith: Trading as a Natural Human Condition

The socialist experiment that was the Soviet Union has been on the garbage heap of human history for 18 years now. Modern China is a weird mix of a socialist ideology and capitalist business practices. Even in a communist utopia that is Earth in a popular TV series "Star Trek," humans still actively negotiate deals and treaties with other sentient species - which shows that, despite living in a society that does not use money or any other sort of exchange currency anymore, people have not lost their knack for the practice of "truck, barter, and exchange." After all, what is a diplomatic negotiations session if not a practice of offering the other side something they might want to get something you might want from them? It is quite clear, therefore, that Adam Smith was right on the money (pardon the intended pun) in describing haggling and other associated practices of business exchange as being part of human nature.

One must only observe parents interacting with their three-year-olds to see that the ability to haggle and the propensity for it makes itself known at a very young age. It is almost universally true that if the parents want their children to do something, they have to promise - and do - something in return. You want ice cream after dinner? Eat all your vegetables at dinner. You want this toy? Be nice to your sister. It does not stop as children get older. You want to use the car? Wash it first. You want higher allowance? Here are some extra household chores. You want your own car? Finish the sophomore year in college better than you finished the freshman year.

Some may claim that such mercantilism is bad because it teaches us to exploit others for our own benefit and thus it makes us coarser, more unfeeling, and less able to help others in need and to appreciate things that are truly important in one's life. This could not be farther from the truth. Exploitation is, of course, possible, as when someone is trying to get something out of another person without giving anything of value in return - something the modern society calls a scam. A scammer, however, is an exception to the rule rather than a normal occurrence. First of all, a scammer will never able to do business with the same person twice, as that person would be naturally wary of being scammed again. Secondly, our society protects us from this type of fraud or extortion through laws of the land. It does so because it is interested in healthy commerce that is achieved through a mutually satisfactory exchange of value, be it in goods or in services.

Furthermore, these types of business dealings make the society progress forward by forcing people to look for additional sources of value to exchange with others. As the population grows, increasingly more people are likely to offer the same products or services to others, which means that such products or services will decline in value as an object of exchange once supply exceeds demand. One way to keep the exchange value high for oneself is to get rid of competition, but this is a lengthy and painstaking process if undertaken legally and harshly punishable if undertaken by illegal means. Another way is to look for a different product or service to offer, or to improve significantly the existing product or service, in both cases ending up with something that is in insufficient supply on the market and thus would generate greater value through increased demand. It is highly doubtful that the Industrial Revolution - and the Digital Revolution that followed it - would have taken place without the forces of capitalist marketplace driving it forward.

As to being more callous and less capable of appreciating what is truly important in life, it is considerably easier to imagine someone who, through successful business dealings, has acquired enough of the basic necessities to have both time and resources to devote to charity, or the development of the arts, or anything else that modern society considers "truly important" than someone who barely keeps one's head above water financially. Living paycheck to paycheck, a person is not prone to appreciate what is "truly important" in life because at the end of the day, that person usually has neither resources nor energy to do so.

Even among those who behave charitably, it is not their benevolence that must be credited for it. People who do charity work like to be acknowledged for their deeds. Some want to be acclaimed publicly, while for others, it is a feeling of quiet personal satisfaction that suffices. For them, feelings that accompany such acknowledgements are a thing of value, to be exchanged for charitable work. In either case, therefore, it is "self-love" that drives these individuals, to a much greater degree than benevolence.