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A Hippie Discovers Economics, And You’ll Never Guess What Happens Next!


A post from Facebook has been making the rounds, where I came across it by way of my Federalist colleague Scott Lincicome.

Here’s the mind-blowing argument: “If we each grow a large crop of different food, we could all trade with each other and eat for practically free.”

Where to start?

Well, for one thing, growing your own food isn’t exactly “free,” not even “practically free.” As anyone who has his own vegetable garden knows, it requires seeds, fertilizer, irrigation, weeding, protection from insects and birds and animals, and a lot of work. The cost may not all be measured in monetary terms, but it isn’t free. In fact, it’s notoriously easy for a vegetable garden to end up costing more money than it saves, which is why most of us do it just as a hobby. As one wag summed up this argument:

But let’s not pick this apart. Let’s take the idea seriously. Hey, what if we all became small farmers and traded with each other? As they say on the Internet: you’ll never guess what happened next.

Maybe instead of everybody growing the same things, we could all produce what we’re best at and trade with others for what we need. We could come up with a catchy name for this, like “division of labor.” And we would need somewhere to exchange these goods with each other, which we could call a “market.”

Don’t Stop There!

Maybe we could get even more specialized. Some people could devote themselves just to growing young plants in greenhouses in the spring for others to plant when the weather gets warmer. Or they could provide seeds for other people to use, or breed hybrids with better yields or other desirable characteristics.

Maybe some crops would grow better in different areas, or at different seasons.

And maybe some crops would grow better in different areas, or at different seasons. I’ll bet you can’t grow blackberries in the middle of winter, but there are other areas of the country, or of the world, where these things still grow even when they won’t grow in your front yard. Maybe you could trade with people who live in those places.

Still, crops come ripe at different times, so maybe we need a system where I can trade my spring harvest of peas for somebody else’s fall harvest of pumpkins. Maybe we could write this all down on little pieces of paper which we pass between us to make trades. Has anybody ever thought of that?

What about trading for things other than food, like tools and transportation? I think we’re going to need some medium of exchange, something that can be traded for whatever you need, even if you don’t know ahead of time what it is.

That solves another problem: we can come to an agreement about how many ears of corn can be traded for how many melons, or how many apples can be traded for one ladder. But imagine trying to keep all of those exchange rates in your head and organizing three- and four-way exchanges: corn for melons for apples for ladders. It would be much better to measure everything by one medium of exchange.

It would be the ultimate way of facilitating our little “sharing economy.” It’s like Uber, but for trade.

This Idea Could Change the World

But why stop there. We might find that everybody growing small front-yard gardens isn’t the most efficient way to do it. I mean, we’re trying to figure out how everyone can eat what they want “for practically free,” right? Maybe it would be more efficient for one person who has a lot of land to grow one really huge garden, kind of a like a farm, right? And he could buy really big equipment that could do a lot of work at once. And maybe a bunch of people could work for him, helping to plant the crop and maintain it and harvest it, and in exchange he would give them part of the harvest—or, you know, some of that medium of exchange we’re using.

Maybe if somebody had some of that medium of exchange saved up, they could distribute it to us workers.

Oh, but wait. We’ve got another problem. We can’t all just wait for the harvest to get rewarded for our work. I mean, we’ve got to eat now. Maybe if somebody had some of that medium of exchange saved up, they could distribute it to us workers, and arrange that we would return their savings back to them when the harvest comes in—with a little extra, you know, to make it worth their while to advance it to us.

We’re also going to need some really big machines, like tractors and harvesters, and things like trucks and railroads to ship tools and food back and forth. So maybe we could find people who had savings they could use to build those factories and railroads.

We could call that “capital” and this person who agrees to help us all out would be a “capitalist.”

By now, of course, you’ve caught on to what I’m doing here. If we start with the idea of people growing crops and trading with one another—as if it were some radical new idea, not the way things have worked for about 12,000 years since the invention of agriculture—and we follow it to its logical conclusion, we would end up reconstructing all of modern industrial capitalism.

So the story here is that a hippie accidentally stumbled upon the concepts of division of labor and trade and the science of economics. He came across all of it as if it were some weird new revelation that no one had ever thought of before, because clearly he has never thought about it before (and probably won’t, even now that he has stumbled across it).

Capitalism Is Organic

The point is not just to mock this particular person, although I have to admit that being totally ignorant about agriculture, economics, and history all at once is quite a feat. The point is that the development of modern industrial capitalism really was a logical, natural development continuing in a direct line from the very earliest, most primitive forms of production and trade. Specialization, markets, a medium of exchange (otherwise known as “money”), division of labor, economies of scale, savings, investment, credit, capital—all of it evolved naturally as solutions to problems that arose from a simple agrarian existence.

They want to stop the flow of human progress at some stage they find emotionally comforting.

Capitalism, in other words, is organic.

That was never the intent of the original post, not by a long shot. It appears to be from a Facebook page devoted to the notion that lawns are evil and should all be replaced by vegetable gardens. But that’s the thing about the muddle-headed pre-industrial nostalgia of the environmentalists. They want to stop the flow of human progress at some stage they find emotionally comforting—like Renaissance Faire enthusiasts trying to turn the entire world into one giant LARP—while they deny the natural extension of progress beyond that arbitrary point.

This really makes no sense, because when we let progress follow its natural course, guess what? The average American spends less than 7% of his income on food, compared to 40% or more in non-industrialized countries. Even among Americans, this is down more than half just in the last 50 years.

So that Internet post was right, after all. Thanks to division of labor and trade—and free-range capitalism—we really did end up eating for practically free.