I agree with Chris Dillow’s point about markets.

There is one criticism of markets that has often baffled me. The idea that free markets are bad because they promote “individualism” and their participants are “selfish” does not make sense.

Even putting aside the idea that selfishness might be a good thing (a subject that I am ambivalent about), I do not really see where where markets got this “selfishly individualistic” image from. Anybody who is truly selfish would surely not last long in a market system.

In Adam Smith’s world, the bread maker gets what he wants by thinking about what his customer wants. In return, the customer gets what he wants by thinking about what the bread maker wants.

While the bread maker’s ultimate goal — to make money — is selfish (as is the customer’s), neither party gets anywhere without considering the other. The baker knows that he can make more money by pleasing his customers, so he has to think about what his customers want. By the same token, the customer will not get his bread unless he thinks about what the bread maker wants.

So in this system you cannot get what you want if you are selfish. This sounds like a paradox. But the fact that you can only get what you want by taking into account what others want is part of the genius of the market system.

The above transaction involving the bread maker is obviously an extremely simple example which doesn’t look too impressive on its own. But most people go through several such situations every day. I am sure both Adam Smith and Friedrich Hayek saw markets as an intertwining network of social interaction. In such a system, you cannot possibly be an individualist! You cannot trade with yourself, can you?

Meanwhile, it is much easier to be a selfish individualist under the supposedly caring socialist system. This kind of arrangement has the potential to allow people to get by simply by sitting around doing nothing except watching television all day. They could spend their time without having a single generous thought about anyone else, and they could still pick up a benefits cheque at the end of the day.

While we are on the subject, here is another reason why markets should be celebrated rather than criticised. They can force bigots to face up to their prejudices.

Think of a racist who likes to buy a newspaper in the morning. If his local cornershop is run by a Pakistani businessman, the racist is forced to think twice. Does he swallow his pride and trade with a Pakistani, or will he spend extra energy and time going to a shop that is run by a white person but is further down the road?

Of course, the racist may well still decide to go to the shop that is further away. But this would make him a fool who ends up wasting a lot of time and energy because of a pretty prejudice.

The same applies to people who spend their time complaining about immigration but turn out to be more than happy to pay Polish immigrants whenever their house needs building work done.

Update: I should point out, in case it isn’t clear, that this is not meant to say that markets are perfect. Just that some of the arguments against it do not make sense.