Too Much Specialisation and Exchange

Much of the prosperity that our world now enjoys comes from the productivity gains achieved by dividing work into smaller tasks that are performed by even more specialised workers.

The most valuable specialisation takes place within a local community through sharing by giving and receiving. The different gifts within the body of Christ are an example. The body is stronger and more effective when every member of the body fulfils their calling. Love and trust are important for allowing this to take place.

A free market allows greater specialisation and productivity by providing for exchange of goods and services with people we do not know. Trade can take place with people without needing to trust them.

Cheap transport by air, land and sea through containerisation has vastly increased the scope of specialisation.

There are limits to how far this specialisation should be pushed.

• When our activities are is totally specialised, work loses its meaning. We are created in the image of God. We are created with a need to create and build things, so mindless tasks are not fulfilling.

• As the specialisation increases, the cost of managing production processes increases. Extreme specialisation becomes very difficult to manage. Some businesses are find that supply chains that stretch to China are too hard to control.

• Local communities are vulnerable, if trade is disrupted by war or an increase in transport costs. If no one wants to buy the things we have specialised in producing and we have forgotten how to grow food, then we might starve.

• Some people will end up doing all the dirty work. For many electronic goods, the interesting design work is done in the United State and the dull manufacturing task are done in Chinese sweatshop. That’s okay for people living in the west, but in the future the design work may be done in China and the dull manufacturing could be done in sweatshops in Detroit.

• The western world now has more than enough wealth, so there is no need to keep on pushing for greater specialisation. We should perhaps settle for less specialisation, less wealth and stronger communities. We can make that change by changing our purchases.

Free Markets (12) - Best Method of Exchange

Every transaction in a free market provides a benefit to both parties. The reason is simple. If either the buyer or the seller thinks they will not benefit, the transaction will not proceed. This is quite amazing. A process that benefits every participant and harms no one really builds up the harmony in society. People who complain about free markets do not understand how markets work.

There are only four other ways that Bob could get John’s car.

1. Love. If Bob were John’s son, he might give him the car for free. Love is very generous, but it does not stretch very far. It is generally limited to close friends and families.
2. Compassion. John might feel sorry for Bob and decide to give him the car. Compassion reaches further than love, but is less generous.
3. Theft Bob could steal John’s car. This gives Bob what he wants, but John loses. The Bible forbids theft, so this is not viable option.
4. Force Bob could persuade someone bigger and tougher than John to force him to hand over the car. This method has been common throughout history and can take various forms. Bob might simply thump John. He might get a gang of friends to intimidate John into signing over the car. Bob could persuade the government to confiscate the car from John and hand it over to him.

All four options have something important in common: they are zero sum. In each case Bob benefits, but John is worse off. In the first two options John freely chooses to be worse off, so that is acceptable. He still has the right of veto. If he decides not to show love or compassion he can keep the car. If he is forced to love, it ceases to be love and becomes force. If John is forced to show compassion, the transaction stops being option 2 and becomes option 4.

This full series is at Markets and Morality.