Home Market Video

Why do we exchange things?

by Learn Liberty

If we each have a boxed lunch with the same sandwich, chips, a pickle, and a cookie, why would we consider trading items? Perhaps I prefer chips and you prefer cookies. Maybe I'll give you my cookie for your chips. Now both of us are happier with our lunches. This is one example of how exchange can make people better off even without increasing the total amount of wealth. Exchange helps correct mistakes in allocation and it makes everyone involved happier. Professor Michael C. Munger offers a few examples of how exchange can make people happier whether people have the same preferences or different preferences, the same stuff to start with or different stuff. The ability to make people better off by simple exchange may seem like magic, Munger says, but it's just markets.

Sugashane has the following to say on the subject:

Markets are this amazing organic machine that sorts out what best fits where, how much do of what we need, how much each thing should cost and any other unknown we may have on an individual level.

This is because a market doesn’t need leadership or guidance or any form of planning or even creation or assembly of the market. It only requires participation. So long as there are enough parties that are willing to participate in exchange, the market will filter through all the information and coordinate the rest of the details. It sounds like magic, but it’s not. It’s logic.

This phenomenon is one of my favorite things to introduce to people who are knew to economics or free market theory. It totally blows their mind at first, almost to the point that they don’t believe it or even deny it.


You might be interested in . . .

Have questions? Get answers!



You can make use of the following text and video to expand your knowledge and understanding of the topic covered in this unit.

A University Built By The Invisible Hand

Are Corporations People?

Capitalism In One Lesson

Capitalism Is NOT Imperialism

Capitalism Vs Statism

Competition And Cooperation

Do Women Earn Less Than Men?

Do You Want To Live In The World Of Atlas Shrugged?

Edgar The Exploiter

Does Trade Promote Peace?

Free Market Myths Debunked

How Free Is The “Free Market”?

How The Free Market Works

I, Pencil

I, Pencil

Liberty And Community: Commercial Societies

Market Anarchism Vs Market Statism

Myth Of The Free Market

Social Cooperation: Why Thieves Hate Free Markets

The Trouble With Bureaucracy

What Is Capitalism?

What Is The Free Market?

What Should We Think Of Chain Stores?

Why Do We Exchange Things?

Did you know that the creator of freeblr is on Minds?