Leading the Revival of Individualism & Self Reliance

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Individualism Has A Bad Name, But It’s The Best Philosophy For Society.

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We include individualism in our name, so it’s good to boldly re-assert the philosophy behind it from time to time. This post is a precis of F.A. Hayeks’s famous essay Individualism: True And False. It’s available free online in pdf form in a larger group of essays titled Individualism And Economic Order.

Individualism has a bad name. It has become a term that no longer communicates what it originally did, having been distorted by its collectivist and socialist opponents into a caricature of selfishness, uncharitableness, and malevolence.

True individualism as a meritorious personal philosophy has a long and distinguished history, going back to John Locke and Adam Smith and Alexis de Tocqueville. What are its essential characteristics?

First, it concerns how people exist together in society. It has nothing to do with isolated or self-contained individuals. In fact, the only way to understand society is through our understanding of individual actions directed toward other people and guided by expectations of others’ behavior. Individualism offers the opposite theory of society to collectivism, which treats society as a unit, existing independently of the individuals who compose it.

By tracing the effects of individual actions, we understand how many of our institutions – such as money, markets, and education – arose through the independent interactions of human behavior and not through the grand designs of kings, presidents, parliaments or legislative bodies. The spontaneous collaboration of free individuals often creates things that are greater than the individuals themselves can comprehend.

The social results of these individual interactions include economic prosperity, abundance rather than scarcity, safety, security, peace, law and order, learning, and health.

This is the case because reason is always fully and equally available to all individuals. When left free to collaborate and co-ordinate with each other, people often achieve more than they could individually, and more than conscious design by a powerful or privileged elite could ever achieve. People do not need a “social contract” or to delegate their individual powers to a government or planning body. Great achievements will emerge from free association, free collaboration, and free co-ordination. The social system of individualism does not require the brilliance or greatness of any boss or ruler. It results from unleashing free individuals in all their variety and complexity.

Some of the confusion about individualism stems from the famous Adam Smith quote: “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own self-interest”. The term “self-interest” became translated as a kind of adversary capitalism, the producer exploiting the consumer. But back then, the “self” in whom the butcher etc. was interested was taken to include family, friends, and community – people for whom the butcher cared. Individuals know only a tiny part of the whole society and it is that tiny part that enters into their motives – the sphere they know is where there are immediate effects of their actions.

The individual should be free to make full use of his or her knowledge and skill, guided by concern for the particular things and people of which he or she knows and about which he or she cares. As markets grow and extend, the individual is able to contribute in an extended manner as producer and consumer, even though his knowledge extends no further than the immediate sphere. Individuals strive for what they think is desirable, and markets transmit this striving as exchange and trade that benefits many. The unlimited variety of human gifts and skills is orchestrated by markets even though all the members of society who benefit are unaware of most individuals’ contributions.

Markets exert hard discipline. If the individual is to be free to choose, it is inevitable that he or she should bear the risk attaching to that choice and that in consequence be rewarded, not according to the goodness or badness of their intentions, but solely on the basis of the value of the results to others. We must face the fact that retaining individual freedom is incompatible with a full satisfaction of our views of distributive justice. Individuals must be ready to adjust to changes that may profoundly affect their fortunes and opportunities, even when the causes of those changes are unintelligible to them, or might seem like blind forces.

The alternative to market individualism is despotism and the imposition of the orders of a superior power or group. Centralization is one way in which this comes about. And so is democracy, insofar as it imposes the binding will of the majority on all individuals. The merit of competition in free markets is precisely that it gives the minority a chance to prevail. It can also be the result of trying to make people equal as distinct from treating them equally. De Tocqueville wrote: “Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.”

Individualism teaches us that society is greater than the individual only insofar as it is free.

The Market Is A Vast Network Of People Being Kind To Other People.

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My wife has been traveling for a few days, so I’ve been alone with the kids for a few days. It’s a little outside my normal routine, but it was made incomparably easier by all the people who helped me along the way. There’s my mother-in-law, obviously, who kept the kids overnight a few days ago because I had a trip that overlapped with my wife’s, but there are and were countless people working behind the scenes who helped this weekend go so well.

It was spectacular in its ordinariness — or at least in what we think of as ordinariness. Virtually every minute was an exercise in tiny miracles turned into the mundane. A lot of unnoticed and unappreciated hands and minds have gone into making our new normal. The beauty of the market economy is that we don’t need to know or care that much about one another to cooperate to mutual advantage.

Consider the sources of the energy powering the computer on which I’m writing this, the dishwasher running in the kitchen, the washer and dryer running in the laundry room, and the electronic devices on which the kids have spent an inordinate amount of time over the last few days. Someone mined the coal that feeds the power plant.

Someone else invented the machinery that another person used to refine the oil that yet another person extracted from the ground into the gasoline that powers the car in which the kids and I have driven around over the last few days. I don’t have to know anything about them, and they don’t have to know anything about me — and yet we are able to make one another better off through a series of transactions summarized in my power bill and a receipt from the gas station.

Or consider the food we ate. We’ll sometimes pray that God would “bless the hands that prepared” whatever we’re about to eat. Those hands are many. Somewhere, a rancher raised cows that a local butcher I don’t know turned into the ground beef that I combined with the seasoning formulated, processed, packaged, and shipped by a veritable army of other people I don’t know so that I could in turn combine the resulting seasoned ground beef with cheese produced, shredded, packaged, and shipped by an army of people I don’t know and sour cream produced, packaged, and shipped by yet another army of people I don’t know in order to have delicious tacos for dinner. Someone grew beans that were processed, packaged, shipped, and available for me at a moment’s notice when my daughter reminded me that I had forgotten to buy some earlier. The sour cream, incidentally, came in a squeezable tube, which made it ever-so-slightly easier to regulate the amount of sour cream we put on each taco and which reduced by one the number of spoons we had to use and wash.

Part of what makes this remarkable is that we take it all for granted. We should wonder in absolute astonishment along with the 19th-century French economist Bastiat how “Paris gets fed,” or in this case, how I and my kids get fed (perhaps a little too much — Smithian self-command misses a foothold in my life on some margins, most of them gastronomic). It works because we have institutions that reward people for helping others achieve their own interests. Somewhere, someone designed a squeezable tube for sour cream. Did he do so because he was thinking about me or because he was thinking about how it would delight taco-eating parents and children everywhere? Almost certainly not. He was doing it because he had his own interests to look after — his own family, his own community, his own church, and so on.

Of course, you may have read the last couple of sentences and thought, “How do you know it was a he?” I don’t, and that’s a good point. Maybe the tube was designed by a she, or even someone who prefers other pronouns. Maybe the sour cream–tube designer is single — or in a polyamorous open marriage. Maybe s/x/z/he doesn’t pray the way I do, or even pray at all. Perhaps we don’t share the same tastes in music, games, and poetry. Or maybe we’d be best friends if we met. One beauty of a free market is that it brings together people who may not otherwise have any reason to come together and who may not even like one another or approve of one another’s lifestyles and allows them to cooperate to mutual advantage — and we can do so with essentially no knowledge about one another.

It’s an example of something F.A. Hayek discussed in his classic paper “The Use of Knowledge in Society.” Hayek quoted Alfred North Whitehead: “It is a profoundly erroneous truism, repeated by all copy-books and by eminent people when they are making speeches, that we should cultivate the habit of thinking of what we are doing. The precise opposite is the case. Civilization advances by extending the number of important operations which we can perform without thinking about them.”

Countless minds and countless hands have contributed to the slow march of civilization and helped to create a modern world (one fraught with problems, which I don’t minimize) in which I can perform innumerable operations closed off to previous generations without thinking about them. As Russell Roberts put it, “Love locally, trade globally.” As it gets easier to do the latter, it gets easier to do the former.

Or as Jeffrey Tucker likes to say, the market loves you, so you should love it back.

 

Choice Is What Sets Capitalism Apart, Not Competition.

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Capitalism has often been described by as “a system of competition” by its adversaries, or a system “based on competition.” Naturally, this assertion is usually coupled with a spirited oration on how this “tooth n’ nail” competition psychologically corrupts us – pitting man against man in a “race to the bottom.”

Many of capitalism’s most vocal advocates have, themselves, imbibed this premise uncritically. They leap to a fervent defenses of competition, extolling its virtues — real or perceived. In my view, this is a mistake. To accept without evaluation the presupposition that capitalism is a system of competition — in contrast to other hypothetical systems of cooperation (namely socialism and communism) — is to frame the very debate itself in leftist terms and play the game on an unfairly tilted game-board.

Capitalism Is About Voluntary Exchange.

This is not to say that competition is necessarily an evil either. The problem is that defining capitalism as “a system of competition” — in comparison to other systems which are supposedly “cooperative” — is a rhetorical ploy. Those who profess it may honestly believe it to be so, but it’s not true. Capitalism is not “a system of competition.” any more than any other system. Capitalism (at least in its free-market, laissez faire ideal) is a system of the voluntary exchange of goods and services in the absence of physical coercion, theft, compulsion or fraud, predicated upon the fundamental right to own and accumulate property.

Or, for brevity: Capitalism is a system of voluntary exchange, predicated upon the right to own property.

One might even venture, therefore, that it is capitalism that is the system most characterized by cooperation.

Because Scarcity Exists, Competition Is Inherent In Any System.

After all, it is not the presence of private property or the free exchange of goods that creates the presence of competition in a capitalist system. Scarcity causes that. In any situation of scarcity of resources, there is bound to be some form of competition over those resources (as well as over how those resources are allocated).

If we have a system that allows voluntary exchange, some competition is bound to arise out of that, but that would happen under any system. Even if you had a completely communistic society, which was centrally planned and involved no exchange of money whatsoever, people’s time would still be limited. If you were a filmmaker in this society, you would probably want as many people to see your films as possible. As would every other film-maker. This would put you at least somewhat in competition with them. Does this mean that communism, too, is a system of competition? Certainly you would be competing for the only customer — the sponsorship of the state. Corruption and cronyism would surely be the result. Who gets their film made and who doesn’t? Who allocates the highly desirable job of being a film-maker over the undesirable job of being a street-sweeper or refuse collector, and how can their favor be courted? The competition will commence, but instead of being decided by the free and voluntary exchange of film-goers, investors and film-makers it will be decided by someone else, I would argue, in a rather more authoritarian fashion.

Competition is just a feature of living in a world of scarcity, and would exist in any system. Socialism cannot do away with competition – nor can any other system.

Opportunity Cost Means Competition Is Everywhere.

The implications of these facts reach into any circumstances of scarcity beyond the economy. For example, supposing two friends each invite me over to dinner of an evening, I might have to make a choice between their invitations which will result in one of them losing out on my company. Does this then mean that friendship is a system of competition?

Similarly, on the market, our time and resources are limited. We make value-based judgments about choices of products and services to consume based upon what utility we think they will bring to us, sacrificing some options to others. Maybe we will choose a coffee shop based on which has the best tasting coffee, or maybe based on which provides the nicest atmosphere, or maybe based on which is closest, or where the customer service is best, or which is the cheapest, or which we have gone to the longest and therefore find familiar, or perhaps even based on which we think has the best ethos — for example, because they are a social enterprise that only sells fair trade produce and deliberately seeks to employ and train disadvantaged people. The fact is we decide. Each service provider believes they will benefit from our custom and will make attempts to attract us, placing an upward pressure on the quality of services and a downward pressure on price which we may correctly identify as a form of competition.

The Benefits of Free Choice

The miraculous wonder we miss when we focus our attention upon the competition which derives from choice is the ability to choose itself.

In fact, there is actually far more cooperation involved in providing people with goods and services than there is competition. To accomplish anything in the marketplace, one must  cooperate with buyers, sellers, managers, employees, suppliers, customers, advertisers, promoters, marketers, collective buyers, and so on. Leonard E. Read, founder of the Foundation for Economic Education, illustrated this in his most famous essay, I, Pencil, first published in 1958. In it he noted that not a single person on the face of this earth knows how to make a pencil. When you include those who manufacture and transport the equipment involved in these processes you cannot help but marvel at the fact that millions of people have a hand in its creation. They are working in concert, in cooperation, and as a result you can get a pencil for pennies.

Market Competition Brings Choice Out of Scarcity.

Because people make choices with scarce resources and limited time, competition will be an inherent part of any economic system so long as there is scarcity. The primary feature of free market capitalism is not competition, but choice. Rather than moderate the amount of competition in an economy, state intervention will replace competition to serve customers and convince them to voluntarily spend their money on a wide array of ever-expanding goods and services. We can contrast this with other systems in which competition rages over who can gain the favor of those who control the levers of government. That is where the real “tooth and nail” begins.

This article originally appeared at mises.org. Edited for length. Antony Sammeroff blogs on economic issues at http://seeingnotseen.blogspot.com.

The Slipstream of the Tour de France Peloton and the Spontaneous Order of Free Markets Pull Everyone Along.

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Every July, France hosts one of the world’s greatest sports spectacles, Le Tour de France, and it offers something for almost all sporting and social appetites. For fans of individual sports there is the points leader and the king of the mountains. For fans of team sports there is the famous yellow jersey and the overall team competition. For entrepreneurs there are races within the race, constant innovation, and rewards for superior specialists. For progressives there is the equality of the peloton, the sacrifice of the domestiques, and the meager financial rewards for all but the elites.

The Wonders of Spontaneous Order

Unlike international soccer, cycling has not gained a lot of popularity or understanding (whichever comes first) in the United States, so here is a little in the way of explanation. The peloton is the big group of cyclists that is comprised of all teams and most of the riders at any given time. What looks like a random pack with lots of colors is usually well organized, and a wonderful example of spontaneous order – no one planned it. Every rider knows their individual role, but not the designs of the other riders. And each individual’s role depends on their team’s goals for the day, the moment they are in, and breakdowns in their plan so far.

A great way to understand the peloton is from the front. There, viewers can see the teams that are setting the pace, and see their colors lined up in single file behind their leader. These are the the trains, and the team leader will never be the locomotive. He is being protected and enjoying the slipstream; conserving energy for the mountains and the overall victory in Paris. The organization of the peloton falls into disarray when winds shift, roads steepen, riders attack, or riders crash (usually in the middle or rear of the peloton, it’s safer in front). That is the uncertainty of the future, yet order always returns with a different network of collaborators at a future unplanned moment.

Of Specialization and the Division of Labor

Within each team there is the team leader, the climbers, the sprinters, the generalists, the time trialists, and the domestiques. And it is possible to switch roles on any given day depending on the team’s goals. Those are dictated by the day’s terrain – flat, mountains, or rolling hills, and injuries. The term GC rider is the team leader being protected in order to stay in contention for the for the general classification victory, meaning the overall win. To have a rider on the GC podium in Paris is a major team victory. The GC guys will never endanger themselves in sprint finishes. However they will contend for mountain stage wins as that is where precious time is won. The sprinters are never GC guys. Their thing is individual stage wins on days set up for sprinters.

Not all teams contend for the three week GC victory, but they all contend for daily stage wins. On mountain stages, the sprinters become domestiques or fall off the back. The generalists do it all, as the name implies. They are competitive sprinters, good climbers, and reliable in the peloton regardless of the terrain. Today’s premier generalist, and the overall rider that’s most fun to watch, is Peter Sagan of Slovakia. A young man with a vibrant sense of life.

Specialization and the division of labor offer great value in the sport of professional cycling in the same way they offer great value in the sport of human life on planet earth. They are the product of having a long-term vision, anticipating the future, and deferring immediate rewards. Not only does this attitude lead to success in the long and arduous competition that is the Tour de France; according to economics professor Saifedean Ammous, it also leads to cultural and artistic enrichment for entire societies.

The Allegory of the Peloton

Americans can easily relate to the idea of team leaders and specialists, but a domestique? Their role is to protect the team leader in the peloton, lead the sprinters toward the finish, and shepherd the specialists back to the peloton if they crash. The English translation is servant. But while they don’t make headlines, they don’t resemble servants either. Instead of building socialist utopias like the horses described in Animal Farm, they are more like the steel workers hired by capitalist Henry Rearden in Atlas Shrugged. They are the best at what they do, prideful of their skill and integrity, and compensated accordingly. Domestiques can also be upwardly mobile, servants to socialist utopias not so much.

If social justice activists could organize a peloton, the exploiters would be placed at the front and create the slipstream. Their victims would be pulled along so that everyone enjoys the same outcome, so long as the entire group behaves into eternity. Free market advocates would just leave it alone; it is the equivalent of a complex system working efficiently. Every participant is pursuing their own rational self-interest and they all function in harmonious rhythm. The peloton is a temporary phenomenon that serves the needs of its riders at the moment. It cannot be rigid, planned, or controlled because there will always be a break-away group of riders that symbolize new ideas and innovation. No authoritarian could ever anticipate this. A free market, like its allegorical peloton, is flexible and ever-changing.

To summarize, the peloton is a network of voluntary cooperation that can’t be improved. Its cyclists have a long-term vision that the group does not. Individually, they have traded immediate rewards for intense physical and mental training; the payoff being greater future rewards. This attitude is natural and necessary for the culture of cooperation that is the peloton, and in a larger sense, all peaceful and prosperous human endeavor. All riders have a vested interest the success of their fellow cyclists. This prevents crashes in the short run and inevitably leads to greater potential rewards for everyone in the long run. So enjoy the spectacle of Le Tour, appreciate the elegance of its various forms, and understand the bright future symbolized by its spontaneous order.

 

 

Why Economists Don’t Understand People And How It Causes Them To Make Mistakes.

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Economists are strange. Their science is supposedly about how we human beings interact in the economic sphere of our lives – working, providing service to others, buying and selling and exchanging in the marketplace, saving and investing, sharing information and communicating in general. We humans make the decisions that are implicit in all those activities based on our subjective individual values, and our decisions are tinged with emotions, often idiosyncratic and not necessarily consistent. How we feel determines what we do.

From those ingredients, economists insist on making mathematical models, populating charts and graphs and computerizing functions they call demand schedules and utility functions. Huh?

When the scenarios and predictions from this math go awry, they tend to blame the human being whom they treat as subjects in their experiments, or, worse still, as “consumers”, as if we did not have any other useful purpose.

Sometimes they insult us. For example, Arnold Kling accuses us of tribalism, which he defines as “hostile and suspicious toward people who are unfamiliar”. In economics, that’s so absurd. The entire economic system rests on collaboration with people we don’t know. When you buy a package of Triscuits or a jug of Tide at the supermarket, you are collaborating with untold thousands – farmers and growers, makers of chemicals, manufacturers and people who make the machines that make the products, truckers, loaders and unloaders, shelf-stockers and checkout clerks and accountants and marketers. They all want you to have a good experience, to have your needs met and to come back again and again. Hostile and suspicious? Hardly.

Here are a few attributes of we humans in the economic realm that economists should think of as primary.

We are collaborative.

Economic tribalism just does not exist. A boat owner in Miami can collaborate with the economic community of Alibaba to find a replacement part, by searching through all the relevant manufacturers in China, checking specs and part numbers, making a purchase and triggering the supply chain that brings the part from China to the US mainland to the purchaser’s boat at dockside, with guaranteed quality (or money refunded) and three-day delivery and low cost. It’s not that the boat owner is collaborating with Jack Ma personally, but collaboration – the co-operative effort to go to great lengths to meet the customer’s exact need at low cost and high speed responsiveness – is the built-in norm. There is trust and positive expectation built in to the entire exchange process. This condition is general and widespread today. Economists talk about individuals pursuing their own self-interest, but, in fact, their interest is in making the system work, and making sure their own contribution to it meets the standard of their customers (or employers), so that they get suitably rewarded. We all want to build up trust and a good reputation. We want to be liked and respected and tribalism and pure self-interest is not going to take us there.

We act on our moral values.

Economists treat us as what they term “maximizers”. They believe we strive for as much income and wealth as we can, pushing others out of the way to get them. They think we want to consume as much as we can, as conspicuously as we can. They tell us our self-respect comes from success at these behaviors and that we are envious of those who accumulate more than us and disdainful of those who don’t. These, they believe, are our motivations.

Does anyone you know behave like that, or think like that? In fact, the opposite is generally the case. People make their decisions based on the values they hold most dear. Those might be family values related to happiness, health and economic security. Or they may be the achievement ethics of hard work and duty. Or they may be broader values regarding helping others, or even saving the world through charity and conservation. All the economic choices people make are shaped by their values. Hostility and suspicion are not part of the economic calculus.

On Econtalk recently, Russ Roberts (with a nod to Jeremy Bentham) cited as economic motivators, among other things, the pleasure of being on good terms with others; the pleasures of a good name, the desire for distinction; the desire to be admired; and Adam Smith’s locution that we desire “not only to be loved, but to be lovely”. At least Dr. Roberts’ thinking is right.

We like to work.

Another term of economics is “disutility of work”, by which economists mean to say that we humans don’t like work and will do everything we can to avoid it. Yet from the time we were children doing our homework, we knew the opposite to be the case. All our incentives, both economic and cultural, not to mention the goading of our parents, are clearly in favor of work. We love to work. It’s dignified, even noble; it generates rewards, both financial and psychic. The profit motive drives us, and it profits us to work.

We Do Best In A Self-Governing System.

Economists are generally in favor of government regulation and government intervention in the economic activities of citizens. They think of the economy as a machine and themselves as the Ph. D. engineers best qualified to manage and maintain it.

But we are not cogs in the machine. We are collaborative, values-driven, hard working individuals. As human beings, we evolved, as Darwin discovered, to the biological supremacy we are in today. Many more biological systems exhibit this energy of spontaneous order, evolving to high degrees of benefit for all members. The economy is a similar biological system. The system-level outcomes of our interactions along vectors of subjective values, individual market exchanges, emotions and idiosyncrasies are impossible to predict and futile to try to plan. The energy at the core of our dynamic economic system is competition, which is a process of discovery: finding out which people and which processes can serve others best with the highest quality and lowest prices. We do not know in advance which individuals are going to do best in this competition. As F.A. Hayek put it (in Law, Legislation and Liberty Vol 3)

“Indeed, competition is of value precisely because it constitutes a discovery procedure which we would not need if we could predict its results.” The economist’s “artificially constructed models ….are interesting only in the instances where he cannot test them because he does not possess that knowledge that he would need.”

All planning, all economic legislation, and all hierarchical ordering of the process of entrepreneurial competition are impositions that can only restrict the dynamics and limit the good outcomes of the value-creating process.

Economics Is Life.

The principles of economics point us towards the good life, well-lived. It’s only economists who fail to understand this.

 

 

Collaboration Has Replaced Competition In The Capitalist Lexicon. Maybe Now The Anti-Capitalists Will Come Around.

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One of the attributes of the anti-capitalist mentality is a tragic misunderstanding of the concept of competition. The enemies of capitalism describe competition as a never-ending dog-eat-dog slasher movie, in which the most vicious weaponized players utilize uncompromised tactics in destroying any entity that vies with them for market share or revenue. They see capitalism as red in tooth and claw, to quote Tennyson.

Metaphors Influence Our Beliefs And Our Behaviors.

Metaphors are important ways we shape our understanding, and they influence our behavior. The language of war becomes the language of business: Marketing Warfare was the title for a popular 1980’s business strategy book, and Sun Tzu’s The Art Of War was fashionable to quote in the 1990’s. Today, a book like Red Team tells us to refer to anyone who doesn’t think like us as The Enemy.

This kind of talk about competition is a perversion of economics. True economics is an information system in which consumers provide feedback to producers about which goods and services please them and which do not. Positive feedback results in more production of those services that please; some entrepreneurs will seek and find ways to make those services even more pleasing, at either higher quality or lower cost or, sometimes, both. This is the true form of competition.

Negative feedback tells producers that their efforts did not quite hit the mark. Consumers have found that they can fulfill their needs better via another service from another provider. They don’t buy the one that they deem inferior. Producers that are not favored by consumer acceptance have a choice of responses. Maybe they decide to shift businesses and move into a field where they can do a better job of earning consumer approval. Maybe they look for ways to further improve their current offering to ask again for consumer adoption and purchase. In any case, the negative feedback function of the consumer economy results in improvement of the consumer experience.

Entrepreneurs And Corporations Are Servants Of Consumers.

The consumer is boss. A tough boss. The consumer insists that their demands are met, otherwise they move on to an alternative offering. The successful entrepreneur is not an ogre of aggressive and vindictive market behavior. He or she is what Ludwig von Mises described as

“a servant of the consumers, bound to comply with their wishes. He cannot indulge his own whims and fancies. But his customers’ whims and fancies are for him ultimate law. He is under the necessity of adjusting his conduct to the demand of the consumers.”

Capitalism is best thought of as a system of co-ordination, bringing consumer demand and producer output into alignment. It’s a system of dynamic efficiency, using feedback to get better and better at service.

Competition Is The Wrong Metaphor For The Networked Economy.

Now that networks are the common organizational form for business, and communications across networks is becoming faster, more accurate, and more available to all, the system of dynamic efficiency is changing in significant ways.

For example, individuals will not compete for jobs (although they might still use that metaphor if they don’t refine their network strategies and skills sufficiently, and feel like they “lost” opportunities). The integration of the right people in the right jobs exercising the right skills in the right project will be a task for profile matching software, not interviewees jousting with interviewers. The profile-matching bot of a project will sort through individual profiles to find the best match and secure a new member for the project team. It’s important for individuals not to use the “compete” metaphor, but its opposite, the “uniqueness” metaphor. How do my skills and experience make me unique? How can I best communicate my uniqueness?

Similarly, commercial strategy will no longer use the metaphor of competition and fighting for market share, in constructs like “ Where To Play, How To Win”. Firms will be asking the network economy questions, “Where Do We Fit In”” and “How Can We Contribute?” They’ll find answers based on their own uniqueness in meeting the specific needs of a highly specific target audience. They won’t compete, they’ll serve. Governments call this unique service offering monopoly. Peter Thiel called it the only sane way to build a business.

Entire economic sub-systems will adopt this new metaphor and become re-shaped and rebalanced around customer-centricity. Healthcare is a great example. As consumers take more and more control of their own healthcare data, such as their own individual DNA map, and become empowered to make their own decisions about which medical services to select, the matching process will revolve more around which providers can offer for consideration the service attributes and knowledge that are most highly customized to the individual patient. The patient chooses. This is not “competition” it is collaboration between patient and provider to discover the best match of unique service to unique needs. These knowledge-mediated exchanges will happen millions and billions of times, and the healthcare service provider universe will evolve into a finely tuned community of unique (i.e. non-competitive) suppliers of customization to a unique set of patients.

We Should Adopt The Collaboration Metaphor, Based On Interpersonal Empathy.

The collaboration metaphor extends to the patient community. Patients will exchange their learning and their experiences with fellow-patients through a rating system or some similar kind of knowledge sharing. This is becoming standard practice in the platform delivery of service, knowledge, and information from amazon.com to tripadvisor.com.

Dog-eat-dog is no longer a valid metaphor for commercial rivalry to improve the customer experience. Competition is a term to be struck from the lexicon of capitalism. Collaboration is a better, and more applicable term.  It functions as a result of the most important attribute of service: empathy.

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.

(Adam Smith, The Theory Of Moral Sentiments, 1759.)

 

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