I have always questioned myself if humans didn’t care to know if they were helping or hurting the market simply by being in it or was it only personal gain that matter?
In “The Two Faces of Adam Smith” Vernon Smith writes that “Smith’s other incredible insight was that every individual in making the annual revenue of society as great as he can neither intends to promote the public interest, nor knows how much he is promoting it.” People are usually happy if their desires and wants are met and in wide-ranging human beings have a selfish leaning of filling their own needs before others. Therefore it is very appealing that people participating in markets generally help the market, without even being aware of it. In fact, it is more likely that a person would be an impediment to a market if they tried to learn the market and play along with it. If people start questioning the market, they try to understand it, and therefore throw it off.
As a result “by pursuing his own interest he frequently promotes that of the society more effectively than when he really intends to promote it.” The realization that a person can ruin the market by focusing on it, and better it by not paying attention to it seems odd, but is true all the same.
It is human propensity to give something in return if you have received something. This tendency helps to better the market because people exchange and trade items that are “fair” on their own. It is a natural human response to receiving, and in most cases, especially considering future trades, people will not default.
For instance, in the Mediterranean culture giving and receiving are strongly upheld. If one family lends to another, it is absolutely essential that the second family returns the favor at some point. To not give a gift after receiving is looked down upon and can give a person a bad reputation, simply by not following through. This type of behavior is common in many cultures and is the basic reason why markets work: one must give in order to receive.
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What you say about each person working for his own self-interest but actually aiding the entire market reminds me of the “Competition as a Discovery Process” article. The merchants in this week’s experiment were driven to go to the outside market in order to increase their own profits. In turn, they had the potential to increase the profits of the entire village. They helped others by helping themselves. I see where you are going with the idea of “questioning the market” being a counterproductive act if it leads to a desire for centralization and control of the market. However, I think there should be a lot of “questioning” going on: this is enacted through people looking for niches to be filled and experimentation. I also don’t know if it is so much a human propensity to want to give something in return as much as it is a convention we are raised with. People have to, as you say, “consider the future,” which is what Hayley addressed in her post. That is not so much an ingrained need to have a fair exchange as it is a means by which to continue trade relations, which have allowed societies with this convention to advance and survive.
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