We’ll start with what some people are pleased to call a contemporary parable:

• Why We Banned Legos (Rethinking Schools Online)

(Hat tip: Call me Ahab)

Here’s the quick version: a pair of “progressive-minded” teachers managed to take all the fun out of playing with Lego by turning it into a dubious analogue of a market. By declaring the experiment “wrong” every time they got results other than those they wanted, they eventually created a centrally-planned Lego economy, of which they’re very proud. They don’t seem to recognize that this is the Creationist model of “science”, not one which actually works.

Their model differs from the real world in two ways: finite resources (if one kid has access to more bricks, another necessarily has fewer), and no added value (none of the kids can take a brick and make it more valuable). This adds up to a zero-sum game.

(sigh)

It’s plenty obvious that free commerce is not a zero-sum game. I go to the liquor store to buy beer. I buy five bottles of Staropolskie Zlote for about ten bucks. I value the beer more than I value the ten bucks — else I wouldn’t have given the clerk my money. The liquor store values my ten bucks more than the beer — else they wouldn’t have sold it to me. We both come away from the exchange happier: I have my beer, they have their money. We both get what we wanted. The world is, in fact, a better place after that exchange than it was before… at least for me and for the liquor store.

If you’re a socialist desperate to make this a zero-sum transaction, you have two choices: futility (no-one benefits) or coercion (someone loses). In the first case, I’m no better off with my beer than I was without, and the liquor store’s no better off with my ten bucks than without. So, uh, why did we bother? I’m losing time and convenience when I take the bus to the liquor store; the store is losing money when it employs people to sell me beer. If neither of us got more out of the exchange than we put in, we wouldn’t do it. No-one’s forcing us to engage in beer-for-cash exchange.

Must be coercion, then.

If it is coercion, I’m in deep shit. After all, I’m a libertarian with strong Rothbardian tendencies; pretty much the only thing I’ll paint as morally wrong is aggressive force… which usually manifests itself as coercion. Read on then, dear friends, and find the shocking answer to the terrifying question: Is Matt a hypocrite?

So. I’m not being coerced into buying beer I’d rather not drink with money I’d rather not spend. The clerk at the liquor store isn’t being coerced — he’s making a decent wage. The owners and operators of the liquor store aren’t being coerced — they’re making a profit. If there’s coercion, it’s further up the pipeline.

The beer distributors aren’t being coerced — they’re making a profit. The shipping company that brings this delightful beer across from Europe are also making a profit, as is the brewery, as are the manufacturers of the brewery’s equipment and the farmers who raise the hops and barley (and anyone I’ve missed). My two bucks a bottle covers all of these people’s profits — not to mention a thundering herd of government bureaucrats and busybodies on both sides of the Atlantic — and still I’m coming out ahead on this exchange. Hell, I’d probably pay three bucks a bottle for Staropolskie Zlote and be pleased with the result.

If everyone involved in the transaction thinks it’s a good deal, who’s being coerced? Who’s losing?

This is the bit where most socialists blame some sort of nebulous “multinational corporate interest” or other. I can’t for the life of me figure out why it matters how big a corporation is if it’s involved in free exchange, but as the Lego story demonstrates (if you read between the lines), people will hate you simply because you have more shit than they do. This is apparently the fault of the hated, not the fault of the haters.

The remainder of the socialists involved will insist that someone’s being coerced without their knowledge… usually either the farmers and labourers (hammer and sickle, geddit?) or the consumer (me). Funny how the farmers and labourers and beer-drinkers can innocently think that they’re satisfied and free of will, only to have some dickhead with a liberal arts degree come along and shrilly insist that they’re wrong, they’re not as happy as they think they are, and only by giving said dickhead control over their praxeology can they be truly happy. (Not that most liberal-arts dickheads know what “praxeology” means — maybe this dickhead has a friend who majored in economics.)

Anyway.

Let’s have a look at the value added side of the argument for just a minute. Consider a farmer growing hops and barley. Now, hops is rather pretty at the right time of year, and barley isn’t bad in the right light either, but by themselves hops and barley growing in fields aren’t terribly useful. The farmer harvests the hops and barley, and suddenly they become more useful: now there’s a brewery in Zduńska Wola which wouldn’t buy the stuff in the farmer’s field, but is pleased to buy the harvested results. By harvesting the hops and barley, the farmer adds enough value to it that someone wants to buy it.

Now, of course, the brewery has the same problem. It can resell the hops and barley as it bought them, of course, but that doesn’t add much value — unless perhaps the brewery has put a great deal of effort into finding the best damn hops and barley ever (in which case it saves its customers that effort). Instead, this brewery — as you might guess — brews beer with the hops and (malted) barley. This adds value: many people are willing to pay much more for beer than they are for hops, barley, yeast, and water separately.

Something’s going on here. A certain quantity of hops and barley is now much more valuable as part of an alcoholic beverage than it was as plant components growing in a chunk of land. See, by adding well-directed effort, the farmer and then the brewer (and anyone in between) increased the value of these components. We have already diverged from the Lego example, where no-one could add value to a brick by transforming it into something else. In that case, the “producers” (the folks who picked bricks out of a bin) were also the consumers (the folks who used bricks). Those kids equate to the people (who doubtless exist) who grow their own hops, malt their own barley, and brew their own beer with their own yeast and water. That must be an exceedingly satisfying endeavour, but it is hardly the basis for an economy.

Well, unless they sell their beer. Which is just what the brewery does. If I’m not willing to brew my own beer from scratch, I may be willing (and I am!) to buy beer which someone else brews for me.

There’s a problem, though: I’m in Canada, and the beer is in Poland.

Can you see where this is going? One firm adds value by trucking the beer from the brewery to a port. Another firm adds value by shipping the beer across the Atlantic. A third firm adds value by shipping the beer across Canada, and yet a fourth firm adds value by providing a broad selection of beers in a relatively convenient place for my buying pleasure.

Then, as a grad student, I take this beer and turn it into geometry-processing algorithms… which themselves have value. (Well, unless you think that a virtual colonoscopy via MRI is no better than an actual colonoscopy via a cold metal tube with a camera on the end shoved up your ass.) Oh, sure, I could probably come up with the same insights without beer… but it would take longer, because I’d be less relaxed and spend more time bitching and less time building sparse graphs on the local maxima of support distance fields. (Just think how productive I’d be without socialists!)

This scenario isn’t possible — even by analogy — in the contrived “Lego town” example. It is, however, duplicated in just about every voluntary exchange made in this here real world.