1. Value is in the mind, not within objects.
Value is not a property of objects or a quality they possess. Although we talk of objects “having value,” we mean that we value them. Value is in the mind of the person contemplating the object, not in the object itself. If value resided in things, it could theoretically be measured objectively and we would all agree on what it was. There would then be no trade, for exchange takes place when each person values what the other person has more than they value what they are offering in exchange. A trade gives each of them something they value more, and thus wealth is created by the exchange. When people make the mistake of supposing that value resides in objects, they ask how it arrived there, and come up with fallacious ideas such as Marx’s labour theory of value. An object can take masses of labour to produce, but if no-one values it, it will be worthless.
2. Time must be factored into activities.
Time must be factored into economic transactions. I could read a book today or read it tomorrow. If I choose to read it tomorrow, I forego the pleasure of a day spent contemplating its wisdom and being stimulated by its insights. I value the activity less if it is in the future. If I postpone gratification I should be compensated for doing so. There is a risk element, too, in that if I postpone a pleasure, circumstances may make it unavailable in future and I will have lost out by delaying my enjoyment. From this notion that present pleasures are valued more than future ones comes the idea of interest, or being compensated for doing without present enjoyment in return for receiving more enjoyment later. And from this arises the notion of investment, of setting aside funds that could bring gratification now, and using them instead to bring more gratification later. This is the essence of capitalism, of using funds as capital, not to bring gratification now, but to increase future rewards.
3. Imperfection abounds.
The world of human activity is not characterized by neatness and perfection. It is not represented by simple, pure principles in action. On the contrary, it is messy, and it changes from moment to moment. In the real world there is no perfect competition and no perfect information. People act rationally sometimes, and not at others. They sometimes change their minds and behave differently. Society is not perfectible, and nor is human nature. People are motivated sometimes by worthy aims, and at other times they show less admirable traits. This imperfection should be recognized and admitted so that it can be coped with, and so that ways might be found to minimize any baleful effects it might generate.
4. Compare the present with the past rather than with an imagined and hypothetical future.
Free market economists tend to think the present is better than the past. People live longer. Life expectancy, which was about 30 years for millennia of human existence, is now at 68, and greater still in advanced countries. Death of mothers in childbirth is a tiny fraction of what it was just over a century ago, and child mortality in infancy is minimal compared to what it was. Major diseases have been conquered, and fewer die of malnutrition than ever did. Fewer live lives at or below subsistence, and more have access to healthcare and education than did in previous ages. By many measures the present is better than the past. Instead of comparing it with a hypothetic future of an imagined world, neo-liberals compare it with the past, inspect what has made it better, and try to do more of what has worked in order to make the future better still.
5. The outcome of spontaneous interaction is better than a preconceived goal.
When people make choices, including economic ones, the outcome produced by those millions of interactions will contain more information and allow more different goals to be met than any brought about by planners thinking one up. The planners are few and they dream up a future that satisfies their own aims. Those freely interacting are many, and they act to produce a future that allows more of their own goals to be achieved. The spontaneous society not only results from more minds and more information, it also reacts faster and is quicker to cope with crises.
6. Poorer peoples become richer by creating wealth, not by redistributing it.
The world’s wealth is not a fixed supply to be shared out according to some idea of what is just. Wealth is created by exchange. When people trade what they value less for what they value more, wealth is increased. Development aid redistributes a little wealth, whereas trade creates a great deal of it. No poor country has become rich through aid, and none has done it without trade. To help poorer countries on that upward path, richer countries should open their markets and buy what they produce.
7. Life before the industrial revolution was far from idyllic.
Although some conservatives and environmentalists have a rosy view of Britain’s pre-industrial past, and praise what they call “the measured rhythm of rural life,” the reality was of abject subsistence for most, accompanied by squalor, disease and early death. Most people worked on the land from dawn till dusk, doing back-breaking work and living in primitive and filthy conditions. Most had no margin, so bad harvests or severe winters could bring starvation. The industrial revolution brought a step up in living standards. What we now regard as poor and unsanitary housing was an improvement from their rural squalor, and wages gradually enabled them to afford decent clothes, china dishes and household items. The industrial revolution brought mass production and affordable items, and created the wealth that raised living standards.
8. Economic growth is a good thing and there are no limits to it.
Economic growth brings the opportunities to satisfy our wants. It enables us to pay for medical care and sanitation, and for education. It funds art galleries, libraries and concert halls as well as meeting our material needs. Although some critics say we will run out of resources, our ability to access new sources of them as technology advances is increasing faster than our use of them. The same is also true of our development of substitutes. Technology is becoming smarter, too, using fewer resources for its outputs. Growth can continue to bring more opportunities and greater security to more and more people.
9. Globalization has brought huge benefits to large numbers across the world.
Globalization has brought millions of people who previously lived fairly isolated, subsistence lives onto world markets. They have been able to sell their labour and their produce to distant buyers and to join in the wealth-creation process that lifts people above the struggle for survival and into a world of greater opportunities. Although some praise buying locally, it is buying globally that uses resources efficiently and enriches more people. As Adam Smith said, we could make wine in Scotland very expensively, but if we buy cheaper French wines it leaves us money left over to spend on other things. Globalization has enriched, and is still enriching, the world.
10. The world is not reducible.
The real world is immensely complex, ever moving, ever changing. It cannot be reduced to a few simple equations. When people attempt to do this, they have to simplify, and in doing so leave out essential information that makes it work as it does. It is not only complex, but inherently unpredictable. We do the best we can with limited information, and always with the knowledge that unforeseen events might alter our plans and thwart our intentions with unintended consequences. The world is not like a clean-lined machine whose mechanism can be studied, but more like a messy mass of interactions whose outcomes are uncertain. Fortunately, the world is fairly resilient and usually manages to cope eventually with the follies people put upon it.