Misunderstanding the free part of free markets
One meaning of the free part of free markets is that the market is free to enter. Anyone, with whatever idea, is free to set up shop and try it out. This is what is being misunderstood here:
In a move nobody outside of boardrooms asked for, Target has become the first fashion retailer in Australia to make its products available to order via the Uber Eats app as of September. This means that a “curated” selection of 25,000 of Target’s products can arrive at your door in under an hour, thanks to Uber Eats’ “on-demand” delivery.
Technology changes over time. There is always some new set of possibilities among the things that can be done therefore. We don’t know whether people would like those new things done. The only way we’ve got of finding out is to do the new thing then see. No, just asking people doesn’t work, there’s always a difference between expressed and revealed preferences.
This is, in the jargon, the function of the entrepreneur. To take the bits and pieces - the possibilities - lying around the economy, combine them in new fashion and see whether there is that demand for this thing that can be newly done. If folk do want it done then the entrepreneur makes a profit and can then be abused as a vile capitalist expropriating the product of labour. Much fun to be had for all the family in that. If not then - eventually - the proponent of the new thing runs out of money and that’s that. The thing not desired, not desired enough to cover the costs of producing it, vanishes.
The system works only if people are free to enter the market. As the boardrooms are doing here. It is possible for us to do this. Let us see whether people like it. Then once they’ve a taste for it let’s see whether they’re willing to pay the costs of it being done. We all get to explore that newly expanded envelope of what can be done as against the other uncertainty cloud of what people desire to have done. Thus we advance.
And, yes, we really do have to allow people to try out the most unlikely things. Who knew that what people really desired was a global fibreoptic system for the delivery of cat pictures?
The only possible opposition to the system comes from those insistent that people shouldn’t want that and a failing of human nature is that we’ve always far too many of them.
This latest tech retail partnership is a timely reminder of our dependence on convenience. Having whatever we want, wherever and whenever we want, has become a given, with delivery apps at our beck and call.
Well, yes, that’s the aim of having an economy. That people get more of what they want when they want it. We’d even suggest that this is the very point of coming down out of the trees and having a civilisation in the first place.
Much of its fashion offerings are everyday pieces, such as underwear and activewear, items people most likely have at home already. So why the need for almost instantaneous delivery?
That’s a rather different problem. Many of those who do need a new pair of kecks are those who don’t think they need a new pair. But that’s another of those problems with humans, not with the economic arrangements surrounding them.
60 minute delivery of clothing may or may not be something humans desire enough to be willing to pay the costs of having it. The way to find out is to try it, do it, see what happens.
All Hail the free market.
Tim Worstall