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Consider how a central planner would solve a simple problem like, “what to do about Mr. Smith’s regularly occurring headaches.” The planner would have to call together a meeting of his planning board, and seek their input on the best way to accommodate me (because of course, they are all benevolent and seek nothing other than to help me). The planners may even have access to fancy computer models to help guide them. The planners might ask me why and when I seem to get headaches and what I generally like to do when I get them (drink lots of caffeine).

After a while, they decide that since I get regular headaches, more coffee should be produced. So, the planners direct the growers to plant more coffee, and the roasters to roast more, and the shippers to ship more, and the paper cup makers to make more, and the brewers to brew more, and the electric generation facilities to generate more electricity, etc. And hopefully, there will be more coffee there waiting for me when I get my regular bout of headaches. Ignore the moral problems with any of this (e.g. how will the planning board convince the growers to grow more in a world without prices? Appeal to their humanity? “Ahh, Mr. Smith is suffering, so you should work harder!” Hardly. It usually ends up being the barrel of a gun) and consider two things. First, think of how the planners would have to know a completely ridiculous amount of detail about how to get that extra coffee to me. Just focus on the growing of beans alone, and then extend the idea to the hundreds of steps along the way in the chain. Should we plant more coffee? If so, where? Should the variety of coffee be the same? Or should we instead use more fertilizer on the same bushes? What kind? Should we instead be more efficient in our harvesting of the existing bushes or less wasteful during the processing of the beans? How can a central planner possibly know? Second, think about the time it would take to get this information processed and production implemented, even if, the planners knew the answers.

Of course, it is impossible, and you would not expect that I get my coffee.

Now consider what happens if we rely on voluntary association to “direct” who gets what and when. I get more headaches, so I go to Tim Horton’s a lot more. Mr. Horton sees me wanting more coffee, so he buys more beans and brewing equipment. Mr. Horton makes more profits by selling me coffee (inspiring other Hortons to try to sell coffee too) and prices for the relevant inputs (including his “exploited” workers) rise. These higher prices for roasted coffee for example inspires the roasters to order more raw beans. Which inspires growers to grow more (they can get higher prices).

Thus, my regular visits to Mr. Horton’s tell a farmer in Colombia to find a way to get more beans to market (in whatever way he thinks best to do it). This is fantastic because the Colombian farmer did not have to ask anyone why he needed to make more beans, nor did he have to make any more. No one had to communicate through the entire chain of command that more or less of something was needed or why. No one had to exercise discretion over someone else’s decisions to get this done. All that was needed was for the prices of the various inputs to change and from those changes people are able to calculate for themselves whether they wish to alter their behavior. Thus, the coffee grower, seeing higher prices for his beans, “responds” to my increasing headaches by growing more coffee. No one had to tell him and no one was forced anywhere in the system to do any of it.

That latter system of course is far more friendly to freedom, democracy and private property rights. But it is also vastly superior in its efficiency, so much so that it is also vastly superior in its equity as well. We’ll explore that idea in the near future.

2 Responses to “How Colombian Coffee Growers Learn About Me”

  1. Harry says:

    Another chapter for one of your future books. Maybe the skeleton of a Broadway musical, with a big cast singing and dancing.

  2. Michael says:

    It is interesting that Marx and Engels defended the price system in “Poverty of Philosophy.” I really enjoyed the intro by Engels, believe it or not.

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