Repeated transactions among trading parties encourage trustworthiness.
Marian L. Tupy —
Competition is an essential part of a capitalist economy. It drives businesses to innovate and to provide consumers with cheaper and better products. If businesses fail to innovate, they go under. The market place can be a brutal place – just think of the way in which Netflix disposed of Blockbuster. “Capitalism without failure is like religion without sin,” as the American economist Alan H. Meltzer once put it. “It doesn’t work.”
But capitalism is also one the most cooperative of human endeavors. Goods and services are traded among strangers and across vast distances, guided – to a great degree – by the price mechanism and by the reputation of the trading parties. Repeated transactions among trading parties encourage trustworthiness – a moral side product of capitalism that we do not spend enough time talking about, let alone celebrating.
Competition produces winners and losers. As Amazon expanded, for example, neighborhood bookstores shuttered across the United States. Some people thought that was a great tragedy, for bookstores provided a pleasant way to browse through publications and, sometimes, meet interesting people. Ultimately, however, the convenience of the internet, and superior choices and prices, proved to be more important to the average customer. Amazon and its clientele won, while Barnes & Noble lost.
The losers, who emerge from capitalist competition, appear to confirm a zero-sum bias in the human brain. It is for that reason that many people tend to focus on the closed local book store, rather than revel in the falling prices and increased choice made possible by Amazon. Where did that bias come from?
For most of our existence in the environment of evolutionary adaptiveness (EEA), which is to say tens of thousands of years we spent wandering the planet as hunters and gatherers, the success of one, usually related, group of people came at the expense of another group. When the resources in an area occupied by group A ran out, group A moved onto a territory occupied by group B. Conflict ensued.
Conflict still continues to define the interaction among animals. Humans, in contrast, evolved additional ways of interacting with one another. Permanent settlements were a key part of that process. Strangers who settled next to one another had to learn how to cooperate. In that process, they either acquired a reputation for trustworthiness, or they became social outcasts excluded from a larger economy.
As a result, humanity advanced. So much so that by the time of the Roman Republic, the Latin term civis became a root word for both the city and civilization. Over time, of course, the city-state gave way to the nation-state and the nation-state became a part of a global economy. As human cooperation expanded, so did our economic horizons.
That was, unambiguously, a moral as well as economic phenomenon. People, who might have otherwise hated each other, were brought together in the pursuit of profit. By the 18th century, the extent of human cooperation within the context of the market economy reached levels that even philosophers, such as Voltaire, felt obliged to opine about. As the French philosopher wrote:
Go into the London Stock Exchange – a more respectable place than many a court – and you will see representatives from all nations gathered together for the utility of men. Here Jew, Mohammedan and Christian deal with each other as though they were all of the same faith, and only apply the word infidel to people who go bankrupt. Here the Presbyterian trusts the Anabaptist and the Anglican accepts a promise from the Quaker. On leaving these peaceful and free assemblies some go to the Synagogue and others for a drink, this one goes to be baptized in a great bath in the name of Father, Son and Holy Ghost, that one has his son’s foreskin cut and has some Hebrew words he doesn’t understand mumbled over the child, others go to their church and await the inspiration of God with their hats on, and everybody is happy.
It is noteworthy that many of the scholars who continue to influence those who are sceptical of capitalism are not economists, but biologists and ecologists. They include the Stanford University professor Paul Ehrlich, the doomsayer partially responsible for the over-population panic that started in the 1960s, Garrett Hardin, the exponent of the “tragedy of the commons” theory, and Jared Diamond, the author of such bestsellers as “Guns, Germs, and Steel” and “Collapse.”
Their analyses of human affairs tend to be analogous to the interactions observable among animals. But humans, while remaining a part of the animal kingdom, have evolved mechanisms that allow for billions of cooperative interactions to take place each day. It is time for the economists to steal the biologists’ thunder by putting a renewed emphasis on the cooperative aspect of capitalism.
Walmart Says Faster Delivery Is Changing How People Shop
“Walmart says faster delivery is changing how customers shop, with more people using 30-minute delivery for everyday needs like diapers, cold medicine and meal ingredients, the company told Axios.
Why it matters: Retailers are increasingly competing on speed — not just price — as Walmart, Amazon, Target and grocery chains battle to become consumers’ go-to platform for urgent shopping.
Driving the news: Walmart says it can now reach 60% of U.S. households in 30 minutes or less. The capability is currently offered in Dallas, Houston, Chicago, St. Louis, Atlanta, Tampa and Oklahoma City, with plans to expand further.”
Amazon and Walmart Compete to Better Serve Rural Communities
“Many rural online shoppers are used to waiting half a week or longer for purchases to arrive. Amazon, which disclosed its $4 billion rural delivery push last year, has narrowed that to less than 24 hours for 1 in 5 rural and small-town households, according to a Bloomberg analysis of delivery times for commonly purchased items. The company offers 48-hour delivery to 62% of rural households, the analysis found.
The payoff could be huge. Rural shoppers in the US collectively spend $1 trillion a year on clothing, electronics, household goods and other items, representing about 20% of retail purchases excluding cars and gasoline, according to Morgan Stanley. Amazon aims to recondition those shoppers to expect quick delivery, which would play to its strengths and make the company top-of-mind for online purchases.
Amazon’s biggest obstacle is Walmart Inc., which claimed the heartland decades ago during an aggressive expansion on its path to become the world’s largest retailer. Walmart has spent years training rural shoppers to come to its stores for groceries and then snag clothes, TVs and crockpots while there. It has a big head start on Amazon in proximity, with stores and Sam’s Clubs located within a 10-mile drive of nearly two-thirds of rural households, Bloomberg’s analysis shows. Walmart is also upping its e-commerce game, turning its thousands of locations into delivery hubs and pickup locations for products ordered online.”
India’s Recent Durables Goods and Asset Ownership Progress
“This study compares the Household Consumption Expenditure Survey 2023–24 with 2011–12 and finds significant advancements in spending on durables goods and ownership of key durable assets. These changes represent shifting priorities and aspirations for consumption among Indian households and improvements in quality of life. Additionally, our analysis focuses on the Bottom 40 (B40) percent of the households by consumption, which have been extensively targeted through programs of the Government of India and state governments. Studying the consumption and ownership trends of these households is an important measure of the effectiveness of welfare policies. Consumption patterns of households have transformed significantly over the last decade with households spending a smaller portion of the monthly per capita expenditure (MPCE) on food items. Across the three components – food items, consumables and services, and durable goods the share of food has fallen to less to than 50% in both sectors. Consequently, a greater share of household consumption expenditure is now non-food spending on consumables and services, and durable goods. Consumables and services are the largest component of household spending in urban areas.”
Drone Deliveries, Slow to Take Flight, Come to Silicon Valley
“The hype around drones may finally be starting to deliver.
Drone deliveries, first touted by Amazon more than a decade ago, are slowly taking off in some parts of the U.S. On Thursday, Matternet, a drone delivery startup, launched its service to Silicon Valley…
The announcement adds to signs of growth for drone delivery. In Fort Worth, Texas, which recently became the first major city in the United States to offer commercial drone deliveries, they’re being used to deliver groceries from WalMart.
In College Station, Texas, Amazon’s drone delivery service has become common enough for residents to see the service as a noisy nuisance. And, with recent FAA approval, the company seems set to expand drone delivery operations across the city and beyond.
Experts say many of the obstacles to drone delivery, most notably the technology and regulations, have been hurdled.”