Self-Sufficiency is Poverty

And how prosperity comes from our differences

Before Adam Smith there was Mother Nature. 

The original division of labor roots from the inherent biological difference between the sexes. Men hunted because they were stronger, women gathered because they were primarily occupied with the important task of carrying and rearing children. Women acquired dependable staple starches while men chased after calorie-rich proteins and fats.

By exchanging and sharing the fruits of their labor, women accessed prized nutrients without being exposed to the risks of hunting, and men accessed a safety-net supply of food that was ready to sustain them when hunts failed. When both sexes specialized in what their biological proclivities gave them an advantage in, the entire group benefitted without anyone having to expend unnecessary energy or take unnecessary risks. This is the principle that drives prosperity: it is the increase in the amount of goods or services you can get in return per unit of labor. 

Theophrastus, a pupil of Aristotle, once said that “time is the most valuable thing a man can spend.” Before gold, dollars, cowrie shells, or obsidian beads, the true measure of anything’s worth is the amount of time it takes to acquire it. In other words, you are poor to the extent that you cannot afford to sell your time in exchange for the commodities you need. To be self-sufficient means earning with your time instead of having things ready-made by other people (and the more efficient something is made by others, the more of it we can afford. For example, the average Briton today consumes about 40,000 times as much artificial light as he did in 1750). The self-sufficient man is a jack of many trades; his production is diverse and slow, his consumption is limited in variety, quality, and quantity. He survives but he does not thrive.

“The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.” — Adam Smith

How Exchange Creates Abundance

Exchange creates abundance in an emergent manner: the whole is different from the sum of its parts and the interactions between them (I talk more about emergence here). Also known as complexity theory, the nature of a newly emerged whole cannot be reduced to the original parts, it is considered a new entity.

Think about our hunter-gatherer ancestors again: the exchange between men and women was a positive-sum game because they each played to their inborn advantages in the grand task of survival. Most importantly, the abundance of such Paleolithic communities depended on (and capitalized off of) the unequal distribution of skills and abilities. Because men and women had different strengths, they were able to specialize in hunting versus gathering, respectively. Because they were unequal in attributes, they could each dedicate their own most precious resource (i.e., time) to the task that brings the greatest benefits to the whole.

“A smaller quantity of labor produce a greater quantity of work…Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command.” — Adam Smith

If we want efficiency, we can not be all doing the same thing. If we want to all be equal in our labor, we can not be efficient. That is what a ‘job’ essentially is: a singular, concentrated production that one person spends all their working time on in exchange for the ability to receive benefits from the higher order system they contribute towards.

For example, if I were a hairdresser, my singular job would be to spend 8 hours a day cutting hair; I can go home and make dinner using ingredients I bought from the grocery store and cookware from certain manufacturers — I do not have to farm my own vegetables, raise my own cattle, mould my own cast iron skillet, or start my own fire. I benefit from the farmers, ranchers, cookware manufacturers, and gas plumbers, each of whom work their own monotonous jobs in order to work ‘for’ me, so that dinner is possible for someone who does not do any of the labor above. The result of this cooperation is that everyone can do one thing but consume many things. Diverse consumption, simple production.

"The Wealth of the Nation" by Seymour Fogel

You stand on the shoulders of giants when you read a book, turn on a lightbulb, drive a car, or use a computer. Even the bread you eat was first cross-bred by a Mesopotamian farmer some 13,000 years ago. The goods and services you consume are the embodiment of the compounded progress of all the scientists, engineers, inventors, patrons, scholars, and entrepreneurs that came before you.

Why Prosperity Requires Inequality

When I was a college freshman, my ‘Introduction to Economics’ professor kicked off the first lecture by writing, “RESOURCES ARE FINITE”, in big loud letters on the board. In the name of fairness, equality means that in order for someone to gain, someone else must pay. The race to absolute equality is therefore a zero-sum game: redistribution, by nature, benefits those with less by taking from those with more. Prosperity can not emerge from a system that forces equality because there is no opportunity for the specialization, division, and multiplication of labor.

“Human beings are born with different capacities. If they are free, they are not equal. And if they are equal, they are not free.” — Aleksandr Solzhenitsyn

Ironically, the push for equality is set up to create more inequality (i.e., “positive discrimination”) and neglects the possibility that everyone can be better off. I like how Laura London’s article on the dichotomy between equality and abundance explains this.

It is uncontroversial to say that everyone wants the world to be a better place; no one is against the alleviation of poverty, starvation, war, and disease. Disagreements arise in how we frame the problem: the zero-sum game of wanting equality, although motivated by the good intention of improving the lives of the resource-poor, is focusing on the wrong fundamental question. Instead of asking “is this fair?”, we should be asking “how can everyone improve?”

The rich may have got richer, but the poor have done even better: the average South Korean earns fifteen times as much income each year as he did in 1955. The average Mexican lives longer now than the average Briton did in 1955. The average Botswanan earns more than the average Finn did in 1955. Infant mortality is lower today in Nepal than it was in Italy in 1951. The percentage of Vietnamese living on less than $2 a day has dropped from 90% to 30% in just twenty years. Prosperity evolves through cooperative exchange and benefits the majority of everyone instead of just one particular group at the expense of another.

We Lift as We Rise

Growing up, my grandparents would commonly bring up the Chinese proverb, “粒粒皆辛苦”, which roughly translates into “every grain comes from hard work.” What has gotten your generation this far is the result of thousands of years of cooperation, among millions of people; one can argue that there is profit incentive and that everyone works out of self-interest — but at the end of the day, does someone not have to sacrifice their time in order for you to acquire what you need? Are your readily available resources not a result of someone else’s labor? Is your lifestyle not owed to the grace of the emergence of abundance?

This path to prosperity is uniquely human: Adam Smith observed that “man is an animal that makes bargains: no other animal does this - no dog exchanges bones with another.” You are not truly self-sufficient — you are a node in your network, a living timestamp in your civilization, an agent of duty in your society, and most importantly, you live by exchanging with others. Therefore, it is not only our ability, but our obligation, to embrace our inequalities and consider what we, as individuals, can do best to cooperate with one another, so that we can continue to grow the prosperity that will serve our future generations like it once served us.

“There is no such thing as a self-made man. Like everyone, to get to where I am, I stood on the shoulders of giants. My life was built on a foundation of parents, coaches, and teachers; of kind souls who lent couches or gym back rooms where I could sleep; of mentors who shared wisdom and advice; of idols who motivated me from the pages of magazines….You’ve got to help others. Don’t just think about yourself.”

— Arnold Schwarzenegger