An average Central American farmer would generally raise livestock and grow a variety of crops to first provide for his family and then to sell the surplus to the market. One day the government decreed that all farmers should grow only soybeans since economists had determined that the area had a comparative advantage internationally on the crop. The farmers questioned the government, “How can we feed our families with only soybeans?” The economists explained that the market for soybeans was such that its sale would generate more than enough money to purchase the food to meet each family’s needs and raise their overall standard of living. A few years later, as the country’s economy transitioned to soybeans, the market price for the crop plummeted, and those who had bet on the world economy lost not only the ability to feed their families, but their farms as well.
I cannot verify the truth of this story but nonetheless its lesson haunts me. Growing up in our economy, I was told I needed to specialize to make it. Our economy is based on the principle of division of labor, with the assumption that if we each specialize and then bring that expertise to the table, we maximize wealth creation and produce a rising tide that raises all boats. Yet what is often not discussed is that an economy that relies on exporting specialized products and importing basic necessities is an inherently high risk-high reward proposition that leaves us economically vulnerable.
I’ve felt this economic vulnerability first hand with my old car, “Boris the Taurus.” Since my college track education didn’t include any classes on basic car maintenance (apparently the assumption being that those going to college would later hire someone else to do such handiwork), poor Boris was always in the shop. Flying blind with a giant sucker sign on my forehead, there was no shortage of things I was told I needed unless I wanted to drive at my own risk. New tires, pads, rotors, alternator, struts – it was only after my wallet was a few thousand dollars lighter that I became suspicious that I was getting ripped off. Yet without any real knowledge on the subject and the car being such a necessary part of everyday life, what could I do?
Our economy loves people like me. Specialized in my own field, reliant on the market for everything else, I exemplify a winning combination for an economy that benchmarks itself by the Gross Domestic Product (GDP) (the value of all final goods and services within a nation in a year). As a specialized producer, I help efficiently produce in my field in a way a generalist could not. As a consumer, my reliance on the open market to fix my car or anything else for that matter, keeps many people employed within their own specialties – and so the system keeps on churning. That is until my value to the economy ceases to generate enough money to be exchanged for such services. If my specialty fails to produce for the economy in a way it deems valuable – whether I get old or sick, the market dries up, or someone figures out how to do it better without me – then I lose my access to the system and the ability to provide for myself. I become the soybean farmer with plenty of soybeans and no way to turn them into the cash I need to buy the food I once raised myself.
So what’s the alternative?
As it turns out, Boris the Taurus taught me a lot about alternative ways to approach the market and mitigate this risk:
- Relying On Friendships and Community: Luckily, there’s an important step in between fighting it out in the open market and attempting to go it alone: community. We need friends, a community of people we can trust, a group of people freely bringing gift and need together. In my case, my friend Chicco, who I met through the Catholic lay movement Communion and Liberation, became the first person I turned to when something in my car didn’t feel or sound right. Many a Saturday afternoon I would bring my car over to his house and he’d look under the hood and diagnose the problem. If he was able to do the work with the tools he had, I’d buy the necessary parts and we’d work together. If it required additional tools or expertise he would send me to the mechanic with specific instructions and a general price quote. Chicco saved me a lot, maybe even my life when in one instance he noticed that the mechanic had forgotten to tighten the bolts on the brake calipers! A true friendship was built under the hood of that car.
- Building Internal Capacity: While keeping my day job as a specialist, I’ve decided to moonlight as a novice generalist. Now that I’m a father it is important to me be able to share the experience of working with our hands with my son. For this, Andrew Wooster (founder of the blog: First World Second Hand) has been my mentor, teaching me the basics of car maintenance – starting with how to change my own oil, and soon moving on to replacing brakes and rotors. With such a skill set, I would feel for the first time as if I had real choices when it comes to my car – to do it myself (because I can!) or to pay someone else to do it for me. In this way, the economy comes full circle. At one time in our past we were largely a nation of generalists, forced to rely on our own skills for everyday living. As specialization and division of labor took hold, it became unnecessary to do everything ourselves, and we became an economically dependent people. Now, with specialization meeting Youtube, there’s a renewed interest in Do-It-Yourself (DIY) projects, presenting, once again, an economic choice.
Specialization isn’t going away and neither are the risks associated with it. That’s why it is so important to foster the communities and personal capabilities that mitigate those risks. There may come a day when my specialization no longer provides me with enough money to fix my car, but in the end money is only necessary for goods and services that are outside the ability of my community and my owns hands to provide. Our economy becomes a lot more edifying when our economic needs are seen first as an opportunity to learn and to bring friends together – an economy in which we’re useful to one another again. As gifts and needs are brought together in new combinations over the years among a group of people, it forms the trust and social capital needed for our economy and for us as people to flourish.