“Political economy or economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing.” – Alfred Marshall, Principles of Economics, 1890
A recent move put my family a short walk from Avondale Park. The park has since become a pretty important part of our lives, and joining Friends of Avondale Park was a no-brainer. It was a chance to get to know other people in the neighborhood and learn the history of the park and the Avondale community (the park used to be the Birmingham Zoo, and Avondale was apparently an old mill town). Recently, the group did a landscaping-and-cleanup project that required a lot of leaf-raking. It was the ordinary business of life, which, of course, means it was stuffed with economics lessons. Here are just a few.
People Respond to Incentives.
A lot of people would have been there regardless. Coffee and donuts, however, made it easier for some people to say “yes” to staying longer or even showing up at all. The coffee definitely meant I stayed a little longer than I otherwise would have–and it meant we didn’t have to do much commanding to get the kids on board. Maybe some people showed up just for the donuts, but so what? If they did, they got to meet some neighbors and we got a marginally nicer park.
Specialization and Division of Labour Lead to Higher Productivity.
Some people arrived early. Some arrived at the appointed hour. Others came a bit later. A larger group meant a finer division of labor: instead of someone raking leaves, then bagging them, then carrying them to where the city would pick them up, people specialized. Some raked exclusively. Others (mostly kids who were lower to the ground) became baggers. Still others moved big bags of leaves to the pickup point. People who would have been sauntering between raking leaves and weeding the plots where the new plants would go were able to concentrate on a single task. The people who had done the design work and who knew where everything was supposed to go were able to help people coordinate and able to tell people “This goes here, that goes there” instead of raking or weeding.
Technology Leads to Higher Productivity and More Opportunities to Specialize.
“What will people do if they are thrown out of work because of new technology, immigrants, or free trade?” It’s a common question that, too often, rests on the “lump of labor” fallacy; namely, the idea that there is only so much work to be done and no more, and that if one person takes a job then someone else is necessarily out of luck. That isn’t the case, though. When my friend showed up with a leaf blower, that meant a lot of people with rakes were suddenly redundant. This didn’t mean there was no work left to do. Leaves had to be bagged. Holes had to be dug. Weeds had to be pulled. Plants had to be carried and planted. Of course, at some point the job was done–there was a concrete end to that particular project, but it didn’t take as long and wasn’t as difficult because of the tools we had. Instead of lamenting this fact, we should rejoice because the saved time and energy could be redeployed doing other things–like writing articles highlighting the economics lessons we can learn from something as simple as a park clean-up.
It’s Not “Markets or Civil Society?” It’s “Markets and Civil Society.”
“Markets or civil society?” is a false choice. We need both to flourish. Generalized goodwill is nice, but in his criticism of the presumptuous statesman–which is one of my favorite passages in Adam Smith–he writes
“What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.”
His insight here fits our noncommercial endeavors, as well. As Smith points out, I could perfectly fulfill the laws of justice by just not bothering anyone, but proper beneficence requires a little more work, and it’s not as easy as just wishing the world were a better place or concocting grand schemes to run the lives of people whose languages I don’t speak, whose histories I don’t know, and whose cultures I may not understand. The people who populate “the great chess-board of human society” have laws of motion all their own. Can I band together with all of humanity and Save the World? No, but I can band together with friends and neighbors to take care of a tiny little bit of it called Avondale Park.
Even Then, the Park is Not a “Public Good.”
When people talk about “public goods,” they often mean some combination of “goods that are good for the public” or “goods that we pay for with tax money.” Public goods, however, are nonrivalrous (my use of it doesn’t reduce the amount of it available for you) and non-excludable (it is difficult or impossible to exclude non-payers). Sometimes, economists refer to things like parks and schools as “local public goods,” but a better term might be something like “local amenities.” Parks–municipal parks, state parks, and national parks–are nonrivalrous up to a point as there is a lot of room on the track that goes around the pond, but they are certainly no less excludable than theme parks like Disney World or Six Flags. Maybe there are other, largely noneconomic reasons why the city should own and operate the park, but it isn’t technically a “public good.” To use the taxonomy Elinor Ostrom proposes in her Nobel Prize lecture, the park might be better thought of as a “toll good” because it has low “subtractability of use” and low “difficulty of excluding potential beneficiaries.”
Those are just five things that jumped out at me while raking and after I returned home. There are, no doubt, many more lessons we could draw. As I never tire of telling my students–though they probably tire of hearing it–economics is everywhere. The cool thing is you don’t even need to know where to look.