Recently I had to face the prospect of moving a large amount of house hold waste to the dump without access to a car or van of any sort. I do not have a driving licence so renting one was out of the question. The solution to this problem was evident; find an obliging friend who would happily drive my broken old furniture to the dump. This was easily done but a second problem quickly emerged, how best to pay my friend for his time and the use of his car. A simple cash payment between friends seemed crass, more akin to a business relationship than an honest friendship, so I was left with a dilemma.
What I actually wanted to acquire from my friend was use of his vehicle and his skills as a driver. Obtaining these for myself had been options in the past, but I deemed the cost of learning to drive and purchasing a car too high and thus declined. This afforded me more money to indulge in my other interests such as buying minimalistic furniture, however the keen investor is usually proved right and thus when some large items of furniture were broken beyond repair I needed to find some means of economic exchange to secure the removal of a broken wardrobe from my living room.
If hard currency was out of the question, what could I offer in exchange for my friend’s Sunday afternoon and his driving skills? Eventually I settled on the idea of a goods exchange. I would use some of my current wealth to purchase goods, which could be given to my friend in exchange for the use of his car and driving skills, which he had invested past wealth in. Both of us being fans of real ale I bought a selection from a local microbrewery for him to enjoy after he had driven home. I made it clear that I was not offering an incentive to violate drink-driving laws.
After our exchange of goods and labour was completed, the whole process made me think. How could I be sure my friend had received a fair price for his labour and the investment he had made in the car? The wardrobe was quite a problem for me and I might have valued the use of the car more highly than the payment I offered. In a competitive market place, where there are no restrictions of friendship then the use the car might have fetched a far higher price in terms of bottles of ale.
The whole situation reminded me of Ayn Rand’s novel Atlas Shrugged in which Midas Mulligan insists his friend charges him for the use of his car rather than simply borrowing it for free. Rand being a believer in the virtues of selfishness saw it as socialism to lend goods for free.
Perhaps this is an extreme interpretation of what she thought but the economics behind her ideas were simple. Someone invests time and money in learning to drive and buying a car. Those who choose otherwise should have to sacrifice some form of economic gain in order to get the benefit of what they have not invested time and money into.
I think Rand is missing a truth to this situation, which played out through my own experiences this weekend. On some level I was offering goods I purchased in exchange for the use of skills and equipment but there was another transaction taking place. My friend was sacrificing his Sunday afternoon to help me out of a situation, a choice which carried with it an opportunity cost. As part of this exchange he was building up good favour with myself which is in turn an investment which will yield fruit later, perhaps in the form of me fixing his computer or helping him clean up after a party. This relationship is not quantified by a direct exchange of goods and labour, but it is still taking place.
In short there is a human exchange taking place as well as an economic one. This human exchange can lead to an economic benefit in the future and the good relationships human exchanges foster can form the basis of strong long term economic alliances of the variety that really benefit communities and the wider economy. Not short term valuation aiming to get the maximum value for minimum input.
In Rand’s world we are all selfish machines, doing what is best for ourselves in the hope that this will somehow make human society richer as a whole. As the economic crash of the 2000s shows unbridled selfishness ultimately makes us all poorer. Human trust is an important commodity and good relations make as much sense economically as they do socially. I am very pleased that my friend gave up his Sunday afternoon to help me and I feel that it brought us closer together in a spirit of co-operation, a closeness that can help us overcome economic hardships.
Rand’s bleak view of humanity misses our real strengths; our willingness to sacrifice for each other that helps us collectively overcome great hurdles. What this all boils down to is that in the future, if I owned a car and Ayn Rand asked to borrow it, the price would not simply be economic and I doubt she could afford it.