As human beings, we all fulfill our needs and desires through interaction and cooperation.  There’s a word that analyzes this kind of human behavior: Economics. Economics happens whenever people interact with one another, and when we interact, markets emerge.  It might not feel like economics is happening, but it’s a daily occurrence.  Economics emerges even from the places where we would least expect it to happen: Birthday parties.  Did I just say that birthday parties can be explained through an economic lens? What happens if I tell you that it can be? I think it is time to put on our birthday caps, and see for ourselves if such a claim can be made.

 

 

It was my best friend’s birthday about 3 weeks ago, and I must say, it was a total blast.  My three friends — the friends who threw the party — and I belong to a social club that is located in the town that we live in.  It is a nice facility to throw a party so the decision to throw the party there wasn’t a difficult one to make.  The harder part was finding the elements which would turn the party into an unforgettable night.  Obviously, you don’t need a doctorate degree in economics to know what a good party requires: Beer and music.  It seems so simple to throw a party, but it actually requires a lot of planning and innovative thinking; you want your party to stand out like Goro from Mortal Combat (for the readers who are scratching their heads about Goro from Mortal Combat, he’s the character with four arms which would make him stand out from the other characters).

 

 

With of all this in mind, my friends had to interact with various people in order get this party up and running like a track meet. There were still questions that had to be answered: Where are we going to get the kegs from? How are we going to get the word out about the party? What bands are we going to get to play at the party? Whose going to work the bar? Whose going to work the door? There were so many tasks to the needed to be completed in order to create such an extravaganza.  Interestingly, my friends use the division of labor to fulfill these duties: One of my friends — who is the most tech savy of all three of them — did all the advertising and social media work for the party, my other friend was in charge of finding musicians and bands that would perform at the party, and the other friend — whose family owns a beer redistributing company — was in charge of the kegs and drinks.

 

 

After dividing up the participation of labor, my friends were able to expand their productivity which made it more easier and efficient to organize the party.  Finally, the day of the party came, and it was time to see if all of their hard work had pay off.  I should give some background information before I go any further: I was the door guy working at this party so I know the behind the scenes of what went on to make such an extravaganza.  At first, things were moving slow; not too many people showed up, and at that point in time it was considerably early.  Once the clock hand struck around 10 pm, that’s when the crowd started to pour in.  Seas of people were rolling into the party like a ruthless avalanche.  At one point in time, it seemed like the flow of people walking into the party was as endless as the dive to the bottom of the Atlantic Ocean.

 

 

The party was going great, and everyone was having a good time, but of course, the birthday boy — who was part of the three friends who threw the party — disappears spontaneously.  Now I’m in a squishy situation; do I leave the door and try to find my friend? Or do I rely on drunk buffoons to find him? I went with the latter and took a heavy risk.  So I went to the bar to ask the bartenders if they knew where he went, but nobody knew.  I noticed that there was a long line to get a drink, but I didn’t think much of it.  I search the whole facility, but couldn’t find him or any evidence of his whereabouts.  At this point, I’m getting nervous, and the anxiety starts to kick in.  I called my friend a couple of times, but he didn’t pick up his phone.  Like a flash of lightning, my friend appears with loads of beer; he tells me that he pretty much emptied the whole beer fridge at the local 7/11.  I laughed at him, and I felt relieved that my friend was alive and ok.  I started to walk back to the door, and as I sat back in my seat thats when it clicked in my head: The market was here.

 

 

Since there was a shortage of alcohol at the party, my friend was struck with incentive to get more alcohol as soon as he can; he was responding to the market signals.  Sure, in his mind he was just getting more beer for the party, but that doesn’t exclude him from the process of the market.  He most likely notice the long line of people who wanted beer; the demand was soaring, but the supply was running dry as the Aral Sea.  Since my friend wanted to provide a good party for the party goers, he rushed quickly to acquire alcoholic beverages so he could keep the party collective happy.  Some people might be in disbelief about the market process having anything to do with my friend getting beer.  They might just say: “Dude, he’s just getting beer for a party, it’s no big deal, and the so call market process you ramble about had nothing to do with it.”  They forget one thing: The market is you.  Yes, literally, it is you, and everybody else; we are all apart of the process.  We all act on our own individualistic will; we live life, and we make choices.

 

 

Through our personal choices, we cooperate with other people to fulfill our desires, and through this process of exchange, markets are created.  It doesn’t matter how meaningless you think the choice or desire is; it could be picking up bread, milk, and cold cuts from Stop and Shop; you are participating in the market process.  The most beautiful thing about the market is that you are part of it, and you can choose what every you want to do.  Even though the market is just people acting on their own voluntary actions, this doesn’t exclude anyone from the harsh externalities that come with life: Natural disasters, death, failure, the State, and many other negative  externalities.  Even though we don’t have full control of the consequences of our choices in life and the externalities of the outside world, and we certainly don’t have full control of what the market will decide, we should be able to participate freely in the market place.  We end up finding better solutions to our problems, and we have a right to figure out what suits our needs correctly.  Through the market process is where we transform our lives and the world around us; life is all about discovery, and through trial and error, we figure out how to bring about the best results.  If we never made mistakes, we would never have been able to acquire the knowledge to know what pieces fit our particular life puzzles.  To get rid of failure is to get rid of success, and success can only be brought about through action and perseverance    .

 

 

I’m so sorry that I got side tracked from party economics, but I feel that it is vital to know the fundamentals of the market process.  Part of that process is cooperation through people’s own self interests.  The fact of the matter is that whenever people interact with each other, markets will emerge; even when you are at your best friends birthday party.  Markets emerge because they are the most efficient means of providing the best service to fulfill our desires.  Markets help us allocate resources in a proper manner so we don’t end up with a depleted amount of resources.  When markets are left free and undistorted from the iron hand of the state, it becomes the greatest communicator.  Without markets, throwing a party would be a difficult task.  The next time you are at a bar or huge party extravaganza, you should thank the market for making life a whole lot easier.   Without markets, where would the bars be? I don’t think the statists ever thought of such a question.