- Today, we begin a series of talks on the price system. Not one market in isolation
with demand in supply but how markets link people and places all over the world.
A key part of this whole story is going to be the role of prices. Something that
you'll be hearing quite often is it a price, it's a signal wrapped up in an
incentive. So we'll be talking about signals, about incentives, about
speculation and prediction, and much else beside. We're going to begin with markets
link in the world. We've already talked about the rose as a global product but
it's not just roses of course. Take a look at the product around you. An iPhone
designed in California has parts from the United States, from Kentucky, from Texas,
from New York. The rare earths are from inner Mongolia. Some of the chips are
produced in Korea and Taiwan. The gyroscope comes from France and from
Italy. It's assembled in China. So where is the iPhone made? It's really made here
in the world. It's a world phone like many of the products we consume today, it's
produced by thousands, hundreds of thousands of people all brought together,
all cooperating in order to produce a product. Now take a look at this picture.
It shows something utterly familiar but I want you to see it deeper now with new
eyes. We have here grapes from Chile, pineapples from Brazil, Kiwis from New
Zealand, all of these within a hand's breath to one another. Think of all the
farmers, all the truckers, all the airline pilots who have worked together to bring
this literal cornucopia to you. And what do we call this place? Think of the name
now with a new meaning. We call it a supermarket. When you read the news or see
it on television, we're often told about conflict but there's another story, a
deeper story, a story which is all around us everyday,
although sometimes it's hard to see and that is a massive, a tremendous amount of
worldwide cooperation. Hundreds of thousands of people from Kido to Chicago
cooperated to bring the rose to our handsome young man and they did so
voluntarily, on the basis of self interest, without central command or
central direction. This is invisible hand in action. Self interest coordinated
towards the social good through the use of markets. Even in economics we often focus
on competition but the deeper story is cooperation, worldwide cooperation. What
markets do is coordinate the self interest of many different people who ultimately
have different goals, different preferences, different insights, different
knowledge, different circumstances. What markets do, they coordinate the different
interests and knowledge of these different people to produce extensive cooperation
and mutual gain. That's one of the deep lessons of economics. Thanks.
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