Market economies are not planned by master mandarins or philosopher kings, but are, instead, the product of the spontaneous interactions of millions of people (many who neither know nor like one another) in a vast hive of overlapping marketplaces. While many great economists have waxed philosophically about spontaneous order, few actually delve into the mechanics of how these orders emerge. Failing to do so is not unreasonable—for the number of people, exchanges, and actions required to make a simple pencil or bring a steak to the supermarket are so numerous and expansive that detailed analysis of “everything and everyone” involved in the process would drive one mad.
Despite the difficulties inherent in studying spontaneous order, a piece that stands out in explaining this great mystery of the marketplace is R.A. Radford’s The Economic Organization of a P.O.W. Camp. In this classic and short article, Radford recounts his observations of the developments of markets within Allied P.O.W. camps during World War II. Not only did prisoners engage in widespread trade, but they spontaneously settled on a currency (cigarettes) and even developed various forms of credit. Some of the more entrepreneurial prisoners even managed to conduct business “over the wire,” as the Red Cross packages received by the prisoners contained goods unobtainable in Nazi Germany (coffee, chocolate, American cigarettes, etc.). At the center of trade sat the middleman and his dogged pursuit of linking willing buyer and willing seller. It was he who brought Sikh soldiers more for their unwanted tins of Red Cross beef and saw to it that British soldiers had their tea and Americans their coffee. Yet despite his role in creating value for his fellow prisoners, the middleman earned much scorn for his labours. He was not viewed as the enabler of exchange and the bringer of value but as the “King Rat” earning profit without increasing the stock of goods. However, as different persons value different goods and services differently (subjective value), wealth creation is as much a factor of what is exchanged as it is what is produced. Anyway, I will let readers draw their own conclusions, but The Economic Organization of a P.O.W. Camp is an economics classic and an absolute must for budding economists, business persons, and the curious.
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