While visiting Oxford Street, London, a few months ago, I bought a new pair of shoes. Later that evening I embraced the summer and wore them on a long walk to my destination.
Regrettably, I ended up with terrible blisters on both heels and desperately sought some plasters to ease the suffering. Not 100 metres from my hotel was an outlet of Britain’s foremost retail pharmacy.
I limped down the street and stopped outside the storefront. There, at the entrance, was a display of all manner of plasters, bandages and blister covers. I had to stop myself from laughing out loud at my apparent good luck.
After paying for my purchase, economic questions started to arrive. How on earth, given the random act of buying a new pair of shoes in London, had the store’s marketer known to put that box of plasters right in my path? What incantations had the data analyst cast to know the probability of me arriving that exact morning?
I suppose the brand managers had done a good job, making me aware that plasters were the kind of product the pharmacy would sell. Without their adverts I would have been hopelessly walking up and down Oxford Street poking my head in at each store. Praise also goes to the merchandisers who positioned the shelves to be visible to this limping pedestrian.
Similarly, it is impossible not to marvel at the decisions of the buyers who had the foresight to order the product months before my trip. Thanks, too, to the shippers and traders who navigated the world’s oceans to deliver the product to the distribution centre; and to the delivery driver who traced his route to that particular store in London.
And what should I say to the foreign manufacturer who recruited the engineer who knew what to do with glue and rubber, fashioning the plaster into its pain-relieving form? Or to the engineer, who knew to go to university 20 years earlier and study chemical engineering to devise the combination? Dare we even think about the men and women who planted the rubber trees before that?
If we’re offering credit, we can’t ignore the financiers who also made their contribution. The overseas suppliers would have needed payment in advance of shipping, as would the insurers who removed the risk of loss while the goods made their way across the seas. Foreign exchange dealers assisted in creating equivalence between pound sterling and the currency due, while stockbrokers and bankers steered capital to the retailer’s financial officer, enabling the settlement of all creditors.
Back in the hotel, as I applied the plaster, I realised what seemed like magical foresight was something more extraordinary; it was a result emerging from countless decisions, co-ordinated not by genius or a central planner but by prices and incentives. Like a baton handed on in some multidimensional relay race, the marvel wasn’t that someone had predicted I would need plasters that morning, but that no-one had to.
A responsive system
Instead, millions of people, pursuing their interests and responding to price signals, create a system so responsive it feels like telepathy. The pharmacy stocked plasters not because they knew about my blisters, but because enough Londoners in new shoes create predictable demand.
The overseas manufacturer produced them not for me, but because profit margins made it worthwhile. Founders set up companies and bargained contracts all the way through the supply line because they saw opportunity in their endeavours.
It is a modern miracle that billions of products, travelling through time and space, are delivered to grateful consumers every second of every day. No human mind can comprehend the extent of the disparate knowledge required to co-ordinate such global efforts.
No single conductor could orchestrate this economic symphony — and yet the symphony plays on, conducted by the invisible hand guiding prices.
• Emerick, an entrepreneur, is deputy chair of the Free Market Foundation board.
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