That Mean Old Sun
In his seminal but no less controversial nineteenth century work, The Origin of Species By Means Of Natural Selection, English naturalist, Charles Darwin, introduced the concepts of survival of the fittest and natural selection. Essentially, Darwin's research concluded that the natural world is a rude place -- agnostic to the mere existence, and cruelly indifferent to the survival, of any species. In nature, Darwin proposed that only those species that effectively deal with the evolutionary changes in their environment can avoid ultimate extinction. Survival of the fittest could literally mean that the physically strongest will prevail. But more often than not, "fittest" is a euphemism for adaptability. Either way, any species that fails the adaptability test will not be dealt with favorably by nature's invisible hand.
About the time Darwin was publishing his findings during the first half of the 19th century, one of his French contemporaries, an economist named Frederic Bastiat (pronounced bahst-ya) was observing some interesting things in another kind of ecosystem, the marketplace.
Twin Sons Of Different Mothers
Over the years, I have come to consider nature and the marketplace to be twin sons of different mothers: both are rude places that are agnostic to your existence, and cruelly indifferent to your survival. But in Darwin's world, nature takes its own course and the participants deal with it as they can. The same could have been said for Bastiat's marketplace, but some participants -- those who resisted the inevitability of change as a threat instead of using it to create opportunity -- had other ideas and attempted to control the natural way of things to change.
Both men were serious about their work, but Bastiat wasn't your garden-variety economist. If he were alive today, Bastiat might have more likely become a comedian instead. But since there wasn't much call for that trade in 19th century France, and as Europe's most ardent advocate of free trade, Bastiat contented himself with sticking his prosaic finger in the eyes of those who would use sophisms and political machinations to restrain the inevitable changes in the marketplace, and therefore, trade.
That Mean Old Sun
In Bastiat's France, merchants and producers were constantly attempting to restrain free trade by getting the government to favor them over consumers by arguing with the sophism that not helping them would ultimately hurt the country. In other words, the survival of merchants and producers was more important than the ability of consumers to get the best products and pricing available from all sources.
One of Bastiat's most famous free trade "fingers" was his satirical pamphlet about tradesmen and merchants associated with the creation of illumination. Titled, The Petition, Bastiat's story artfully describes candlemakers, etc., petitioning the government to protect them from the "ruinous competition of a foreign rival who works under a system far superior to our own...and is flooding the domestic market with light at an incredibly low price." Their evil "foreign rival?" The sun.
In this Bastiat classic, the French purveyors of artificial light wanted the government to pass a law that would require citizens to, "...close all windows, dormers, skylights, shutters, curtains..." etc., etc., which the "...light of the sun may enter to the detriment of our fair industry."
Bastiat's fictional candle making and tallow rendering petitioners even justified their request in part because they were disadvantaged over their English counterparts, since they were denied the benefit of the famous English fog.
Modern-Day Candlemakers
In nature, change typically occurs very slowly, often over millions of years. In the marketplace, for centuries change happened at a pace that, while not as slow as nature, rarely ever impacted any participant in their lifetime.
But market morphing picked up speed as people, goods and information began moving around more freely. Over the past century and a half, changes in the marketplace increased in speed to the point where in our current era, a market strategy or product can become passé and uncompetitive literally in months rather than years.
Sadly, some things haven't changed. It turns out that the biggest enemy of free markets is still opponents of free movement of products and information by any era's "candlemakers." People and companies that would rather use sophisms and political machinations to restrain trade when a competitor has a better idea or more efficient way of making a product, than achieving a competitive advantage through their own innovation and operating efficiencies.
Here are some examples of modern-day free trade sunlight and our present-day candlemakers who would like to hold it back. Now, when I use the term sunlight here, it's not meant as a benevolent reference, but rather as a metaphor for things that are ridiculous to try to hold back.
21st century sunlight: North American Free Trade Agreement
21st century candlemakers: I still hear people blaming NAFTA for their problems and some are actually calling for its repeal. It's true that U.S. jobs were lost, especially in the textile and garment industry, as a result of the passing of NAFTA in the 1990s. But history shows that what happened in the past decade could actually be called NAFTA III. NAFTA I happened when textile jobs in England were lost to Americans in the 19th century, and NAFTA II happened in the early 20th century when those same jobs moved to U.S. southern states. Unskilled jobs, like water, will always run to the lowest level.
21st century sunlight: Globalization
21st century candlemakers: The only thing that has changed about international trade in 3,000 years is delivery speed and modal options. In fact, those opposing globalization don't have any new objections, except that with the current velocity of change, paradigms are shifting in front of our very eyes. The good news is that the same innovations and capabilities that are creating shifts at dizzying speeds are available to everyone, including those who would rather try to hold back the sunlight than innovate.
21st century sunlight: E-Commerce
21st century candlemakers: Some industries have successfully had laws passed to make it illegal for residents to take delivery of their products if purchased on the Internet. According to the Association of Competitive Technologies:
• It's illegal in 49 states to take delivery of a new automobile by purchasing it online from the manufacturer.
• Some states have made it illegal for residents to take delivery of wine purchased online.
• Thirteen states make it illegal for realtors to discount commissions by giving rebates to buyers. Such laws limit the ability of Internet realty companies to share efficient practices with their customers by charging lower commissions.
• Bypassing legal maneuvers, some industries are trying to hold back e-commerce sunlight through member practices that are de facto restraint of trade.
In our current marketplace, change is happening so fast that by the time contemporary candlemakers make their petition to restrict the sunlight, the market may have changed again, creating yet another "foreign rival." It's more realistic than cruel to say that with every inevitable change there will be winners and losers. Like the natural world, the market is a rude place.
So, for small business owners, I encourage us to forego the complaining and petitioning and recognize that the reality of survival of the fittest actually favors the nimble and adaptable -- that's you and me -- more than the big and strong. Another reason I call the 21st century the Century Of The Entrepreneur.
Small businesses must embrace change. Let's spend less time petitioning to protect our paradigms and more time adapting to, and perhaps even creating, the inevitable paradigm shifts.
Write this on a rock... I'll take sunlight over candles every time. Free trade is not the enemy of small business. It can actually be our most powerful tool.
