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Smart people, smart process

| Tuesday, March 26, 2013, 9:00 p.m.

We humans are not as smart as we humans think we are. Sure, we figured out how to split the atom, fly, vaccinate against smallpox and pipe ESPN 24/7 into our homes and onto our smartphones.

But these marvels are more the results of smart processes rather than of smart people .

Look at your cellphone. Even if your particular phone isn't as smart as an iPhone or a Samsung Galaxy S3, it's still an incredible piece of technology. By pressing just a few buttons, you can talk in real time, at little cost and with no wires, to your children across town or to your friend across the ocean. France's King Louis XIV could have offered his entire kingdom in exchange for that ability and still found himself unable to do what you do routinely with your phone.

And while lots of smart people — engineers, bankers, accountants, marketing specialists — were necessary to make your phone a reality, they weren't sufficient. Smart human beings existed for tens of thousands of years without coming close to developing any of the modern marvels that we today take for granted.

Another indispensable ingredient for our modern prosperity is a process that not only inspires people to exercise their smarts, but also leverages those smarts into a whole that is immensely larger than the sum of its parts.

The undeniably smart Steve Jobs' vision for an affordable smartphone was dazzlingly creative. But that vision would have amounted to zilch had not many other people been available to help make Jobs' vision a reality. Some of these other people were also smart. Others were of only ordinary intelligence. And almost every one of them was a complete stranger to Jobs.

Yet somehow, they all cooperated with Jobs and with each other to create the iPhone.

What has not been around, unlike smart people, for tens of thousands of years is the smart process that encourages the globe-spanning cooperation that makes goods such as the smartphone possible.

The “smart process” is a market economy. It has two essential features. First, participants in a market economy are governed by the laws of property and contract: Jones is not entitled to take, damage or destroy Smith's property without Smith's permission — and Jones doesn't get such entitlement even if he becomes a high government official.

Second, the bourgeois pursuits of innovation, entrepreneurship and industry are widely celebrated — and with little concern given to the nationalities or religious identities of other market participants.

Only in the past few centuries did this open-ended market process emerge. It, and it alone, supplies the indispensable institutional framework to leverage people's ideas into the goods and services that make our modern lifestyles possible.

Everything that is distinctive about a modern economy requires the joint, cooperative efforts of thousands or even millions of people. The process that combined Steve Jobs' vision of a smartphone with the knowledge and efforts of manufacturers of metals, glass, microchips and other components of an iPhone is far greater than the brainpower of even the smartest human being — a zillion times greater.

So we can take pride in our ability to produce airplanes and Wi-Fi signals and smartphones and all of the other amenities of modernity. But let's also be aware that the market process that produces these things is much “smarter” than any of us is as an individual.

Donald J. Boudreaux is a professor of economics at George Mason University in Fairfax, Va. His column appears twice monthly.

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