Free Markets Are Intrinsic to Humans

We use credits and debits to cooperate across genetic boundaries

Naval: Overall capitalism [meaning free markets] is intrinsic to the human species. Capitalism is not something we invented. Capitalism is not even something we discovered. It is in us in every exchange that we have.

When you and I exchange information, I want some information back from you. I give you information. You give me information. If we weren’t having a good information exchange, you’d go talk to somebody else. So, the notion of exchange, and keeping track of credits and debits, this is built into us as flexible social animals.

We are the only animals in the animal kingdom that cooperate across genetic boundaries. Most animals don’t even cooperate. But when they do, they cooperate only in packs where they co-evolve together, and they share blood, so they have some shared interests.

Humans don’t have that. I can cooperate with you guys. One of you is a Serbian. The other one is a Persian by origin. And I’m Indian by origin. We have very little blood in common, basically none. But we still cooperate.

What lets us cooperate? It’s because we can keep track of debits and credits. Who put in how much work? Who contributed how much? That’s all free market capitalism is.

So, I strongly believe that it is innate to the human species, and we are going to create more and more wealth, and abundance for everybody.

Everybody can be wealthy. Everybody can be retired. Everybody can be successful. It is merely a question of education and desire. You have to want it. If you don’t want it, that’s fine. Then you opt out of the game.

But don’t try to put down the people who are playing the game. Because that’s the game that keeps you in a comfortable warm bed at night. That’s the game that keeps a roof over your head. That’s the game that keeps your supermarkets stocked. That’s the game that keeps the iPhone buzzing in your pocket.

So, it is a beautiful game that is worth playing ethically, rationally, morally, socially for the human race. It’s going to continue to make us all richer and richer, until we have massive wealth creation for anybody who wants it.

Too many takers and not enough makers will plunge a society into ruin

Nivi: It’s not just individuals secretly despising wealth, right? There are countries, groups, political parties that overtly despise wealth. Or at least seem to.

Naval: That’s right. What those countries, political parties, and groups are reduced to is playing the zero-sum game of status. In the process to destroy wealth creation, they drag everybody down to their level.

Which is why the U.S. is a very popular country for immigrants because of the American dream. Anyone can come here, be poor, and then work really hard and make money, and get wealthy. But even just make some basic money for their life.

Obviously, the definition of wealth is different for different people. A First World citizen’s definition of wealth might be, “Oh, I have to make millions of dollars, and I’m completely done.”

Whereas to a Third World poor immigrant just entering the country, and we were poor immigrants who came here when I as fairly young, to the United States, wealth may just be a much lower number. It may just be, “I don’t have to work a manual labor job for the rest of my life that I don’t want to work.”

But groups that despise it will essentially bring the entire group to that level. If you get too many takers, and not enough makers, society falls apart. You end up with a communist country.

Look at Venezuela, right? They were so busy taking, and dividing, and reallocating, that people are literally starving in the streets, and losing kilograms of body weight every year just from sheer starvation.

Another way to think about it is imagine an organism that has too many parasites. You need some small number of parasites to stay healthy.

You need a lot of symbiotes. All the mitochondria in all of our cells that help us respirate and burn oxygen. These are symbiotes that help us survive. We couldn’t survive without them.

But, to me, those are partners in the wealth creation that creates the human body. But if you just were filled with parasites, if you got infected with worms, or a virus, or bacteria that were purely parasitical, you would die. So, any organism can only withstand a small number of parasites. When the parasitic element gets too far out of control, you die.

Again I’m talking about ethical wealth creation. I’m not talking about monopolies. I’m not talking about crony capitalism. I’m not talking about mispriced externalities like the environment.

I’m talking about free minds, and free markets. Small-scale exchange between humans that’s voluntary, and doesn’t have an outsized impact on others.

I think that kind of wealth creation, if a society does not respect it, if the group does not respect it, then society will plunge into ruin, and darkness.