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On January 15, Wikipedia turns 20. Its anniversary is a good time to celebrate the success of a service that has become so useful to so many.
Members of my family, for instance, have undertaken university training in mathematics, economics, accounting, philosophy, English, art history, theology, counseling, women’s studies, education, and digital editing. All of us agree that Wikipedia is valuable. When used sensibly, it can be highly productive, particularly as a place to start learning about a topic.
A good place to see Wikipedia’s usefulness can be seen in its entry on itself. It is a lengthy piece (and recently updated, of course) which clearly strives for balance. My recent search turned up fifty major headings, 365 footnotes, and many references for further study. That it offers such easily accessible information and connections for further investigation has made it the most popular general reference work site on the internet, with 365 million readers, 55 million articles (over 6.2 million in English) in 285 languages, and still growing, and has ranked it among the fifteen most popular websites overall.
While almost everyone I have talked to about Wikipedia has a generally positive view of it, as an economist, I found certain things particularly important. As Wikipedia’s former executive director, Sue Gardner, wrote on its twelfth anniversary:
An encyclopedia is one of humankind’s grandest displays of collaborative effort, and Wikipedia takes that collaboration to new levels.
I don’t know of a comparable effort, a more diverse collection of people coming together, in peace, for a single goal.
Wikipedia has become an indispensable part of the world’s information infrastructure.
Each of these statements draws on something—the degree of collaboration, the extent to which it incorporates diversity, the degree to which it achieves its goal in peace, that it is an indispensable source of information for many—that should remind us that anyone who likes Wikipedia should like markets more, because voluntary exchange in markets is mankind’s most productive collaborative accomplishment.
Wikipedia, with its thousands of contributors and millions of beneficiaries, is still a much smaller demonstration of the beauty of collaboration than we find in the voluntary associations that make up markets. Exchange interactions bring everyone into collaboration, whether they intend to collaborate or not.
In markets, every participant’s preferences and values are incorporated into the results. Everyone who chooses to buy does so voluntarily, reflecting the fact that they place a greater value on what they receive than on what they give up. Everyone who chooses to sell does so voluntarily, reflecting the fact that they, too, place a greater value on what they receive than on what they give up. And those market relationships move goods and services to more highly valued forms, locations, and time periods, as well as to owners who place higher values on them, which are the only changes self-interested parties will mutually agree to. That is a far vaster field of social cooperation than Wikipedia. And everyone who uses the prices that result as information about the tradeoffs others are willing to make—that is, everyone—benefits from it.
Because markets reflect the choices—and therefore the preferences, abilities, and circumstances—of their participants, they also reflect the changes that impact them, communicating that information to others through relative price changes. While Wikipedia is far more nimble than other reference sources when it comes to incorporating new information, markets incorporate vastly greater amounts of useful new information far more quickly.
In fact, as Friedrich Hayek pointed out in “The Use of Knowledge in Society,” markets can incorporate information initially known only to one individual, even if she has no intention of benefiting others by that knowledge. That is because her self-interested market behavior will be reflected in price changes that communicate the consequences of that information, regardless of her intent. And that will allow for its productive use not just in the market where the information makes its initial appearance, but in markets for related products, such as substitutes, substitutes of those substitutes, complements, etc., in an expanding universe of effects.
Further, Wikipedia focuses on presenting facts that can be articulated and whose sources can be traced. But in markets, there is so much more information—including all the details of time and place that can change individual evaluations of goods and services—that it overwhelms our ability to know and process it. Much of that information is transitory and often not even articulable. Markets still incorporate that information by answering the question we are typically most interested in with respect to our productive associations: How much?
How much will someone else give me for something, or how much will someone else demand from me for it? While sparing us from the need to know all the infinitely complex combinations of who, what, when, where, and how, drastically economizing on information costs, it communicates the most essential things we wish to know through prices and changes in them.
When one thinks carefully about the beyond-remarkable feats of social coordination markets make possible, it is not hard to understand why Hayek concluded:
I am convinced that if [the market system] were the result of human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind.
Add to these marvels the fact that the market’s amazing feats of cooperation are accomplished in peace. When one’s property rights are well defined and defended, only voluntary arrangements are possible. Or as Leonard Read put it in his most famous book, Anything That’s Peaceful is allowed, but nothing that is not. Force is employed only when necessary to stop those who would violate others’ rights.
Indeed, early leaders of the free trade movement emphasized not just markets’ advantages for society in general, and the poor in particular, but for the advancement of peace. In Richard Cobden’s words:
[We] advocated Free Trade, not merely on account of the material wealth which it would bring to the community, but for the far loftier motive of securing permanent peace [with] people…brought into mutual dependence by the supply of each others’ wants.
The peaceful nature of market interactions is all the more amazing in view of the fact that unlike the shared goals that motivate the writers of a Wikipedia article, markets do not advance a single agreed goal. They vastly expand social cooperation, but that cooperation is in service of individuals’ widely disparate, often conflicting, goals. For example, we all desire food, clothing, and shelter, but we do not want the same amounts or kinds of food, clothing, or shelter, nor do we want them for the same people, at the same time, in the same quality and form, or in the same place. And that holds for innumerable other things.
Markets are not just a far more “indispensable part of the world’s information infrastructure” than Wikipedia, they provide their services under a greater handicap: governments do not constantly attack and undermine the information Wikipedia provides. In contrast, the information infrastructure provided by markets is widely undermined by government through a panoply of intrusions, including price ceilings and floors, taxes and subsidies, protectionism (tariffs, quotas, and nontariff barriers), and regulations that deter entry and stifle innovation.
Wikipedia is an impressive success story. It is informative, collaborative, diverse, and peaceful. But it is not humanity’s greatest collaborative effort, nor its greatest source of useful information. Those arise from the incredible benefits of people’s peaceful, voluntary arrangements in markets, when they are not short-circuited by government interference and hindrances. Consequently, if we could only give voluntary market arrangements the kind of respect and freedom Wikipedia enjoys, it would provide a major step forward for humanity.
