The Economics of Loneliness

Edward Glaeser:

Economists are not believers in the virtues of lone wolves. Economics should be seen as a discipline that has spent centuries chronicling the enormous gains that come from people connecting with each other. Ayn Rand’s heroes, like the architect Howard Roark, may have been distinguished by their lack of standard social connections. But the heroes of Adam Smith or Alfred Marshall or even Milton Friedman are not isolated...

Division of labor requires human interaction. A group of 10 people working together is more productive than a solo operator, because larger groups allow people to specialize. Smith wrote his own warning against social isolation: “In the lone houses and very small villages which are scattered about in so desert a country as the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family.”

Smith and Friedman’s arguments for free markets are, at their heart, arguments about the advantages of human interaction. The argument against fettering free trade, made by both Smith and Friedman, is that when countries, or people, trade with one another, they benefit by taking advantage of each other’s talents. Free-market economists don’t oppose government intervention because every man is an island, but because interpersonal exchange makes everyone better off. A market, “unfettered” or not, is a social organism — a collection of people—that generally can survive only if it improves the lives of its members.

Read the whole thing.