"The Customer is God, and the market decides everything."
Ancient Chinese Saying
Ancient Chinese Saying
The symbols above mean "free enterprise" in traditional Chinese script. Interestingly, the symbols also can say "economic risk." Free enterprise is a system of economic risk! From start to finish.
And that is well put.
There are no guarantees in a free enterprise system. There are too many things that can and do interact to guarantee anything. If, that is, the market is operating freely. Billions of interactions happen to bring the simplest product to market. They cannot be managed of course, except when the huge fabric of the market place brings all the stages of innovation, design, production, marketing and distribution together harmoniously.
The MARKET is the only way this can happen. And this has been recognized for millenia.
The MARKET decides everything.
But what's this that the customer is GOD?
The business should worship the customer?
Well, yes! If I am a large or small business and I do not take care of my customer, somebody else will.
But I thought Adam Smith's saying that the butcher, the baker and the beer maker don't bring their products to the market for any other reason but self interest.
IT IS SELF INTEREST! But that doesn't discount the importance of the customer!
The wise business presents its products in the most attractive way possible!
When a chef sells a recipe book, the photos are incredible! It's all about presentation! It's all about the customer!
What is the chef's objective in selling the book? The chef's self interest! The chef wants to become better known, establish a niche, gain market share, be different, show off specialties, become a household word, and attract future customers!
This is what Adam Smith's words about the butcher, baker and beer maker mean! Businesses act out of self interest, and the bottom line is return.
The butcher winks at a patron and cuts the meat slightly thicker, knowing this makes the patron feel special. The patron returns. And tells others.
The baker might sell a vase of flour that has been pushed down and compacted, knowing that the patron feels there is extra for the money. The patron returns. And tells others.
And the beer maker might have larger mugs in his tavern or include free food in addition to the drink. The patron returns. And tells others.
And it's all about the bottom line!
AS WE SAY THE BOTTOM LINE IS RETURN, WE SHOULD SAY THE BOTTOM LINE IS PROFIT! BECAUSE IT IS!
Self interest is not selfishness. All businesses small and large want to survive. And they want to get better in whatever ways it takes to survive.
Competition DEMANDS that a business gets better. And change. And distinguish itself in terms of product (which microeconomics calls product differentiation) and public perception. Free enterprise is the only system that encourages, yes encourages, competition. It encourages that businesses stand out. And the stand outs attract a market and survive.
It is survival of the fittest.
But, as this Invisible Hand of the marketplace directs that everything moves toward being more and more efficient, and stabilizes a system of risk and reward, it is not a pounding fist.
The Invisible Hand is present day and night, and is always a beacon, for those who have eyes to see and ears to hear. Those who see and hear respond more quickly to market changes.
The Invisible Hand is a protective hen brooding her flock, gathering into safety and allowing to grow.
The Invisible Hand brings the customer out of the wood work and into the market place to see and enjoy and participate.
THE INVISIBLE HAND IS THE REASON THE MARKET DECIDES.
THE INVISIBLE HAND ESTABLISHES FREE ENTERPRISE.