In “The Elves and the Shoemaker,” the famous fairy tale by the Brothers Grimm, a cobbler and his wife struggle to survive, barely making enough to eat (never mind investing in the future of their business).
One morning, however, they wake to find that their last scraps of leather have been turned into a remarkable pair of shoes. Not knowing the source of such craftsmanship — and apparently incurious — the cobbler sells them off at a higher price, gaining new capital to grow his business. Each night thereafter, the miracle continues, and the enterprise grows in turn.
Months later, they finally take an interest in the source of such help, staying awake through the night to spot two naked elves, each happily laboring to make more shoes. The wife sews clothes for the elves, who, after finishing their work, express their thanks and graciously depart, never to be seen again.
One can find several morals or lessons in the tale, but Jeffrey Tucker does a marvelous job of highlighting its themes on the meaning of work, the gift of exchange, and the glories of capitalism.
“We were born into a world of amazing prosperity that our generation did not create,” he writes. Much like the cobbler and his wife, we find ourselves stumbling onto civilizational blessing, rather than striving, struggling, and warring for it. “Most of us never did anything of our own merit to cause us to benefit from this amazing world,” he continues. “At our birth, we woke up in the morning and found a finished and beautiful pair of shoes given unto us.”
Yet, also like the cobbler and his wife, we show little curiosity or appreciation for the sources of such blessings, or the institutions and ideas that enable them.
Indeed, since the beginnings of economic liberalization, many have preferred to outright oppose such features, even as they relish in newfound freedoms and conveniences. (See: Bernie Sanders supporter holding a smartphone)
“They are plotting to kill the elves,” Tucker concludes. But in this case, there are six, not two:
(What follows is quoted directly from Tucker, but excerpted/abbreviated with slight changes to format. Read the full thing here.)
- Private property: “It would not be necessary if there were a superabundance of all things, but the reality of scarcity means that exclusive ownership is the first condition that permits us to improve the world. Collective ownership is a meaningless phrase as it pertains to scarce resources.”
- Exchange: “So long as it is voluntary, all exchange takes place with the expectation of mutual benefit. Exchange is a step beyond gift giving because the lives of both parties are made better off by the acquisition of something new. Exchange is what makes possible the formation of exchange ratios and, in a money economy, the development of the balance sheet for calculation profit and loss.”
- Division of labor: “This is about more than dividing up productive tasks. It is about integrating everyone into the great project of building civilization. Even the master of all talents and skills can benefit by cooperating with the least skilled among us. The discovery of this reality is the beginning of true enlightenment. It means the replacement of war with trade and the replacement of exploitation with cooperation.”
- Risk-taking entrepreneurship: “Uncertainty over the future is a reality that binds all of humanity; entrepreneurs are those who do not fear this condition, but rather see this as an opportunity for improving the lives of others at a profit.”
- Capital accumulation: “[This is] the amassing of goods that are produced not for consumption, but for the production of other goods. Capital is what makes possible what F.A. Hayek calls the ‘extended order,’ that intertemporal machinery that stabilizes the events of life over time. Capital is what makes planning possible. It makes the hiring of large workforces possible. It allows investors to plan for and build a bright future.”
- The desire for a better life and the belief that it can happen if we take the right steps: “It is the belief in the possibility of progress. If we lose this, we lose everything. Even if all the other conditions are in place, without the intellectual and spiritual commitment to climb higher and higher out of the state of nature, we will slip further and further into the abyss. This state of mind is the essence of what came to define the Western mind, and which has now spread to the entire world.”
It took the shoemaker and his wife several months and plenty of success to pause and appreciate the elves, but when they did, they took immediate action to show their gratitude. They valued their role in the flourishing of the enterprise, and when it comes to the ideas and ecosystems that drive civilizational prosperity, so can we.
“So too should we clothe the institutions that made our world beautiful in order to protect them against the elements and their enemies,” Tucker concludes. “And even after they scurry off into the night, we must never lose consciousness of what they have done for us.”