H. Beliefs about buying and selling

The society believes that mutual gains come from voluntary exchanges, and therefore a business deal is “good” if it brings benefits to both buyer and seller

If a society is going to grow from poverty toward greater productivity and prosperity, then it is important that people understand the amazing creation of value that occurs as a result of voluntary buying and selling in the marketplace. The society must realize that buying and selling are normally not situations of exploitation of one person by another, but rather win-win transactions in which both buyer and seller end up better off than they were before.

The sale of a loaf of bread is a simple example. If it costs the baker $3 in materials to make a loaf of bread, and he sells it to me for $4, we both think we are better off after the sale. I think I am better off because I wanted the loaf of bread more than I wanted my $4. Otherwise, I would not have traded the money for the bread. But the baker thinks he is better off because he wanted my $4 more than he wanted that loaf of bread (which would grow stale by the next day). Otherwise, he would not have traded the bread for the money. I am better off and he is better off.

This is the wonder of voluntary exchanges in a free market. A society that understands this simple concept will have a positive view of business transactions, and people will enjoy doing business with one another because both parties end up better off. Buyers and sellers will be happy not only for the value that they derive from a transaction, but also for the fact that they give some value, that the business transaction is a “good deal” to the other person as well. Another benefit of this cultural attitude is that companies will value long-term business relationships with their customers.

Similarly, this win-win perspective will apply to employer and employee relationships. Employers will recognize that their businesses are better off after employees have done a good day’s work. They can be happy for this. But employees will also recognize that they are better off after getting paid for a day’s work, because they will have more money than they had before. Most employers and employees, then, can think of their relationship as a win-win relationship.

We believe the Bible supports such a win-win viewpoint. Buyers and sellers, and employers and employees, can all think of themselves as fulfilling the Golden Rule through their business relationships. Business transactions can be thought of as one way of loving one’s neighbor as oneself.86

By contrast, if a society does not have this kind of attitude, then suspicion and mistrust will proliferate. The society will believe that businesses generally “win” and customers and employees generally “lose” in voluntary exchanges in the marketplace. Also, people will quibble endlessly before making business agreements, because they suspect that business deals generally have a “winner” and a “loser” rather than two winners. In such a society, companies will place a low value on developing long-term business relationships or long-term employee relationships, and customers and employees will simply look for every opportunity to defraud businesses or to get paid without doing high-quality work that is worthy of the pay they are receiving.

One of the reasons why China stagnated economically for several centuries was that beginning in the 1430s, a form of Confucianism came to dominance: “Mandarins who scorned and distrusted commerce.”[1] As it was then, so it is today: an attitude of hostility toward business tends to hinder economic productivity and keep a nation trapped in poverty.

  • [1] Landes, Wealth and Poverty, 95.
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