#Trade is good. It is amazing that so many fail to comprehend how trade works. But, more importantly, even fewer the huge implications of it. Let's take a look. When two parties voluntarily exchange, they do so because each of them expect to become better off by doing so. It
doesn't matter if they are equally wealthy, or if one has a more pressing need. The simple truth still holds: they wouldn't exchange unless they saw reason to. Any trade that takes place is thus the result of each of the parties' striving for a situation that is more satisfying
to them. This makes exchange different from redistribution, which takes from one to give to another, and it requires the absence of fraud, where one party tricks the other into exchanging based on (intentionally) false information. Without the use or threat of physical force or
fraud, both parties expect to gain. So total satisfaction increases. But this also means that it doesn't matter what level of analysis we adopt: the two parties both expect to gain. Whether they are individuals, families, companies, or countries. Yet note that the expectation of
gain is on the same level as that of the exchange. So when two companies exchange, both companies expect to gain. This doesn't mean all persons in each of those companies must gain from the exchange. This is because the exchange happens on the aggregate level, and the decision
therefore is centralized so the expected gains are on the aggregate level (unless, of course, the decision-maker is acting for his/her own gain at the expense of the company). A company exchanging for machines can therefore be better off, by becoming more competitive, but may as
a result (or according to plan) let go of some of those previously employed. Similarly when "countries" (that is, governments) trade, the exchange is expected to benefit both governments, but this does not mean all parts of governments, or their subjects, also must gain. But note
the reason: parts of the whole may not gain from exchange because those parts do not themselves exchange. Others trade on their behalf, aiming for ends that are not in line with the parts' own ends, which typically causes redistribution within the aggregate: with winners and
losers. It is not the exchange itself that produces these losers, but the redistribution. So if those "wholes" (companies, governments, etc.) were not acting as aggregates but as decentralized networks of trade themselves, things would be different. If the parts of the companies
or governments would themselves trade with each other, they would not be disadvantaged from the centralized exchange because there would be no redistribution. To the degree an exchange changes a party's behavior, there would only be a lack of exchange. But a lack of exchange is
not a loss, only a lack of gain. This is unlike redistribution, which requires loss for one party to produce gain for another. It is in fact the centralized decision that creates the losers, by redistributing from them to those who instead will gain. In other words, we would be
able to avoid these painful outcomes (the losses) if the aggregates were not so, but the parts instead exchanged with each other. Thus, if centralized bodies of top-down decision-making were decentralized and split into autonomous units. The lower the level, the greater the gains
from trade. In other words, replacing structures of control with markets (decentralized voluntary exchange) would solve a lot of problems. Centralization, which may provide those at the top with grandeur yet creates only the illusion of "muscle," has a role to play, but is only
of value when and where it facilitates outcomes impossible through means of exchange. In market production, this involves the coordinated implementation on novel production processes (see my book, The Problem of Production), but such structures should--for the benefit of all--be
abolished as soon as they have served that purpose. Most organizations today, whether for-profit companies or government agencies, are most likely highly ineffective compared to their "trade-network selves." They do not facilitate otherwise impossible outcomes as much as they
facilitate redistribution, and thus can impose costs (losses) on some to create gains for others. Yet it would be a fundamental error to blame the exchange for this state of affairs. It is not the exchange but the centralization of it that causes the observed problems.
