Leitmotif

Reason as the Leading Motive

Food For Thought: Free Market and Indian Eateries

Posted by Jerry on June 22, 2007

Over lunch at a restaurant table, sitting by myself, I happened to be thinking about the logical operators “and” and “or” and their implications in the truth-value of propositions. But anyhow, my thought process was interrupted by a fellow Indian who decided to seat himself beside me at my table because all the other tables were taken during the rush of the lunch hour.

It is a rather common practice in India for total strangers to share a table—no matter how small—during their meals. However, this practice is mostly restricted to low-end eateries and Indian fast-food joints. They usually get a rush of crowd during the lunch hours and after-work evening hours.

What struck me about this practice was that it was a simple but elegant expression of free market operations. During the peak meal times, there is a large demand for fast and inexpensive food, which brings hordes of hungry patrons to these restaurants at the same time.

More people seated at one table means more people are quickly served their meals,
More incoming customers are given seats to have their meals quickly,
The restaurant makes double or triple the money than normal per table by this practice,
The servers (waiters) make more money in tips due to double or several checks per table,
All this extra and efficient earnings per table—plus the low cost of wages for servers earning handsome amounts in tips—allow the restaurateur to control prices and provide cheap meals for his patrons,
Which keeps the patron satisfied because he is getting a quick and inexpensive meal,
Which means the patron will continue to patronize the restaurant, thus sustaining a business in the economy,
And in the end—everyone is satisfied, and the transaction has benefited all the parties involved.

Free market—supply meets demand—no regulations—market value prices—efficient service—mutual benefit.

Of course, a huge part of this transactional chain is the cultural aspect of Indians, who are pretty (extremely?) flexible with their notions of private space—if they even have one.

Such a practice would not work in the United States because Americans have a very rigid notion of private space and consider it invasive and offensive to violate this space.

But the beauty of the free market is that it allows such cultural considerations to seamlessly guide the transactional operations without external regulation, monitoring, or coercion.

To illustrate, even though Indians have little qualms about invasion of personal space when it comes to inexpensive fast-food eateries, they become highly attuned to their space issues when they visit expensive restaurants. This is again the operations of free market creating a framework of transactions that blends in cultural considerations. In expensive restaurants, the extra money you pay ensures (or is intended to ensure) not only exotic food but also a unique experience. And the money buys you the privilege to individually monitor who comes within the sphere of your pleasurable experience, i.e., who invades or shares your personal space—a stranger or your companion. The extra money affords you the legitimate demand to deny a stranger what you are experiencing.

The restaurateur has to respect this demand from his customers if he intends to continue his business of charging expensive rates for the food and ambience of his restaurant. Thus, the items on the menu are pricey and the tips given to servers are generally higher. Customers do not complain about this because it is a legitimate exchange of value for value—and all are benefiting from the transaction.

Now, such a thing cannot be expected from an Indian low-end, fast-food eatery because the items on the menu are not priced to provide you a value for more than just the meal. And as a customer, you are well aware of this fact and you do not complain. In addition to low price of the meal, as an Indian, you are also aware of the fact that cultural mores here do not permit you the luxury of personal space at a place not intended to be luxurious.

Thus, free market in Indian contexts allows for such variance in the practices observed among customers while eating out. This is because the essence of the free market is that everyone sorts out his own problems, devises his own solutions, and engages in the trade of values or ideas with others on a voluntary basis. If you don’t like what you’re getting, you have the right to withdraw from the transaction.

Free market in the American context means that Americans will not practice sharing tables with strangers in restaurants—no matter how inexpensive—because no one (or very few) is willing to enter such a transactional framework. As Americans, they are aware that personal space is not a matter of luxury but an expression of their individuality.

Thus, the free market system is not culture-bound. It is not a uniquely western phenomena unsuited for the needs and mores of non-western cultures. The free market need not be modified, tampered with, controlled, or monitored by government “checks and balances” simply because they distrust this free-for-all “western” system.

The free market is simply a term designated to denote individual freedom in economic matters—and all individuals across the globe regardless of their culture have the right to be free.

Addendum:

My response to a commentor on this article bears some important points that need highlighting and that clarify the above article in more explicit terms. Here is what I said:

[Commentor] said: Capitalism should not be enforced/crudely exported.

Ergo: If capitalism were enforced, then it would not be capitalism at all. That would be a contradiction of concepts. Laissez-faire capitalism *requires* that people be let *free* to be irrational or rational in their dealings with each other. All that capitalism requires is a guarantee to freedom, liberty, and ownership of property. These are the roles of the government and supporting capitalist institutions. But no, the government cannot *force* someone to engage in voluntary free trade or enter a transaction that the individual does not want to engage in. That is not capitalism.

Next, Capitalism cannot be exported, “crudely” or otherwise. Because to “export” implies that capitalism or free market system is a uniquely western phenomena that has to be tailored to meet the needs of host economies in the east. But the point of my post above was precisely to illustrate how free market systems can arise *organically* in any culture without any external or government regulation or supervision and can take into account all the cultural mores prevalent at that time in a given framework (I illustrated two contrasting frameworks of transaction–the low-end Indian eatery and the high-end Indian restuarant–with two contrasting cultural mores–the Indian cultural more where private space is a luxury and the American culture where private space is an expression of individuality). My article attempted to show how free market transactions can arise organically within any of these diverse cultural frameworks.

[Commentor] said: Capitalism should evolve over a great deal of time.

I agree with you on this. Even Ayn Rand pointed out that to institute capitalism immediately would be destructive even if we accept that the loss could be quickly recouped by the free market system. Rand advocated gradual evolution towards free market systems by putting in place capitalism institutions, slowly withdrawing or reducing welfare and socialist policies, reducing taxation, encouraging private business ventures, etc. Yes, all this should happen over time for people to get used to the idea of having to be personally responsible for their actions and transactions.

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5 Responses to “Food For Thought: Free Market and Indian Eateries”

  1. Some nice observations.

    There is certainly a deep link between the free-market and individuality, however superficial many of the various expressions of individuality might be.

    I do notice a change, at least in the UK and the US, that people might share a table. Though, this is contingent upon the type of establishment – it’s more likely to occur in a coffee shop that caters to “sophisticates”. This said, I have regularly shared a table in London Chinese restuarants and in noisy bars.

    I’d be interested to hear your thoughts on whether you think capitalism is an occidental phenomenon as opposed to the universally valid free-market. My point is that private ownership of the means of production is not a necessary feature of a market economy (a market can be a barter market, an illegal market, a free-market, or a command economy).

    Cheers,

    MWQ.

  2. Ergo said

    Hi MWQ,

    Capitalism is most definitely a western invention–and one of the best things man has devised in this world. However, its *application* is universal, i.e., it can be applied to the dealings between all men everywhere so long as we recognize that we are human beings of a certain nature and have certain moral requirements, for example: the moral requirement for the right to liberty and property, which is the bedrock of capitalism.

    Now, it is true that a market economy need not be a laissez-faire capitalist economy. But traditionally, the notion of “free market” is used to refer to this type of capitalist system, which is the sense I use it as well. Since the essence of freedom in free market is also to have the freedom to own property and reap its benefits, the private ownership of the means to production (capitalism) is a proper expression of free individuals in a free market at work. Thereby, capitalism is as universally applicable to all individuals everywhere.

  3. I’m very aware of the tension between the universalizing tendencies of the postulates of a laissez-faire system and localized traditions, mores, practices etc. This tension can manifest itself in social unrest which is the one thing that undermines the prospects for capitalism. Perhaps the transition to capitalism should:

    a) not be enforced/crudely exported;
    b) evolve over a great deal of time.

    MWQ.

  4. Ergo said

    MWQ,

    You said: Capitalism should not be enforced/crudely exported.

    If capitalism were enforced, then it would not be capitalism at all. That would be a contradiction of concepts. Laissez-faire capitalism *requires* that people be let *free* to be irrational or rational in their dealings with each other. All that capitalism requires is a guarantee to freedom, liberty, and ownership of property. These are the roles of the government and supporting capitalist institutions. But no, the government cannot *force* someone to engage in voluntary free trade or enter a transaction that the individual does not want to engage in. That is not capitalism.

    Next, Capitalism cannot be exported, “crudely” or otherwise. Because to “export” implies that capitalism or free market system is a uniquely western phenomena that has to be tailored to meet the needs of host economies in the east. But the point of my post above was precisely to illustrate how free market systems can arise *organically* in any culture without any external or government regulation or supervision and can take into account all the cultural mores prevalent at that time in a given framework (I illustrated two contrasting frameworks of transaction–the low-end Indian eatery and the high-end Indian restuarant–with two contrasting cultural mores–the Indian cultural more where private space is a luxury and the American culture where private space is an expression of individuality). My article attempted to show how free market transactions can arise organically within any of these diverse cultural frameworks.

    You said: Capitalism should evolve over a great deal of time.

    I agree with you on this. Even Ayn Rand pointed out that to institute capitalism immediately would be destructive even if we accept that the loss could be quickly recouped by the free market system. Rand advocated gradual evolution towards free market systems by putting in place capitalism institutions, slowly withdrawing or reducing welfare and socialist policies, reducing taxation, encouraging private business ventures, etc. Yes, all this should happen over time for people to get used to the idea of having to be personally responsible for their actions and transactions.

    P.S. I visited your blog and liked what I read. I particularly liked and agreed with your article on political correctness. Unfortunately, you have closed all comments to your articles so I couldn’t leave you a comment there.

  5. Greetings,

    You said: Capitalism should not be enforced/crudely exported.

    MWQ: By this I meant that it is exported as part of an ideological package typically tied to liberalism and democracy, none of which **need** to be conjoined. There is a complex tapestry of (metaphysical, moral, and political) freedoms or autonomy that lies behind this alliance, but there is no logical entailment.

    P.S. I visited your blog and liked what I read. I particularly liked and agreed with your article on political correctness. Unfortunately, you have closed all comments to your articles so I couldn’t leave you a comment there.

    MWQ: Thanks. The blog is more a website than a blog for me.

    Cheers,

    MWQ.

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