I, Nutella

“The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society’s legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed.” —Leonard Read

I recently came across this fascinating graphic that shows all the countries that contribute to the making of one jar of Nutella, the popular chocolate hazelnut spread that has become a cultural phenomena with its own holiday.

Over at National Review, Kevin Williamson breaks it down:

Like Leonard Read’s famously cosmopolitan No. 2 pencil, Nutella is the product of a vast, global network, a spontaneous order through which international, cross-cultural, and cross-lingual cooperation emerges with no central authority in charge of it. The corporate headquarters of the Ferrero Group, which manufactures Nutella, is in Alba, Italy. The sugar comes from producers in Brazil and from France, which also contribute vanillin to the process. The hazelnuts come from Turkish producers, the cocoa from Nigerians, the palm oil from Malaysians. The factories are in Brantford, Stadtallendorf, Belsk, Vladimir, Lithgow, Poços de Caldas, and Los Cardales. Of course, those are only the producers near the end of the process—qqqbefore them come the makers of the machinery they use, the producers of the steel used to make that machinery, the roughnecks bringing up oil that will make the diesel that powers the trucks and ships that move those 250,000 tons of Nutella around the world, the bankers who financed these endeavors, etc….

Nutella is a product of a truly global economy, and as a model of human cooperation, it is beautiful.

I have nothing to add to the details of Mr. Williamson’s eloquent summary. Nutella is a stirring example of globalization and spontaneous order in action.

Leonard Read’s famous essay, “I, Pencil,” introduced millions (including myself) to the beauty of free markets and spontaneous order. Tracing the journey that goes into the making of a common no. 2 pencil, Read tells a humbling yet uplifting story that illustrates Adam Smith’s metaphor of the “invisible hand” and F.A. Hayek’s insights on dispersed knowledge.

What goes for the simple pencil applies to Nutella and all the other wonderful products of the modern era, including the iPhone and Boeing 787. No government bureaucracy or political commissar ever gave orders for them to be made and get distributed to where they are needed. Instead, the miracle of the market was repeatedly “confirmed” under the guidance of the “invisible hand.”

In stark contrast, government action, exemplified by the use or threat of force, can only be described as an iron hand. Yet, for all their power, governments hold a dismal record in trying to “plan” economies and societies towards paradise. From the mass starvation of China’s Great Leap Forward to the current toilet paper shortage in Venezuela, central planners of all stripes have created no shortage of errors. A hundred million eggs were broken, and not a single omelet was made, let alone Nutella. These follies all demonstrate what Hayek calls “the pretense of knowledge.”

Given the complexities of the modern economy and human nature itself, it is impossible for such utopian schemes to work. As Hayek famously wrote in The Fatal Conceit, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Today’s interventionists, “czars,” and other “expert” do-gooders need to heed this warning and recognize that human beings are more than capable of cooperation and coordination without the need of a singular mastermind. Nutella, for instance, did not emerge according to any well-intentioned blueprint by a government bureaucracy, but rather was developed by profit-seeking business executives aware of their limitations and acting in accordance with the spontaneous order fostered by the free market. No central planner can claim credit.

Today, there are few open advocates for full-blown collectivization. However, many people still harbor a deep opposition to time-tested classical liberal ideas urging free markets, free trade, open competition, and the free flow of labor. From labor unions on the Left to xenophobic nationalists on the Right, anti-globalization activists and protectionists are found across the political spectrum. This crowd tends to advocate lofty-sounding, populist policies such as “Fair Trade,” “Buy American,” and “Buy Local.” Unfortunately (vindicating Hayek once more), good intentions do not equate with good results. The rest of us ordinary consumers would be punished and impoverished with higher costs and fewer choices. It would be a safe bet to assume Nutella would be one of the first goods to disappear should these activists get their way in restricting how products get made, sold, and distributed.

Nutella simply would not exist without economic interdependence and the global division of labor. As with the making of the pencil, thousands of people across the world, strangers to each other, were brought together through the invisible hand of the market to produce a jar of tempting hazelnut spread. There is not one country, let alone a single individual, on this planet that could ever make Nutella without outside help. Simply put, globalization is the extension of human cooperation across international boundaries. It makes no sense to confine voluntary interactions among different peoples to one arbitrary area. In his excellent book Global Crossings, Alvaro Vargas Llosa emphasizes that liberty comes as a whole and it would be foolhardy to decouple the free movement of people from the free flow of goods, or vice versa:

Placing more barriers to stave off the “pernicious” effects of competition, as the reactionaries who decry the free circulation of people, goods, services, capital, or ideas would do, will render a disservice to the very nations seeking to preserve their international leadership. Trying to be open in some areas—the circulation of goods—and protectionist in others will place nations at a disadvantage vis-à-vis those that understand that freedom is indivisible and that breaking it up into compartments severely curtails its blessings.

Nutella and the other fruits of prosperity we enjoy in everyday life are the results of capitalism, freedom, and globalization. Most importantly, this system is driven by the underlying principles of voluntarism and free exchange. If only more people understood and appreciated the marvel of emergent order that has made the world around us! This intricate system of cooperation, ingenuity, productivity, and risk-taking on a global scale not only continually improves human living standards, but it is also what makes civilization itself possible.

I do not know what the future may bring, but if we can enjoy delicious Nutella right now, one can only imagine what the economy of the future can provide!