I used a Sonicare toothbrush recently on the recommendation of our dentist and an inquiry from my wife, who found that Walmart.coms daily deal was a Sonicare for about $50. When I was in grad school, I had a friend who bought one for $100. This was in 2001 or 2002. Adjusting for inflation, with the Consumer Price Index, this would have been about $120 in todays dollars. The inflation-adjusted price of the Sonicare we bought was less than half of what my friend paid. This teaches us a few important lessons about the distribution of the capitalist bounty and the subtlety of economic growth.
The real winners from capitalist innovation are not the dynasties of yore. Theyre regular people like you and me. Capitalism has created wonders that were out of reach of the richest kings from ancient times to modernity and made them widely available. Joseph Schumpeter famously wrote that all the wealth of Louis XIV couldnt have bought him the conveniences of modern dentistry. All of his wealth could not have bought him a Sonicare that an American worker can purchase with a little over two hours of work at average hourly earnings of $22.95. In his classic Capitalism, Socialism, and Democracy, Schumpeter explains (p. 67):
There are no doubt some things available to the modern workman that Louis XIV himself would have been delighted to have yet was unable to havemodern dentistry for instance. On the whole, however, a budget on that level had little that really mattered to gain from capitalist achievement. Even speed of traveling may be assumed to have been a minor consideration for so very dignified a gentleman. Electric lighting is no great boon to anyone who has money enough to buy a sufficient number of candles and to pay servants to attend to them. It is the cheap cloth, the cheap cotton and rayon fabric, boots, motorcars, and so on that are the typical achievements of capitalist production, and not as a rule improvements that would mean much to the rich man. Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.
The changes are incremental, almost imperceptible, but these tiny drops in what the economist Donald Boudreaux calls the prosperity pool add up over time. In her ongoing series of books on what she calls The Bourgeois Era, the economist Deirdre McCloskey argues that it was new dignity and esteem for simple acts of innovation that helped create modern economic growth. Here are the effects of so trivial a set of innovations as the invention of the Sonicare and the development of a distribution system that will deliver it to my door for $50:
1. Less dentistry and saved money. Our demand for dental services falls. Doesnt this hurt dentists and providers of dental services? In the short run, perhaps, in that it reduces demand for simple dentistry. It saves us money, however, some of which we can spend on cosmetic dentistry or other luxuries. Part of our saving might go in the bank, where it will be available to lend to someone who is looking to buy a house or a car or open a new business.
2. Higher productivity. I get back hours I might have otherwise spent in a dentists chair. I will use some of them to work, and I will use some of them to rest and relax. The world will be richer by the amount of what I can produce and perhaps by the greater longevity I might enjoy because of my increase in leisure. The lower probability of future dental problems (and lower probability of pain) also means I can be more attentive. I will learn more, and I will make fewer mistakes.
3. Less pain and a more pleasant life. Ive had dental problems in the past; I expect to have fewer in the future. My life is better because of a handful of mundane innovations that allowed someone to build a better toothbrush. I dont have any particular love for Philips or for the Sonicare, its just that this is the most recent in a very long series of innovations that have made my life better.
This illustrates the innovative properties of a relatively unrestrained market economy. Bit by bit by bit, entrepreneurs and innovators come up with ways to make our lives better. The policy implication is stay out of their way.