From Raiders to Traders

The most basic economic concepts of exchange, systematically presented through story.

Part 3 of The Action Odyssey. Click here for part 2.

Odysseus continued to save and invest, to produce capital goods and increase his productivity. He farmed, hunted, and fished. He built tools and structures. He accumulated food and materials. Then one day when he was exploring the island, he saw him.

Ten feet tall and massive. A single huge eye in his forehead. A cyclops. And not just any cyclops. He knew it was his old enemy, because of the scar at the bottom of his eye. A scar that he himself had given him.

“Polyphemus,” muttered Odysseus.

“Nobody!” bellowed the cyclops.

Years ago Odysseus had told him his name was “Nobody.” Thanks to this, when Odysseus attacked him, Polyphemus cried out to his fellow cyclopes, “Nobody is killing me!” His comrades thought, “Well, good for you,” and went about their business.

“You can see me?” Odysseus asked. “I thought I had taken care of that hideous eye of yours.”

“I healed! You will not!”

The two foes leapt at each other, Polyphemus brandishing his club and Odysseus drawing his stone daggers.

Dodge and thrust, smash and stomp. The creature and the great warrior battled for hours.

The wounded giant fell. But as Odysseus pounced to finish him off, he was met with a backhand that sent him reeling. Totally disoriented, the warrior staggered off, and Polyphemus was too injured to follow.

“This isn’t over!” yelled the Cyclops.

“Oh don’t worry, you’ll see me again; but only in the moment before I finish off that eye!” retorted Odysseus.

And they did meet, the next morning. But it went as before. The two were too evenly matched. Neither could get the upper hand and finish the other off. Day after day they fought. And day after day, Odysseus became poorer. Spending all day fighting left hardly any time for production or maintenance.

As his savings shrank, so did his investment. As his investment shrank, so did his stock of capital goods. As his capital stock shrank, so did his productivity. And as his productivity shrank, so did his savings. And around and around this cycle of poverty went.

And as his injuries accumulated, his productivity also suffered from his weakness. Besides, he redirected much of his labor and capital goods toward fashioning weapons. The war even extended into the night, as each undertook night raids on the other’s supplies.

One night, in the hours before dawn, as Odysseus was laying on the ground, imagining new ways to attack his enemy, Athena appeared before him.

“Dear lady, where have you been? Give me the power to destroy Polyphemus!”

“Why do you fight the one-eyed man?”

“He is no man! He is a barbarian, a monster, a beast!”

“A beast? You are behaving just as bestially as he is. Animals too are always at war with each other.”

“He is the animal! He would like to eat me, like a lion eating a deer, just as he ate several of my soldiers years ago.”

“Yes, he is a predator. But you would like take all of his supplies, like a hyena snatching that deer from the lion. That makes you a kind of parasite!”

“Well that’s life for a warrior like me! It’s dog-eat-dog. Eat or be eaten. Steal or starve!”

“You’re talking about law of the jungle, or biological competition. But that’s a win-lose game. The lion cannot win and eat without the zebra losing and being eaten. The zebra cannot win and escape without the lion losing and starving.”

“That may be. But it’s a game I’ve always won!”

“You’ve always won it so far. But do you think you always will?”

“No. I’ve seen many of my brave friends die in battle. I know I will one day follow them.”

“If you’re lucky. There are worse ways to die than battle. Like freezing to death. It is now winter, and you are sleeping in the open air with no fire. You will freeze before you are slain. Why not try something different? Why not try a win-win game?”

“Win-win?”

“This war is impoverishing you. You don’t have enough lumber to build a shelter and you need firewood. Polyphemus’s side of the island is heavily forested, and he is incredibly fast at felling trees with his tremendous strength. So he has great stacks of wood.”

“I know; I’ve been trying to raid his woodshed for many nights now. But he always drives me off.”

“Why raid, when you could trade?”

“T…. t… trade?”

“Yes. He, unlike you, doesn’t know how to farm…”

“What a barbarian.”

“…and so he is always short on food.”

“Yes, I’m hoping he’ll starve over the winter.”

“You may freeze before he starves. Why not offer to trade him some grain for some wood? That would be called an exchange and it would be a win-win game.”

“What?”

“In an exchange, both sides win, because both sides value what they get more than what they give. Animals almost always war with each other, and almost never exchange. But humans do. When you choose trade over war, you become more human and less animal.”

“Is a shopkeeper more of a man than a warrior?!”

“Yes, he is.”

“Well, I’ll do it. But only so I don’t freeze before he starves, and only so I can survive long enough to destroy him later.”

And so the next morning he brought grain as well as arms to the battlefield. When he saw Polyphemus in the distance, he called out to him, offering a day’s truce and to trade.

Polyphemus, for his part, was worried that he would starve before Odysseus froze, so he left and came back pulling a sled full of lumber.

“What are your terms?” shouted the giant.

“Terms?” thought Odysseus, “A strange way for a barbarian to speak!”

He shouted back, “I will give you ten bushels of grain for fifty cubits of lumber.”

“Fifty? You must think me a bumpkin! I will give you thirty at the most.”

“Thirty? You’re as grasping as a Greek! I will take forty-five at the least.”

Deny and demand, ask and argue. The giant and the great warrior haggled for hours.

“The brute bargains as well as he battles!” thought Odysseus. But he had to admit to himself that the cyclops’s counter-offers hurt much less than his uppercuts.

Finally they settled on ten bushels for forty cubits. Each left his weapons behind, and dragged his sled forward. They met in the middle of the field. Each warily handed over his sled rope over to the other at the same time.

Odysseus thought about the long cold nights he had suffered. He thought of the warm fire he could build with the lumber Polyphemus was handing him. All bargaining protests aside, ten bushels of grain was a small price to pay to warm his bones. He could not help but feel grateful to the giant cyclops, as strange as that seemed. And in Polyphemus’s single hungry eye, Odysseus thought he saw the same feeling.

As he pulled the sled back to his camp, Athena appeared beside him.

“You seem perplexed, Odysseus.”

“It was strange not dealing with Polyphemus as an enemy. Although, when I was bargaining with him, I still felt he was an adversary. Yet, as hard as we bargained, at the end, I was still happy.”

“Again, that is because it was an exchange. You valued what you received higher than what you gave. Otherwise you would not have traded.”

“Hmph,” Odysseus grunted.

“Well, with the truce, now you have the rest of the day to build a hut and then a fire. And then tomorrow, it’s back to war?”

“Well,” Odysseus grumbled, “I do need a new plow. And none of these pieces are big enough for that. I thought I’d offer another truce tomorrow, and see if he would trade a bigger piece for some of my homemade bread. I bet he hasn’t had really good bread in a long time. Of course, I’ll definitely kill him the day after that.”

“Of course you will,” smiled Athena.

Continued in part 4.