Is it possible that in the 1770s there were computers and the Internet and even e-commerce? If not elsewhere in the world then at least in Glasgow, Scotland? I am not hallucinating. I am simply marvelling at the precision with which the working of e-auction— championed by eBay—matches what Adam Smith, father of economics and a professor at the University of Glasglow, had described as fundamental economic behaviour. One of the cornerstones of his 1776 seminal book The Wealth of Nations was the concept of “the invisible hand”, whereby “the private interests and passions of men” are led in the direction “which is most agreeable to the interest of the whole society”.
In more ways than one, e-auction (lead section of our cover story, pg 28) is the best living example of “the invisible hand”. E-auction is the final frontier in the creation of a global market where every person on earth with a computer and Net connection (already 233 million in the world and about 2 million in India) is a buyer and a seller—of everything under the sun. From jewellery to junk, from furniture to fabric, people are selling things on eBay India to buyers across the world, all with the click of a mouse. At last count, some 13,000 Indians in 660 towns and cities across the country were profiting from e-auction.
The wonder doesn’t stop here. The buyers and sellers who have never seen or known each other don’t cheat. Buyers purchase even the most expensive of things based on the description and pictures on their computer screen and sellers close the sale deal based on the promise of purchase made on the Net. Yet almost every time, the buyer gets exactly what he was promised and seller gets the money he was committed. As our story explains, the fierce, free and borderless competition prevents overpricing and a mandatory and transparent system of rating prevents cheating. This is exactly what Smith had envisioned when he said that the “drive of individual selfinterest in an environment of similarly motivated individuals will result in competition…which will result in provision of goods that society wants, in the quantity that society desires, and at the prices society is prepared to pay”. If the real world couldn’t live up to Smith’s ideas, the cyberworld has.
The unfolding power of the Internet as an earning potential took seven sections across 40 pages in this issue. We bet you will enjoy each of these—and pardon us for not being able to introduce the promised page on global investing because of the space crunch.