The Elves and Shoemaker Story
Not among the most popular ones, yet still pretty well known fairy tale by brothers Grimm, Shoemaker and the elves presents a story about hard working shoemaker who doesn’t have much success with selling his shoes. When it looks his business will definitely fail, a miracle happens.
When he wakes in the morning, a pair of shoes was made from the last piece of leather. It was so well made, he could sell it for enough to buy leather for two pairs and next morning two pairs were really waiting for him. His business unexpectedly expands until he tries to find out who helps him.
When he and his wife find out two elves are helping them and they don’t even have clothes, they prepare them nice present instead of usual pieces of leather. Elves get dressed and stop working but shoemaker’s business is just fine from then on.
In this case I decided to emphasize three important facts from this fairy tale which was written by Grimms in the time of formation of new society. If we want, it can be great example of early capitalism:
1. The cobbler is working hard but this isn’t enough. He needs something more for success. While in the story this is magic, we can also say he needs something extra to be notices on the market. It doesn’t necessary mean he has to beat the competition, in this case superb quality looks enough to incite demand on market.
2. When you got first costumers, you need to make another important step: reinvest the profit. In the fairy tale shoemaker doesn’t rest on laurels. Everything he earns, he invests in new material and despite the mysterious helpers he never stops working, he just specializes in his parts of the production process: purchase, cutting and selling. Division of labor is another important feature of capitalism.
3. This one is my favorite observation – reward of workers. When shoemaker and his wife give elves clothes, they stop working for them. Although in this particular case everything ends well (cobbler’s business runs great even without elves), we can also understand how can a reward be really double edged sword. If you pay your workers too much, your profit will be lower and if they get a chance, they can even leave you and maybe start working on their own. They can actually become your competition and capitalism never liked that.
I am pretty sure the relation between the elf and shoemaker (worker and employer) would not have such a happy ending if the story was written in 21st century…
What do you think?