The Power of Practice and Specialization: Why Market Economics Expands Human Potential

As a behavioral economist, I often look at how timeless economic principles blend with human psychology to explain not only why societies flourish, but also why individuals, no matter their starting point, can create meaningful value. Two ideas—comparative advantage, introduced by David Ricardo in the early 19th century, and Wright’s Law, first observed in the 1930s by Theodore Wright while studying aircraft production—hold surprising power when combined.

Taken together, they illustrate how markets allow people to be productive and how entrepreneurship enables individuals to amplify their value over time. This is not abstract theory—it is the foundation for why market economics and entrepreneurship are such positive forces for good.

About the author: Jeff Hulett leads Personal Finance Reimagined, a decision-making and financial education platform. He teaches personal finance at James Madison University and provides personal finance seminars. Check out his book -- Making Choices, Making Money: Your Guide to Making Confident Financial Decisions.

Jeff is a career banker, data scientist, behavioral economist, and choice architect. Jeff has held banking and consulting leadership roles at Wells Fargo, Citibank, KPMG, and IBM.

The Constraint of Time

Every human being, from a Nobel Prize–winning scientist to a garbage picker cleaning up after a college graduation, faces the same unyielding constraint: 24 hours in a day, 168 hours in a week. Time is the great equalizer. What differentiates us is not how much time we have, but how we allocate it.

Because time is finite, no one can do everything. Every choice carries an opportunity cost: time spent in one activity is time not spent in another. This is where comparative advantage and the power of markets come in, offering a powerful lens for understanding productivity.

Comparative Advantage: You Don’t Have to Be the Best

David Ricardo demonstrated that even if one person is better than another at every task, both still benefit from trade when they specialize. What matters is not who is absolutely the best, but who is relatively better at certain tasks. This insight reveals the true power of free markets: by enabling specialization and exchange, markets ensure that everyone can contribute productively, while society as a whole becomes far wealthier than if each person tried to work in isolation.

Neuroscientist Robert Sapolsky, in his recent work on determinism, uses the example of a college graduation scene to illustrate his view. In the foreground, students cross the stage to applause, while in the background, the garbage picker quietly cleans up. For Sapolsky, this juxtaposition highlights the idea that genes and environment largely dictate outcomes: the graduate and the garbage picker are locked into roles set long before that day.

I see the same image differently. Instead of comparing the graduate and the garbage picker, imagine Professor Sapolsky himself and the garbage picker, both working on the same campus:

• Professor Sapolsky could spend his limited time either conducting neuroscience research or collecting garbage.

• The garbage picker, while not able to match Sapolsky’s skill in research, contributes by specializing in the work that frees Sapolsky to focus on neuroscience.

But because Sapolsky’s time is limited, every hour he spends on garbage picking is an hour not spent on neuroscience. Through price signals—wages and salaries—the market naturally guides him toward research, where his comparative advantage is greatest. This, in turn, leaves room for the garbage picker to fill an essential role. Both contributions are valuable, and both individuals become more productive through specialization. (We will return to the role of price later in the article.)

The beauty of comparative advantage is that it enables a role for everyone. Even if you are not the absolute best at anything, you can still be productive by focusing on where your relative efficiency lies. This is the first building block of market economics: the division of labor.

Wright’s Law: Practice Amplifies Advantage

Comparative advantage explains where we should focus our time. Wright’s Law explains what happens when we do.

Theodore Wright, an aerospace engineer, discovered that in aircraft manufacturing, costs dropped by a predictable percentage each time cumulative production doubled. More practice led to fewer mistakes, streamlined processes, and higher efficiency.

When applied broadly, Wright’s Law is simply the learning curve: the more we repeat an activity, the better and more efficient we become.

• The garbage picker who organizes workflows and refines routines becomes faster and more reliable.

• Sapolsky, immersed in experiments and lectures, sharpens his scientific insights.

Both move down their personal “learning curves.” Over time, their comparative advantages are not just preserved—they are amplified.

The Marriage of Ricardo and Wright

Now combine these two principles:

1. Comparative advantage says that everyone can achieve a productive role, even if they are not the best at anything.

2. Wright’s Law says that practice within that role will improve efficiency, reinforcing and expanding one’s advantage.

This marriage explains why market systems are so powerful. By encouraging specialization, markets encourage everyone to contribute. By enabling repeated practice, markets create feedback loops where individuals and organizations continuously improve.

What makes this process work is price. Wages and salaries act as signals, guiding people—suppliers of labor—toward the roles where their time and skills have the greatest comparative advantage. When the market values their work, that recognition provides positive feedback—much like a “like” on social media—that encourages the brain to keep practicing and achieving. As Wright’s Law predicts, repeated practice within a specialization compounds efficiency and skill. If those growing skills are valued in the market, they command a higher price, creating a reinforcing loop where neurobiology and market dynamics align. Price thus reflects current value, rewards growth, and builds the scaffolding for individuals to emerge, specialize, and prosper.

This is the essence of the division of labor. As Adam Smith famously described in The Wealth of Nations, a single worker making pins alone might produce only a handful per day. But when the work is divided into specialized tasks—drawing the wire, cutting it, pointing it, attaching the head—the same group of workers could collectively produce tens of thousands of pins daily. Specialization turned modest effort into extraordinary output.

Wright’s Law gives Smith’s insight a modern, quantitative backbone: experience compounds, and costs fall predictably as tasks are repeated and refined. Together, Ricardo’s comparative advantage and Wright’s learning curve demonstrate how ordinary effort, multiplied across people and amplified by practice, creates extraordinary wealth.

Beyond Determinism: Why Markets and Practice Matter

“Life can only be understood backwards; but it must be lived forwards.”

― Søren Kierkegaard

Determinism suggests that our genome and upbringing prewire much of who we become. There is some truth in this—our genetic inheritance and early environment create obstacles or advantages that shape our starting point. Yet the deterministic view is fundamentally backward-looking. It emphasizes what has already happened, not what might emerge.

The future, by contrast, is highly variable, and the human brain is profoundly adaptive. For the garbage picker, this adaptability means that comparative advantage and Wright’s Law provide the scaffolding for growth. By learning skills tied to their role—organization, time management, communication—they not only become a better garbage picker but also expand their capacity to move beyond garbage picking. Specialization gives them a foothold in the market, and repeated practice helps them climb higher.

Where determinism suggests people are locked into past trajectories, comparative advantage and Wright’s Law open future possibilities. They show how individuals can rise above their starting point by investing time wisely, practicing deliberately, and engaging productively in markets.

Time as Investment Capital

In my seminars, I walk students through how much disposable time per week they have for investment. While the required time for sleep, meals, self-care, and work varies, on average, people are left with about 50 hours per week of discretionary time available for investment. Then, I ask students to open their smartphones and check the screen time section. Many are shocked to see how much of that 50 hours is consumed by scrolling through social media or other “low-investment” uses of time.

This exercise helps make time investment real by being close to home and thought-provoking. I remind students that the social media business model is built on redirecting their investment time in themselves into profit for the platform’s investors. The trade-offs quickly become clear: if most of those 50 hours are captured by distraction, little remains for building skills, relationships, or opportunities. By contrast, a student who invests even half of that time intentionally—say, 25 hours a week toward learning, networking, or practicing a craft—compounds those hours into significant human capital over months and years. At 25 hours a week, over a year, that is 1,300 hours of deliberate practice—the equivalent of an internship or the mastery of a new skill.

Just as money can be invested, so can time. Every hour is either consumed in the present or invested in future skill development. Choosing where to invest is a behavioral decision—often biased by distraction, impatience, or overconfidence.

Personal Finance Reimagined (PFR) emphasizes structured decision-making precisely to overcome these behavioral biases. When students learn to treat time like money—allocating it intentionally—they build human capital that compounds much like financial capital.

Entrepreneurship: The Engine of Amplification

Many believe capital is the lifeblood of entrepreneurship. Certainly, money matters—but it is not the scarcest resource. Time is. Every entrepreneur faces the same 168-hour constraint, and how those hours are invested determines whether a venture thrives or fails.

Capital can be raised, borrowed, or replaced. Time cannot. This is why successful entrepreneurs think in terms of systems rather than isolated tasks. They design businesses that relentlessly adjust and adapt priorities, ensuring that every hour of founder and team effort is allocated to where it creates the most value. In practice, this means:

• Squeezing the most out of comparative advantage by focusing each person’s limited hours on their relative strengths.

• Delegating or automating lower-value tasks so time is not wasted on activities that dilute impact.

• Iterating quickly, using feedback to shift resources toward what is working and away from what is not.

Entrepreneurship, then, is not only about creating products or services. It is about creating decision-making frameworks and adaptive systems that make the best possible use of time across people and resources. This is why even small businesses can outperform larger competitors—they often use time more wisely, focusing scarce hours on what matters most.

From a behavioral economics perspective, this is also why entrepreneurship is so empowering. It requires individuals to confront trade-offs head-on, to prioritize under uncertainty, and to structure their limited time in ways that compound returns. This is where Wright’s Law and Ricardo’s comparative advantage converge: entrepreneurs specialize where they can contribute most, and then improve relentlessly through practice.

At Personal Finance Reimagined (PFR), we extend this philosophy to entrepreneurs and families. Our decision-making frameworks help people treat their time as their most valuable investment resource, aligning choices with long-term goals. Just as entrepreneurs build systems to maximize scarce time, PFR equips individuals to structure their decisions so every hour invested yields compounding returns in wealth, opportunity, and life satisfaction.

Why Market Economics Is a Force for Good

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” 

— F.A. Hayek, The Fatal Conceit

Critics of markets often highlight inequality, risk, or exploitation. These concerns are real and require:

• Legal guardrails and law enforcement to secure property rights and personal safety.

• Patience to give markets the time to achieve long-term value.

But the underlying engine of markets—comparative advantage enhanced by learning—remains one of the greatest forces for human progress. Market manipulation has proven to create unseen, unintended consequences that often cost more than the benefit of the manipulation. In the case of markets, manipulations create more damage than the intended cure.

Market Manipulation Unintended Consequences Examples:

Minimum Wage: Economist Thomas Sowell has shown that minimum wage laws often backfire. By raising the cost of low-skilled labor above what employers can afford, businesses cut entry-level jobs, outsource, or automate. The result: young workers are denied the scaffolding opportunities they need to move down Wright’s Law learning curve.

Rent Controls: Urban economist Assar Lindbeck demonstrated that rent controls discourage new construction and drive down housing quality, ultimately making housing less affordable. They also push workers away from high-opportunity zones, depriving them of the daily practice and feedback needed to advance along Wright’s Law curve.

Left to operate freely, markets do three profoundly good things:

1. They enable roles. Comparative advantage ensures that those without absolute advantages can contribute.

2. They make people better over time. Wright’s Law means that practice within specialization compounds, creating efficiency and opportunity.

3. They create wealth collectively. The division of labor allows individuals to benefit from one another’s progress. When I specialize and improve, I not only help myself but also free others to do the same.

This is why societies that embrace markets and entrepreneurship consistently outpace those that rely on central planning or rigid hierarchies. Human potential is too diverse and dynamic to be directed from above. It flourishes when individuals, guided by their comparative advantages, invest their time in practice and improvement.

The proof is in the pudding

“What made us rich was not piling brick on brick, or bachelor’s degree on bachelor’s degree, or bank balance on bank balance, but the widening of liberty and dignity.”

— Deirdre McCloskey, Bourgeois Dignity: Why Economics Can’t Explain the Modern World

History provides the strongest evidence of why comparative advantage and Wright’s Law matter. When combined within the framework of market economics, these principles have fueled unprecedented human progress.

Over the last two centuries, global GDP has grown by orders of magnitude, lifting billions out of poverty. At the same time, average life spans have doubled, reflecting not only advances in medicine and technology but also the efficiency gains from specialization, trade, and relentless learning-by-doing. Comparative advantage ensured that everyone could contribute productively, while Wright’s Law guaranteed that practice and repetition steadily reduced costs and improved quality.

Together, these forces explain why the market era has been so transformative. Wealth has not been created by chance, but through the compounding effects of specialization and practice, multiplied across billions of people and generations.

Conclusion

At graduation ceremonies across the country, proud families celebrate students while grounds crews clean up in the background. At first glance, it may seem like two different worlds. But both the graduate and the garbage picker are subject to the same 168-hour constraint. Both can contribute through comparative advantage. And both can improve through Wright’s Law.

This is the deeper promise of market economics: it creates space for everyone to play a role, and it rewards practice that compounds over time. It is why entrepreneurship is not just about profit—it is about progress.

Ricardo showed us that you do not have to be the best to matter. Wright showed us that the more you do, the better you become. Sapolsky reminded us of the forces of determinism, but markets reveal how practice and specialization enable people to transcend it.

The future is an open playing field. The question is not whether you have a role to play, but how you will invest your most precious resource—time—to move down your own learning curve and contribute to the wealth we create together.

Resources for the Curious

Books

• Ricardo, David. On the Principles of Political Economy and Taxation. John Murray, 1817. — Introduces comparative advantage, showing how specialization creates value even when one party is not the best at anything.

• Roberts, Russell. The Choice: A Fable of Free Trade and Protectionism. Pearson Education, 2006. — Explains Ricardo’s principle of comparative advantage through a fictional dialogue, showing how specialization and trade create mutual gains even when one party is better at everything.

• Smith, Adam. The Wealth of Nations. W. Strahan and T. Cadell, 1776. — Classic treatment of the division of labor and market coordination.

• Sapolsky, Robert. Determined: A Science of Life Without Free Will. Penguin Press, 2023. — Explores determinism through genetics, environment, and social context, including the garbage picker metaphor.

• Wright, Theodore P. “Factors Affecting the Cost of Airplanes.” Journal of Aeronautical Sciences, Vol. 3, No. 4, 1936, pp. 122–128. — Original articulation of what later became known as Wright’s Law.

• Dweck, Carol. Mindset: The New Psychology of Success. Random House, 2006. — Defines fixed versus growth mindsets and their role in achievement.

• Smith, Adam. The Theory of Moral Sentiments. A. Millar, 1759. — Explores the impartial spectator and moral grounding of markets.

• Friedman, Milton. Capitalism and Freedom. University of Chicago Press, 1962. — Argues that free markets expand both economic opportunity and individual liberty, showing how specialization, trade, and entrepreneurship create the conditions for prosperity and human flourishing.

Journal Articles & Research

• Hoel, Erik. The World Behind the World: Consciousness, Free Will, and the Limits of Science. Avid Reader Press, 2023. — Introduces “causal emergence,” explaining how micro-level actions compound into macro-level outcomes.

• Seth, Anil. Being You: A New Science of Consciousness. Dutton, 2021. — Describes free will as probabilistic and partially controllable, aligning with Stoic principles.

Online Articles (Jeff Hulett, The Curiosity Vine)

• Hulett, Jeff. The Hidden Wealth of Time: Turning Challenges into Opportunity. The Curiosity Vine, 2023. — Explores how mindset, preparation, and specialization transform time into an investment for upward mobility.

• Hulett, Jeff. Challenging Our Beliefs: How to Be Bayesian in Our Day-to-Day Life. The Curiosity Vine, 2023. — Explains how Bayesian inference helps us update beliefs and make better decisions under uncertainty.

• Hulett, Jeff. The Gene Trade: Making the Market for Gene-Altering Interventions and Medical Selection. The Curiosity Vine, 2022. — Discusses nature, nurture, and determinism through the lens of biotechnology and markets.

• Hulett, Jeff. How Our Neurobiology Impacts Our Life’s Pursuits: Are You from ‘Dope-land’ or ‘Acetyl-ville?’  The Curiosity Vine, 2023. — Uses neurotransmitter metaphors to explore motivation, attention, and habit formation.

• Hulett, Jeff. Higher Education Reimagined. The Curiosity Vine, 2020. — Examines affordable, flexible pathways to lifelong learning.

• Hulett, Jeff. Diamonds in the Rough: A Perspective on Making High-Impact College Hires. The Curiosity Vine, 2021. — Explains how GPA and signals of effort matter in recruiting decisions.