I walk to school each morning. I enjoy the walk, which takes a rigorous 50 minutes, listening to seriously bad punk music to get in the mood for staff briefing.

I would be a middle-aged Adonis if it wasn't for the bakeries along the way. My nemesis is cream doughnuts. I reconcile my bad habit by using doughnuts in my teaching of basic economic concepts.

I teach at a Catholic boys' school. Cream doughnuts are a prized, short-lived possession since school canteens were afflicted by the modern mantra of healthy eating. They now serve miso soup and bland chicken wraps where it is hard to determine where the wrapper ends and the wrap begins. It is a mild form of child abuse.

It has taken some of the fun out of teaching. Years ago there was the fringe benefit of confiscating a fatty meat pie off chubby young students who had failed to tuck their shirts in. Rules are rules.


I use cream doughnuts as an instruction tool for my students. They are ideal for teaching the law of demand, auction theory, marginal utility, elasticity, scarcity and monopoly power, with me being the monopoly seller.

They are also ideal for teaching a fundamental concept of human civilisation. An aspect of modern societies which is so ubiquitous we seldom appreciate its magnificence. The cream donut encapsulates human evolutionary progress over countless millennium.

It represents the economic concepts of specialisation, interdependence (mutual reliance) and the apparent effortless co-ordination of free markets.

The wheat used to make the flour for my doughnuts is grown in Australia. The founding father of the wheat industry in Australia was James Ruse, an ex-convict with an entrepreneurial flair for farming.

He likely helped prevent the young colony from starving to death. His gravestone reads, "in this Coelney I sowd the forst grain and now with my Hevenly Father, I hope to remain." James Ruse was a failed burglar, a pioneering farmer and atrocious speller.

The sugar in my doughnuts is refined at the Chelsea sugar refinery established in the 1880s on the North Shore of Auckland. The raw sugar is imported from growers in Australia and the Pacific.

In 1814 Samuel Marsden brought a bull and two heifers to New Zealand. This was the start of New Zealand's dairy industry. The butter and cream in my doughnuts are the products of dairy farms and factories in New Zealand.

In 1773 on his second visit to New Zealand, Captain Cook gave hens to the Maori he encountered. It was the start of poultry farming in New Zealand. The eggs that go into my cream doughnuts are produced by various poultry farmers around the country.


The salt used in my doughnuts comes from Lake Grassmere in the South Island. The salt works was started by George Skellerup in 1942 when salt was difficult to import, due to the war. Skellerup is still the major producer of gumboots in New Zealand. George has long since departed.

Twenty-year-old Thomas Edmonds stepped off a sailing ship in Lyttelton in 1879. This young entrepreneur went on the establish the highly successful Edmonds cooking ingredient business. The yeast and baking soda and cooking oil used in my cream doughnuts are a legacy of his enterprise.

These various ingredients are combined by the baker in the early hours of the morning to make my fresh cream doughnuts. It is an almost magical process of human co-ordination. My cream doughnut is the outcome of the efforts of thousands of workers and entrepreneurs, most of whom never met each other.

It would be impossible for any single person to make a cream doughnut from scratch. The ability for a single individual to have the technical skills to make wheat, flour, sugar, cream, butter, yeast, cooking oil and other ingredients would be an impossibility.

Yet somehow my fresh cream doughnuts magically appear each morning at my bakery in Kingsland.

This hugely effective system of human co-operation is seldom appreciated. It is not directed by a central government. It is the result of countless workers and entrepreneurs being co-ordinated by an invisible hand based on self interest.

This near miraculous co-ordination was what Adam Smith was describing in The Wealth of Nations published in 1776.

A species of apes that emerged from the savannahs of Africa over 100,000 years ago has evolved an economic and social system that co-ordinates the efforts of thousands of people unknown to each other to reliably manufacture fresh cream doughnuts each morning for fuller figured consumers such as myself.

We seldom consider the specialisation and interdependence of countless humans motivated by self interest and co-ordinated by the invisible hand of various markets to produce humble cream doughnuts.

Cream doughnuts are an amazing evolutionary achievement for a bunch of overdeveloped apes.

Peter Lyons, excerpt from The Economist's Secret Handbook