Sizeable history has been made in baseball this winter. The largest contract ever for a pitcher was given out: Barry Zito, $126 million, as well as the fifth-largest for any baseball player: Alfonso Soriano, $136 million. The responses to these contracts have ranged from criticism of overpaying and wasting money to frustration with the supply and demand of the baseball market.

Both responses fail to appreciate what underlies these seemingly outrageous contracts and our own daily individual exchanges.

Underlying the baseball offseason is the simple working of voluntary exchange. That is, two individuals, with separate interests, give up something they value less than what they are receiving free from coercion.

In the case of Zito, he has exchanged his services as a baseball pitcher for $126 million because he values that money more than what he could receive elsewhere doing something else. The San Francisco Giants – who signed Zito – valued Zito’s services more than $126 million and thus engaged in the exchange.

The concept is simple, pervading our everyday interactions, but we sometimes lose sight of this powerful simplicity.

The language we use to describe such exchanges clarifies this. It is said that the Giants overpaid for Zito or wasted money on him.

These denouncements sound as if there were an objective standard by which every exchange between two parties should be measured. But there is no yard stick for the value of any exchange as individuals have their own values on how much a certain exchange is worth.

The Giants showed they clearly valued Zito more than any other team by the amount of money they offered. Zito, who also had interest in an acting career, valued the offer from the Giants more than that of the New York Mets, who offered less money but were in a city with acting possibilities.

There is no yardstick to measure these values in every other exchange.

Thus, it is contrary to say that Zito is being overpaid or that the Giants wasted their money. What was done was in the separate interests of both parties, not anyone else’s.

Still, others resort to blaming the baseball market as if it were a kite, let alone to the caprices of a strong wind, unpredictable and uncontrollable.

But no outside party has forced the other baseball teams to participate in the lavishing of money upon baseball players.

While the operation of supply and demand certainly has an effect on the value players put on themselves, this does not deny other alternatives of trades or the minor leagues.

It’s curious that some baseball general managers have denounced the competition of the market in an attempt to better their teams. These managers might as well say, “Stop winning so much, you’re forcing us to win or look bad.”

Some will say that voluntary exchange is fine for small interactions, but larger ones need a third party to direct and guide the exchange. The party can be any – the most effective being government – and the reasons can vary from protecting a weaker party to greater interests such as national security.

Such an imposition ultimately distorts information in any exchange. As a result, parties actually do overpay and waste money. The interests of the two involved parties are no longer bound by what they are freely able to value. A third party instead obstructs the exchange with an arbitrary and supposedly fair price. Neither of the two original parties can know what they might otherwise get for what they offer. They only know what is enforced upon them. Their interest is no longer upheld, but only the imposing party’s.

Baseball has long been America’s pastime, but the idea of voluntary exchange has been for even longer.

We shouldn’t want anything different.