At lunch yesterday, Tom Palmer mentioned to me a 1956 essay by the late Ludwig Lachmann entitled “The Market Economy and the Distribution of Wealth.” It’s in a collection of Lachmann’s essays, edited by Walter Grinder, that I’ve owned now for more than 30 years and read cover-to-cover long ago – but, I confess, I had no recollection of the essay when Tom mentioned it to me yesterday (and none when I re-read it just now).
But, oh my, what a splendid piece of analysis! Here again is a link to it, with my strong encouragement that you read it carefully. It’s quite short, yet original and deeply profound.
In this essay Lachmann argues that the market is constantly redistributing wealth far more productively and fairly than any government efforts on this front. But that’s not the really profound part.
What’s most profound is Lachmann’s clear and compelling explanation of just why it’s the case that wealth in a market economy has constantly to be created and re-created; that it’s never fixed – never an inexhaustible fund that pays out goodies to lucky passive owners.
I’ll perhaps write more about Lachmann’s 1956 essay later; for now I want to further reflect on it, digest it more completely, and share it with you.