Bonus Quotation of the Day…

by Don Boudreaux on January 19, 2017

in Adam Smith, Competition, Complexity & Emergence, Economics, Myths and Fallacies

… is from page 100 of Frank Machovec’s profoundly important 1995 volume, Perfect Competition and the Transformation of Economics (citations omitted; original emphasis):

Unknown-2The state of affairs ultimately created by competition was certainly discussed by every classical writer, but to apply a magnifying glass to the price-equals-cost (equilibrium) condition, as if it were the heart of classical analysis, is a case of mistaking ‘the shadow for the substance’.  In fact, Adam Smith’s most emphatic and recurring thematic point – his explanation of the invisible hand – had nothing to do with the final results of the process and had everything to do with the role of incentives, i.e., the nature of the process.


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