Quotation of the Day…

by Don Boudreaux on January 11, 2017

in Competition, Economics, Hayek, Hubris and humility, Myths and Fallacies

… is from page 188 of the 2016 Mercatus Center re-issue of my late colleague Don Lavoie’s superb and still-relevant 1985 volume National Economic Planning: What Is Left? (original emphasis):

unknown-2The case for the free market does not rest on any sort of belief that market forces bring the economy to some ideal equilibrium state of full adjustment.  It argues that market forces drive a process of plan coordination in which full coordination can never be attained, but which uses more knowledge than any single agent or organization can command.

DBx: Indeed so.  And for this reason – because the market is an on-going process of discovery, change, creation, and adjustment – any supposed revelation by some professor, pundit, or politician of a market ‘imperfection’ (say, monopsony ‘power’ in today’s market for low-skilled workers in northeastern Nebraska or southwestern New Jersey) creates no good case for government intervention.  Not only is there a much-better-than-even chance that this professor, pundit, or politician is mistaken (for such people are almost never actual participants in the markets on whose details they presume to pronounce) – and not only are the ‘remedies’ offered by such people ones that, being imposed by force, distort future market processes – the likelihood that alert and creative entrepreneurs will discover whatever correctible problems exist today and launch courses of action, often in competition with each other, to address these problems in the best manner possible (that is, without political influence, and with more knowledge than can be mustered by government regulators) is high.


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