Quotation of the Day…

by Don Boudreaux on October 1, 2017

in Creative destruction, Reality Is Not Optional, The Future

… is from page 18 of the 2000 Liberty Fund edition of Geoff Brennan’s and Jim Buchanan’s 1985 book, The Reason of Rules:

At any point, one can contemplate the prevailing market order and recognize the nature and magnitude of the gains from human cooperation under the division of labor.  But one cannot predict ex ante what the nature and magnitude of those gains will be.  To do so would require the analyst to possess all the creative imagination currently spread over the entire set of economic agents.

DBx: The freer is any society, the more is that society open-ended.  Predicting the details of what the multitude of individuals in a free society will produce by way of economic arrangements and economic outcomes is, because of the very nature of free markets, impossible.  Part of the case for free markets is the fact that these markets unleash and magnify human creativity (while simultaneously channeling it away from destructive uses and towards productive ones).  And so the case for free markets cannot legitimately be founded upon the requirement that its champions offer predictions of what specific jobs, what specific outputs, and what specific organizational arrangements will arise when markets are free.  No one knows and no one can possibly know such details.  (Those who are disturbed by this reality should ask themselves if they’d be better satisfied today if the economy in, say, 1917 – or even in 1977 – had been arranged by government to make the economic details of 2017 predictable to those alive back then.)

All that we can predict about free markets is that they are far more likely than are government-run or controlled economies to generate what the 2006 Nobel-laureate economist Edmund Phelps calls “mass flourishing,” and that creative destruction will be a never-ending feature of free markets.  Many people who fear change – who prefer the details of the present simply because these details are familiar – are thereby willing use government power in an attempt to freeze society and the economy in their current states.  Such an attempt, though, will fail if what is attempted to be preserved is itself the result of free markets.  A market economy can no more be frozen in time on its trajectory than a jetliner can be frozen in airspace on its trajectory.


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