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Quotation of the Day…

… is from page 18 of Douglass C. North‘s and Robert Paul Thomas’s 1975 article “The Role of Governments in Economic Growth in Early Modern Times: Comment” (which is a comment on this article by Frederic Lane) in the March 1975 issue of the Journal of Economic History:

The very process of trade creates wealth as goods move from persons who value them less to persons who value them more.  Both parties in a voluntary exchange become better off.  Furthermore, the opportunity to trade allows specialization and lowers the cost of inventing and innovating which further increases the wealth of society.  One does not have to have a surplus to engage in trade because one could move from below to above subsistence simply by engaging in the wealth creating process of trading.  If trade is possible, fewer resources would be required to maintain subsistence than in its absence.  Ever since paleolithic times man has been improving his economic lot by trade.  The gains from trade must be the cornerstone of serious study of man’s economic past.


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