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Quotation of the Day…

… is from pages 31-32 of the 1967 reprint of Frank Knight‘s important 1933 volume, The Economic Organization (footnote excluded):

One of the most conspicuous features of organization through exchange and free enterprise, and one most often commented upon, is the absence of conscious design or control.  It is a social order, and one of unfathomable complexity, yet constructed and operated without social planning or direction, through selfish individual thought and motivation alone.  No one ever worked out a plan for such a system, or willed its existence; there is no plan of it anywhere, either on paper or in anybody’s mind, and no one directs its operations.  Yet in a fairly tolerable way, “it works”, and grows and changes.  We have an amazingly elaborate division of labor, yet each person finds his own place in the scheme; we use a highly involved technology with minute specialization of industrial equipment, but this too is created, placed, and directed by individuals, for individual ends, with little thought of larger social relations or any general social objective.  Innumerable conflicts of interest are constantly resolved, and the bulk of the working population kept generally occupied, each person ministering to the wants of an unknown multitude and having his own wants satisfied by another multitude equally vast and unknown – not perfectly indeed, but tolerably on the whole, and vastly better than each could satisfy his wants by working directly for himself.  To explain the mechanism of this cooperation, unconscious and unintended, between persons whose feelings are often actually hostile to each other, is the problem of economic science.

Perhaps because of my life-long fascination with Frank Knight’s work, I’ve always had a special fondness for this description by Knight of the role of economics.  It’s pretty darn good.  I would change some words, if I could – for example, I’d replace “selfish” with “self-interested,”; “constructed” with “evolved”; and – following Hayek – “organization” with “order.”  But these quibbles are small.