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Quotation of the Day…

… is from page 446 of the 2011 Definitive Edition (Ronald Hamowy, Ed.) of F.A. Hayek’s 1960 book, The Constitution of Liberty (footnote excluded):

The whole attitude which regards large gains as unnecessary and socially undesirable springs from the state of mind of people who arc used to selling their time for a fixed salary or fixed wages and who consequently regard a remuneration of so much per unit of time as the normal thing.  But though this method of remuneration has become predominant in an increasing number of fields, it is appropriate only where people sell their time to be used at another’s direction or at least act on behalf of and in fulfillment of the will of others.  It is meaningless for men whose task is to administer resources at their own risk and responsibility and whose main aim is to increase the resources under their control out of their own earnings. For them the control of resources is a condition for practicing their vocation,’just as the acquisition of certain skills or of particular knowledge is such a condition in the professions.  Profits and losses are mainly a mechanism for redistributing capital among these men rather than a means of providing their current sustenance.  The conception that current net receipts are normally intended for current consumption, though natural to the salaried man, is alien to the thinking of those whose aim is to build up a business.  Even the conception of income itself is in their case largely an abstraction forced upon them by the income tax.  It is no more than an estimate of what, in view of their expectations and plans, they can afford to spend without bringing their prospective power of expenditure below the present level.  I doubt whether a society consisting mainly of “self-employed” individuals would ever have come to take the concept of income so much for granted as we do or would ever have thought of taxing the earnings from a certain service according to the rate at which they accrued in time.

It is questionable whether a society which will recognize no reward other than what appears to its majority as an appropriate income, and which does not regard the acquisition of a fortune in a relatively short time as a legitimate form of remuneration for certain kinds of activities, can in the long run preserve a system of private enterprise.