Quotation of the Day…

by Don Boudreaux on April 20, 2015

in Competition, Creative destruction, Growth, Innovation, Seen and Unseen

… is from page 10 of Sheldon Richman’s essay “Monopoly and Aggression,” which appears in the April 2015 issue (Vol. 26, No. 4) of Future of Freedom (original emphasis; the quotations from Frederic Bastiat are from his 1850 volume, Economic Harmonies):

Bastiat praised the competitive market process – where the state abstains from plunder on behalf of any special interests – precisely because it transfers “real wealth constantly … from the domain of private property into the communal domain….  What he meant was that, when economizing, profit-seeking producers substitute the free services of nature (water, gravity, electricity, wind, et cetera) for onerous human labor, competition drives down prices to reflect the lower production costs.  When consumers obtain the same or greater utility at a lower price, the enjoy free of charge some of the utility they previously had to pay for with their labor.  Innovation-with-competition delivers the fruits of the services of nature gratis, and the whole community benefits.

That is why Bastiat said that the market transfers wealth from the realm of private property to the “communal realm.”  Producers who formerly reaped returns on human services that provided utility to consumers now instead employ nature’s services from which they can reap no return at all.  As a result, we all get increasing amounts of free stuff.

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