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Quotation of the Day…

… is from pages 116-117 of Gerry O’Driscoll’s insightful 1977 essay, reprinted in Louis M. Spadaro, ed., New Directions in Austrian Economics (1978), and entitled “Spontaneous Order and the Coordination of Economic Activities“ (original emphasis; footnote deleted; links added):

The principle of spontaneous order – or of “undesigned order,” as it might more properly be called – can be viewed as the first principle of economics.  Indeed, James Buchanan has recently gone so far as to suggest that it is the only principle of economics.  The principle is, in any case, a cornerstone of modern economics, whether we trace modern (i.e., post-mercantilist) economics back to Adam Smith and the other Scottish moral philosophers, or to the Physiocrats.  With this principle, scholars for the first time could see economic phenomena as interdependent events.  Indeed, this principle made it possible to reason systematically and coherently about economic phenomena.  Much of nineteenth century economics can be seen as consisting of developments of this principle (along with minority criticisms of the principle and the systems of thought deduced therefrom).

On the other hand, most of twentieth century economics has consisted of reactions against systems in which this principle plays a central role.  In this, Keynesian economics is but one among a family of theories that deny the existence of a spontaneous or undesigned market order in which plans are coordinated.  The reaction has been so complete that what was taken by earlier economists to be an empirical law – the existence of a spontaneous market order – is now frequently viewed as the product of ideological bias or prejudice.  If anything, modern economic discussions presuppose the absence of the very order whose existence was the cornerstone of much of nineteenth century economics.  In this sense, modern economics is fundamentally inconsistent.