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Quotation of the Day…

… is from page 618 of Alberto Mingardi’s Fall 2015 Cato Journal article, “A Critique of Mazzucato’s Entrepreneurial State” – which is a devastating review of Mariana Mazzucato’s 2013 book, The Entrepreneurial State (links added):

What private business does, in a market economy, is order factors of production in a way consistent with its attempt to meet and anticipate consumer demand.  Breakthrough innovation doesn’t happen in a vacuum and is seldom realised just because of brilliant ideas and new technological achievements.  “Gadgets” alone are not the be-all and end-all of innovation.  To be successful, they must also create excitement among buying customers, meet a demand, and thus cause a readjustment of the factors of production.

Technological progress doesn’t add new products to the shelves by itself.  F.A. Hayek (1955: 98) once commented that “compared with the work of the engineer that of the merchant is in a sense much more ‘social,’ i.e., interwoven with the free activities of other people.”  The entrepreneur’s role is not to create new inventions but to anticipate and meet consumers’ demands.  Innovations, in turn, are useful because of the needs and desires they may satisfy.  Government is typically a bad entrepreneur not because some economists or political philosophers deem it to be, but because the conditions under which it operates are radically different from those facing private entrepreneurs.  Market-driven economies are dynamic; they have to be to survive.  State-driven economies, or what Nobel laureate economist Edmund Phelps (2013: 127) calls “social economies,” are “fatally lacking in dynamism.”