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Quotation of the Day…

… is from page 64 of the 2016 Mercatus Center re-issue of my late colleague Don Lavoie’s superb 1985 volume National Economic Planning: What Is Left? (original emphasis):

A substantial degree of opposition to the use of force in human relationships is not merely one particular moral position among others; it is a prerequisite for the growth of knowledge.  Scientists must be free to maintain, reject, or invent paradigms or theories according to their own largely inarticulate judgments as to what they find intellectually convincing.  They must be free to believe in ideas that they cannot fully defend.  But at the same time this freedom does not say that anything goes; it is intimately bound up with the sense of responsibility the scientist feels toward the attainment of valid meaning, and it requires a willingness on the part of each scientist to submit to the authority of specialists in areas beyond his own expertise.

What is true of scientists in search of a better understanding of reality is true also of entrepreneurs in search of a better understanding of consumer demands.  For genuine economic growth to occur, entrepreneurs must be free to experiment – in competition with each other and with existing means of satisfying consumer demands – with new products and new methods of production and distribution.  At the same time, in order for these entrepreneurial tests to yield positive results over time for the economy as a whole, (1) consumers must be free to spend their money as they choose – to switch as much or as little as they like of their spending from these firms and industries to those firms and industries; and (2) investors must be free to invest their money as they choose – to switch as much or as little as they like of their funds from these firms and industries to those firms and industries.

Only this competitive process can reliably discover how best to satisfy, and to continually improve the satisfaction of, consumers’ desires – that is, can best promote genuine and sustained economic growth.  People who talk of ‘planning’ or ‘providing for’ the ‘industries of the future’ typically are engaged in silly talk, for such talk typically includes specific predictions about what sorts of products, services, jobs, firms, industries, and methods of production are destined to exist in the future.  But no one knows the future in sufficient detail to predict such things.  Open competition in both output and input markets – including financial markets – is required to create those future patterns of specialization and trade that will be discovered to be, for their times, the best ones.