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Quotation of the Day…

… is from pages 306-307 of the late University of Washington economist Paul Heyne‘s 1995 article in Agenda titled “Teaching Introductory Economics,” as this article is reprinted in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.) (original emphasis):

But the genuinely useful light that economics sheds does not fall on the economizing process; it illuminates the process of exchange.  Just about everyone knows how to economize, and does so effectively.  What people do not know and what economics can explain for them is how millions of economizing people, each one pursuing his or her own interest, manage to cooperate effectively despite the fact that they are all substantially ignorant of what others want or can do.  The fundamental problem of economics is not so much scarcity as a multitude of interdependent projects that somehow have to be coordinated.

DBx: Yes.  Deirdre McCloskey frequently points out that even grass economizes.  As necessary as economizing is to survival and to growth, it’s not the sole or even the chief activity of human beings engaged in “economic” activities.  What are central are exchange and innovation.  Efforts to create and to use new opportunities for exchange can be modeled as economizing activities.  Ditto for efforts to innovate.  But viewing these efforts through an ‘economizing’ lens blinds us to the creativity of these efforts.  Using only the economizing lens leads us to mistake creativity for mechanical adjustments, and to see the details of exchange as pre-programmed while, in fact, they had to be figured out and made possible by the parties involved.

Markets themselves – exchange opportunities – the many different and nuanced ways that we contract with each other – the division of labor that exchange makes possible, and the enormous prosperity that these processes generate are taken for granted.  Every denizen of the modern world is the fortunate beneficiary of a stupendously complex and productive emergent order of market exchange – an order that works so remarkably smoothly and well that we notice not its successes, which occur every moment of every day, but its hiccups. And we panic at each hiccup, rushing to prescribe ill-thought-out remedies that typically prolong the hiccups or that even worsen them.

If you are reading my words now, you are – every day of your life – the beneficiary of the creativity and efforts of billions of people, each of whom has somehow managed to have his or her activities coordinated with those of billions of other individuals in a process that results in the food that you eat, the clothes on your body, the furniture in your home and workplace, the marvelous motorized transportation that you use daily without ever bothering to marvel at it, and the indoor plumbing and solid roofs and hard floors and electrical power that ensures that your home and workplace is clean and comfortable.  This globe-spanning, incredibly complex market process is designed by no one and operated by no one.  It, as a whole, is undirected by conscious effort.  It is not a thing to be engineered; it is not a thing that could possibly be successfully engineered.

Economists’ core duty is to study and to explain the logic of this emergent order of exchange and innovation – and to help the general public better appreciate its reality and marvelousness.


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