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Quotation of the Day…

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… is from page 306 of F.A. Hayek’s 1968 brilliant lecture “Competition As a Discovery Procedure,” as reprinted in The Market and Other Orders [2] (Bruce Caldwell, ed., 2014) – a collection of some of Hayek’s most influential essays:

[E]conomic theory sometimes appears at the outset to bar its way to a true appreciation of the character of the process of competition, because it starts from the assumption of a ‘given’ supply of scarce goods. But which goods are scarce goods, or which things are goods, and how scarce or valuable they are – these are precisely the things which competition has to discover.

DBx: It cannot be said too often that the economy is not an engineering project; the economy, rather, is an emergent order.  The economy – more precisely, the catallaxy that we call “the economy [3]” – is that extraordinarily complex and ever-changing pattern of human relationships that emerges as individuals (sometimes alone, more often as members of households, firms, or other organizations), each equipped with his or her own unique bits of knowledge and pursuing his or her own unique goals, exchange peacefully with each other.  ‘The economy’ is not an entity with an “objective function” made up of variables to be “maximized” or “minimized.”  “The economy,” as such, has no purpose.  “The economy” is part of what results as each purposeful individual goes about in trial-and-error processes in pursuit of his or her own goals.  In this process, if we individuals in the modern world are left reasonably free, each of us winds up being served by literally hundreds of millions of strangers each and every day of our lives – and each of us serves literally hundreds of millions of strangers.