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Quotation of the Day…

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… is from page 93 of F.A. Hayek’s insightful 1983 paper “The Muddle of the Middle,” which is chapter 7 of the superb 1983 collection, edited by Svetozar Pejovich, Philosophical and Economic Foundations of Capitalism [2]:

The social product which is now maintaining a human population of this world four or five hundred times as large as that which man could achieve in the natural hunting and gathering stage is owed only to the division of labor, skills, and knowledge. This division could never have been designed or planned, but it arose through and is now maintained by the guiding service of competitive market prices and wages that tell each person where its efforts can make the largest contribution to the total. These self-generating signals, which inform the individuals about the combined efforts of thousands of events of which they can have no direct information, bring about an adaptation of the individual efforts to the unknown. No central direction could achieve this adaptation because the knowledge of all the facts of which the market takes account is spread among thousands and cannot be known to any central authority. It is, of course, impossible to improve signals when one does not know what determines them.

DBx: Of course, disagreeing with Hayek are the likes of Marco Rubio, Bernie Sanders, Alexandria Ocasio-Cortez, and others – conservative and “Progressive” – who fancy that the economy can be improved with conscious coercive interventions such as tariffs, subsidies, and other ‘tools’ of industrial policy. The identities of those who disagree should suffice to establish the credibility, or lack thereof, of their case.