Bonus Quotation of the Day…

by Don Boudreaux on January 29, 2020

in Complexity & Emergence, Creative destruction, Growth, Hubris and humility, Innovation, Man of System, The Profit Motive

… is from pages 7-8 of the manuscript of an as-yet-unpublished July 1st, 2018, interview of Deirdre McCloskey by Mauricio Meglioli:

What are the virtues of capitalism?

Trying things out. The only way to get new things, such as we have to an astonishing degree since the liberal revolutions of the 19th century let ordinary people “have a go” (as the English say), is through trying out commercially tested betterment. If an electric car in 1900 is a failure in the market, the age of internal combustion engines comes. If it succeeds in 2000, the age of electric cars comes. The government is ill-equipped to choose such winners.

The other virtue is massive altruism. A novelty does not survive a commercial test unless it is profitable. Being profitable means that the entrepreneur has found something that masses of people find desirable, such as central heating in cold countries or cheap air conditioning in hot. Being unprofitable means that you are harming people on balance, wasting resources to make things they do not want. Markets are the most altruistic system we have. Governments, by contrast, are systems of coercion, by definition producing what people do not want, worsened by corruption impossible in mutually advantageous exchange.

DBx: This all-important lesson of economics – and also of history – is lost not only on the likes of Bernie Sanders, Elizabeth Warren, and other “Progressives.” This lesson is lost also on many modern conservatives such as Oren Cass, Michael Brendan Dougherty, Daniel McCarthy, and Marco Rubio. May we all be saved from the awful fate that would be visited on us by these arrogant and economically uninformed “men (and women) of system” – people who mistake their good intentions for justifications for overriding, with state coercion, the entrepreneurial discovery process that flourishes only in open and competitive markets.

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