Bonus Quotation of the Day…

by Don Boudreaux on August 4, 2020

in Complexity & Emergence, Hubris and humility, Innovation

… is from pages 97-98 of the late Stanford University economic historian Nathan Rosenberg’s 1992 paper “Economic Experiments,” as this paper is reprinted in Rosenberg’s 1994 book, Exploring the Black Box: Technology, Economics, and History:

These technological achievements were thus based upon capitalist legal institutions, especially with respect to contracts and property rights, which legitimized the right to experiment with new organizational forms as well as with new technologies. The final arbiter of whether something new was socially desirable was not a government authority, or the religious clergy, or the guild members, or the merchants whose personal interests might be adversely affected by some innovation. Rather, the final arbiter was the marketplace. Capitalism did legitimize innovation, but only if it could pass the market test. It was indeed, as Marx recognized, the first form of social organization in which economic life was dominated by groups whose economic interests caused them to threaten the status quo.

The freedom to conduct experiments, in turn, required that yet other conditions be fulfilled. One of these conditions was that the economic sphere had to attain a higher degree of autonomy from external forces, especially freedom from arbitrary and unpredictable interventions by government authorities.

DBx: Indeed.

Industrial-policy advocates and other proponents of protectionism wish to restore the guild system. They arrogantly believe themselves equipped with the knowledge to know, independently of experience in actual markets, which innovations are worthwhile and which not. They present themselves to the public as possessing the ability to divine which industries are most likely to enable their fellow citizens to thrive and which are hostile to such thriving. They – priestlike – behave as if they are uniquely blessed with a vision of a glorious future as well as with the miraculous powers to arrange for that future to unfold.

Never, ever do these people explain the source of their knowledge and supernatural powers.

…..

Don’t miss my Mercatus Center colleague Adam Thierer’s book Permissionless Innovation.

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