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Quotation of the Day…

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… is from page 166 of University of Notre Dame philosopher James Otteson’s excellent 2021 book, Seven Deadly Economic Sins [2]:

What markets enable, then, is extensive networks of cooperation. Indeed, the networks can become so vast that it might be literally impossible to know or trace them all. Adam Smith claimed – in the eighteenth century – that an attempt to trace out all the links in even a single chain of cooperation “exceeds all computation.”

DBx: Very often the simplest of intellectual points are of realities profoundly important yet very easily missed. The Smithian-Hayekian point made above by Otteson is one such point.

I call this point “Smithian-Hayekian,” but it is a point that is understood and accepted by all competent economists – indeed, by all people who think with competence about the economy or about society. And its importance cannot be over-emphasized.

If a list were to be made of the top five most significant errors made by people who propose economic or social policies, on that list would surely be some entry such as this: “Failure to appreciate just how inconceivably complex is the economy and society.” Too many people mistake the end results that they see – the rising money price of propane, the department store filled with goods bearing labels reading “Made in China,” the neighbor who loses her job because her employer downsized, the fall in mortgage interest rates – without seeing the vast, swirling, dense, and inconceivably complex economic forces that give rise to each of these, and billions of other, economic phenomena. Too many people think that by forcibly pushing or pulling on the observed phenomena – pushing or pulling on one of the more visible nodes of a massive, globe-spanning web interconnections – the observed phenomena will change in the way that the pusher or puller desires without any other significant consequences.

People do not understand the incredible interconnectedness of countless suppliers with each other and with consumers. This interconnectedness is inseparable from the competitive processes that make available to the masses today’s great variety of affordable goods and services.

…..

The unseen parts of market processes that give rise to the goods, services, and other economic phenomena that are visible on the economy’s surface are magnitudes more vast, relative to the surface phenomena, than is the unseen part of any iceberg relative to the ice that is visible on the ocean’s surface.

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