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Quotation of the Day…

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… is from page 268 of F.A. Hayek’s March 9th, 1976, essay in the Daily Telegraph, “Adam Smith’s Message in Today’s Language,” as this essay is reprinted in Hayek’s 1978 collection, New Studies in Philosophy, Politics, Economics and the History of [2] Ideas [2]:

The great achievement of his [Adam Smith’s] famous discussion about the division of labour was the recognition that men who were governed in their efforts, not by the known concrete needs and capacities of their intimate fellows, but by the abstract signals of the prices at which things were demanded and offered on the market, were thereby enabled to serve the enormous field of the ‘great society’ that ‘no human wisdom and knowledge could ever be sufficient’ to survey.

DBx: This Smithian insight is indeed profound. As such, it has vast implications – only one of which is that so-called “corporate social responsibility,” sincerely pursued, would make society poorer than it will be if corporate managers aim exclusively at maximizing shareholder value. (Note that the case for maximizing shareholder value implies that corporate managers serve as faithful agents for their principals – that is, shareholders.)

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The essay by Hayek in which the above quotation appears was published exactly, to the day, 200 years after the publication of Smith’s magnificent An Inquiry Into the Nature and Causes of the Wealth of Nations [3].