Quotation of the Day…

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… is from pages 588-589 of my former GMU Econ colleague Tom DiLorenzo’s excellent Fall 1984 Cato Journal paper, “The Political Economy of National Industrial Policy“:

The market is a process in which individuals voluntarily interact with one another in pursuit of their own interests. With appropriately designed institutions – such as well-defined, enforced, and respected property rights and freedom of contract, freedom of exchange, and the enforcement of contracts – self-interested behavior generates a spontaneous order. This order is chosen by no one, yet it tends to maximize the subjective values of all the market participants. Only in this sense can the market process be termed “efficient.” The maximization of subjective values, as individuals perceive them, is the end result of the market process and cannot be defined or “maximized” by any outside observer. A market situation can be judged “efficient” to the extent that it allows individuals to exercise their preferences subject only to the principles of mutual agreement and noninterference with the equal rights of others. The determination of what is efficient by some third party, such as government, would require interpersonal utility comparisons that are arbitrary and meaningless. In the absence of an omniscient and benevolent despot, market efficiency can he defined only in terms of the extent to which existing institutions facilitate mutually advantageous trade, subjectively valued.