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Quotation of the Day…

… is from page 450 of F.A. Hayek’s brilliant April 1982 Journal of Economic Affairs paper, “Two Pages of Fiction,” as this paper is reprinted as chapter 30 of Essays on Liberalism and the Economy (2022), which is volume 18 (expertly edited by Paul Lewis), of The Collected Works of F.A. Hayek:

How the market brings about an adaptation to a multitude of circumstances which in their totality are not known to anyone is precisely the process which the science of economics has to explain.

DBx: Yes – although too few economists these days are trained well-enough to understand this core task of their discipline. Far too many economists today fancy that they’re doing science whenever they process lots of data using their razzling-and-dazzling ‘advanced’ econometric methods.

The unfathomable complexity and vastness of the details of modern economies – each detail that, in almost all cases, is and can be known only to one or handful of individuals (and, hence, cannot be captured by statistical methods) – make literally impossible any attempts to ‘plan’ an economy centrally, or even to centrally ‘plan’ any large part of it. (Impossible, that is, as long as humans are denied god-like access to knowledge.) Unfortunately, this inescapable reality doesn’t prevent people – politically left and right – from fancying that the simple, happy economic outcomes that they can imagine are able to be engineered into existence by the state. Such images are always of outcomes; they never include recognition of the deep unseen, detailed, and churning processes necessary to generate these outcomes in ways that are sustainable.


Pictured above are Milton Friedman and F.A. Hayek.

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