≡ Menu

Quotation of the Day…

… is from page xxv of Historical Impromptus, a 2020 collection of some of Deirdre McCloskey’s work on economic history; this quotation, specifically, is originally from a 2018 interview of McCloskey:

What is amazing about the modern world is not large-scale enterprise or big accumulations of capital, but commercially tested betterment. Call it perhaps “innovism.”

DBx: For at least two reasons, this reality alone condemns industrial policy to failure.

First, by its very nature, industrial policy tests new patterns of resource allocation, not commercially, but politically. Yet no industrial-policy proponent has ever explained how government officials charged with designing and implementing these politically determined patterns of resource allocation will get the knowledge they must have in order that these new patterns stand a reasonable chance of outperforming the market at increasing over time the well-being of ordinary people.

Second, true discovery and innovation will – by their nature and necessarily – always threaten to upend any industrial-policy plan. The former must therefore be suppressed in order to maintain the latter.

Next post:

Previous post: