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Bonus Quotation of the Day…

… is from page 91 of the late Nobel laureate Douglass North‘s 2005 book, Understanding the Process of Economic Change:

The movement from personal to impersonal exchange always increases total transaction costs but the consequence is a drastic reduction in production costs, which more than offset the increased resources going into transacting.

DBx: Yes. It‘s therefore ironic that modern mainstream economics will often label the imperfect knowledge or asymmetric information as sources of “market failure” or as “market imperfections.” Even if, contrary to fact, it were true that when exchange was personal (rather than impersonal) humans had “perfect” knowledge and all parties to all exchanges were always equally informed, it‘s absurd to label as a “failure” or “imperfection” an unavoidable consequence of markets greatly enhancing their capacity to enable individuals to prosper.