Democracy and competitive capitalism make a difficult, but precious, marriage of complementary opposites. A market economy that operates under trustworthy rules, rather than the whims of the powerful, underpins prosperity and lowers the stakes of politics. In turn, a competitive democracy induces politicians to offer policies that will improve the performance of the economy and so the welfare of the people. Beyond these practical reasons for the marriage of liberal democracy and market economy, there is also a moral one: both are founded on a belief in the value of human agency – people have a right to do the best they can for themselves; people have a similar right to exercise a voice in public decisions. At bottom, both are complementary aspects of human freedom and dignity.Martin Wolf (2023). The Crisis of Democratic Capitalism, p 371-372.
Post Category → Quotes
(T)here is no reason to believe that, given individualism, the social problem would be essentially different if life had no economic aspect whatever. If all our material wants were automatically gratified, or if we had none; if we had no “work” in any sense to do, and the social problem in, say, the United States, were simply that of organizing play activities for the relief of boredom, there is no reason to believe that social conflicts would be either less intense or essentially changed in character. (Moreover, there would probably be “classes” and “class struggles” in essentially the same meaning as now.) Indeed, it is a sobering reflection that the competitiveness of play is a phenomenon indefinitely older and more general than the competitive organization of economic life.Frank H. Knight (1947). Pragmatism and Social Action, in Freedom and Reform. Essays in Economics and Social Philosophy, p 51
Comment les Américains combattent l’individualisme par la doctrine de l’intérêt bien entendu.Alexis de Tocqueville (1848). De la Démocratie en Amérique. Tome troisième. Chapitre VIII.
Je ne crois pas, à tout prendre, qu’il y ait plus d’égoïsme parmi nous qu’en Amérique; la seule différence, c’est que là il est éclairé et qu’ici il ne l’est point.
L’intérêt [eigenbelang] bien entendu est une doctrine peu haute, mais claire et sûre. Elle ne cherche pas à atteindre de grands objets; mais elle atteint sans trop d’efforts, tous ceux auxquels elle vise. Comme elle est à la portée de toutes les intelligences, chacun la saisit aisément et la retient sans peine. …
La doctrine de l’intérêt bien entendu ne produit pas de grands dévouements; mais elle suggère chaque jour de petits sacrifices; à elle seule, elle ne saurait faire un homme vertueux, mais elle forme une multitude de citoyens, réglés, tempérants, modérés, prévoyants, maîtres d’eux-mêmes; et, si elle ne conduit pas directement à la vertu, par la volonté, elle en rapproche insensiblement par les habitudes.
Si la doctrine de l’intérêt bien entendu venait à dominer entièrement le monde moral, les vertus extraordinaires seraient sans doute plus rares. Mais je pense aussi qu’alors les grossières dépravations seraient moins communes. La doctrine de l’intérêt bien entendu empêche peut-être quelques hommes de monter fort au-dessus du niveau ordinaire de l’humanité; mais un grand nombre d’autres qui tombaient au-dessous la rencontrent et s’y retiennent. Considérez quelques individus, elle les abaisse. Envisagez l’espèce, elle l’élève.
In addition to the endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. …Henry Hazlitt (1946). Economics in One Lesson, p 3-4
In this lies almost the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. … The bad economist sees only what the effects of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.
Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousand fold by a factor that is insignificant in, say, physics, mathematics or medicine—the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also … interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups.Henry Hazlitt (1946). Economics in One Lesson, p 3.
Sen: “It is quite possible that Britain’s long run problems have something to do with the tremendously narrow motivation structure in British industry. In any kind of small, independent enterprise in which cooperation over large groups isn’t involved, the British are marvelous. They run the best pubs in the world, with the labor of two or three people, possibly a family. There is not much shirking. A lot of efficient work. In contrast, whenever there is a situation involving large groups and team work, requiring an understanding of, and response to, each other’s interests and goals, there seem to be problems. This is where Japan, or Germany, or even the United States, may still have an advantage, and the nature of social norms and of schooling on behavior patterns may be important here.”Arjo Klamer (1989). A Conversation with Amartya Sen. Journal of Economic Perspectives, 3(1), p 146-147
Naar aanleiding van de 175ste verjaardag van de publicatie van het Communist Manifesto.
[The bourgeoisie] has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals … The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. …Karl Marx, Friedrich Engels (February 21, 1848), Manifesto of the Communist Party, ch 1
The bourgeoisie has subjected the country to the rule of the towns. It has created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life. …
The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?
We must come to agree that democratic societies, as they now operate, will self-destruct, perhaps slowly but nonetheless surely, unless the rules of the political game are changed. … [We hope that] a new “civic religion” is on the way to being born that will return, in part, to the skepticism of the eighteenth century concerning politics and government and that, quite naturally, will concentrate our attention on the rules that constrain governments rather than on innovations that justify ever expanding political intrusions into the lives of citizens. …Geoffrey Brennan, James Buchanan (1985). The Reason of Rules. Constitutional Political Economy, p 166-167
We must redesign our rules, and our thinking about rules with the ultimate aim of limiting the harm that governments can do, while preserving the range of beneficial governmental-collective activities. We plead with our fellow academicians to cease their proffering of advice to this or that government or politician in office. Good games depend on good rules more than they depend on good players. Fortunately for us all, and provided that we understand the reason of rules in the first place, it is always easier to secure agreement on a set of rules than to secure agreement on who is or is not our favorite player.
Just as there was a tendency in times of material poverty to exaggerate what redistribution of income could do to diffuse what was then the most sought-after prerogative of the contemporary rich, their material comfort, so there is a tendency in times of material affluence to exaggerate what growth can do for diffusion of the new distinctive preserve of the rich, their positional prerogatives.Fred Hirsch (1977). The Social Limits to Growth, p 68
Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. In this very minute, a child is being born to an American family and another child, equally valued by God, is being born to a family in India. The resources of all kinds that will be at the disposal of this new American will be on the order of 15 times the resources available to his Indian brother. This seems to us a terrible wrong, justifying direct corrective action, and perhaps some actions of this kind can and should be taken. But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.Robert Lucas (2004). The Industrial Revolution: Past and Future
(T)hroughout the long twentieth century, communities and people looked at what the market economy was delivering to them and said: “Did we order that?” And society demanded something else. The idiot Mr. Hyde side of Friedrich von Hayek called it ‘social justice’, and decreed that people should forget about it: the market economy could never deliver social justice, and to try to rejigger society so that social justice could be delivered would destroy the market economy’s ability to deliver what it could deliver – increasing wealth, distributed to those who owned valuable property rights.J. Bradford DeLong (2022). Slouching Towards Utopia. An Economic History of the Twentieth Century, p 6
The political problem of mankind is to combine three things: Economic Efficiency, Social Justice, and Individual Liberty. The first needs criticism, precaution, and technical knowledge; the second, an unselfish and enthusiastic spirit which loves the ordinary man; the third, tolerance, breadth, appreciation of the excellencies of variety and independence, which prefers, above everything, to give unhindered opportunity to the exceptional and to the aspiring. The second ingredient is the best possession of the great party of the Proletariat. But the first and third require the qualities of the party which, by its traditions and ancient sympathies, has been the home of Economic Individualism and Social Liberty.John Maynard Keynes (1926). Liberalism and Labour, in Essays in Persuasion (2009), p 187.
Why did farming ever replace foraging if the rewards were work, inequality and war?Ian Morris (2010). Why the West Rules – for now, p 107 [verwijzend naar Marshall Sahlins (1972). Stone Age Economics]
(Y)ou need a lot more than “market failure” to have a successful government subsidy program of firms–you need massive externalities and precise, well understood targets. The garden-variety market failure that can be shown on a blackboard isn’t enough, in part because such arguments often underestimate the market and in part because they overestimate government.Alex Tabarok (2022). Marginal Revolution: Chinese Industrial Policy is Failing
When millions of people produce goods for each other’s use, they must have some way of notifying each other of their desires. Moreover, people’s desires and preferences are fluctuating, complex and delicate. James Joyce could have filled a fat volume in describing the half-formed inclinations in the mind of a woman setting out on a shopping expedition. No words could completely define her potential desires. Consumers cannot therefore be expected to present shopkeepers with an adequate psychological analysis of their needs. Money comes to their rescue. Their offer to buy certain things at certain prices completely reveals what they have in mind.Michael Polanyi (1951). The Logic of Liberty, p 139