It is sometimes said that “knowledge is power”. Hayek showed that a strong reading of this claim – that knowledge and power always go together – is profoundly false. While knowledge often confers power, the reverse is not true. Centralizing power over an economy, or any other large-scale cooperative system, does nothing to centralize knowledge of how that system works or could be made to work better. Knowledge remains dispersed, being passed around in small quantities by people’s ability to signal to each other, through prices. In a working economy, nobody knows everything but everybody knows something. And things work best when it’s kept that way.Daniel Halliday and John Thrasher (2020). The Ethics of Capitalism. An Introduction, p 66
Rational recognition of the economic performance of capitalism and of the hopes it holds out for the future would require an almost impossible moral feat by the have-not. That performance stands out only if we take a long-run view; any pro-capitalist argument must rest on long-run considerations. In the short run, it is profits and inefficiencies that dominate the picture. … In order to identify himself with the capitalist system, the unemployed of today would have completely to forget his personal fate and the politician of today his personal ambition.Joseph Schumpeter (1943). Capitalism, Socialism and Democracy, p 129-130
Games give players the feeling that their labor is valuable, that their contributions to the world are important and meaningful. This feeling doesn’t happen very often in real-life work, where most of the time you’re more of a non-playable character than a protagonist.Bijan Stephen (2021). Side Quest
A protagonist has agency in their own life. Employment, at least in America, is designed to take away agency; the lack of a social safety net and a robust welfare state mean you are always one catastrophe away from losing whatever you’ve worked to build, which makes work far more important than it should be. In America, your job is your identity, your lifeline, and your purpose—unless you’re part of this country’s ruling class, in which case your work is immaterial. If labor were valued more highly, life might look a little more like a game. One that any player might win.
(S)ocial attitudes toward production and work (and leisure) are another major factor in determining the likelihood of innovation. Technologically progressive societies were often relatively egalitarian ones. In societies dominated by a small, wealthy, but unproductive and exploitative elite, the low social prestige of productive activity meant that creativity and innovation would be directed toward an agenda of interest to the elite. The educated and sophisticated elite focused on efforts supporting its power such as military prowess and administration, or on such topics of leisure as literature, games, the arts, and philosophy, and not so much on the mundane problems of the farmer in his field, the sailor on his ship, or the artisan in his workshop. The agenda of the leisurely elite was of great importance to the lovers of music in the eighteenth-century Habsburg lands, but was not of much interest to their farmers and manufacturers. The Austrian Empire created Haydn and Mozart, but no Industrial Revolution.Joel Mokyr (2017). A Culture of Growth. The Origins of the Modern Economy, p 17
A merchant is accustomed to employ his money chiefly in profitable projects, whereas a mere country gentleman is accustomed to employ it chiefly in expence. The one often sees his money go from him and return to him again with a profit; the other, when once he parts with it, very seldom expects to see any more of it. Those different habits naturally affect their temper and disposition in every sort of business. A merchant is commonly a bold, a country gentleman a timid undertaker. […] The habits, besides, of order, economy and attention, to which mercantile business naturally forms a merchant, render him much fitter to execute, with profit and success, any project of improvement.Adam Smith (1776). An Inquiry into the Nature and Causes of the Wealth of Nations, Book III, ch 4
Economic activity is at the same time a means of want-satisfaction, an agency for want- and character-formation, a field of creative self-expression, and a competitive sport. While men are “playing the game” of business, they are also moulding their own and other personalities, and creating a civilization whose worthiness to endure cannot be a matter of indifference.Frank H. Knight (1923). The Ethics of Competition, p 587
The early 20th century was an era of building, in the broadest sense, from universities to government agencies to cities to highways. The by-product of building is maintenance, and we haven’t figured out how to meta-maintain — to avoid emergent sclerosis in the stuff we build.Patrick Collison (2021). Interview met Noah Smith.
Personally, I’ve never met a person who was evil in the classic Hollywood mode, who throws down happily on the side of evil while cackling, the sworn enemy of all that is good because of some early disillusionment. Most of the evil I’ve seen in the world – most of the nastiness I’ve been on the receiving end of (and, for that matter, the nastiness I, myself, have inflicted on others) – was done by people who intended good, who thought they were doing good, by reasonable people, staying polite, making accommodations, laboring under slight misperceptions, who haven’t had the inclination or taken the time to think things through, who’ve been sheltered from or were blind to the negative consequences of the belief system of which they were part, bowing to expedience and/or “commonsense” notions that have come to them via their culture and that they have failed to interrogate.George Saunders (2021). A Swim in a Pond in the Rain (In Which Four Russians Give a Master Class on Writing, Reading and Life), p 292-293 (ht Erwin K)
The … issue is the competence with which the state discharges its economic functions. Does regulation of railway rates keep them at proper levels? Does review of new stock issues protect the investor from loss? Does review of the truthfulness of advertisements protect consumers? Does the federal mediation service reduce the frequency or duration of strikes? Will the review of new drugs save human lives?George Stigler (1975). The Citizen and the State. Essays on Regulation, p. 10
I ask you to believe a strange thing. No one knows the answer to questions of this sort. At most only a tiny set of policies have been studied with even moderate care. The conservative has not found it necessary to document his charges of failure, nor the liberal to document his claims of success.
(W)e … think of economic growth in terms of material considerations versus moral ones. … We weigh material positives against moral negatives.Benjamin Friedman (2005). The Moral Consequences of Economic Growth, p 4
I believe this thinking is seriously, in some circumstances dangerously, incomplete. The value of a rising standard of living lies not just in the concrete improvements it brings to how individuals live but in how it shapes the social, political, and ultimately the moral character of a people.
Economic growth … more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy.
L’esprit de commerce entraîne avec soi celui de frugalité, d’économie, de modération, de travail, de sagesse, de tranquillité, d’ordre et de règle. Ainsi, tandis que cet esprit subsiste, les richesses qu’il produit n’ont aucun mauvais effet. Le mal arrive lorsque l’excès des richesses détruit cet esprit de commerce; on voit tout à coup naître les désordres de l’inégalité, qui ne s’étaient pas encore fait sentir.Montesquieu (1748). De l’Esprit des Lois, Ch VI
The fundamental attitude of true individualism is one of humility toward the processes by which mankind has achieved things which have not been designed or understood by any individual and are indeed greater than individual minds.Friedrich Hayek (1948). Individualism and Economic Order, p 32
The stupendous loss in the depth and richness of human nature is a noticeable part of the price we have paid in transforming economics from a moral science of man creating wealth to a cold logic of choice in resource allocation. No longer a study of man as he is, modern economics has lost its anchor and drifted away from economic reality. As a result, economists are hard pressed to say much that is coherent and insightful, although their counsel is badly needed in this time of crisis and uncertainty.Ronald Coase & Ning Wang (2013). How China Became Capitalist, p. 206
COCHRANE: Economists should never make predictions.John Cochrane (2021). Conversations with Tyler
COWEN: But theories make predictions.
COCHRANE: Theories make conditional predictions. Theories make if x happens and you hold everything else constant, then y ought to happen. Economics is awfully bad at making unconditional predictions. “Here’s what’s going to happen.” Period. …
So yes, it’s about risk. It’s not about the forecast. That’s a good way of putting it.
(H)ow exactly did this improvement come about? Did the world somehow become more fair? The answer is clearly “no”. The major difference between now and then is that our economy is more efficient – we can produce more with less. In the twentieth century, total world economic output exceeded that of all the previous centuries combined. At the same time, the overall level of social inequality increased. Our economic system is just as unfair as it always has been. The amount of wealth that actually gets redistributed from rich to poor in our society has been, and remains, puny. We rely on efficiency – not brotherly love – to do the work of making our economic system even halfway tolerable for those at the bottom of the heap.Joseph Heath (2001). The Efficient Society. Why Canada Is As Close To Utopia As It Gets, p 6-7