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February 10, 2006
Thought for the day
I lifted practically all of Jane Galt's post titled Capitalistic Thought for the Day and pasted it below so you wouldn't be able to avoid Reading The Whole Thing. This quote comes from Capitalism: The Movie, an article in The Atlantic Online by Clive Crook (subscription req'd).
Capitalism is prey to excesses, self-evidently, and it creates, or leaves unattended, a host of problems that decent societies must address by other means. Even so, the prevailing culture of suspicion and disappointment is at odds with the facts. Mainly, what is missing is awe. Premodern scholars (Karl Marx is an exception) could scarcely have imagined the material advance that capitalism has delivered. Certainly Adam Smith never dreamed that his "invisible hand" would arrange things so well.In the late 1980s, as Mikhail Gorbachev embarked on his perestroika program of economic reform, Soviet officials were sent abroad to see how things were done in the West. One visited London's main vegetable market. He asked how the market was organized, and how prices were set. He was told that the individual traders bought whatever quantities they wished, and set their own prices, and that these fluctuated throughout the day as the balance of supply and demand changed. At this, the Soviet visitor laughed. He said he understood that this was the official line--but, please, how did the market really set prices?
That, in fact, was the reaction of an intelligent man. It is fantastically improbable that markets work, at scale, as well as they do. It is astonishing that in an economy of Americ's size--to say nothing of the world economy as a whole--a limitless variety of goods and services is continuously offered at prices people are willing to pay, without persistent gluts or shortages, entirely without central direction. That the system also calls forth an endless flow of innovation and improvement is a miracle. The man from Moscow was right to be incredulous.
I had read the story about the Russian official in London at another site recently and was reminded of Larry Kudlow's apothegm: You either believe in markets or you believe in government.
Posted by joke du jour at February 10, 2006 07:00 PM
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