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Bonus Quotation of the Day…

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… is from page 311 of the 2007 Liberty Fund edition (Bettina Bien Greaves, ed.) of Ludwig von Mises’s 1949 treatise, Human Action: Ownership of the means of production is not a privilege, but a social liability. Capitalists and landlords are compelled to employ their property for the best possible satisfaction of the consumers. If they are slow and inept in the performance of their duties, they are penalized by losses. If they do not learn the lesson and do not reform their conduct of affairs, they lose their wealth. No investment is safe forever. DBx: While in the opening sentence of this quotation Mises might be guilty of a bit of hyperbole, he’s making an important point that is typically overlooked – and overlooked completely. For the vast majority of people (namely, everyone who

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is from page 311 of the 2007 Liberty Fund edition (Bettina Bien Greaves, ed.) of Ludwig von Mises’s 1949 treatise, Human Action:

Bonus Quotation of the Day…Ownership of the means of production is not a privilege, but a social liability. Capitalists and landlords are compelled to employ their property for the best possible satisfaction of the consumers. If they are slow and inept in the performance of their duties, they are penalized by losses. If they do not learn the lesson and do not reform their conduct of affairs, they lose their wealth. No investment is safe forever.

DBx: While in the opening sentence of this quotation Mises might be guilty of a bit of hyperbole, he’s making an important point that is typically overlooked – and overlooked completely. For the vast majority of people (namely, everyone who does not inherit a huge fortune of assets deployed in a market economy), to be a capitalist – to own capital – is not an accident. It doesnt just happen. One must save – or borrow from those who save – in order to become a capitalist. And one must work hard, constantly, and creatively to increase, or even to maintain, the value of capital.

Contrary to the utterly fictional tale told by people such as Thomas Piketty, the value of capital does not automatically grow. When capital is poorly used, its value shrinks or disappears altogether. When capital is abused by the state or by cultural forces, its value shrinks or disappears altogether. Capital is not bestowed on a society by some mystical or ‘historical force; it is created by human choices, effort, and risk-taking – and it is never permanent.

This reality seems undeniable when so stated, yet it is among the aspects of economic reality that is most widely ignored.

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Don Boudreaux
He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

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