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Were Adam Smith and Hayek Mistaken?

Here’s a letter to Liberty & Law: Editor: Attempting to defend industrial policy carried out in the name of economic nationalism, Oren Cass commits several errors that reveal his unfamiliarity with economics (“Comparative Disadvantage,” January 15). Detailing these errors would require a full-length essay, so I here mention only two. First, Mr. Cass mistakenly presumes that nations compete against each other economically. They don’t, as economists since Adam Smith have demonstrated....

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A Second Open Letter to Samuel Hammond

Mr. Samuel HammondNiskanen Center Sam: I cannot resist responding to another of the many mistakes that run throughout your attempted defense of industrial policy (“The ‘Central Planning’ Strawman,” January 7). Specifically, you are incorrect to assert that Mises’s and Hayek’s identification and explanation of the knowledge problem was “stretched” by later generations of Austrian economists “far beyond its original application into a kind of epistemological nihilism.” Who, precisely,...

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Quotation of the Day…

… is from page 263 of F.A Hayek’s 1958 profound paper “The Creative Powers of a Free Civilization,” which is Chapter 9 in Essays on Individuality, Felix Morley, ed. (Indianapolis: Liberty Press, 1977 [1958]): The whole conception of man, already endowed with a mind capable of conceiving civilization, set out to create that civilization as it was already preformed in his mind, is fundamentally false. Man does not simply impose upon nature a preformed mental pattern. His mind is itself a...

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Quotation of the Day…

… is from page 93 of F.A. Hayek’s insightful 1983 paper “The Muddle of the Middle,” which is chapter 7 of the superb 1983 collection, edited by Svetozar Pejovich, Philosophical and Economic Foundations of Capitalism: The social product which is now maintaining a human population of this world four or five hundred times as large as that which man could achieve in the natural hunting and gathering stage is owed only to the division of labor, skills, and knowledge. This division could never...

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Quotation of the Day…

… is from page 261 of Deirdre McCloskey’s 2019 book, Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All (original emphasis): The more complex and specialized and spontaneously bettering an economy is, the less it can be planned, the less a central planner however wise and good can know about the trillions of preferences and plans for consumption and production and betterment. A household or your personal life might possibly be plannable,...

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Quotation of the Day…

… is from page 88 of the 2011 Definitive Edition (Ronald Hamowy, ed.) of F.A. Hayek’s great 1960 book, The Constitution of Liberty: The relevant distinction is not between individual and group action but between conditions, on one hand, in which alternative ways based on different views or practices may be tried and conditions, on the other hand, in which one agency has the exclusive right and the power to prevent others from trying. It is only when such exclusive rights are conferred on...

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Quotation of the Day…

… is from page 102 of the 2007 Definitive Edition (Bruce Caldwell, ed.) of F.A. Hayek’s classic 1944 book, The Road to Serfdom: The point which is so important is the basic fact that it is impossible for any man to survey more than a limited field, to be aware of the urgency of more than a limited number of needs. Whether his interests center round his own physical needs, or whether he takes a warm interest in the welfare of every human being he knows, the ends about which he can be...

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Quotation of the Day…

… is from page 102 of the 2007 Definitive Edition (Bruce Caldwell, ed.) of F.A. Hayek’s classic 1944 volume, The Road to Serfdom: This is the fundamental fact on which the whole philosophy of individualism is based. It does not assume, as is often asserted, that man is egoistic or selfish or ought to be. It merely starts from the indisputable fact that the limits of our powers of imagination make it impossible to include in our scale of values more than a sector of the needs of the whole...

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Bonus Quotation of the Day…

… is from page 120 of the 2007 Definitive Edition (Bruce Caldwell, ed.) of F.A. Hayek’s classic 1944 volume, The Road to Serfdom: The Rule of Law thus implies limits to the scope of legislation: it restricts it to the kind of general rules known as formal law and excludes legislation either directly aimed at particular people or at enabling anybody to use the coercive power of the state for the purpose of such discrimination. It means, not that everything is regulated by law, but, on the...

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