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“ So long as effective freedom of exchange is maintained, the central feature of the market organization of economic activity is that it prevents one person from interfering with another in respect of most of his activities. The consumer is protected from coercion by the seller because of the presence of other sellers with whom he can deal. The seller is protected from coercion by the consumer because of other consumers to whom he can sell. The employee is protected from coercion by the employer because of other employers for whom he can work, and so on. And the market does this impersonally and without centralized authority.

Indeed, a major source of objection to a free economy is precisely that it does this task so well. It gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.

” — Milton Friedman (1912 – 2006)
Capitalism and Freedom , 1962

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“ The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the "rules of the game" and as an umpire to interpret and enforce the rules decided on. What the market does is to reduce greatly the range of issues that must be decided through political means, and thereby to minimize the extent to which government need participate directly in the game. The characteristic feature of action through political channels is that it tends to require or enforce substantial conformity. The great advantage of the market, on the other hand, is that it permits wide diversity. It is, in political terms, a system of proportional representation. Each man can vote, as it were, for the color of tie he wants and get it; he does not have to see what color the majority wants and then, if he is in the minority, submit. ” — Milton Friedman (1912 – 2006)
Capitalism and Freedom , 1962

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“ In civilized society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens. Even a beggar does not depend upon it entirely. The charity of well-disposed people, indeed, supplies him with the whole fund of his subsistence. But though this principle ultimately provides him with all the necessaries of life which he has occasion for, it neither does nor can provide him with them as he has occasion for them. The greater part of his occasional wants are supplied in the same manner as those of other people, by treaty, by barter, and by purchase. With the money which one man gives him he purchases food. The old cloaths which another bestows upon him he exchanges for other old cloaths which suit him better, or for lodging, or for food, or for money, with which he can buy either food, cloaths, or lodging, as he has occasion. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ The inequality with which a tax of this kind might fall upon the owners of different ground-rents would arise altogether from the accidental inequality of this division. But the inequality with which it might fall upon the inhabitants of different houses would arise not only from this, but from another cause. The proportion of the expence of house-rent to the whole expence of living is different in the different degrees of fortune. It is perhaps highest in the highest degree, and it diminishes gradually through the inferior degrees, so as in general to be lowest in the lowest degree. The necessaries of life occasion the great expence of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expence of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be any thing very unreasonable. It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ Without the assistance of some artificers, indeed, the cultivation of land cannot be carried on but with great inconveniency and continual interruption. Smiths, carpenters, wheel-wrights, and plough-wrights, masons, and bricklayers, tanners, shoemakers, and tailors are people whose service the farmer has frequent occasion for. Such artificers, too, stand occasionally in need of the assistance of one another; and as their residence is not, like that of the farmer, necessarily tied down to a precise spot, they naturally settle in the neighbourhood of one another, and thus form a small town or village. The butcher, the brewer, and the baker soon join them, together with many other artificers and retailers, necessary or useful for supplying their occasional wants, and who contribute still further to augment the town. The inhabitants of the town and those of the country are mutually the servants of one another. The town is a continual fair or market, to which the inhabitants of the country resort in order to exchange their rude for manufactured produce. It is this commerce which supplies the inhabitants of the town both with the materials of their work, and the means of their subsistence. The quantity of the finished work which they sell to the inhabitants of the country necessarily regulates the quantity of the materials and provisions which they buy. Neither their employment nor subsistence, therefore, can augment but in proportion to the augmentation of the demand from the country for finished work; and this demand can augment only in proportion to the extension of improvement and cultivation. Had human institutions, therefore, never disturbed the natural course of things, the progressive wealth and increase of the towns would, in every political society, be consequential, and in proportion to the improvement and cultivation of the territory or country. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ In seeking for employment to a capital, manufactures are, upon equal or nearly equal profits, naturally preferred to foreign commerce, for the same reason that agriculture is naturally preferred to manufactures. As the capital of the landlord or farmer is more secure than that of the manufacturer, so the capital of the manufacturer, being at all times more within his view and command, is more secure than that of the foreign merchant. In every period, indeed, of every society, the surplus part both of the rude and manufactured produce, or that for which there is no demand at home, must be sent abroad in order to be exchanged for something for which there is some demand at home. But whether the capital, which carries this surplus produce abroad, be a foreign or a domestic one is of very little importance. If the society has not acquired sufficient capital both to cultivate all its lands, and to manufacture in the completest manner the whole of its rude produce, there is even a considerable advantage that rude produce should be exported by a foreign capital, in order that the whole stock of the society may be employed in more useful purposes. The wealth of ancient Egypt, that of China and Indostan, sufficiently demonstrate that a nation may attain a very high degree of opulence though the greater part of its exportation trade be carried on by foreigners. The progress of our North American and West Indian colonies would have been much less rapid had no capital but what belonged to themselves been employed in exporting their surplus produce. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ The ancient policy of Europe was, over and above all this, unfavourable to the improvement and cultivation of land, whether carried on by the proprietor or by the farmer; first, by the general prohibition of the exportation of corn without a special licence, which seems to have been a very universal regulation; and secondly, by the restraints which were laid upon the inland commerce, not only of corn, but of almost every other part of the produce of the farm by the absurd laws against engrossers, regrators, and forestallers, and by the privileges of fairs and markets. It has already been observed in what manner the prohibition of the exportation of corn, together with some encouragement given to the importation of foreign corn, obstructed the cultivation of ancient Italy, naturally the most fertile country in Europe, and at that time the seat of the greatest empire in the world. To what degree such restraints upon the inland commerce of this commodity, joined to the general prohibition of exportation, must have discouraged the cultivation of countries less fertile and less favourably circumstanced, it is not perhaps very easy to imagine. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ The inhabitants of a city, it is true, must always ultimately derive their subsistence, and the whole materials and means of their industry, from the country. But those of a city, situated near either the sea-coast or the banks of a navigable river, are not necessarily confined to derive them from the country in their neighbourhood. They have a much wider range, and may draw them from the most remote corners of the world, either in exchange for the manufactured produce of their own industry, or by performing the office of carriers between distant countries and exchanging the produce of one for that of another. A city might in this manner grow up to great wealth and splendour, while not only the country in its neighbourhood, but all those to which it traded, were in poverty and wretchedness. Each of those countries, perhaps, taken singly, could afford it but a small part either of its subsistence or of its employment, but all of them taken together could afford it both a great subsistence and a great employment. There were, however, within the narrow circle of the commerce of those times, some countries that were opulent and industrious. Such was the Greek empire as long as it subsisted, and that of the Saracens during the reigns of the Abassides. Such too was Egypt till it was conquered by the Turks, some part of the coast of Barbary, and all those provinces of Spain which were under the government of the Moors. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ Secondly, the wealth acquired by the inhabitants of cities was frequently employed in purchasing such lands as were to be sold, of which a great part would frequently be uncultivated. Merchants are commonly ambitious of becoming country gentlemen, and when they do, they are generally the best of all improvers. 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 one is not afraid to lay out at once a large capital upon the improvement of his land when he has a probable prospect of raising the value of it in proportion to the expence. The other, if he has any capital, which is not always the case, seldom ventures to employ it in this manner. If he improves at all, it is commonly not with a capital, but with what he can save out of his annual revenue. Whoever has had the fortune to live in a mercantile town situated in an unimproved country must have frequently observed how much more spirited the operations of merchants were in this way than those of mere country gentlemen. 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 (1723 – 1790)
The Wealth of Nations , 1776

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“ A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great proprietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one, and the industry of the other, was gradually bringing about.

It is thus that through the greater part of Europe the commerce and manufactures of cities, instead of being the effect, have been the cause and occasion of the improvement and cultivation of the country.

” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ To take an example, therefore, from a very trifling manufacture; but one in which the division of labour has been very often taken notice of, the trade of the pin-maker; a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. I have seen a small manufactory of this kind where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former consequently would be glad to dispose of, and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner, as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry. ” — Adam Smith (1723 – 1790)
The Wealth of Nations , 1776

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“ If competition is contrasted with energetic co-operation in unselfish work for the public good, then even the best forms of competition are relatively evil; while its harsher and meaner forms are hateful. And in a world in which all men were perfectly virtuous, competition would be out of place; but so also would be private property and every form of private right. Men would think only of their duties; and no one would desire to have a larger share of the comforts and luxuries of life than his neighbours. Strong producers could easily bear a touch of hardship; so they would wish that their weaker neighbours, while producing less should consume more. Happy in this thought, they would work for the general good with all the energy, the inventiveness, and the eager initiative that belonged to them; and mankind would be victorious in contests with nature at every turn. Such is the Golden Age to which poets and dreamers may look forward. But in the responsible conduct of affairs, it is worse than folly to ignore the imperfections which still cling to human nature.

History in general, and especially the history of socialistic ventures, shows that ordinary men are seldom capable of pure ideal altruism for any considerable time together; and that the exceptions are to be found only when the masterful fervour of a small band of religious enthusiasts makes material concerns to count for nothing in comparison with the higher faith.

” — Alfred Marshall (1842 – 1924)
Principles of Economics , 1890

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“ Man cannot create material things. In the mental and moral world indeed he may produce new ideas; but when he is said to produce material things, he really only produces utilities; or in other words, his efforts and sacrifices result in changing the form or arrangement of matter to adapt it better for the satisfaction of wants. All that he can do in the physical world is either to readjust matter so as to make it more useful, as when he makes a log of wood into a table; or to put it in the way of being made more useful by nature, as when he puts seed where the forces of nature will make it burst out into life.

It is sometimes said that traders do not produce: that while the cabinet-maker produces furniture, the furniture-dealer merely sells what is already produced. But there is no scientific foundation for this distinction. They both produce utilities, and neither of them can do more: the furniture-dealer moves and rearranges matter so as to make it more serviceable than it was before, and the carpenter does nothing more. The sailor or the railway-man who carries coal above ground produces it, just as much as the miner who carries it underground; the dealer in fish helps to move on fish from where it is of comparatively little use to where it is of greater use, and the fisherman does no more. It is true that there are often more traders than are necessary; and that, whenever that is the case, there is a waste. But there is also waste if there are two men to a plough which can be well worked by one man; in both cases all those who are at work produce, though they may produce but little. Some writers have revived the mediæval attacks on trade on the ground that it does not produce. But they have not aimed at the right mark. They should have attacked the imperfect organization of trade, particularly of retail trade.

” — Alfred Marshall (1842 – 1924)
Principles of Economics , 1890

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“ The hope that poverty and ignorance may gradually be extinguished, derives indeed much support from the steady progress of the working classes during the nineteenth century. The steam-engine has relieved them of much exhausting and degrading toil; wages have risen; education has been improved and become more general; the railway and the printing-press have enabled members of the same trade in different parts of the country to communicate easily with one another, and to undertake and carry out broad and far-seeing lines of policy; while the growing demand for intelligent work has caused the artisan classes to increase so rapidly that they now outnumber those whose labour is entirely unskilled. A great part of the artisans have ceased to belong to the "lower classes" in the sense in which the term was originally used; and some of them already lead a more refined and noble life than did the majority of the upper classes even a century ago.

This progress has done more than anything else to give practical interest to the question whether it is really impossible that all should start in the world with a fair chance of leading a cultured life, free from the pains of poverty and the stagnating influences of excessive mechanical toil; and this question is being pressed to the front by the growing earnestness of the age.

” — Alfred Marshall (1842 – 1924)
Principles of Economics , 1890

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“ It is often said that the modern forms of industrial life are distinguished from the earlier by being more competitive. But this account is not quite satisfactory. The strict meaning of competition seems to be the racing of one person against another, with special reference to bidding for the sale or purchase of anything. This kind of racing is no doubt both more intense and more widely extended than it used to be: but it is only a secondary, and one might almost say, an accidental consequence from the fundamental characteristics of modern industrial life.

There is no one term that will express these characteristics adequately. They are, as we shall presently see, a certain independence and habit of choosing one's own course for oneself, a self-reliance; a deliberation and yet a promptness of choice and judgment, and a habit of forecasting the future and of shaping one's course with reference to distant aims. They may and often do cause people to compete with one another; but on the other hand they may tend, and just now indeed they are tending, in the direction of co-operation and combination of all kinds good and evil. But these tendencies towards collective ownership and collective action are quite different from those of earlier times, because they are the result not of custom, not of any passive drifting into association with one's neighbours, but of free choice by each individual of that line of conduct which after careful deliberation seems to him the best suited for attaining his ends, whether they are selfish or unselfish.

The term "competition" has gathered about it evil savour, and has come to imply a certain selfishness and indifference to the wellbeing of others. Now it is true that there is less deliberate selfishness in early than in modern forms of industry; but there is also less deliberate unselfishness. It is deliberateness, and not selfishness, that is the characteristic of the modern age.

” — Alfred Marshall (1842 – 1924)
Principles of Economics , 1890

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“ Again, the modern era has undoubtedly given new openings for dishonesty in trade. The advance of knowledge has discovered new ways of making things appear other than they are, and has rendered possible many new forms of adulteration. The producer is now far removed from the ultimate consumer; and his wrong-doings are not visited with the prompt and sharp punishment which falls on the head of a person who, being bound to live and die in his native village, plays a dishonest trick on one of his neighbours. The opportunities for knavery are certainly more numerous than they were; but there is no reason for thinking that people avail themselves of a larger proportion of such opportunities than they used to do. On the contrary, modern methods of trade imply habits of trustfulness on the one side and a power of resisting temptation to dishonesty on the other, which do not exist among a backward people. Instances of simple truth and personal fidelity are met with under all social conditions: but those who have tried to establish a business of modern type in a backward country find that they can scarcely ever depend on the native population for filling posts of trust. It is even more difficult to dispense with imported assistance for work, which calls for a strong moral character, than for that which requires great skill and mental ability. Adulteration and fraud in trade were rampant in the middle ages to an extent that is very astonishing, when we consider the difficulties of wrong-doing without detection at that time. ” — Alfred Marshall (1842 – 1924)
Principles of Economics , 1890

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“ Here, as elsewhere, we must bear in mind that the desire to make money does not itself necessarily proceed from motives of a low order, even when it is to be spent on oneself. Money is a means towards ends, and if the ends are noble, the desire for the means is not ignoble. The lad who works hard and saves all he can, in order to be able to pay his way afterwards at a University, is eager for money; but his eagerness is not ignoble. In short, money is general purchasing power, and is sought as a means to all kinds of ends, high as well as low, spiritual as well as material.

Thus though it is true that "money" or "general purchasing power" or "command over material wealth," is the centre around which economic science clusters; this is so, not because money or material wealth is regarded as the main aim of human effort, nor even as affording the main subject-matter for the study of the economist, but because in this world of ours it is the one convenient means of measuring human motive on a large scale. If the older economists had made this clear, they would have escaped many grievous misrepresentations; and the splendid teachings of Carlyle and Ruskin as to the right aims of human endeavour and the right uses of wealth, would not then have been marred by bitter attacks on economics, based on the mistaken belief that that science had no concern with any motive except the selfish desire for wealth, or even that it inculcated a policy of sordid selfishness.

” — Alfred Marshall (1842 – 1924)
Principles of Economics , 1890

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“ How should we act so as to increase the good and diminish the evil influences of economic freedom, both in its ultimate results and in the course of its progress? If the first are good and the latter evil, but those who suffer the evil, do not reap the good; how far is it right that they should suffer for the benefit of others?

Taking it for granted that a more equal distribution of wealth is to be desired, how far would this justify changes in the institutions of property, or limitations of free enterprise even when they would be likely to diminish the aggregate of wealth? In other words, how far should an increase in the income of the poorer classes and a diminution of their work be aimed at, even if it involved some lessening of national material wealth? How far could this be done without injustice, and without slackening the energies of the leaders of progress? How ought the burdens of taxation to be distributed among the different classes of society?

” — Alfred Marshall (1842 – 1924)
Principles of Economics , 1890

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“ It is of interest to note that a disproportionately large fraction of the people involved apparently went into the most competitive sectors of the economy-small businesses, trade, farming-where the market approaches most closely the ideal free market. No one who buys bread knows whether the wheat from which it is made was grown by a Communist or a Republican, by a constitutionalist or a Fascist, or, for that matter, by a Negro or a white. This illustrates how an impersonal market separates economic activities from political views and protects men from being discriminated against in their economic activities for reasons that are irrelevant to their productivity-whether these reasons are associated with their views or their color.

As this example suggests, the groups in our society that have the most at stake in the preservation and strengthening of competitive capitalism are those minority groups which can most easily become the object of the distrust and enmity of the majority-the Negroes, the Jews, the foreign-born, to mention only the most obvious. Yet, paradoxically enough, the enemies of the free market-the Socialists and Communists-have been recruited in disproportionate measure from these groups. Instead of recognizing that the existence of the attitudes of their fellow countrymen, they mistakenly attribute the residual discrimination to the market.

” — Milton Friedman (1912 – 2006)
Capitalism and Freedom , 1962

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“ The gradual transformation of a rigidly organized hierarchic system into one where men could at least attempt to shape their own life, where man gained the opportunity of knowing and choosing between different forms of life, is closely associated with the growth of commerce. From the commercial cities of northern Italy the new view of life spread with commerce to the west and north, through France and the southwest of Germany to the Low Countries and the British Isles, taking firm root wherever there was no despotic political power to stifle. In the Low Countries and Britain it for a long time enjoyed its fullest development and for the first time had an opportunity to grow freely and to become the foundation of the social and political life of these countries. And it was from there that in the late seventeenth and eighteenth centuries it again began to spread in a more fully developed form to the West and East, to the New World and to the center of the European continent, where devastating wars and political oppression had largely submerged the earlier beginnings of a similar growth. ” — Frederick Hayek (1899 – 1992)
The Road to Serfdom , 1944

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“ The task of creating a suitable framework for the beneficial working of competition had however, not yet been carried very far when states everywhere turned from it to that of supplanting competition by a different and irreconcilable principle. The question was no longer one of making competition work and of supplementing it but of displacing it altogether. It is important to be quite clear about this: the modern movement for planning is a movement against competition as such, a new flag under which all the old enemies of competition have rallied. And although all sorts of interests are now trying to reestablish under this flag privileges which the liberal era swept away, it is socialist propaganda for planning which has restored to respectability among liberal-minded people opposition to competition and which has effectively lulled the healthy suspicion which any attempt to smother competition used to arouse. What in effect unites the socialists of the Left and the Right is this common hostility to competition and their common desire to replace it by a directed economy. Though the terms "capitalism" and "socialism" are still generally used to describe the past and the future forms of society, they conceal rather than elucidate the nature of the transition through which we are passing.

Yet, though all the changes we are observing tend in the direction of a comprehensive central direction of economic activity, the universal struggle against competition promises to produce in the first instance something in many respects even worse, a state of affairs which can statisfy neither planners nor liberals: a sort of syndicalist or "corporative" organization of industry, in which competition is more or less suppressed but planning is left in the hands of the independent monopolies of the separate industries. This is the inevitable first result of a situation in which the people are united in their hostility to competition but agree on little else. By destroying competition in industry after industry, this policy puts the consumer at the mercy of the joint monopolist action of capitalists and workers in the best organized industries. Yet, although this is a state of affairs which in wide fields has already existed for some time, and although much of the muddled (and most of the interested) agitation for planning aims at it, it is not a state which is likely to persist or can be rationally justified. Such independent planning by industrial monopolies would, in fact, produce effects opposite to those at which the argument for planning aims. Once this stage is reached, the only alternative to a return to competition is the control of the monopolies by the state-a control which, if it is to be made effective, must become progressively more complete and more detailed. It is this stage we are rapidly approaching. When, shortly before the war, a weekly magazine pointed out that there were many signs that British leaders, at least, were growing accustomed to thinking in terms of national development by controlled monopolies, this was probably a true estimate of the position as it then existed. Since then this process has been greatly accelerated by the war, and its grave defects and dangers will become increasingly obvious as times goes on.

” — Frederick Hayek (1899 – 1992)
The Road to Serfdom , 1944

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“ The welfare of the country is squarely up to us as individuals. That is where it should be and that is where it is safest. Governments can promise something for nothing but they cannot deliver. They can juggle the currencies as they did in Europe (and as bankers the world over do, as long as they can get the benefit of the juggling) with a patter of solemn nonsense. But it is work and work alone that can continue to deliver the goods — and that, down in his heart, is what every man knows.

There is little chance of an intelligent people, such as ours, ruining the fundamental processes of economic life. Most men know they cannot get something for nothing. Most men feel — even if they do not know — that money is not wealth. The ordinary theories which promise everything to everybody, and demand nothing from anybody, are promptly denied by the instincts of the ordinary man, even when he does not find reasons against them. He knows they are wrong. That is enough. The present order always clumsy, often stupid, and in many ways imperfect, has this advantage over any other — it works.

” — Henry Ford (1863 – 1947)
My Life and Work , 1922

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“ The moral fundamental is man's right in his labour. This is variously stated. It is sometimes called "the right of property." It is sometimes masked in the command, "Thou shall not steal." It is the other man's right in his property that makes stealing a crime. When a man has earned his bread, he has a right to that bread. If another steals it, he does more than steal bread; he invades a sacred human right. If we cannot produce we cannot have — but some say if we produce it is only for the capitalists. Capitalists who become such because they provide better means of production are of the foundation of society. They have really nothing of their own. They merely manage property for the benefit of others. Capitalists who become such through trading in money are a temporarily necessary evil. They may not be evil at all if their money goes to production. If their money goes to complicating distribution — to raising barriers between the producer and the consumer — then they are evil capitalists and they will pass away when money is better adjusted to work; and money will become better adjusted to work when it is fully realized that through work and work alone may health, wealth, and happiness inevitably be secured.

There is no reason why a man who is willing to work should not be able to work and to receive the full value of his work. There is equally no reason why a man who can but will not work should not receive the full value of his services to the community. He should most certainly be permitted to take away from the community an equivalent of what he contributes to it. If he contributes nothing he should take away nothing. He should have the freedom of starvation. We are not getting anywhere when we insist that every man ought to have more than he deserves to have — just because some do get more than they deserve to have.

There can be no greater absurdity and no greater disservice to humanity in general than to insist that all men are equal. Most certainly all men are not equal, and any democratic conception which strives to make men equal is only an effort to block progress. Men cannot be of equal service. The men of larger ability are less numerous than the men of smaller ability; it is possible for a mass of the smaller men to pull the larger ones down— but in so doing they pull themselves down. It is the larger men who give the leadership to the community and enable the smaller men to live with less effort.

” — Henry Ford (1863 – 1947)
My Life and Work , 1922

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“ There is one sure mark of the coming partner, the future millionnaire; his revenues always exceed his expenditures. He begins to save early, almost as soon as he begins to earn. No matter how little it may be possible to save, save that little. Invest it securely, not necessarily in bonds, but in anything which you have good reason to believe will be profitable, but no gambling with it, remember. A rare chance will soon present itself for investment. The little you have saved will prove the basis for an amount of credit utterly surprising to you. Capitalists trust the saving young man. For every hundred dollars you can produce as the result of hard-won savings, Midas, in search of a partner, will lend or credit a thousand; for every thousand, fifty thousand. It is not capital that your seniors require, it is the man who has proved that he has the business habits which create capital, and to create it in the best of all possible ways, as far as self-discipline is concerned, is, by adjusting his habits to his means. Gentlemen, it is the first hundred dollars saved which tells. Begin at once to lay up something. The bee predominates in the future millionnaire.

Of course there are better, higher aims than saving. As an end, the acquisition of wealth is ignoble in the extreme; I asstune that you save and long for wealth only as a means of enabling you the better to do some good in your day and generation. Make a note of this essential rule: Expenditure always within income.

” — Andrew Carnegie (1835 – 1919)
The Empire of Business , 1902

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“ You may grow impatient, or become discouraged when year by year you float on in subordinate positions. There is no doubt that it is becoming harder and harder as business gravitates more and more to immense concerns, for a young man without capital to get a start for himself, and in this city especially, where large capital is essential, it is unusually difficult. Still, let me tell you for your encouragement, that there is no country in the world, where able and energetic young men can so readily rise as this, nor any city where there is more room at the top. It has been impossible to meet the demand for capable, first-class bookkeepers (mark the adjectives) the supply has never been equal to the demand. Young men give all kinds of reasons why in their cases failure was clearly attributable to exceptional circumstances which render success impossible. Some never had a chance, according to their own story. This is simply nonsense. No young man ever lived who had not a chance, and a splendid chance, too, if he ever was employed at all. He is assayed in the mind of his immediate superior, from the day he begins work, and, after a time, if he has merit, he is assayed in the council chamber of the firm. His ability, honesty, habits, associations, temper, disposition, all these are weighed and analysed. The young man who never had a chance is the same young man who has been canvassed over and over again by his superiors, and found destitute of necessary qualifications, or is deemed unworthy of closer relations with the firm, owing to some objectionable act, habit, or association, of which he thought his employers ignorant. ” — Andrew Carnegie (1835 – 1919)
The Empire of Business , 1902

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“ There is no longer any room for conducting the manufacture of such articles upon a small scale; expensive works and machinery costing millions are required, as the amount per ton or per yard of what we call "fixed charges" is so great a factor in the total cost that whether a concern can run successfully or not in many cases depends upon whether it divides these fixed charges — which may be said to be practically the same in a large establishment as in a smaller — by a thousand tons per day or by five hundred tons per day of product. Hence the reason for the continual increase year by year in the product of your mills, not that the manufacturer wishes primarily to increase his product, but that the strain of competition forces him into extensions that he may thereby reduce more and more per ton or per yard these fixed charges, upon which the safety of his capital depends. It being therefore impossible for the employers of thousands to become acquainted with their men, if we are not to lose all feeling of mutuality between us, the employer must seek their acquaintance through other forms, to express his care for the well-being of those upon whose labour he depends for success, by devoting part of his earnings for institutions like this library, and for the accommodation of organizations such as the co-operative stores which occupy the lower floor of this building, and I hope in return that the employes are to show by the use which they make of such benefactions that they in turn respond to this sentiment upon the part of employers wherever it may be found. By such means as these we may hope to maintain to some extent the old feeling of kindliness, mutual confidence, respect and esteem which formerly distinguished the relations between the employer and his men. We are younger than Europe, and have still something to see from the older land in this respect; but I rejoice to see that many manufacturers in this country are awaking to the sense of duty to their employes; and what is even still more important are the evidences which we find among our workmen of a desire to establish societies which cannot but be beneficial to themselves. It is all well enough for people to help others, but the grandest result is achieved when people prove able to help themselves. ” — Andrew Carnegie (1835 – 1919)
The Empire of Business , 1902

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“ The most melancholy feature in all the disputes between labour and capital is that it is scarcely ever capital that succeeds in breaking down the price of labour, but, alas, it is labour which stabs labour. Look around you and see labour working for 10, 20 and even 30 per cent, less in some mills, and at Johnstown and Harrisburg for less than one-half what we pay for skilled labour in this district; and then in your hearts blame not capital, but consider employers who regret those reductions in wages, who stand out against them and run for years at higher prices, as the best friends of labour, even although at last they must frankly confess that if they are to give their men steady employment and save their capital and works, they are forced to ask them to work at the rates obtained by their competitors. The first employer who reduces labour is labour's enemy; but the last employer to reduce labour may be labour's staunchest friend. The fatal enemy of labour is labour, not capital. ” — Andrew Carnegie (1835 – 1919)
The Empire of Business , 1902

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“ I have heard employers say that there was great danger that the masses of the people might become too well educated to be content in their useful and necessary occupations. It has required an effort upon my part to listen to this doctrine with patience. It is all wrong; I give it an unqualified contradiction. The trouble between capital and labour is just in proportion to the ignorance of the employer and the ignorance of the employed. The more intelligent the employer the better, and the more intelligent the employed the better. It is never education, it is never knowledge, that produces collision. It is always ignorance on the part of one or the other of the two forces. Speaking from an experience not inconsiderable, I make this statement. Capital is ignorant of the necessities and the just dues of labour, and labour is ignorant of the necessities and dangers of capital. That is the true origin of friction between them. More knowledge on the part of capital of the good qualities of those that serve it, and some knowledge upon the part of the men of the economic laws which hold the capitalists in their relentless grasp, would obviate most of the difficulties which arise between these two forces, which are indispensably necessary to each other. I hope that those of our men who possess that inestimable prize, the taste for reading, will make it a point to study carefully a few of the fundamental laws from which there is no escape, either on the part of capital or labour. If this library be instrumental in the slightest degree in spreading knowledge in this department, it will have justified its existence. ” — Andrew Carnegie (1835 – 1919)
The Empire of Business , 1902

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“ With American and French Revolutions and the opening of vast pioneer countries, a substantial reversal of the trend developed, as to important sections of the world population, especially in political aspects, especially in political respects, also evidenced in the movement for universal education. But many new things of nineteenth century reversed this temporary change in attitude. Of these, the theory of evolution, the emphasis upon the biological background of the individual, and the study of sociology and social anthropology profoundly affected the importance of the individual in our habits of thought. And to these, the study of economics and economic speculation, especially of French, German and English socialists, gradually contributed enormously. Then finally flowered the modern corporation and the organized labor movement, all emphasizing interdependence, cooperation, regimentation, as the essential aspects of life, as the constructive forces of civilization, until the subservience of individual to state, society, economic machinery, is the habitual attitude of mind. It has become exceedingly difficult to consider the individual. Chiefly the psychologist, the psychiatrist, the physician, the clergyman, and (to some extent) the teacher, recognize "man" as an individual, rather than as a statistical unit, in the major aspects of their work.

I am not making a plea for "individualism" as opposed to "collectivism." The extreme emphasis upon the individual in doctrinarie argument against various aspects of collective interest and action seems to me even less realistic than the reverse emphasis upon organization and collectivism. Not only socially and politically but also economically, men are more interdependent, at least in western civilization, than ever before. By reason of organized cooperation in innumerable ways, both population and the standard of living, and perhaps even the quality of living, have been greatly increased. Without such organization in society, retrogression is inevitable. Recognition of these facts, however, does not require a denial of the coexistence of the individual. It is individuals who are being organized, and the effectiveness of the group depends not only upon the scheme of grouping and function, but upon the quality of the elementary units. It is impossible in practice to disregard either aspect very far; but in general our condition of mind, our attention and interest in the problems of organization, dispose us constantly to a one-sided approach.

” — Chester Barnard (1886 – 1961)
Organization and Management: Selected Papers , 1947

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“ The produce of the earth—all that is derived from its surface by the united application of labour, machinery, and capital, is divided among three classes of the community; namely, the proprietor of the land, the owner of the stock or capital necessary for its cultivation, and the labourers by whose industry it is cultivated.

But in different stages of society, the proportions of the whole produce of the earth which will be allotted to each of these classes, under the names of rent, profit, and wages, will be essentially different; depending mainly on the actual fertility of the soil, on the accumulation of capital and population, and on the skill, ingenuity, and instruments employed in agriculture.

” — David Ricardo (1772 – 1823)
On the Principles of Political Economy and Taxation , 1817

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“ Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit, and binds together by one common tie of interest and intercourse, the universal society of nations throughout the civilized world. It is this principle which determines that wine shall be made in France and Portugal, that corn shall be grown in America and Poland, and that hardware and other goods shall be manufactured in England. ” — David Ricardo (1772 – 1823)
On the Principles of Political Economy and Taxation , 1817

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“ Monetary calculation reaches its full perfection in capital accounting. It establishes the money prices of the available means and confronts this total with the changes brought about by action and by the operation of other factors. This confrontation shows what changes occurred in the state of the acting men's affairs and the magnitude of those changes; it makes success and failure, profit and loss ascertainable. The system of free enterprise has been dubbed capitalism in order to deprecate and to smear it. However, this term can be considered very pertinent. It refers to the most characteristic feature of the system, its main eminence, viz., the role the notion of capital plays in its conduct. ” — Ludwig von Mises (1881 – 1973)
Human Action , 1949

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“ The market economy must be strictly differentiated from the second thinkable--although not realizable--system of social cooperation under the division of labor; the system of social or governmental ownership of the means of production. This second system is commonly called socialism, communism, planned economy, or state capitalism. The market economy or capitalism, as it is usually called, and the socialist economy preclude one another. There is no mixture of the two systems possible or thinkable; there is no such thing as a mixed economy, a system that would be in part capitalist and in part socialist. Production is directed by the market or by the decrees of a production tsar or a committee of production tsars.

If within a society based on private ownership by the means of production some of these means are publicly owned and operated--that is, owned and operated by the government or one of its agencies--this does not make for a mixed system which would combine socialism and capitalism. The fact that the state or municipalities own and operate some plants does not alter the characteristic features of the market economy. The publicly owned and operated enterprises are subject to the sovereignty of the market. They must fit themselves, as buyers of raw materials, equipment, and labor, and as sellers of goods and services, into the scheme of the market economy. They are subject to the laws of the market and thereby depend on the consumers who may or may not patronize them. They must strive for profits or, at least, to avoid losses. The government may cover losses of its plants or shops by drawing on public funds. But this neither eliminates nor mitigates the supremacy of the market; it merely shifts it to another sector. For the means for covering the losses must be raised by the imposition of taxes. But this taxation has its effects on the market and influences the economic structure according to the laws of the market. It is the operation of the market, and not the government collecting the taxes, that decides upon whom the incidence of the taxes falls and how they affect production and consumption. Thus the market, not the government bureau, determines the working of these publicly operated enterprises.

” — Ludwig von Mises (1881 – 1973)
Human Action , 1949

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“ All civilizations have up to now been based on private ownership of the means of production. In the past civilization and private property have been linked together. Those who maintain that economics is an experimental science and nevertheless recommend public control of the means of production, lamentably contradict themselves. If historical experience could teach us anything, it would be that private property is inextricably linked with civilization. There is no experience to the effect that socialism could provide a standard of living as high as that provided by capitalism.

The system of market economy has never been fully and purely tried. But there prevailed in the orbit of Western civilization since the Middle Ages by and large a general tendency toward the abolition of institutions hindering the operation of the market economy. With the successive progress of this tendency, population figures multiplied and the masses' standard of living was raised to an unprecedented and hitherto undreamed of level. The average American worker enjoys amenities for which Croesus, Crassus, the Medici, and Louis XIV would have envied him.

” — Ludwig von Mises (1881 – 1973)
Human Action , 1949

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“ The freedom of man under capitalism is an effect of competition. The worker does not depend on the good graces of an employer. If his employer discharges him, he finds another employer. The consumer is not at the mercy of the shopkeeper. He is free to patronize another shop if he likes. Nobody must kiss other people's hands or fear their disfavor. Interpersonal relations are businesslike. The exchange of goods and services is mutual; it is not a favor to sell or to buy, it is a transaction dictated by selfishness on either side.

It is true that in his capacity as a producer every man depends either directly--e.g., the entrepreneur--or indirectly--e.g., the hired worker--on the demands of the consumers. However, this dependence upon the supremacy of the consumers is not unlimited. If a man has a weighty reason for defying the sovereignty of the consumers, he can try it. There is in the range of the market a very substantial and effective right to resist oppression. Nobody is forced to go into the liquor industry or into a gun factory if his conscience objects. He may have to pay a price for his conviction; there are in this world no ends the attainment of which is gratuitous. But it is left to a man's own decision to choose between a material advantage and the call of what he believes to be his duty. In the market economy the individual alone is the supreme arbiter in matters of his satisfaction.

” — Ludwig von Mises (1881 – 1973)
Human Action , 1949

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“ Because Soviet enterprises were not under the same financial constraints as capitalist enterprises, they acquired more machines than they needed, "which then gather dust in warehouses or rust out of doors," as the Soviet economists put it. In short, Soviet enterprises were not forced to economize-that is, to treat their resources as both scarce and valuable in alternative uses, for the alternative users were not bidding for those resources, as they would in a market economy. While such waste cost individual Soviet enterprises little or nothing, they cost the Soviet people dearly, in the form of a lower standard of living than their resources and technology were capable of producing.

Such a waste of inputs as these economists described could not of course continue in the kind of economy where these inputs would have to be purchased in competition with alternative users, and where the enterprise itself could survive only be keeping its costs lower than its sales receipts. In such a price-coordinated capitalist system, the amounts of inputs ordered would be based on the enterprise's most accurate estimate of what was really required, not on how much its managers could persuade higher government officials to let them have.

” — Thomas Sowell (1930)
Basic Economics , 2015

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“ For those producers who are too blind or too stubborn to change, continuing losses will force their business into bankruptcy, so that the waste of the resources available to the society will be stopped that way. That is why losses are just as important as profits, from the standpoint of the economy, even though losses are not nearly as popular with businesses.

In a price-coordinated economy, employees and creditors insist on being paid, regardless of whether the managers and owners have made mistakes. This meant that capitalist businesses can make only so many mistakes for so long before they have to either stop or get stopped-whether by an inability to get the labor and supplies they need or by bankruptcy. In a feudal economy or a socialist economy, leaders can continue to make the same mistakes indefinitely. The consequences are paid by others in the form of a standard living lower than it would be if there were greater efficiency in the use of scarce resources.

” — Thomas Sowell (1930)
Basic Economics , 2015

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“ No matter how long may be the series of periodical reproductions and former accumulations through which the capital now invested may have passed, it always retains its primal virginity. So long as the laws of exchange are observed in every act of exchange, individually considered, the mode of appropriation may be completely revolutionized without in the least affecting the property right bestowed by the production of commodities. The same right remains in force, whether it be at a time when the product belonged to the producer, and when this producer, exchanging equivalent for equivalent, could enrich himself only by his own labour, or whether it be under capitalism, where the social wealth becomes in an ever increasing degree the property of those, who are in a position to appropriate to themselves again and again the unpaid labour of others.

This result becomes inevitable, as soon as labour-power is sold as a commodity by the "free" labourer himself. It is from that time on that the production of commodities becomes universal and a typical form of production. Henceforth every product is intended at the outset for sale, and all produced wealth passes through the circulation. The production of commodities does not impose itself upon the whole society, until wage-labour becomes its basis. And only then does it unfold all its powers. To say that the intervention of wage labour adulterates the production of commodities means to say that the production of commodities must not develop, if it wishes to remain unadulterated. To the same extent that it continues to develop by its own inherent laws into a capitalist production, the property laws of the production of commodities are converted into the laws of capitalistic appropriation.

” — Karl Marx (1818 – 1883)
Das Kapital , 1867

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“ Again, in proportion to the increasing mass of the means of production, now no longer the property of the labourer, but of the capitalist, the necessity increases for some effective control over the proper application of those means. Moreover, the co-operation of wage labourers is entirely brought about by the capital that employs them. Their union into one single productive body and the establishment of a connexion between their individual functions, are matters foreign and external to them, are not their own act, but the act of the capital that brings and keeps them together. Hence the connexion existing between their various labours appears to them, ideally, in the shape of a preconceived plan of the capitalist, and practically in the shape of the authority of the same capitalist, in the shape of the powerful will of another, who subjects their activity to his aims. If, then, the control of the capitalist is in substance twofold by reason of the twofold nature of the process of production itself,—which, on the one hand, is a social process for producing use-values, on the other, a process for creating surplus-value—in form that control is despotic. As co-operation extends its scale, this despotism takes forms peculiar to itself. Just as at first the capitalist is relieved from actual labour so soon as his capital has reached that minimum amount with which capitalist production, as such begins, so now, he hands over the work of direct and constant supervision of the individual workmen, and groups of workmen, to a special kind of wage labourer. An industrial army of workmen, under the command of a capitalist, requires, like a real army, officers (managers), and sergeants (foremen, overlookers), who, while the work is being done, command in the name of the capitalist. The work of supervision becomes their established and exclusive function. When comparing the mode of production of isolated peasants and artisans with production by slave labour the political economist counts this labour of superintendence among the faux frais of production. But, when considering the capitalist mode of production, he, on the contrary, treats the work of control made necessary by the co-operative character of the labour process as identical with the different work of control, necessitated by the capitalist character of that process and the antagonism of interests between capitalist and labourer. It is not because he is a leader of industry that a man is a capitalist; on the contrary, he is a leader of industry because he is a capitalist. The leadership of industry is an attribute of capital, just as in feudal times the functions of general and judge were attributes of landed property. ” — Karl Marx (1818 – 1883)
Das Kapital , 1867

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“ In the elementary form, under which we have hitherto viewed it, co-operation is a necessary concomitant of all production on a large scale, but it does not, in itself, represent a fixed form characteristic of a particular epoch in the development of the capitalist mode of production. At the most it appears to do so, and that only approximately, in the handicraft-like beginnings of manufacture, and in that kind of agriculture on a large scale, which corresponds to the epoch of manufacture, and is distinguished from peasant agriculture, mainly by the number of the labourers simultaneously employed, and by the mass of the means of production concentrated for their use. Simple co-operation is always the prevailing form, in those branches of production in which capital operates on a large scale, and division of labour and machinery play but a subordinate part.

Co-operation ever constitutes the fundamental form of the capitalist mode of production; nevertheless, the elementary form of co-operation continues to subsist as a particular form of capitalist production side by side with the more developed forms of that mode of production.

” — Karl Marx (1818 – 1883)
Das Kapital , 1867

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“ The genesis of the industrial capitalist did not proceed in such a gradual way as that of the farmer. Doubtless many small guild-masters, and yet more independent small artisans, or even wage-labourers, transformed themselves into small capitalists, and (by gradually extending exploitation of wage-labour and corresponding accumulation) into full-blown capitalists. In the infancy of capitalist production, things often happened as in the infancy of mediæval towns, where the question, which of the escaped serfs should be master and which servant, was in great part decided by the earlier or later date of their flight. The snail's-pace of this method corresponded in no wise with the commercial requirements of the new world-market that the great discoveries of the end of the 15th century created. But the middle age had handed down two distinct forms of capital, which mature in the most different economic social formations, and which, before the era of the capitalist mode of production, are considered as capital quand même—usurer's capital and merchant's capital. ” — Karl Marx (1818 – 1883)
Das Kapital , 1867

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Portal:Capitalism/Selected quote/44 "I began asking myself whether our present form of capitalism is the best way to support American democracy in the long term. It didn't seem that way to me. I thought that the model corporation of the future should be largely owned by the people who work for it, not by banks or mutual funds or shareholders who might have inherited the stock from their parents and done nothing to earn it. Entrepreneurs and capitalists would always have a key place-if you risk your money by putting it behind Henry Ford you certainly ought to be able to enjoy the fruits of your investment. But there is enormous strength in proprietorship-people develop strong attachments to the things they own, especially if they can influence whether those things succeed or fail-and it seemed imprudent to let the ownership of a business rest with people and institutions that are not directly involved. Remedying this situation would have to be an evolutionary process, but as I imagined it, gradually, over two or three generations, a business would, by law, shift into the hands of employees."

—Thomas J. Watson Jr. and Peter Petre, Father, Son & Co., 1990

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“ Here are what I consider to be the fourteen serious shortcomings of capitalism that need to be addressed and remedied to whatever extent possible. I believe that capitalism:

1.Proposes little or no solution to persisting poverty

2.Generates a growing level of income and wealth inequality

3.Fails to pay a living wage to billions of workers

4.May not provide enough human jobs in face of growing automation

5.Doesn't charge businesses with the full social costs of their activities

6.Exploits the environment and natural resources in the absence of regulation

7.Creates businesses cycles and economic instability

8.Emphasizes individualism and self-interest at the expense of community and the commons

9.Encourages high consumer debt and leads to a growing financially driven rather than producer-driven economy

10.Lets politicians and business interests collaborate to subvert the economic interests of the majority of citizens

11.Favors short-run profit planning over long-run investment planning

12.Should have regulations regarding product quality, safety, truth in advertising, and anticompetitive behavior

13.Tends to focus narrowly on GDP growth

14.Needs to bring social values and happiness into the market equation

” — Philip Kotler (1931)
Confronting Capitalism , 2015

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“ THERE ARE VILLAGES WHERE markets have been established by the interest of some property owner or royal resident. These markets, held once or twice a week, encourage several little entrepreneurs and merchants to establish themselves there. In the market, they buy the products brought from the surrounding villages in order to transport them to the large towns for sale. In the large towns, they exchange them for iron, salt, sugar and other merchandise, which they sell on market days to the villagers. Many small artisans, like locksmiths, cabinetmakers and others, also settle down in these places to serve the villagers, and, as a result, these villages become market towns. A market town being located in the center of the villages whose people come to the market, it is natural and easier for the villagers to bring their products for sale on market days and to buy the articles they need, than it would be for the merchants and entrepreneurs to transport the merchandise to the villages and exchange them for the villagers' products. ” — Richard Cantillon (1680 – 1734)
Essay on the Nature of Trade in General , 1755

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“ Economic development tends to reduce these economic sacrifices, with the result that even between the most distant lands more and more economic exchanges become possible which previously could not have taken place.

Implicit in what has been said is an explanation of the source from which all the thousands of persons who are intermediaries in trade derive their incomes. Because they do not contribute directly to the physical augmentation of goods, their activity has often been considered unproductive. But an economic exchange contributes, as we have seen, to the better satisfaction of human needs and to the increase of the wealth of the participants just as effectively as a physical increase of economic goods. All persons who mediate exchange are therefore—provided always that the exchange operations are economic—just as productive as the farmer or manufacturer. For the end of economy is not the physical augmentation of goods but always the fullest possible satisfaction of human needs. Trades people contribute no less to the attainment of this end than persons who were, for a long time, and from a very one-sided point of view, exclusively called productive.

” — Carl Menger (1840 – 1921)
Principles of Economics , 1870

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“ By a Market I shall mean much what commercial men use it to express. Originally a market was a public place in a town where provisions and other objects were exposed for sale; but the word has been generalised, so as to mean any body of persons who are in intimate business relations and carry on extensive transactions in any commodity. A great city may contain as many markets as there are important branches of trade, and these markets may or may not be localised. The central point of a market is the public exchange,—mart or auction rooms, where the traders agree to meet and transact business. In London, the Stock Market, the Corn Market, the Coal Market, the Sugar Market, and many others, are distinctly localised; in Manchester, the Cotton Market, the Cotton Waste Market, and others. But this distinction of locality is not necessary. The traders may be spread over a whole town, or region of country, and yet make a market, if they are, by means of fairs, meetings, published price lists, the post office, or otherwise, in close communication with each other. Thus, the common expression Money Market denotes no locality: it is applied to the aggregate of those bankers, capitalists, and other traders who lend or borrow money, and who constantly exchange information concerning the course of business. ” — William Stanley Jevons (1835 – 1882)
Theory of Political Economy , 1871

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“ (a) When the individual has become associated with a cooperative enterprise he has accepted a position of contact with others similarly associated. From this contact there must arise interactions between these persons individually, and these interactions are social. It may be, and often is, true that these interactions are not a purpose or object either of the cooperative systems or of the individuals participating in them. They nevertheless cannot be avoided. Hence, thought not sought, such interactions are consequences of cooperation, and constitute one set of social factors involved in cooperation.

These factors operate on the individuals affected; and, in conjunction with other factors, become incorporated in their mental and emotional characters. This is an effect which makes them significant. Hence, cooperation compels changes in the motives of individuals which otherwise would not take place. So far as these changes are in a direction favorable to the cooperative system they are resources to it. So far as they are in a direction unfavorable to cooperation, they are detriments to it or limitations of it.

” — Chester Barnard (1886 – 1961)
The Functions of the Executive , 1938

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“ For good or evil, American labor has declared itself in as a silent partner in every business. With the acquiescence of the public and the government, workers ask for, and usually succeed in getting, some fraction of corporation profits. (The moral for the self-interested laborer is to apprentice himself to a profitable quasi-monopolistic industry which has plenty of gravy to share.)

Modern capitalist society seems so imbued with a feeling of guilt over the existing inequality of income that almost everyone believes in the desirability not only of higher wages, but of much higher wages. Consequently, the demands of workers are literally insatiable. An employer cannot buy them off at any price. All he can buy is a little time; but in a few months, the workers will be back for more.

The above remarks are stated as facts, without any expression of approval or viewing with alarm. It should be said, however, that there is nothing sacred about the traditional fraction of two-thirds of the national income going to wages and salaries. Moreover, with production growing over time, real wages can continue to rise without at all impairing the returns to property. But a reckless labor movement that forces up money wages too rapidly can certainly bring economic ruin upon itself and the economic system as a whole.

” — Paul Samuelson (1915 – 2009)
Economics: The Original 1948 Edition

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“ No longer is modern man able to believe "that government governs best which governs least." In a frontier society, when a man moved farther west as soon as he could hear the bark of his neighbor's dog, there was some validity to the view "let every man paddle his own canoe." But today, in our vast interdependent society, the waters are too crowded to make unadulterated "rugged individualism" tolerable. The emphasis is increasingly on "we're all in the same boat," "don't rock the craft," "don't spit into the wind," and "don't disregard the traffic signals."

Perhaps nineteenth-century America came as close as any economy ever has to that state of laissez faire which Carlyle called "anarchy plus the constable." The result was a century of rapid material progress and an environment of individual freedom. Also there resulted periodic business crises, wasteful exhaustion of irreplaceable material resources, extremes of poverty and wealth, corruption of government by vested interest groups, and too often the supplanting of self-regulating competition in favor of all-consuming monopoly.

Gradually, and in the face of continuing opposition, the methods of Alexander Hamilton began to be applied toward the objectives of Thomas Jefferson: the constitutional powers of central and local government were interpreted broadly and were used to "secure the public interest" and to "police" the economic system. Utilities and railroads were brought under state regulation; after 1887, the Federal ICC (Interstate Commerce Commission) was set up to regulate rail traffic across state boundaries. The Sherman Antitrust Act and other laws were invoked after 1890 against monopolistic combinations in "restraint of trade." Regulation of banking became thoroughgoing; after 1913, the Federal reserve system was set up to serve as a central bank, aiding and controlling member commercial banks; and since 1933 most bank deposits have been insured by the Federal Deposit Insurance Corporation or in the case of Federal saving banks, by the Federal Savings and Loan Insurance Corporation.

” — Paul Samuelson (1915 – 2009)
Economics: The Original 1948 Edition

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“ A cynic might say of free competition what Bernard Shaw once said of Christianity: the only trouble with it is that it has never been tried. There never was a golden age of free competition, and competition is not now perfect in the economist's sense; probably it is becoming less so every day, in large part because of the fundamental nature of large-scale production and technology, consumers' tastes, and business organization.

This does not mean that we must accept as inevitable the trend toward big business, mergers, trusts, and cartels that began to swell in the 1890's. We may not believe ourselves captains of our souls, but at least we can try to be first mates. Vigorous and intelligent administration of antitrust legislation may stem the ride; but it is like the dog baying at the moon to expect universal creation of the atomistic conditions that we shall see are necessary for perfect or pure competition. It will not be easy, but our imperfectly competitive system can be helped to work better. By itself, this will not solve the problem of unemployment or purchasing power, as is developed at length in the saving-investment analysis in Part Two.

” — Paul Samuelson (1915 – 2009)
Economics: The Original 1948 Edition

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“ Now the remarkable fact is not how much the government does to control economic activity-tariff legislation, pure-food laws, utility and railroad regulations, minimum-wage regulations, fair-labor-practive acts, social security, price ceilings and floors, public works, national defense, national and local taxation, police protection and judicial redress, zoning ordinances, municipal water or gas works, etc.-but how much it does not do, even in time of war when controls multiply. Hundreds of thousands of commodities are produced by millions of people more or less at their own volition without central direction or master plan.

In a system of free enterprise no individual or organization is consciously concerned with the triad of economic problems discussed in Chap. 2. This is really remarkable. To paraphrase a famous economic example, consider the city of New York. Without a constant flow of goods in and out of the city, in a week it would be on the verge of starvation. More than a variety of right kinds and amounts of food is involved; from the surrounding hinterland, from 48 states, and form the far corners of the world, goods have been travelling for days and months with New York City as their destination. All this is undertaken without coercion or centralized direction by any conscious body!

How is it that 7 million people are able to sleep easy at night without living in mortal terror of a breakdown in the elaborate economic processes upon which the city's existence depends?

This alone is convincing proof that a competitive system of markets and prices-whatever else it may be, however imperfectly it may function-is not a system of chaos and anarchy. There is in it a certain order and orderliness. It works. It functions. Without intelligence it solves one of the most complex problems imaginable, involving thousands of unknown variables and relations. Nobody designed it. Like Topsy it just grew, and like human nature, it is changing; but at least it meets the first test of any social organization-it is changing; but at least it meets the first test of any social organization-it is able to survive.

” — Paul Samuelson (1915 – 2009)
Economics: The Original 1948 Edition

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“ Not very long ago it was fashionable for economic historians to dwell on the evils of the industrial revolution and the poverty-ridden condition of the masses in the disease-producing cities. In point of fact no Dickens novel ever did justice to the conditions of child labor, length of the working day, and conditions of safety and sanitation in early nineteenth-century factories. A work week of 84 hours was the prevailing rule, with time out for breakfast and sometimes supper, as well as lunch. A good deal of work could be got out of a six-year-old boy or girl, so long as one didn't care about his health or existence beyond the age of twelve. If a man lost two fingers in a machine, he still had eight left.

However true their lurid picture of industrial factory towns, the earlier historians erred in thinking that conditions were worse than it the preindustrial era. The earlier "putting-out" or domestic system in which wool or yarn was provided to workers for them to spin or weave in their homes brought the worst conditions of the sweatshop into the home. Sleep and need battled for the week's 168 hours. The whole family, not just the breadwinner, was figuratively forced to run on the treadmill to keep alive. For these reasons labor unions have always opposed this system of production, even more than the factory with all its evils.

Furthermore, poverty is never so obvious in the country as in the industrial cities where it forces itself on the observer. The idyllic picture of the healthful happy countryside peopled by stout yeoman and happy peasantry is a mirage in most parts of the world. Even today, nothing in New York's Hell's Kitchen or east side, nothing in Boston's south or north end, nothing "behind the Yards" in Chicago or in its black belt can overshadow the poverty and squalor of our rural problem areas: the Tobacco Road of the deep South, the hillbilly regions of the Appalachian Plateau, the two dust bowls, the ghost mining towns of Pennsylvania, and the cutover region of the upper Michigan peninsula.

” — Paul Samuelson (1915 – 2009)
Economics: The Original 1948 Edition

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“ The question is always who controls the existing bureaucratic machinery. And such control is possible only in a very limited degree to persons who are not technical specialists. Generally speaking, the highest-ranking career official is more likely to get his way in the long run than his nominal superior, the cabinet minister, who is not a specialist.

Though by no means alone, the capitalistic system has undeniably played a major role in the development of bureaucracy. Indeed, without it capitalistic production, could not continue and any rational type of socialism would have simply to take it over and increase its importance. Its development, largely under capitalistic auspices, has created an urgent need for stable, strict, intensive, and calculable administration. It is this need which is so fateful to any kind of large-scale administration. Only by reversion in every field -political, religious, economic, etc.- to small-scale organization would it be possible to any considerable extent to escape its influence. On the one hand, capitalism in its modern stages of development requires the bureaucracy, though both have arisen from different historical sources. Conversely, capitalism is the most rational economic basis for bureaucratic administration and enables it to develop in the most rational form, especially because, from a fiscal point of view, it supplies the necessary money resources.

Along with these fiscal conditions of efficient bureaucratic administration, there are certain extremely important conditions in the fields of communication and transportation. The precision of its functioning requires the services of the railway, the telegraph, and the telephone, and becomes increasingly dependent on them. A socialistic form of organization would not alter this fact. It would be a question (cf. ch. II, sec. 12) whether in a socialistic system it would be possible to provide conditions for carrying out as stringent a bureaucratic organization as has been possible in a capitalistic order. For socialism would, in fact, require a still higher degree of formal bureaucratization than capitalism. If this should prove not to be possible, it would demonstrate the existence of another of those fundamental elements of irrationality- a conflict between formal and substantive rationality of the sort which sociology so often encounters.

” — Max Weber (1864 – 1920)
Economy and Society , 1922

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“ A glance at the occupational statistics of any country of mixed religious composition brings to light with remarkable frequency a situation which has several times provoked discussion in the Catholic press and literature, and in Catholic congresses in Germany, namely, the fact that business leaders and owners of , as well as the higher grades of skilled labor, and even more the higher technically and commercially trained personnel of modern enterprises, are overwhelmingly Protestant. This is true not only in cases where the difference in religion coincides with one of nationality, and thus of cultural development, as in Eastern Germany between Germans and Poles. The same thing is shown in the figures of religious affiliation almost wherever capitalism, at the time of its great expansion, has had a free hand to alter the social distribution of the population in accordance with its needs, and to determine its occupational structure. The more freedom it has had, the more clearly is the effect shown. It is true that the greater relative participation of Protestants in the ownership of capital, in management, and the upper ranks of labor in great modern industrial and commercial enterprises, may in part be explained in terms of historical circumstances, which extend far back into the past, and in which religious affiliation is not a cause of the economic conditions, but to a certain extent appears to be a result of them. Participation in the above economic functions usually involves some previous ownership of capital, and generally an expensive education; often both. These are today largely dependent on the possession of inherited wealth, or at least on a certain degree of material well being. A number of those sections of the old Empire which were most highly developed economically and most favored by natural resources and situation, in particular a majority of the wealthy towns went over to Protestantism in the sixteenth century. The results of that circumstance favor the Protestants even today in their struggle for economic existence. There arises thus the historical question: why were the districts of highest economic development at the same time particularly favorable to a revolution in the Church? The answer is by no means so simple as one might think. ” — Max Weber (1864 – 1920)
The Protestant Ethic and the Spirit of Capitalism , 1905

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“ And the same is true of the most fateful force in our modern life, capitalism. The impulse to acquisition, pursuit of gain, of money, of the greatest possible amount of money, has in itself nothing to do with capitalism. This impulse exists and has existed among waiters, physicians, coachmen, artists, prostitutes, dishonest officials, soldiers, nobles, crusaders, gamblers, and beggars. One may say that it has been common to all sorts and conditions of men at all times and in all countries of the earth, wherever the objective possibility of it is or has been given. It should be taught in the kindergarten of cultural history that this naive idea of capitalism must be given up once and for all. Unlimited greed for gain is not it the least identical with capitalism, and is still less its spirit. Capitalism may even be identical with the restraint, or at least a rational tempering, of this irrational impulse. But capitalism is identical with the pursuit of profit, and forever renewed profit, by means of continuous, rational, capitalistic enterprise. For it must be so: in a wholly capitalistic order of society, an individual capitalistic enterprise which did not take advantage of its opportunities for profit-making would be doomed to extinction. ” — Max Weber (1864 – 1920)
The Protestant Ethic and the Spirit of Capitalism , 1905

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“ The land belongs to the owners but would be useless to them if it were not cultivated. The more labor is expended on it, other things being equal, the more it produces; and the more its products are refined, other things being equal, the more value they have as goods. Therefore, the owners need the inhabitants as they need the owners. However, in this econonomy, it is the property owners who have the control and direction of the landed capital, to give the most advantageous turn and movement to the whole. Also, everything in a state depends mainly on the moods, modes and ways of life of the property owners, as I will try to clearly show in the remainder of this essay.

Thus, need and necessity enable farmers, artisans of every kind, merchants, officers, soldiers, sailors, domestic servants and all the other classes who work or are employed in the state, to exist. All these working people server not only the prince and the property owners, but each other as well. Many of them do not work directly for the property owners, and so it is not seen that they subsist on the capital of these proprietors and live at their expense. As for those whose professions are not essential, like dancers, actors, painters, musicians, etc., they are only supported in the state for pleasure or ornamentation, and their number is always very small compared to the population.

” — Richard Cantillon (1680 – 1734)
Essay on the Nature of Trade in General , 1755

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“ Capitalism is great and having thousands of things going on in parallel. And a lot of them fail. Some are just mediocre. But the ones that are special can grow and, you know, stun everybody. And in all those fields I mentioned, there is going to be several companies that kind of take your breath away. ” — Bill Gates (1955)
CNBC Town Hall Event Columbia University, 12 November 2009

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“ In 1995, in The Road Ahead, I used the term friction-free capitalism to describe how the Internet was helping to create Adam Smith's ideal marketplace, in which buyers and sellers can easily find one another without taking much time or spending much money. Finding the other interested party is the first problem in most markets. The second is understanding the nature and quality of the goods and services being offered. The Internet make it easy for a buyer to get background information about a product-how it's rated by consumer organizations or other independent reviews-and to compare prices easily. Buyers can also tell sellers more about their requirements, and sellers will be able to target their wares to the people most interested and to cross-sell related products. ” — Bill Gates (1955)
Business @ the Speed of Thought , 1999

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“ What are the alternatives to getting healthier and safer products produced and consumed under capitalism? We have seen that bans don't generally work.

The first alternative is suggested by the cigarette example, where putting higher taxes on cigarettes reduced their sales. We could put higher taxes on items that are harmful to health or safety. Such taxes would most likely be passed on to consumers. But they would accomplish the goal of reducing consumption of these items.

The second alternative is to apply a "nudging" strategy, which involves loading the choices in a way likely to lead customers to buy the healthier alternatives. Some studies show that high school students will end up eating healthier food if the healthier food items are put near the front of the cafeteria line. Students are usually hungry after classes and grab what they see first. Extending this idea further, we can imagine supermarkets such as Whole Foods giving better shelf positions to the healthier brands within each category. So, healthier cereals would be at eye level and cereals loaded with fat and sugar would be on the lower shelves.

A third alternative is to use "social marketing tools" to persuade people to make healthier choices. The 4Ps (product, price, place, and promotion) could be applied to convince people about healthier and smarter choices. Advocates of better eating would describe the benefits of eating the right foods and the bad effects of eating unhealthy foods. Mayor Michael Bloomberg of New York City was the kind of civic leader who "counter-marketed" by trying to get supermarkets not to carry 16-ounce of larger sizes of sweetened drinks and ordering cigarettes to be put out of the sight of consumers.

” — Philip Kotler (1931)
Confronting Capitalism , 2015