Economist Quotes

Action Economics takes inspiration from the great economists of the past. In this selection of quotes, we read Carl Menger, Eugen von Böhm-Bawerk, Ludwig von Mises, Milton Friedman and Murray Rothbard.

On Value

The value of goods arises from their relationship to our needs, and is not inherent in the goods themselves. With changes in this relationship, value arises and disappears. … Objectification of the value of goods, which is entirely subjective in nature, has nevertheless contributed very greatly to confusion about the basic principles of our science.

— Carl Menger, ‘Principle of Economics‘ 1871, Mises Institute, pp. 120-121

On the Value of Particular Goods

The value of a particular good or of a given portion of the whole quantity of a good at the disposal of an economizing individual is thus for him equal to the importance of the least important of the satisfactions assured by the whole available quantity and achieved with any equal portion.

— Carl Menger, ‘Principle of Economics‘ 1871, Mises Institute, pp. 139

On the Function of Prices

The price system works so well, so efficiently, that we are not aware of it most of the time.  We never realize how well it functions until it is prevented from functioning, and even then we seldom recognise the source of the trouble. … Prices perform three functions in organising economic activity: first, they transmit information; second, they provide an incentive to adopt those methods of production that are least costly and thereby use available resources for the most highly valued purposes; third, they determine who gets how much of the product – the distribution of income. These three functions are closely interrelated. … However we might wish it otherwise, it simply is not possible to use prices to transmit information and provide an incentive to act on that information without using prices also to affect, even if not completely determine, the distribution of income.

— Milton Friedman, ‘Free to Choose’ 1980, Harcourt Brace, p. 14 & 23

On Prices and Peaceful Cooperation

When you buy your pencil or your daily bread, you don’t know whether the pencil was made or the wheat was grown by a white man or a black man, by a Chinese or an Indian. As a result, the price system enables people to cooperate peacefully in one phase of their life while each one goes about his own business in respect of everything else.

— Milton Friedman, ‘Free to Choose’ 1980, Harcourt Brace, p. 13

On Interest

Every mode and manner of acquiring interest goes back to one identical cause. It is always a matter of the growth of future goods as they mature into present goods.

— Eugen von Böhm-Bawerk, ‘Positive Theory of Capital‘ 1889, Libertarian Press, p. 337

On the Capitalist

What sort of person, then, is the capitalist? To put it briefly, he is a merchant who offers present goods for sale. He is the fortunate possessor of a stock of goods which at the moment he does not need for his personal wants. He therefore exchanges them in one form or another for future goods, and then allows the latter to mature, while in his keeping, until they too attain the status of full-value present goods.

— Eugen von Böhm-Bawerk, ‘Positive Theory of Capital‘ 1889, Libertarian Press, p. 337

On the Rights of Man

Declaration of Independence
Declaration of Independence

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. –That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, that whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Declaration of Independence, 4 July 1776

On All Rights as Property Rights

… in the most profound sense there are no rights but property rights. The only human rights, in short, are property rights. There are several senses in which this is true. In the first place, each individual, as a natural fact, is the owner of himself, the ruler of his own person. The “human” rights of the person that are defended in the purely free-market society are, in effect, each man’s property right in his own being, and from this property right stems his right to the material goods that he has produced.

In the second place, alleged “human rights” can be boiled down to property rights, although in many cases this fact is obscured. Take, for example, the “human right” of free speech. Freedom of speech is supposed to mean the right of everyone to say whatever he likes. But the neglected question is: Where? Where does a man have this right? He certainly does not have it on property on which he is trespassing. In short, he has this right only either on his own property or on the property of someone who has agreed, as a gift or in a rental contract, to allow him on the premises. In fact, then, there is no such thing as a separate “right to free speech”; there is only a man’s property right: the right to do as he wills with his own or to make voluntary agreements with other property owners.

— Murray Rothbard, ‘Man, Economy, and State with Power and Market’ 1962, Mises Institute, pp. 1337-1338

On Economic Calculation

The theory of economic calculation shows that in the socialistic community economic calculation would be impossible. … Where there is no market there is no price system, and where there is no price system there can be no economic calculation.

— Ludwig von Mises, ‘Socialism’ 1936, Liberty Fund, pp. 112-113

Every step that takes us away from private ownership of the means of production and from the use of money also takes us away from rational economics.

— Ludwig von Mises, ‘Economic Calculation in the Socialist Commonwealth’ 1920, Mises Institute, p. 20

The paradox of “planning” is that it cannot plan, because of the absence of economic calculation. What is called a planned economy is no economy at all. It is just a system of groping about in the dark. … What is called conscious planning is precisely the elimination of conscious purposive action.

— Ludwig von Mises, ‘Human Action’ 1949, Scholar’s Edition, Mises Institute, pp. 696-697

On the Power of Ideas

The favourable evolution of human affairs depends ultimately on the ability of the human race to beget not only authors but also heralds and disseminators of beneficial ideas. … In the long run even the most despotic governments with all their brutality and cruelty are no match for ideas. Eventually the ideology that has won the support of the majority will prevail and cut the ground from under the tyrant’s feet.

— Ludwig von Mises, ‘Theory and History‘ 1957, p. 371-2

The newborn child has inherited from his ancestors the physiological features of the species. He does not inherit the ideological characteristics of human existence, the desire for learning and knowing. What distinguishes civilised man from a barbarian must be acquired by every individual anew. Protracted strenuous exertion is needed to take possession of man’s spiritual legacy.

— Ludwig von Mises, ‘Theory and History‘ 1957, p. 293