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This is one of the great texts on economics. Together with "Economics in One Lesson" by Hazlit, should be required high school reading all over the planet. Thes

This is one of the great texts on economics. Together with "Economics in One Lesson" by Hazlit, should be required high school reading all over the planet. These texts immunise the mind against logical fallacies about material progress. They will make mankind come together without politicians or enemies. "There is a fact still more astounding: the absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring me into being. No trace of such a person can be found." This is one of the beautiful miracles of our kind, a fact that remains unknown to most of us. Including many who figure themselves at the commanding heights. Every attempt to make this fictional mastermind more powerful makes our fate worse.

mannykannot 10y ago
It is a bit weak on some of the more complex of economic issues, such as the role of contract law in the emergence and functioning of industrial societies.
- nine_k 10y ago
  Judges are definitely not masterminds. Lawmakers are sort of masterminds, especially when defining the founding principles of the law. They don't have pencil production, and usually any particular production, in mind. The beauty is that a general principle allows almost any business to flourish; the lawmakers need not know what specific business it might be. This makes such laws reasonably future-proof.
- unknown_apostle 10y ago
  Well, the text makes visible an invisible machine, built by all but planned by none. I don’t think the author wanted to write a reference work on all aspects of its subject :-) Here’s what I personally get out of its perspective: contentment and inspiration. It provides glory to the seemingly mundane tasks of everyday economic life. Comparing prices, finding customers and suppliers, solving small problems, settling disputes. This is what the invisible machine is composed of. It also shields my mind, like a lode star that guides me away from many popular beliefs about what “needs to be done to boost GDP”.
  - mannykannot 10y ago
    Well, You did call it one of the great economics texts... I agree that the topic is an important one (I have told a similar story about nuts and bolts), but its presentation here ends up in simplistic dogma that ignores several realities of industrial economies. I am not sure that a mind shield is a good thing.
    - unknown_apostle 10y ago
      Yes, in the context of getting high school kids acquainted with the emergent nature of economic order. The shield/lode star thing: let's not go full politics. I'm not narrow minded... Let's just leave it at that :-)
      - mannykannot 10y ago
        We can agree to disagree :-) In a libertarian utopia, no-one should be required to read anything.
bo1024 10y ago
Sorry, I think it's very interesting and makes some nice points with beautiful language, but I don't follow the conclusion. It oversteps in arguing without proof that all forms of enterprise must function just like pencils, soluble by the natural dynamics of a free market. But not all forms of enterprise have the same properties as pencil production. You could imagine an antithetical essay "I, police" involving a lawless village in which each person trains extensively in martial arts and marksmanship in order to protect themselves. Then each realizes it is more efficient to focus on their own vocation and hire a private security guard. Then a few neighbors realize it is more efficient to pool their money and hire just enough security to protect their block, and finally the whole village realizes it is most efficient to pool their money into just enough security, at which point they realize they have formed a government with taxes and police force. The story could end with "It is a fact most astounding that the forces of an unencumbered free market lead directly to an inevitable centralization into a collective governing whole." Of course this story does not prove that all affairs should be handled by the government; but the pencil doesn't prove the opposite either.
- BurningFrog 10y ago
  One difference is that the pencil story actually happened. It describes real practical life. Your village police story OTOH is made up.
  - falsedan 10y ago
    Pretty sure there are police forces.
    - wojt_eu 10y ago
      I usually hear about villages forming militias rather than hiring professional security. It would be interesting to read examples of primitive governments formed like that.
      - TeMPOraL 10y ago
        If you count in "hiring" security from within the community, then this would probably describe most governments.
marklgr 10y ago
Thie is a charming free-market story, but the problem comes when people construe it as "unplanned, unregulated and competitive is always better". The idea that things can "work themselves out" to a better result than if supervised is highly exciting, to the point that some cannot resist it and just fall in love with it. This leads to the classic "Man-with-a-hammer", as C.Munger calls it: this is so good, let's hammer/free-market all the things! Games are full of Man-with-a-hammer examples, like "bluff all the things" (eg. poker), "sacrifice all the things" (chess) or "never run to win the race" (backgammon). This inevitably leads to failure, but economy being what it is, the failure is too vague, too diffuse and too erratic to acknowledge them in the case of "free market all the things".
- mariodiana 10y ago
  The problem comes in when people imagine that what's going on is "unplanned." As the economist George Reisman has pointed out, decentralized activity by actors who have a financial stake in the game and who are thus guided by profit and loss is exactly what economic planning is. Centralized "planning," as the economist Ludwig von Mises pointed out, is planned chaos.
linschn 10y ago
"Economics in One Lesson" has been touted as a perfect introduction to Economics, yet I was pretty underwhelmed after I read it. It just assumes that trickle down economics works, and repeats this "lesson" ad nauseam chapter after chapter. However, it is very clear historically that trickle down economics does not work, and that completely unregulated markets lead to human rights abuse. Picketty is much more enlightening.
- unknown_apostle 10y ago
  Piketty's book contains a correlation-implies-causation statistics-driven narrative to pitch yet another tax increase. Economics In One Lesson is an exercise in logic, showing that many popular economic policies are flawed or will necessarily have non-obvious side effects. EIOL is also deliberately written to be an easy read. It's hard to compare the two. (In the unlikely case anyone cares, my personal take on Piketty: wealth inequality doesn't matter unless you think jealousy is a matter of public policy. Wealth inequality is an inevitable consequence of progress. What matters is whether the wealthy can loose their wealth due to their own mistakes, and whether wealth inequality implies legal inequality. Private profits and public risks, bailouts, legislation a la tete du client, bribes, lobbying, monopolies, special tax agreements, propping up markets, complicated laws, ... that's how the 99% get screwed. Taxes allow the government to function. They cannot "counterbalance" the legal privileges of the 1%.)
  - notahacker 10y ago
    The other way of looking at it is that Piketty is a popularisation of serious piece academic research, however flawed some of its data processing and conclusions may be, whereas Economics in One Lesson is a pamphlet beating straw men to death with "analysis" that's beneath simplistic in many parts and flatly wrong in some of the others (e.g "for every public job created...a private job has been destroyed somewhere else") The one thing they have in common is both being pretty polemical in tone.
    - unknown_apostle 10y ago

mannykannot 10y ago

It is a bit weak on some of the more complex of economic issues, such as the role of contract law in the emergence and functioning of industrial societies.

nine_k 10y ago
Judges are definitely not masterminds. Lawmakers are sort of masterminds, especially when defining the founding principles of the law. They don't have pencil production, and usually any particular production, in mind. The beauty is that a general principle allows almost any business to flourish; the lawmakers need not know what specific business it might be. This makes such laws reasonably future-proof.
unknown_apostle 10y ago
Well, the text makes visible an invisible machine, built by all but planned by none. I don’t think the author wanted to write a reference work on all aspects of its subject :-) Here’s what I personally get out of its perspective: contentment and inspiration. It provides glory to the seemingly mundane tasks of everyday economic life. Comparing prices, finding customers and suppliers, solving small problems, settling disputes. This is what the invisible machine is composed of. It also shields my mind, like a lode star that guides me away from many popular beliefs about what “needs to be done to boost GDP”.
- mannykannot 10y ago
  Well, You did call it one of the great economics texts... I agree that the topic is an important one (I have told a similar story about nuts and bolts), but its presentation here ends up in simplistic dogma that ignores several realities of industrial economies. I am not sure that a mind shield is a good thing.
  - unknown_apostle 10y ago
    Yes, in the context of getting high school kids acquainted with the emergent nature of economic order. The shield/lode star thing: let's not go full politics. I'm not narrow minded... Let's just leave it at that :-)
    - mannykannot 10y ago
      We can agree to disagree :-) In a libertarian utopia, no-one should be required to read anything.

bo1024 10y ago

Sorry, I think it's very interesting and makes some nice points with beautiful language, but I don't follow the conclusion. It oversteps in arguing without proof that all forms of enterprise must function just like pencils, soluble by the natural dynamics of a free market. But not all forms of enterprise have the same properties as pencil production. You could imagine an antithetical essay "I, police" involving a lawless village in which each person trains extensively in martial arts and marksmanship in order to protect themselves. Then each realizes it is more efficient to focus on their own vocation and hire a private security guard. Then a few neighbors realize it is more efficient to pool their money and hire just enough security to protect their block, and finally the whole village realizes it is most efficient to pool their money into just enough security, at which point they realize they have formed a government with taxes and police force. The story could end with "It is a fact most astounding that the forces of an unencumbered free market lead directly to an inevitable centralization into a collective governing whole." Of course this story does not prove that all affairs should be handled by the government; but the pencil doesn't prove the opposite either.

BurningFrog 10y ago
One difference is that the pencil story actually happened. It describes real practical life. Your village police story OTOH is made up.
- falsedan 10y ago
  Pretty sure there are police forces.
  - wojt_eu 10y ago
    I usually hear about villages forming militias rather than hiring professional security. It would be interesting to read examples of primitive governments formed like that.
    - TeMPOraL 10y ago
      If you count in "hiring" security from within the community, then this would probably describe most governments.

marklgr 10y ago

Thie is a charming free-market story, but the problem comes when people construe it as "unplanned, unregulated and competitive is always better". The idea that things can "work themselves out" to a better result than if supervised is highly exciting, to the point that some cannot resist it and just fall in love with it. This leads to the classic "Man-with-a-hammer", as C.Munger calls it: this is so good, let's hammer/free-market all the things! Games are full of Man-with-a-hammer examples, like "bluff all the things" (eg. poker), "sacrifice all the things" (chess) or "never run to win the race" (backgammon). This inevitably leads to failure, but economy being what it is, the failure is too vague, too diffuse and too erratic to acknowledge them in the case of "free market all the things".

mariodiana 10y ago
The problem comes in when people imagine that what's going on is "unplanned." As the economist George Reisman has pointed out, decentralized activity by actors who have a financial stake in the game and who are thus guided by profit and loss is exactly what economic planning is. Centralized "planning," as the economist Ludwig von Mises pointed out, is planned chaos.

linschn 10y ago

"Economics in One Lesson" has been touted as a perfect introduction to Economics, yet I was pretty underwhelmed after I read it. It just assumes that trickle down economics works, and repeats this "lesson" ad nauseam chapter after chapter. However, it is very clear historically that trickle down economics does not work, and that completely unregulated markets lead to human rights abuse. Picketty is much more enlightening.

unknown_apostle 10y ago
Piketty's book contains a correlation-implies-causation statistics-driven narrative to pitch yet another tax increase. Economics In One Lesson is an exercise in logic, showing that many popular economic policies are flawed or will necessarily have non-obvious side effects. EIOL is also deliberately written to be an easy read. It's hard to compare the two. (In the unlikely case anyone cares, my personal take on Piketty: wealth inequality doesn't matter unless you think jealousy is a matter of public policy. Wealth inequality is an inevitable consequence of progress. What matters is whether the wealthy can loose their wealth due to their own mistakes, and whether wealth inequality implies legal inequality. Private profits and public risks, bailouts, legislation a la tete du client, bribes, lobbying, monopolies, special tax agreements, propping up markets, complicated laws, ... that's how the 99% get screwed. Taxes allow the government to function. They cannot "counterbalance" the legal privileges of the 1%.)
- notahacker 10y ago
  The other way of looking at it is that Piketty is a popularisation of serious piece academic research, however flawed some of its data processing and conclusions may be, whereas Economics in One Lesson is a pamphlet beating straw men to death with "analysis" that's beneath simplistic in many parts and flatly wrong in some of the others (e.g "for every public job created...a private job has been destroyed somewhere else") The one thing they have in common is both being pretty polemical in tone.
  - unknown_apostle 10y ago