Frank Knight

Quotes From

“Capital, Time, and the Interest Rate” (1934)

• [It is a fallacy] that capital is produced (and reproduced in any sort of cycle) by labour or “primary factors” in any sense. This is palpably absurd; “labour,” “capital instruments,” and “land” are in the first place categories of no homogeneity within themselves and of extensive overlapping, and in the second place, however productive agencies may be classified, it is evident that each is produced and continuously reproduced (when at all) by the co-operation of all, including itself.#
• The quantity of capital in an existing thing depends on the rate of interest and its earning power in any field in which it may have earning power.#
• We may give a fairly realistic or defensible meaning to either the beginning or the end of a production process, but if we do identify either, it is never possible to say what would be meant by the other boundary… If production is regarded as a process occupying time, its only beginning is the beginning of time, and its only end is the end of time.#
• All capital is inherently completely mobile with respect to any change foreseen as to date and character at the time the investment is made… the mobility of capital is overwhelmingly a matter of planning for either a particular transfer or for mobility in the abstract, through general availability.#
• Income is the primary economic reality, wealth being merely a source of or title to future income.#
• As regards economic—not technical—rôle in production and distribution, no classification of productive factors has any validity.#

“AEA Presidential Address” (1950)

• The serious fact is that the bulk of the really important things that economics has to teach are things that people would see for themselves if they were willing to see.#Quoted in Daniel Klein, “A Plea to Economists who Favor Liberty” (2001)

Risk, Uncertainty, and Profit (1921)

• We live in a world full of contradiction and paradox, a fact of which perhaps the most fundamental illustration is this: that the existence of a problem of knowledge depends on the future being different from the past, while the possibility of the solution of the problem depends on the future being like the past.#Quoted in George Selgin, Praxeology and Understanding (1990)

The Ethics of Competition and Other Essays (1935)

• There are no laws regarding the content of economic behavior, but there are laws universally valid as to its form.#Quoted in George Selgin, Praxeology and Understanding (1990)

The Economic Organization (1934)

• The cost of any alternative (simple or complex) chosen is the alternative that has to be given up; where there is no alternative to a given experience, no choice, there is no economic problem, and cost has no meaning.#Quoted in James Buchanan, Cost and Choice (1969)

“Intellectual Confusion on Morals and Economics” (1935)

• The familiar diagram showing the intersection of an ascending and a descending curve (typically called “supply” and “demand”) is a picture of the action of any two opposed elastic forces.#
• Practically speaking, to call a situation hopeless is identical with calling it ideal.#
• The economic man, knowing what he wanted and striving intelligently and ruthlessly to secure it in the maximum degree, would not be a social man and could neither come into existence in society nor live in society.#
• The main, most serious problem of social order and progress is beyond both and all these—the problem of having the rules obeyed, or preventing cheating. As far as I can see there is no intellectual solution of that problem. No social machinery of “sanctions” will keep the game from breaking up in a quarrel, or a fight (the game of being a society can rarely just dissolve!) unless the participants have an irrational preference to having it go on even when they seem individually to get the worst of it.#