Topic: Development

Quotes

Adam Smith, Lectures on Jurisprudence (1763)

• This is one great cause of the slow progress of opulence in every country; till some stock be produced there can be no division of labor, and before a division of labor takes place there can be very little accumulation of stock.#

Axel Leijonhufvud, “Capitalism and the Factory System” (1986)

• As one subdivides the process of production vertically into a greater and greater number of simpler tasks, some of these tasks become so simple that a machine could do them. … [We are led to] the discovery of … opportunities for mechanization.#Quoted in Peter Lewin, Capital in Disequilibrium (1999)

Carl Menger, Principles of Economics (1871)

• Wherever we turn among civilized peoples we find a system of large-scale advance provision for the satisfaction of human needs.#Quoted in Erwin Dekker, The Viennese Students of Civilization (2016)

Dani Rodrik, “Goodbye Washington Consensus, Hello Washington Confusion?” (2006)

• We know that growth happens when investors feel secure, but we have no idea what specific institutional blueprints will make them feel more secure in a given context.#
• The conventional package of reforms was too obsessed with deadweight-loss triangles and reaping the efficiency gains from eliminating them, and did not pay enough attention to stimulating the dynamic forces that lie behind the growth process. Seeking efficiency gains does not amount to a growth strategy. #
• China was able to elicit inordinate amounts of private investment under a system of state ownership (township and village enterprises), something that Russia failed to do under Western style private ownership. Presumably this was because investors felt more secure when they were allied with local governments with residual claims on the stream of profits than when they had to entrust their assets to private contracts that would have to be enforced by incompetent and corrupt courts. #

Doug North, Violence and Social Orders (2009)

• It is not that natural states are incapable of progress; it is that they are as likely to move back toward personal arrangements and more limited access as they are toward impersonal arrangements.#

Erwin Dekker, The Viennese Students of Civilization (2016)

• Civilization is always concerned with practices, how things are done: with greater or less foresight, with more or less specialization, with manners or without, with more or less technical sophistication.#

F.A. Hayek, The Constitution of Liberty (1960)

• A large part of the expenditure of the rich, though not intended for that end, thus serves to defray the cost of the experimentation with the new things that, as a result, can later be made available to the poor.#
• The experience of the United States at least seems to indicate that, once the rise in the position of the lower classes gathers speed, catering to the rich ceases to be the main source of great gain and gives place to efforts directed toward the needs of the masses.#
• To prevent progress at the top would soon prevent it all the way down.#
• The housing problem is not an independent problem which can be solved in isolation: it is part of the general problem of poverty and can be solved only by a general rise in incomes.#

Hernando De Soto, The Mystery of Capital (2000)

• Formal property’s contribution to mankind is not the protection of ownership; squatters, housing organizations, mafias, and even primitive tribes manage to protect their assets quite efficiently. Property’s real breakthrough is that it radically improved the flow of communications about assets and their potential.#

James Buchanan, Economic Inquiry and its Logic (2000)

• The paucity of billboards in the Moscow of 1990 was not primarily attributable to regulatory prohibition. This result emerged directly from the fact that no seller-supplier of any good or service felt any economic pressure to respond to customer interests or to expand the demands for products.#

Joseph Schumpeter, Capitalism, Socialism, and Democracy (1943)

• A system that at every given point of time fully utilizes its possibilities to the best advantage may yet in the long run be inferior to a system that does so at no given point of time, because the latter’s failure to do so may be a condition for the level or speed of long-run performance.#

Ludwig Von Mises, Human Action (1949)

• It is not labor legislation and labor-union pressure that have shortened hours of work and withdrawn married women and children from the factories; it is capitalism, which has made the wage earner so prosperous that he is able to buy more leisure time for himself and his dependents. The nineteenth century’s labor legislation by and large achieved nothing more than to provide a legal ratification for changes which the interplay of the market factors had brought about previously. As far as it sometimes went ahead of industrial evolution, the quick advance in wealth soon made things right again. As far as the allegedly prolabor laws decreed measures which were not merely the ratification of changes already effected or the anticipation of changes to be expected in the immediate future, they hurt the material interests of the workers.#

Max Weber, The Protestant Ethic and the Spirit of Capitalism (1905)

• The universal reign of absolute unscrupulousness in the pursuit of selfish interests by the making of money has been a specific characteristic of precisely those countries whose bourgeois-capitalistic development, measured according to Occidental standards, has remained backward.#

Peter Boettke, “The New Comparative Political Economy” (2005)

• Schooling is not the answer any more than technology transfer unless members of the indigenous population are secure in their knowledge that if they place a bet on an economic idea, they will be able to reap the rewards should that bet pay off.#
• The visible manifestation of underdevelopment is poverty and its immediate cause is lack of saved capital. The underlying cause, however, is the lack of credible institutions in the realms of politics, law, economics, finance, and society. This lack of credible institutions manifests itself in the inability to ward off predation by either private or public actors. Perhaps one of the most important empirical lessons we have learned from the transition from socialism and the problem of development assistance more generally is that efforts to supply the saved capital in terms of loans are counter productive except in areas where credible institutions which constrain predation are already in place.#

Ronald McKinnon, Money and Capital in Economic Development (1973)

• Without this access [to external finance], the constraint of self- finance sharply biases investment strategy toward marginal variations within the traditional technology.#Quoted in Ross Levine, “Financial Development and Economic Growth: Views and Agenda” (1997)

Ross Levine, “Financial Development and Economic Growth: Views and Agenda” (1997)

• More specialization requires more transactions. Because each transaction is costly, financial arrangements that lower transaction costs will facilitate greater specialization. In this way, markets that promote exchange encourage productivity gains.#

Terry Anderson, “Privatizing the Commons: An Improvement?” (1983)

• As the potential rents from resources rise, as the value of the resource increases, more efforts will be devoted to definition and enforcement activity. The worth of perfectly defined and enforced rights is represented by the net present value of the rents and individuals would be willing to spend up to that amount to obtain these rights. If the rents can be obtained for less than this amount, net rents will be positive and society’s output will be greater.#

William Easterly, The Elusive Quest for Growth (2001)

• Are terms of trade of developing countries going up or down? The best answer I’ve seen is “both.” Experts on the left often warn simultaneously about the declining terms of trade of poor countries and the coming shortages of raw materials (which would improve the terms of trade of poor countries).#