Deirdre McCloskey on the true beneficiaries of free markets

By: | Post date: December 30, 2017 | Comments: No Comments

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From her book, Bourgeois Dignity: Why Economics Can’t Explain the Modern World:

“Nor during the Age of Innovation have the poor gotten poorer, as people are always saying. On the contrary, the poor have been the chief beneficiaries of modern capitalism. It is an irrefutable historical finding, obscured by the logical truth that the profits from innovation go in the first act mostly to the bourgeois rich.”

It’s easy to see the riches bestowed upon some inventor/entrepreneur.  What’s difficult to see is how that individual’s actions enriched the world.  We pay for goods and services that we could never create on our own, filling the coffers of someone far removed from our daily lives.  Yet who benefits? The answer is that we both benefit.  I value my money less than what I wish to buy with it.  The grocery store, or appliance store, or cafe, values their product less than my money.  It is a win-win, positive sum interaction.  The unrestrained market economy consists of billions of such positive-sum interactions on a daily basis.  To understand that is to understand the miracle of free trade.