Friday, June 5, 2009

Greenspan on Laissez-Faire

"The error of the nineteenth-century observers was that they restricted a wide abstraction - competition - to a narrow set of particulars, to the "passive" competition projected by their own interpretation of classical economics. As a result, they concluded that the alleged "failure" of this fictitious "passive competition" negated the entire theoretical structure of classical economics, including the demonstration of the fact that laissez-faire is the most efficient and productive of all possible economic systems. They concluded that a free market, by its nature, leads to its own destruction - and they came to the grotesque contradiction of attempting to preserve the freedom of the market by government controls, i.e., to preserve the benefits of laissez-fair by abrogating it."
Alan Greenspan, Antitrust, 1961.

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