The first economic revolution was not a revolution because it shifted man's major economic activity from hunting and gathering to settled agriculture. It was a revolution because the transition created an incentive change for mankind of fundamental proportions. The incentive change stems from the different property rights under the two systems. When common property rights over resources exist, there is little incentive for the acquisition of superior technology and learning. In contrast, exclusive property rights which reward the owners provide a direct incentive to improve efficiency and productivity, or, in more fundamental terms, to acquire more knowledge and new techniques. It is this change in incentive that explains the rapid progress made by mankind in the last 10,000 years in contrast to his slow development during the long era as a primitive hunter/gatherer.
Douglass NorthRelated topics
acquisition activity agriculture change common contrast development different direct efficiency era exclusive fundamental gathering gatherer hunting hunter incentive knowledge last learning major mankind primitive productivity progress property rapid revolution reward slow superior technology transition under years proportionsRelated quotes
... a rather different class of applications of the idea of best allocation of scarce resources... usually referred to as the theory of optimal economic growth. In most studies of this kind made in the countries with market economies there is not an identifiable client to whom the findings are submitted as policy recommendations. Nor is there an obvious choice of objective function, such as cost minimization or profit maximization in the studies addressed to individual enterprises. The field has more of a speculative character. The models studied usually contain only a few highly aggregated variables. One considers alternative objective functions that incorporate or emphasize various strands of ethical, political, or social thought. These objectives are then tried out to see what future paths of the economy they imply under equally simplified assumptions of technology or resource availability.
Tjalling Koopmans
The powers, and faculties, and principles that are necessary fully to comprehend all that we see and all that surrounds us, exist and have been bestowed on man by his beneficent Creator. Still, it is only by slow degrees that he is to become their master, acquiring knowledge, step by step, as he has need of its services, and learns how to use it. Such seems to be the design of Providence, which is gradually opening to our inquiries the arcana of nature, in order that we may convert their possession into such uses as will advance its own wise intentions. Happy are they who feel this truth in their character of individuals! Thrice happy the nations which can be made to understand, that the surest progress is that which is made on the clearest principles, and with the greatest caution! The notion of setting up anything new in morals, is as fallacious in theory as it will be found to be dangerous in practice.
James Fenimore Cooper
In the aftermath of the war, we find one of the most hidden eras of US history; and that is the period of radical reconstruction. It certainly remains the most radical era in the entire history of the United States of America. And this is an era that is rarely acknowledged in historical texts. ... There were progressive laws passed challenging male supremacy. This is an era that is rarely acknowledged. During that era of course we had the creation of what we now call historically black colleges and universities and there was economic development. This period didn't last very long. From the aftermath of the abolition of slavery, we might take 1865 as that day until 1877 when a radical reconstruction was overturned-and not only was it overturned but it was erased from the historical record-and so in the 1960s we confronted issues that should have been resolved in the 1860s. One hundred years later.
Angela Davis
...the principle of nationality and the principle of reverence for antiquity-the principle of what I may call local patriotism-is not only an ennobling thing in itself, but has a great economic value. ... The attachment to your country, the attachment among British subjects to Britain, but also the attachment among Welsh-born people to Wales, has in it, in some degrees, the nature both of an appeal to energy and an incentive to its development, and likewise, no few elements of a moral standard; for the Welshman, go where he may, will be unwilling to disgrace the name. It is a matter of familiar observation that even in the extremest east of Europe, wherever free institutions have supplanted a state of despotic government, the invariable effect has been to administer an enormous stimulus to the industrious activity of the country.
William Ewart Gladstone
In fact, the only person to rival Friedman for policy influence in the twentieth century is John Maynard Keynes, who had a strikingly different view of the role of government. Keynes was influential because he advocated more government intervention into what he perceived as poorly functioning private economies caught up in the Great Depression. In contrast to Keynes, Friedman put the main blame for the Depression on government failures, especially of monetary policy. Hence, the Depression did not make Friedman a fan of big government. He also found in the Federal Reserve's failure to prevent deflation an argument in favor of monetary rules. As the world evolved- with low inflation becoming the major mission of central banks and free markets and secure property rights becoming the main policies to promote economic growth-Friedman surely won the intellectual battle.
Robert Barro
