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GG on Capital

November 7, 2007

Tags Capital and Interest Theory

Sorry to revisit the same topic so shortly, but in that same AA edition cited in my previous post, I simply cannot praise Garrett's piece, entitled 'Mythologies of Reconversion', enough. This is not just a witheringly effective dismissal of the central planner's and inflationist's folies de grandeur, but one of the most evocative treatments you could wish for of what that much-misunderstood word 'capital' really means. He also paints a vivid picture of how stupefyingly complex are the interrelations of the modern economy and emphasizes that only the individual entrepreneur, acting to secure himself an honest profit can therefore contribute to its functioning. When you read it - as I urge you should - bear in mind that when our sage talks about the tremendous waste involved in beating swords back into ploughshares and of how exquisitely tooled pieces of equipment may become absolutely useless once long-suppressed consumer preferences are allowed to reassert themselves, he is not just talking here of the particular circumstances of 1945, but of the painful aftermath of every mass folly of intervention-driven malinvestment. Truly spectacular!

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