[From the papers donated to the Mises Institute by Bettina Bien Greaves. Appeared in National Review XVIII, no. 10 (March 8, 1966): 200.]

Why Markets Are Pro-Human

In an unhampered market economy, entrepreneurs anticipate what we want and need and then use labor to turn land and natural resources into things that are most urgently needed: like houses, schools, hospitals, food, cars, and energy. Consumers respond by either buying or not buying what entrepreneurs have produced. The resulting profits and losses provide signals and incentives to the entrepreneurs in such a way as to encourage economizing behavior and discourage its opposite, waste.

According to Ludwig von Mises’s Austrian Business Cycle Theory (ABCT), the artificial lowering of interest rates by the central bank leads to a misallocation of resources due to the fact that businesses undertake various capital projects that prior to the lowering of interest rates weren’t considered viable. This misallocation of resources is commonly described as an economic boom.

From the Quarterly Journal of Austrian Economics 21, no. 2 (Summer 2018).