Apr 9, 2008

Wilhelm Röpke on the profit and loss guide to a "rational economy"

The individual is forced by competition to seek his own success in serving the market, that is, the consumer. Obedience to the market ruled by free prices is rewarded by profit, just as disobedience is punished by loss and eventual bankruptcy. The profits and losses of economic activity, calculated as precisely and correctly as possible by the methods of business economics, are thus at the same time the indispensable guide to a rational economy as a whole. Collectivist economies, of whatever degree of collectivism, try in vain to replace this guidance by planning.

~ Wilhelm Röpke, from a section titled "The Spiritual and Moral Setting," A Humane Economy

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