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Published: 2018-1-15-T6:44:25

 



ECONLIB QUOTE OF THE DAY

2018-1-15 T6:44:25


Monday, January 15, 2018
From: Knight, Risk, Uncertainty, and Profit, Part II, Chapter VI, (par. II.VI.11):

    We must now turn again briefly to the point mentioned above, the extent to which outside interests not represented in agreements between individuals are affected by them (otherwise than through direct competition in the market). The mere mechanical effectiveness of competitive free contract in producing a reconciliation of individual interests under given conditions depends largely on the answer to this question. Obviously, outsiders may be affected either advantageously or disadvantageously. In the former case voluntary agreements will not be carried far enough to secure maximum social (total individual) advantage, while in the latter case they will be carried too far. These facts form the most important source of the need for social interference. Many services, such as communication and education, not to mention the administration of justice, confer a general benefit on the community in addition to the special benefit to the individual, and must be encouraged by bounties or actually taken over and performed by public agencies or they will not be developed to the point of maximum benefit. The most familiar illustrations of the opposite case in our society relate to the use of land for purposes which damage the neighborhood, or are thought to do so....

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