…of the late Ronald Max Hartwell. Excerpted from page 17 of his 1983 paper “The Origins of Capitalism: A Methodological Essay”, which is part 2 of the 1983 collection by the late Steve Pjovich. Philosophical and economic foundations of capitalism:
The Industrial Revolution was the gradual liberation of human entrepreneurship from the bonds of habit and command that led to the tremendous economic growth.
DBX: Yes.
Industrial policy makers want to bind human entrepreneurial abilities behind the steel of government-provided economic ‘plans’. Oren Cass and other industrial policy advocates insist that the economy is doing better than the Palys. Although they say (longer, healthier and richer life ‘only’), they don’t admit – or worse, they don’t see – that their plans are incompatible with true innovation.
If true innovation is allowed, it will turn plans that look great today into plans that will have to be scrapped and replaced tomorrow. Although the goals of the original plan will continue. Plans are blueprints that lay out specific ways to achieve specific objectives. Because innovation disrupts existing means of implementing the plan (not to mention it may present new objectives to consider), industrial policy—if it is to be pursued seriously—must destroy innovation.
But if industrial policymakers, rightly accused of wanting to destroy innovation, proclaim their openness to innovation, it is important to examine exactly how they intend to deal with innovation. The only answer is how their (supposed) inventions fit into their evolving plans. However, this approach not only weakens the incentive to innovate, but also reduces innovation—industrial-policy consumers must try to predict future innovation if their plans don’t fall apart quickly. But such a prediction is impossible. (If you deny that such a prediction is impossible – that is, if you believe that such a prediction is possible – then prove your case by predicting. some Tell us about innovations that will happen in the next 12 months. If you can do this, you will be the richest man in the world within a year. If you are not very rich by April 23, 2024, please re-evaluate your understanding of creativity. Not only which innovations to allow and which to stifle, almost daily, but how to change – again, almost daily – the allocation of resources so that the hoped-for results are realized.
In short, industrial policy is to innovation as Seder dinner is to spiral ham.
