Wednesday, April 01, 2015

The nature of economic laws

"Consequently to engage in business is to aim at profit, and the choice of profit is an instance, not of the working of an economic law or a natural propensity, but of reasoned action, as of course Adam Smith was well aware. Thus the regularity which economic transactions present is the regularity of reasoned action, as opposed to caprice, and law is the disguise which that regularity takes on, when by abstraction the field in which it occurs is reduced from life to rigidity. Economic law is an abstraction, not an imagination, and its truth is precisely the uniformity which rational choices present when they are abstractly or atomically considered." -- T.M. Knox, "The Study of Economic Activity," Philosophy, 1936

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