Whoda thunk THEY said that?
"[Capitalism] has been the first to show what man's activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts and Gothic cathedrals. ... [Capitalism] ... draws all nations ... into civilization. It has ... rescued a considerable part of the population from ... idiocy ... . During its rule of scarce one hundred years, [it] has created more massive and more colossal productive forces than have all preceding generations together."
-- Karl Marx, Communist Manifesto, as quoted by Schumpeter in Capitalism, Socailism, and Democracy, p. 4.
"Of course, competition is an ideal type, like a Euclidean line or point. No one has ever seen a Euclidean line -- which has zero width and depth -- yet we all find it useful to regard many a Euclidean volume - such as a surveyor's string -- as a Euclidean line. Similarly, there is no such thing as "pure" competition. Every producer has some effect, however tiny, on the price of the product he produces. The important issue for understanding and for policy is whether this effect is significant or can properly be neglected, as the surveyer can neglect the thickness of what he calls a 'line.' The answer must, of course, depend on the problem."
-- Milton Friedman, Capitalism and Freedom, (1962) p. 120 [emphasis added].
"Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle."
-- ready for it?
-- John Maynard Keynes, six years after he wrote the General Theory which everyone is citing today in support of the bailout and massive infrastructure projects. Hat tip to Greg Mankiw. Empashis added.
And, for anyone worried that all economics has been turned on its head recently, may I recommend this fairly readable piece by future Nobel winner Daron Acemoglu. (Seriously, he's a shoo in.) I don't necessarily agree with all of his conclusions, but he does a good job pointing out some specific blind spots that need future research and some other areas that are still very valid and ought to be remembered.