The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built.I learn a lot from Mises about the impossibility of socialism. But Mises goes too far in this sentence concerning what has been accomplished with economic knowledge.
We (who study economics from a viewpoint which emphasizes spontaneous order and market process) tend to believe that we understand why some nations have grown prosperous, in contrast with other nations which have remained poor. We see differences in the institutions of property rights and law. We know enough, we believe, to explain what has happened. But we cannot claim that our knowledge has yet founded any successful, prosperous nation, as I described more fully in this 2003 paper. (I will allow however that some of the progress in China during the past 30 years has probably been encouraged by knowledge such as ours.)
Contrary to a literal reading of the Mises quote above, nothing much outside academia has been built upon our economic knowledge. We have too few followers among the rich and powerful.
There have been sweet-spots of prosperity in human history. But these have happened spontaneously — guided by an invisible hand which we are only beginning to perceive and describe. The need for perception and description of the institutions which make free nations possible encouraged me to start the Free Nation Foundation back in 1993. It is still a worthy project.
