In 1951, Mises gave an outstanding paper that made the summary case for the price system under capitalistic economic systems. In "Profit and Loss," he explains how cost accounting is the critical institution that ferrets out social waste, ensures that resources are directed to their most highly valued ends, and how entrepreneurs respond to price signals. His presentation is systematic, relentless, logical, and ultimately devastating to the opponents of profit and loss.
He explains what it is that entrepreneurs confront in a market economy and how no bureaucratic institution can replicate the trial-and-error process that is at the heart of the market system. He weaves into his analysis the role of the consumer as the final arbiter of what is produced and distributed.
Behind Mises's presentation was a burning desire to not only persuade the world but the attendees of the Mont Pelerin Society meeting in particular, whom Mises suspected were losing touch with core truths about the market order.
The great merit of this essay is its brevity and passion. It explains the workings of what most people never think about or take for granted. Graduate students of economics have appreciated this essay for many years as the best summary of the technical side of the market. When it first appeared, it was as a monograph but it has been more than 50 years since it has been available in this format.
But if you have Planning For Freedom this essay is included in the book.
Some background info on this work.
This was a lecture presented at the 1951 Mont Pelerin Society meeting. It was later published as a small monograph by something called the "Consumers-Producers Economic Service" that year.
It is ALSO included as on of the essays in "Planning for Freedom". As I have that work, I don't need to get this one.
This has to be one of the most effective and interesting descriptions of the free market profit & loss system ever written. The writing style is so concise and well written. It is pure Mises! It is a great introduction not only to free markets, but also to Mises himself.
It is an easy and relatively short read, so it is an excellent low cost gift for someone you are looking to introduce Austrian economics and Mises to. I already purchased one for a friend.
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