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Profit is vital to human well-being. Profit is the payment to entrepreneurs just as wages are payments to labor, interest to capital and rent to land. In order to earn profits in free markets, entrepreneurs must identify and satisfy human wants and do so in a way that economizes on society's scarce resources.
Eliminate all forms of monopolistic market power, to include the breakup of large oligopolistic corporations and application of anti-trust laws to labor unions. A Federal incorporation law could be used to limit corporation size and where technology required giant firms for reasons of low cost production the Federal government should own and operate them... Promote economic stability by reform of the monetary system and establishment of stable rules for monetary policy... Reform the tax system and promote equity through income tax... Abolish all tariffs... Limit waste by restricting advertising and other wasteful merchandising practices.
The market universe is composed of two types of oceans: red oceans and blue oceans. Red oceans are all the industries in existence today; they are increasingly characterized by intense competition. Blue oceans are all the industries not in existence today; they are untouched and uncontested. To prosper in the future, companies need to go beyond competing; they need to create blue oceans. The issue is how to do so.
My views are more akin to the nineteenth-century liberal philosophy espoused by Milton Friedman, especially in his Capitalism and Freedom. In that work, he proposed many policies that are harmonious with free markets and are receiving serious attention in the United States and other countries. This list includes school choice, the flat-rate income tax, rules for monetary stability, privatized social security, and the elimination of affirmative-action programs.
We regarded opium as a godsend. It did not develop into an illicit trade, though. There was no legal prohibition, no police running around trying to suppress drugs, driving up the price artificially, and no marketing system. There were no distant markets to send it to because shipping anything was slow at best and often unreliable, and travel was something you just didn't do anymore. Anybody could grow their own poppies or buy raw opium paste from one of the growers. Farmers made more money growing raspberries or asparagus. They grew poppies as a public service. A few people took to smoking opium, but those with an extremely apathetic attitude toward survival tended not to last long in the new disposition of things.
The reader can test his own psychology by asking himself whether he would consider, in retrospect, the selling at 156 in 1925 and buying back at 109 in 1931 was a satisfactory operation. Some may think that an intelligent investor should have been able to sell out much closer to the high of 381 and to buy back nearer the low of 41. If that is your own view you are probably a speculator at heart and will have trouble keeping to true investment precepts while the market rushes up and down.
American society today is shaped not nearly as much by vast open spaces as it is by vast, bureaucratic organizations. Over half the working population toils away at enterprises with 500 or more employees—up from zero percent in 1800. Is this institutional immensity the logical outcome of technological forces in an all-efficient market, as some have argued?
Own one idea. Complete it. Map the current model of purchase and usage. Change how it is done so at least some part of the market uses only your product. Extend from that core user to a much broader universe. Describe your concept in a very short, "six-word story" - a la Ernest Hemingway: "For sale: baby shoes, never worn."
Shocked disbelief greets suggestions that many women may take pleasure in rape fantasies, established long ago by Nancy Friday in her pioneering 1973 study, My Secret Garden, and dramatized today by the staggering mass-market popularity of Harlequin Romances, where heroines are overwhelmed by passionate, impetuous men.
The reason why the foreign producer gets his produce to market cheaper, relatively, is this — that foreign produce is collected and brought in such large quantities and is sent in great masses to the market. That is the secret of cheap carriage... We must try to make our pounds of produce into tons — or must bring together a number of producers. If you small agriculturists can collectively offer a great bulk of merchandise to the railway companies, they will give you good terms.
Nineteenth-century civilization rested on four institutions. The first was the balance-of-power system which for a century prevented the occurrence of any long and devastating war between the Great Powers. The second was the international gold standard which symbolized a unique organization of world economy. The third was the self-regulating market which produced an unheard-of material welfare. The fourth was the liberal state. Classified in one way, two of these institutions were economic, two political. Classified in another way, two of them were national, two international. Between them they determined the characteristic outlines of the history of our civilization.
I return to economics and to economists, and to the question of why the profession's directions have evolved in the manners evident from this book. A major conservative economist once explained that a source of his antipathy to government traced back to the defeat of his southern ancestors by a larger north economy. Here is a similar factoid. Joan Robinson once wrote that her opposition to having the U. K. enter the European Market was due to the fact that she had more friends in [Nehru's] India than on the continent.