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Source link: http://archive.mises.org/16838/in-praise-of-cheapeners/

In Praise of Cheapeners

May 7, 2011 by

Who cares if a great invention is made if it doesn’t become assessable to everyone?  What’s making life better is that the price of technology is falling, not that big flat screens were invented in the first place.  Same way with computers, phones and digital media.

“Cheapeners deserve as much credit as inventors,” writes Matt Ridley in the Wall Street Journal.  He points out that John D. Rockefeller cut oil prices, Andrew Carnegie cut steel prices and  Cornelius Vanderbilt cut the price of rail freight but were reviled for being robber barons.

And while the face of corporate evil for many is Wal-Mart, Sam Walton created the only game in town for the low income and down and out shopper.

“Yet it’s the cheapening that raises the world’s living standards. And cheapening is often mighty hard work.”


Ball May 7, 2011 at 8:46 pm

Problem is the race to the bottom often creates inferior products because customers aren’t aware of the differences, or what Mises would call a lack of sophistication. Wal-Mart is case in point, and they don’t help customers by essentially buying a label like Veleeta then turning it into yellow dog poo.

(they better not mess with the Stagg recipe…)

jmorris84 May 7, 2011 at 9:37 pm

If you don’t like the cheaper products at Walmart then I’m sure you can find whatever it is you are looking for somewhere else, of higher quality, while having to shell out a few extra dollars. While I’d absolutely love to be able to enjoy the luxuries of driving around a Rolls-Royce, I’m thankful that other companies are out there making cheaper cars for everyone else that can afford them. I hope you see my point.

Gene Berman May 9, 2011 at 9:32 pm


I’m pushing 75 and have been a buyer and consumer of many kinds of products for many years. NO PLACE I’ve ever seen has been such a consistent deliverer of quality/price as Walmart (tho’
I do most shopping at Sam’s Club). You almost have to be young not to appreciate that fact.

They’re not perfect, by any means. But the intensity of their competition has revolutionized much of shopping, even in their competitors’ places–much to the advantage of consumers. In particular (and not only at Walmart), the price and quality of many types of items has been much enhanced (and is continuing in that direction).

Jeffrey Tucker May 7, 2011 at 9:16 pm

Please Ball! I think you missed the point.

The point is very obvious once stated, but you have to state it to see it. Inventions are nothing without a market to make it available to everyone over time. This is a great point. The inventor is always getting credit but the market apparatus at every stage, driven by risk and entrepreneurship and continue innovation, is what brings the once rare thing to the masses. Mises actually makes this point that the key contribution of capitalism was not invention but marketing.

Kaizen Curious May 8, 2011 at 6:53 am

How did Mises define marketing? I tried looking it up in Google and in wiki.mises.org and did not find much.

Any idea why capital accumulation was not a greater contribution of capitalism? I thought capital accumulation led to technological development, more invention, more marketing, etc.

vcif May 8, 2011 at 9:33 am


I hope Jeff will correct me if this is not accurate.

I think you may be taking the term “marketing” too literally and strictly. I don’t see “marketing” per se in the index for Human Action. I think Jeff may mean “marketing” as bringing to market as opposed to the more limited sense of “advertising” although that would certainly be a component. Mises warns us in HA that catallactic terms and general lay language “equivalents” can be confusing when applied loosely.

Mises defines certain categories of actors such as entrepreneurs who take risk in predicting the most urgent wants of consumers and bringing those goods to market usually in conjunction with the actors know as capitalists. Of course, those catallactic categories are not limited to specific individuals- we can all be entrepreneurs, capitallists, and consumers simultaneously.

“Any idea why capital accumulation was not a greater contribution of capitalism?”

Not sure what you mean by this, but it seems that you may have a slight misunderstanding regarding capital accumulation’s role in capitalism. Let me give it a try-

For a given time-preference, people will consume or invest. By putting off some consumption, ie investing more, there is capital accumulation and lengthening of the production process which allows for greater/cheaper production.

“Technological development” per se is not strictly or necessarily required to reap the benefits of entrepreneurship and capital accumulation.

At least that is my understanding so far from reading 2/3s of Human Action.

Gene Berman May 9, 2011 at 9:13 pm

VCIF is correct in his assumption. Even were all of what we conceive as innovation to cease completely and for all time, continuous improvement (and application of accumulated capital)
is not interrupted thereby. Almost everything in existence can be improved in one manner or another not involving anything more innovative than making it either cheaper or more durable or some other obvious improvement previously not feasible because of the state of capital accumulation. Thicker, more durable roads, etc.

Somewhere, Mises made the point that, at any given time, the world is stuffed with an “invisible pile” of innovative or improvinhg ideas unusable at present but merely awaiting a more favorable supply of capital (and the entrepreneurial acumen to recognize that time, though I don’t remember if that was mentioned).

Daniel May 9, 2011 at 10:40 pm

Somewhere, Mises made the point that, at any given time, the world is stuffed with an “invisible pile” of innovative or improving ideas unusable at present but merely awaiting a more favorable supply of capital (and the entrepreneurial acumen to recognize that time, though I don’t remember if that was mentioned).

It’s a strange example. It is a good analogy of what really happens, even though the invisible pile idea is a little like the socialist’s “wealth cave” or the platonist’s “perfect world of forms” :s

Aside from that, yeah, it’s a pretty apt description.

Gene Berman May 9, 2011 at 9:17 pm


Mises treated the subject thoroughly, though I think he probably used the term “sales promotion” as an overarching surrogate. I’ll try to find the relevant passage citations and post ‘em tomorrow.

Inquisitor May 9, 2011 at 8:31 am

Innovation is, in the end, turning new ideas into marketable propositions.

Gene Berman May 9, 2011 at 9:37 pm

Mr. French: It’s “accessible.”

mushindo May 10, 2011 at 7:53 am

Valid point, yes, but its not a new one. At a principled level, whether its a new invention or a lower cost way of delivering an existing one, its all innovation.

this is one of my favourite quotes , and the writer had it all covered, including the ‘cheapening’ dimension:

‘There must be farmers to produce food, men to extract the wealth of mountains and marshes, artisans to process these things and merchants to circulate them. There is no need to wait for government orders: each man will play his part, doing his best to get what he desires. So cheap goods will go where they fetch more, while expensive goods will make men search for cheap ones. When all work willingly at their trades, just as water flows ceaselessly downhill day and night, things will appear unsought and people will produce them without being asked. For clearly this accords with the Way and is in keeping with nature.’

Ssu-ma Ch’ien (c.145-86 BC)

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