Excerpt of the Day

The bound, proof copy of my book arrived via UPS today for my final okay before publication. Very exciting. Leafing through, I came across another passage I thought would go well here. It’s from the end of Chapter 2, “Profit and Loss Guide Innovation”:

The main job of free-market profits and losses is not to do moral justice for past action but to give practical guidance for future action.  Their crucial role is future-oriented.  Reward or punishment for past actions is the incidental means, not the essential end.  Looking backward at profits or losses realized from past projects, entrepreneurs see how well they created value for others.  Based on that information, their own judgment, and current and expected prices, they make profit-or-loss estimates for various other projects they might undertake in the future.  When they choose the ones they expect to be most profitable, in the expectation that they will enjoy the profit or suffer the loss, society benefits.


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