Freedom of movement--the sine qua non of economic prosperity and progress.

• Author: Higgs, Robert
• Position: Etceteras...

We economists often employ static models to make our points. Doing so may be fine in many cases, but we do ourselves and our students a disservice when we tall into supposing that actual economic life ever is or can be static. Movement is the very heart and soul of the economic process, as economists such as Joseph Schumpeter and Ludwig von Mises have taught us repeatedly. Not for nothing did Mises give his magnum opus the title Human Action. Action denotes movement, making a change, and, as Mises emphasized, it represents a person's reaction to felt unease and a desire to remove that unease by making a change for the (expected) better. Even a primitive, seemingly fixed economy, such as those at the local or manorial level in Europe during the Middle Ages, was not completely fixed--not a stationary state or an evenly rotating economy. People necessarily had to react to changes of various sorts--in the weather; from diseases, invasions, political and religious strife; and in other aspects of socioeconomic life. So we would do well always to remember that change is unavoidable and to put change and movement at the heart of our understanding of economic life.

When we speak, as we often do, of the reallocation of resources--in response to changes in relative prices, for example--we are speaking of movement. Although most economic models contain no explicit locational element, such resource reallocation connotes, if it does not denote, moving resources from one place to another, even if only within the confines of a single firm or other productive unit. If we imagine a world in which such movements are impossible, we could easily see that such frozen conditions would quickly result in complete collapse of the productive apparatus as a whole. Like a biological species that cannot evolve in the face of changing natural conditions, an economic order that cannot adjust to changes in technology, costs, and prices cannot long survive, and even less can it prosper.

Of course, in many cases, clamping restraints on people's freedom to move resources can yield rents to certain persons, firms, and industries as a whole. So incumbents constantly seek to bring the state's coercive powers to bear on those whose changes jeopardize the incumbents' existing or prospective rents. Most taxes, including tariffs, represent levies that impede changes that free actors wish to make in their own interest. When owners and input suppliers in the U.S. steel industry induce...