Reference
Quotations
A standing collection of passages from the history of economic thought, chosen because each compresses an idea that recurs constantly in the news. They are grouped by theme, drawn from writers who disagreed with one another, and given with enough context to be useful rather than decorative. All are from published works old enough to be freely available.
On prices and coordination
"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."
Adam Smith, The Wealth of Nations, 1776
The most quoted sentence in economics and among the most misused. Smith's point is not that self-interest is admirable but that a well-functioning market does not require anyone to be admirable — it converts ordinary motives into useful outcomes. The same book is scathing about businessmen colluding against the public and clear that markets need rules to work.
"The marvel is that in a case like that of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause, tens of thousands of people... are made to use the material or its products more sparingly."
Friedrich Hayek, "The Use of Knowledge in Society", 1945
The clearest statement of what a price does: it transmits information about scarcity that no single participant possesses, and coordinates behaviour without anyone being told why. This is the argument behind most of what this site says about energy markets.
On the limits of the mechanism
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Adam Smith, The Wealth of Nations, 1776
Worth setting beside the butcher and the baker. Smith's confidence was in competition, not in businessmen, and he expected the second to erode the first whenever allowed to.
"The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future."
John Maynard Keynes, The General Theory, 1936
From the chapter on expectations, where Keynes argues that investment decisions rest on judgements about an unknowable future and are therefore vulnerable to shifts in confidence in a way that models assuming full information cannot capture.
On incentives and unintended consequences
"There is all the difference in the world between treating people equally and attempting to make them equal."
Friedrich Hayek, The Constitution of Liberty, 1960
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
Friedrich Hayek, The Fatal Conceit, 1988
A useful caution in both directions: it applies as much to confident forecasts of a policy's cost as to confident plans for an economy. The parallel point about the difficulty of anticipating technological response runs through our report on costing climate policy.
On measurement
"The welfare of a nation can scarcely be inferred from a measurement of national income."
Simon Kuznets, National Income, 1929–1932, report to the United States Senate, 1934
Written by the economist who built the first national income accounts, in the document that introduced them — a caveat issued by the designer of the statistic, in the same breath as the statistic itself. GDP measures market production and does that well; the error is asking it for a verdict on welfare. See the economy.
"When a measure becomes a target, it ceases to be a good measure."
Commonly rendered as Goodhart's Law, after Charles Goodhart, 1975
Originally an observation about monetary aggregates, now applied everywhere. The mechanism is simple: once behaviour is rewarded by a statistic, the statistic stops measuring what it did before people started managing it.
On models and humility
"It is better to be roughly right than precisely wrong."
Attributed to John Maynard Keynes; the phrasing predates him and appears in several forms
Included with its attribution problem intact, because the problem is instructive: quotations migrate to famous names, and a citation that cannot be traced to a source is worth treating carefully — a habit that applies to statistics as much as to sentences.
"Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world."
John Maynard Keynes, letter to Roy Harrod, 1938
The best short description of what economists actually do, and of why two competent analysts can reach different answers: the modelling is disciplined, but the choice of model is a judgement.
Using these
A quotation is an invitation to read the source, not a substitute for it. Several of the works above are out of copyright and freely available; the Concise Encyclopedia of Economics gives short accounts of the ideas behind most of them, and the reading list points to book-length treatments.