Article Image

IPFS News Link • Economic Theory

Economic Insights from Javier Milei's 2021 Presentation for FEE

•, Javier Milei

On May 6, 2021, Javier Milei delivered a virtual presentation for FEE to 9,750 students titled "4 Record-Breaking Economics Lessons." The following is an excerpt from that presentation.

The institutions of capitalism can be boiled down to five key principles. The first institution is what we know as private property.

The second is free markets, meaning markets without state interference.

Next is competition, but not the neoclassical concept of perfect competition. It's closer to Adam Smith's idea of competition, involving free entry and exit. This concept was further refined in recent times by William Baumol and the theory of contestable markets, which deals with market operations.

Lastly, there are two institutions related to the logic of the market: the division of labor, which promotes specialization, and social cooperation.

People are naturally diverse, and the larger the market, the more it promotes the division of labor. This division of labor fosters social cooperation. As Bastiat put it, "Where goods do not cross borders, armies will." In other words, societies that engage in trade tend to have more peace.

Essentially, what is a market? A market is a process of social cooperation where property rights are exchanged. This is where the definition of property rights and free, unregulated markets come into play.