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Download e-book for iPad: Bureaucracy by Ludwig von Mises

By Ludwig von Mises

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In such a state of affairs there is need for a continuous adjustment of production to the change in conditions. This is where the entrepreneur comes in. Those eager to make profits are always looking for an opportunity. As soon as they discover that the relation of the prices of the factors of production to the anticipated prices of the products seems to offer such an opportunity, they step in. If their appraisal of all the elements involved was correct, they make a profit. But immediately the tendency toward a disappearance of such profits begins to take effect.

And in searching for profit, he adjusts production to the demands of the consuming public. We can view the whole market of material factors of production and of labor as a public auction. The bidders are the entrepreneurs. Their highest bids are limited by their expectation of the prices the consumers will be ready to pay for the products. The co-bidders competing with them, whom they must outbid if they are not to go away empty-handed, are in the same situation. All these bidders are, as it were, acting as mandatories of the consumers.

As the German General Staff knew that it would be impossible for warring Germany to import natural rubber, they decided to foster domestic production of synthetic rubber. There is no need to inquire whether or not the British and American military authorities were convinced that their countries, even in case of a new World War, would be in a position to rely upon the rubber plantations of Malaya and the Dutch Indies. At any rate they did not consider it necessary to pile up domestic stocks of natural rubber or to embark upon the production of synthetic rubber.

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