Friday, November 2, 2012

Matias Vernengo — On Austrian Business Cycle


Matias weighs in on ABCT.

Naked Keynesianism
On Austrian Business Cycle
Matias Vernengo | Associate Professor, University of Utah

15 comments:

Bob Roddis said...

Schumpeter is really not an Austrian and Vernengo is clearly oblivious to the central Austrian concept of economic calculation. I'm shocked.

Matt Franko said...

Bob,

'Who' is doing the 'calculating'?

Invisible hand on a calculator?

This is unscientific from the word go...

rsp,

Matias Vernengo said...

You maybe shocked, but Schumpeter was an Austrian. His theory was,and even if he was influenced by Walras and Marx (the only stuff worth in his theories by the way, including creative destruction) there is little doubt about the affiliation of his theories.

Bob Roddis said...

Schumpeter was an Austrian national, like Arnold.

He is not properly considered to be part of the "Austrian School of Economics" in the Misean, Hayekian or Rothbardian sense.

http://www.acting-man.com/?p=18228

Bob Roddis said...

The always courteous Jonathan F. Catalan critiques the Vernengo critique. I'm not always so courteous.

http://www.economicthought.net/blog/?p=3077

Lord Keynes said...

"He is not properly considered to be part of the "Austrian School of Economics" in the Misean, Hayekian or Rothbardian sense."

While Schumpeter converted to neoclassical Walrasian theory, most the interwar Austrians did too, so in that respect he wasn't that different from other Austrians:

http://socialdemocracy21stcentury.blogspot.com/2011/06/neoclassical-wing-of-austrian-school.html

And as for Hayek he also was using neoclassical equilibrium theory in his business cycle research years - yet nobody denies he was an Austrian.

Roddis has also demonstrated his contemptible ignorance in peddling mainstream neoclassical ideas about market-clearing Walrasian price vectors, and asserting that these are fundamental *Austrian* ideas never understood by anyone outside the Austrian cult.

Bob Roddis said...

"Lord Keynes" still does not even understand economic calculation. Or the knowledge problem. Or how either is applied by Austrian economists. He's not in a position to say anything about Austrian school theory.

Of course, Mike Norman thinks a regime of anti-gouging price controls is the same thing as "the free market". I don't think "Lord Keynes" would say that.

Lord Keynes said...

"Lord Keynes" still does not even understand economic calculation"

So says someone who has now admitted on multiple occasions that this is what he means by alleged "economic calculation" problems:

(1) the alleged miscalculation problems caused in the Austrian business cycle theory (ABCT).

(2) alleged price distortions caused by government spending, deficit spending, central bank fiat money creation, price controls, subsidies, income policies, and so on.

(3) Cantillon effects

(4) impediments to a price vector that will clear all markets (with flexible wages clearing the labour market)in this quotation of Hayek:

The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept.” (Hayek 1975: 6–7).

------
I'll ask again: is this what you mean by "economic calculation" problems, bob?

If you answer "yes", you have demonstrated that your statement that nobody outside the Austrian cult understands alleged "economic calculation" problems is sheer nonsense.

If "no", well, then, obviously we need not worry about any of these things! They can't cause any economic calculation problems!

Let us assume you are interested in serious debate: if one can demonstrate that markets have no tendency to any wage and price vector with market-clearing equilibrium prices, it follows that there are no price *distortions* away from something non-existent, doesn't it?

Are you willing to admit that on a theoretical level?

Or are you just a loud mouth, intellectually dishonest, laughable Austrian troll, who will cowardly avoid any serious debate?

I'm not holding my breath!

Bob Roddis said...

LK, you lying bastard. Give up. You've lost.

Lord Keynes said...

Let's see:
"Or are you just a loud mouth, intellectually dishonest, laughable Austrian troll, who will cowardly avoid any serious debate?"

" Bob Roddis said...

LK, you lying bastard. Give up. You've lost"


I think the expression is: QED, quod erat demonstrandum.

Bob Roddis said...

Ok, so LK's not a lying bastard. He's just dumber than a crate of anvils. Austrian theory has nothing to do with "market-clearing Walrasian price vectors". During a long Keynesian boom phase, it's quite possible for unemployment to be at 1% and everything that's made being sold. Unlimited "market clearing" prices (for a while). But since these are false prices and do not reflect the underlying supply and demand schedules that would obtain absent the Keynesian fiat funny money injections, the boom will be unsustainable.

"Market-clearing Walrasian price vectors" have nothing to do with it.

And having been called an "idiot" by that lying bastard LK about 50 times over the last several years while I've made an effort to be nice, I'm entitled to call him whatever I feel like calling him. The lying bastard.

Lord Keynes said...

1. Most recent statement by bob roddis:

"Austrian theory has nothing to do with 'market-clearing Walrasian price vectors'."

2. The quotation recycled endlessly by bob from Hayek:

"The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept.” (Hayek 1975: 6–7).

Statement 1 is so flagrantly, blatantly false, one seriously has to wonder whether roddis really knows anything about neoclassical economics and what he is even talking about.

A "deviation of the actual structure of prices and wages from its equilibrium structure" is nothing but standard neoclassical, Walrasian theory.

Let readers judge for themselves here.

Bob Roddis said...

As I have stated over and over, Hayek uses the term “equilibrium structure” to refer to the price structure that would have existed but for GOVERNMENT intervention, especially granting banks the right to create fiat funny money loans out of thin air, thereby distorting the price, investment and capital structure. Hayek stated:

These discrepancies of demand and supply in different industries, discrepancies between the distribution of demand and the allocation of the factors of production, are in the last analysis due to some distortion in the price system that has directed resources to false uses. It can be corrected only by making sure, first, that prices achieve what, somewhat misleadingly, we call an equilibrium structure, and second, that labor is reallocated according to these new prices. ****

The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept. The point I want to make is that this equilibrium structure of prices is something which we cannot know beforehand because the only way to discover it is to give the market free play; by definition, therefore, the divergence of actual prices from the equilibrium structure is something that can never be statistically measured. ****

In contrast, the modern fashion demands that a theoretical assertion which cannot be statistically tested must not be taken seriously and has to be discarded. As a result of this belief, a theory which, in my opinion, is the true explanation has been discarded as not adequately confirmed, and a false theory has been generally accepted merely because it happens to be the only one for which statistical evidence, even though very inadequate evidence, is available.”


This analysis has nothing to do with “market-clearing Walrasian price vectors”.

Lord Keynes said...

"This analysis has nothing to do with “market-clearing Walrasian price vectors”.

Nothing to do with it?

You continue to eloquently disprove yourself.

Lord Keynes said...

This analysis has nothing to do with “market-clearing Walrasian price vectors

In fact, the sheer stupidity of this remark beggars belief.

Hayek:
"The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure."

So this has zero relationship to Walraisan GE theory? Is that correct? Nothing at all? As in no relationship whatsoever?

Nobody really needs to refute bob roddis anymore: he does it so well when left to himself.