Saturday, May 25, 2013

Lord Keynes — Wieser Advocated Fiat Money


Austrian factoid about Friedrich von Wieser preference for paper over commodity money in the interest of greater stability.

Social Democracy For The 21St Century: A Post Keynesian Perspective
Lord Keynes

31 comments:

Bob Roddis said...

So Wieser was a big time statist and Fabian. zzzzzzzzzzz

Hayek surmised:

If Carl Menger had not aged at such a relatively early date, and if Böhm-Bawerk had not died so early, Mises probably would have found support in them. But the only survivor of the earlier Austrian School, my very dear teacher Friedrich von Wieser, was himself rather a Fabian, proud, as he thought, to have delivered with his development of marginal-utility theory a scientific justification of the progressive income tax.

Bob Roddis said...

Schumpeter on Wieser’s deficiencies:

With sovereign quietness, which we others soon learned to understand as his right, he puts aside the professional literature. He is not even able to read quickly or much. And almost never has he thoroughly dealt with the details of the systems of thought of other people. He has never engaged in polemics, never on a professional level and certainly not on a personal one.

Hayek added:

In his work he never dealt with the present state of the science. He has never tried to reconcile existing theorems with one another or to deduce new theorems from them through mere logical operations. Rarely has a theoretician been more different from the usual image of a theoretician than Wieser. . . . [His theoretical contemplations] entirely monopolized him and did not leave him any time to delve into, or systematically analyze, the systems of thought of others. He felt the necessity to do this hampered his own work on the conceptualization of reality, and thus he avoided even oral discussions if they risked ending up in something other than the more perfect exposition of his own ideas.

Lord Keynes said...

"So Wieser was a big time statist and Fabian."

lol.. so merely advocating fiat money makes you a "big time statist" in the idiot world of roddis.

Also, why wasn't Mises a "big time statist" if he said this:

There are people who call government an evil, although a necessary evil. However, what is needed in order to attain a definite end must not be called an evil in the moral connotation of the term. It is a means, but not an evil. Government may even be called the most beneficial of all earthly institutions as without it no peaceful human cooperation, no civilization, and no moral life would be possible. In this sense the apostle declared that ‘the powers that be are ordained of God.’” (Mises 2007: 57).

Moreover, it wasn't just Wieser who was a Fabian, but also

(1) Eugen von Philippovich;
(2) the early Hayek, and
(3) Richard von Strigl.

Lord Keynes said...

Oh, and have you understood the concept of market clearing prices yet, roddis?

Or are you still ignorant of basic Austrian concepts?:

"I do not like the term “market clearing prices”. I don’t use it and I do not think it is particularly helpful in understanding reality. When I see the term used, my reaction is always “WTF are you actually trying to say”?"
http://mikenormaneconomics.blogspot.com/2013/05/daniel-little-what-about-marx.html?showComment=1369144674917#c9135395801097278615

Bob Roddis said...

I understand that "market clearing prices" are associated with "market clearing quantities" and "market clearing levels of production" and "market clearing qualities" and that a price or series of prices relates to that actual set of goods and/or services being offered for sale and/or sold. LK, being a monstrous and desperate liar, makes a pathetic attempt at trying to separate price from what is actually being sold.

LK has been completely and totally vanquished with his pathetic assertion that a change in quantity or quality at an unchanged price to deal with a change in the market is contrary to present-day Austrian analysis.

Give up, LK. It's over. You've lost (again).

Tom Hickey said...

No, Bob. It is not over. The market state/economy is based on Hayek's Uses of Knowledge in Society wrt economic calculation, which assumes the neoliberal ideal of free markets, free trade, and free capital flows in an environment of near perfect competition of actors of equal freedom of choice, with symmetric information flow with unimpeded feedback, no institutional preconditions that influence markets, and no transaction costs, none of which is true. So the market state/economy is not the overarching computational system than Hayek and the proponents of the neoliberal market state assume and make it out to be in neoliberal propaganda, any more than are particular markets within the market economy. Instead the game is rigged in the favor of privilege in the name of "meritocracy."

See Philip Mirowski, Against Mechanism and Philip Mirowski and Dieter Plehwe (eds), The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective, in particular Mirowski's Postface.

Of course, neoliberals are not willing to address any of this criticism, let alone admit the none of their assumptions hold,, claiming instead that its is government intervention that is resulting in distortions, especially "Keynesian" (read "socialist") policy ideas and the lack of sound money as a basis of economic calculation.

Austrians will claim further that Austrian economics is different from neoliberalism, but Mirkowski et al show how there are two factions in the Mont Pelerin "thought collective," the Austrian and the neoclassical. They disagree over some points but agree that the market state is the liberal ideal and seek to replace the remnant of classical liberalism with it although their chief opponent is social liberalism in the form of liberal democracy based on one person-one vote instead of one currency unit-one vote. The basis of the market state is elitism and privilege wrought through the "sanctity of private property," "sound money," and "meritocracy" that encouraged unlimited acquisition, hence unlimited inequality. It' is based on the assumption that some people are better than others.

Lord Keynes said...

"I understand that "market clearing prices" are associated with "market clearing quantities" and "market clearing levels of production" and "market clearing qualities" and that a price or series of prices relates to that actual set of goods and/or services being offered for sale and/or sold."

So now you're telling us that fixprice businesses generally change output instead of prices! Correct!

In other words, flexible prices adjusted to market clearing levels by human action in the ideal Austrian fantasy world economic coordination theory does not apply to most modern markets.

Demand drives output and employment. Keynesianism is vindicated.

But roddis is too monumentally stupid and ignorant to see when he's effectively conceded defeat.

Bob Roddis said...

Pleasing consumers who will make purchases drives output. A buyer won't buy unless he/she is pleased and will pay.

What drives Keynensianism is the obsessive delusion about why the number of anticipated buyers were not as expected because this would have been due to Keynesian price distortions and Keynesians can't accept that they are the cause the problem. The solution is to allow prices (which includes prices for quantities, qualities, location etc....) to readjust to unadulterated levels so that people can know just how much unadulterated "demand" there really is for what and what might be profitably produced and sold so that they might proceed on an informed basis.

Bob Roddis said...

That "Road from Mont Pelerin" sounds like that same dishonest and ignorant crap peddled by Pilkington. Nothing to worry about with that.

http://www.fee.org/the_freeman/detail/the-road-from-mont-pelerin-the-making-of-the-neoliberal-thought-collective#axzz2UL2ID3Q7

http://www.thedivineconspiracy.org/Z5259S.pdf

Lord Keynes said...

"The solution is to allow prices (which includes prices for quantities, qualities, location etc....) to readjust to unadulterated levels "

Roddis continues to destroy himself.

He tells us that flexible prices are the magical panacea, even though he has already admitted above that the vast majority of businesses shun flexible prices and prefer administered prices. So Austrian flying unicorn theory is largely irrelevant to the REAL WORLD.

He's also clueless about money supply. Money supply has always been endogenous and elastic in any advanced capitalist economy. Even in a gold standard it was.

Extra demand from extra money growth is a completely normal process in modern capitalism.

Even Mises accepts that basic money supply growth arising from growing money demand does not inhibit his "economic calculation":

"For the sake of economic calculation all that is needed is to avoid great and abrupt fluctuations in the supply of money. Gold and, up to the middle of the nineteenth century, silver served very well all the purposes of economic calculation. Changes in the relation between the supply of and the demand for the precious metals and the resulting alterations in purchasing power went on so slowly that the entrepreneur’s economic calculation could disregard them without going too far afield."

Roddis demonstrates again he wouldn't know Austrian theory if it bit him repeatedly in the a**.

Tom Hickey said...

Pleasing consumers who will make purchases drives output. A buyer won't buy unless he/she is pleased and will pay.

Utter nonsense in today's markets which are constrained by what producers produce on one hand and on the other by what stores stock.

It's also contradicted by advertising & marketing, branding, intellectual property rights, and transaction costs.

Moreover the very existence of fixed price v. flex price proves market power is held by firms.

In addition, economies of scale lead to monopoly power.

The idea of a perfectly flexible market responding to supply and demand such that the market acts as a computation device that brings all factors into balance through continual price discovery is an imaginary model of economists, for example, as Ronald Coase has shown in his analysis of transaction costs, which are poorly understood by both firms and customers, hence not reflected in price discovery.

F. Beard said...

A commodity money is neither.

Bob Roddis said...

The idea of a perfectly flexible market responding to supply and demand .. blah blah blah

It seems to me that "monopoly power" didn't stop GM from going bankrupt and didn't help Circuit City or Borders. People tell me our banking system would have collapsed without government bailouts of the banks.

Read your Gabriel Kolko and learn the difference between a free market where monopolization does not happen and a market where big business uses the government to monopolize it (an impossible task of comprehension for any "progressive").

Bob Roddis said...

Nobody ever said that human beings were "perfectly flexible". However, they require the best information available for how to proceed and that information is supplied by unadulterated prices and distorted by Keynesianism.

Tom Hickey said...

The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective SEPTEMBER 21, 2011 by BRIAN DOHERTY

Looks like Doherty just read the table of contents. He addresses none of the article in the book in a way that would lead one to conclude that he actually read and understood them. If this is supposed to be a book review, I'd grade it F, other than if I were a LIbertarian looking for someone to tell me what to read and what not to read.

Bob's second reference is to a PDF of Dieter Plehwe's intro to The Road From Mont Pelerin. Read it and decide for yourself, although I think that Mirowski's Postface needs to be considered, too. Most of it can be read through Amazon's "preview this book." Google Books also has a great deal of the book online with only some pages not available. Unfortunately, even the Kindle edition is pricey.

Bob Roddis said...

Lumping minimal government Mises in with funny money Keynesian-lite Friedman is just garbage analysis.

I'm all for my opponents making an atrocious jumbled mess of even their taxonomy. Further, I'm all for the opponents of freedom to voluntarily lump themselves together with the Marxist hard left. That'll sell in the USA. Go for it.

Tom Hickey said...

However, they require the best information available for how to proceed and that information is supplied by unadulterated prices and distorted by Keynesianism.

Again, you have stated the underlying assumption of Neoliberalism as if it were either an obvious fact, which it is not, or a "law," which is not either. It's a theoretical hypothesis that can only be tested if there is no government and only commodity money. Lacking these conditions, defenders will always say a counterinstance was due to some condition not bing met. These extreme conditions will never be met in a modern society, so it is a gratuitous assumption meant to drive a political agenda based on minimal government and maximal acquisition with no rights admitted other than the right to life, negative liberty in Berlin's sense, and an absolute right to hold property. What this does is replace monarchs and feudal lords who gained possession of the commons by force with acquisitors, who become the new privilege elite.

Bob Roddis said...

What this does is replace monarchs and feudal lords who gained possession of the commons by force with acquisitors, who become the new privilege elite.

No. It provides complete protection for the bodies and property of the most powerless, who are always the sad victims of the "progressive's" war on private property and contract. See Africa.

Bob Roddis said...

Again, you have stated the underlying assumption of Neoliberalism.........

Who other than Austrians discuss prices as information and funny money prices as disinformation? Most of your so-called "neoliberals" support funny money in one shape or the other and actively suppress discussions of funny money as the key source of price distortion. Your taxonomy is a purposeful dishonest mess.

Bob Roddis said...

Lack of physical safety is and has always been the major problem facing mankind. Keynesianism by definition must substantially remove the protections for the powerless against the Keynesian Kleptocratic state.

http://www.flickr.com/photos/bob_roddis/8525140770/lightbox/

Tom Hickey said...

Funny then that it's the Keynesians that are concerned with human right, civil rights, and social welfare, and neoliberal, including the Austrians, not so much, not at all, or are predatory on the powerless.

Tom Hickey said...

Who other than Austrians discuss prices as information and funny money prices as disinformation? Most of your so-called "neoliberals" support funny money in one shape or the other and actively suppress discussions of funny money as the key source of price distortion. Your taxonomy is a purposeful dishonest mess.

All market fundamentalists, whether neoclassical or Austrian, hold that prices as information make markets the most efficient distribution mechanism and that price instability introduces disinformation and price distortion. The difference is over how to achieve price stability as a paramount objective along with growth. The Austrian faction tends toward commodity money and the neoclassical toward monetarism administered by a politically independent central bank. No market fundamentalists are concerned with unemployment, since they do not believe there can be any voluntary unemployment if workers are willing to reduce their offer to what is bid in the market.

Tom Hickey said...

Lack of physical safety is and has always been the major problem facing mankind.

That's true and all that one has to do to verify it is to look around the world to places were government is weak and ineffective or absent. No sign of "Keynesian kleptocracy, which is a figment of an fevered mind.

And in developed countries, where there is rampant corruption, there is a neoliberal-leaning government in power that is beholden to business and finance. Leading the charge against this is Bill Black, a professor at UMKC, the epicenter of MMT.

JK said...

"they do not believe there can be any voluntary unemployment if workers are willing to reduce their offer to what is bid in the market."

fantasy land.



y said...

Tom, keep up the fight! Bravo.

Broddis, not so much.

Lord Keynes said...

"Most of your so-called "neoliberals" support funny money in one shape or the other and actively suppress discussions of funny money as the key source of price distortion."

Many Austrians -- apart from the Rothbardian lunatic cult -- support credit money and FR banking, and elastic money supply.

Even in Mises's work there much evidence he did not oppose credit money and money supply increases in line with demand for it.

But idiots like roddis have no understanding of basic Austrian concepts -- he's proved that again and again.

Lord Keynes said...

"Keynesianism by definition must substantially remove the protections for the powerless against the Keynesian Kleptocratic state."

No, it doesn't, roddis.

But Rothbard thought police can beta and torture mere suspects:

http://socialdemocracy21stcentury.blogspot.com/2011/10/rothbard-on-torture.html

And even more horrible things:

http://socialdemocracy21stcentury.blogspot.com/2012/06/horror-of-rothbardian-natural-rights.html

y said...

"a free market where monopolization does not happen"

Blobbis continues to deny reality and the facts of history.

y said...
This comment has been removed by the author.
y said...

by the way, regarding "funny money", see my comments on LK's blog. I show that, as usual, boddis has no idea what he is talking about.

Tom Hickey said...

"a free market where monopolization does not happen"

With economies of scale? Just look at how Walmart dominated retail in just a few years and is not dominating food.