Showing posts with label Friedrich Hayek. Show all posts
Showing posts with label Friedrich Hayek. Show all posts

Wednesday, August 14, 2019

The road to serfdom before Hayek (Knight, Lippmann, and a note on Weber today) — Eric Schliesser

So, here's my hypothesis. The road to serfdom thesis was if not inspired by Lippmann, at least prompted, in part, by him. But Lippmann did not hold the thesis; it is articulated by Knight in his review of Lippmann and (mistakenly) ascribed to Lippmann. Knight, however, thinks there is nothing inevitable about the thesis because he thinks the future is still very much open. I cannot prove that Hayek read Knight's review of Lippmann. (Knight was later a somewhat ambivalent referee for The University of Chicago Press of Road to Serfdom.) But Knight articulated several major challenges to liberal self-reflection in his review of Lippmann. And some of Hayek's major contributions to the liberal self-imagine, for good and ill, can be fruitfully interpreted as responses to that review.
Digressions&Impressions
The road to serfdom before Hayek (Knight, Lippmann, and a note on Weber today)
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences

Saturday, January 27, 2018

Branko Milanovic — The importance of Taleb’s system: from the Fourth Quadrant to the Skin in the Game


Interesting exploration of Nassim Taleb's systematic thought and its implicitly evolutionary basis.

Global Inequality
The importance of Taleb’s system: from the Fourth Quadrant to the Skin in the Game
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

See also

Branko Milanovic also meanings Hayek's The Fatal Conceit, in which Hayek points to what is now called "bounded rationality" in arguing for a conservative approach that emphasizes the importance of tradition as that which served us well to get where we are. Here is an interest reflection on it.

Jonathan Neumann

Friday, December 29, 2017

Peter Radford — 1937


Hayek, Coase and uncertainty.
In any case I find it fascinating that the two, Hayek and Coase, both in their own way, brought the impact of uncertainty to the fore in the same year.
It’s a shame that economics has never fully embraced, nor realized, the full richness of their ideas. Neither author was willing to step into the world that they clearly understood existed. Hayek was right about universal central planning: it is an impossibility. He was wrong to assert that this implied anything about the market place or prices. By his own argument we simply cannot know whether something is optimal. Uncertainty makes such a thing inscrutable too us. And Coase was equally correct when he saw the need for local central planning: it is the only way we can organize production adequately in the face of uncertainty. But his focus on transactions was a legacy of the classical emphasis on exchange. It ignored the need for active coordination. He missed the requirement for management. He should have talked about “management cost” not “transaction cost”. They’re different animals.
So: an interesting question is this: what happens to Coase’s “institutional structure of production” when information, and by association knowledge, is less clumpy in the economic landscape? Does something like the Internet, which is a vector for information and knowledge, obviate the need for such structure? Does it smooth that landscape out sufficiently for firms not to exist?
We need to think about that.
We need a new version of the discussion that ought to have taken place in 1937.
The Radford Free Press
1937
Peter Radford

Monday, December 25, 2017

David Sloan Wilson — The Invisible Hook: How Pirate Society Proves Economic Self-Interest Wrong

Pirate bands are radically democratic and egalitarian: Hayek and the evolutionary imperative.
Evonomics
The Invisible Hook: How Pirate Society Proves Economic Self-Interest Wrong
David Sloan Wilson | SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo

Monday, July 24, 2017

David Glasner — Hayek, Deflation and Nihilism


At least Hayek later admitted he was wrong about deflation being useful in breaking rigidities.

Uneasy Money

Tuesday, January 24, 2017

James Kwak — What’s Wrong With Econ 101

Both Hayek and Friedman saw themselves as participants in a battle of ideas against encroaching socialism. In their hands, an analytical framework became a universal worldview: Economics 101 became economism. Economism is the belief that basic economics lessons can explain all social phenomena — that people, companies, and markets behave according to the abstract, two-dimensional illustrations of an Economics 101 textbook. Ideally, students should learn that the competitive market model is just that — a model, which by definition abstracts from the real world. According to the rhetoric of economics, however, the lessons of Economics 101 can be transplanted directly into the real world. The central idea that free markets generate the greatest possible economic well-being for society becomes a universal framework for understanding and answering any policy question.
Economism may not accurately describe reality, but its reduction of complex phenomena to simple concepts was a major asset in the battle of ideas. The political landscape of the United States after World War II was dominated by the shadow of the New Deal and the idea that the government could and should play a major role in managing the economy. Businesses that opposed intrusive regulations and wealthy individuals who feared higher taxes needed an intellectual counterweight to the New Deal, a conceptual framework that explained why an activist government was bad not just for their profits and their pocketbooks, but for society as a whole. Economism filled that need....
Economism aka Econ 101 is ideology, pure and simple, masquerading as science — because the math "proves" it.
As the mantra of free markets, small government, and lower taxes became more popular with voters, Democrats adapted by also paying homage to competitive markets. It was Bill Clinton who said, "The era of big government is over." And Barack Obama’s signature health-care-reform program is centered on the idea of using (regulated) market competition to expand access to health insurance.…
Economism is the reduction of social reality not just to Economics 101, but to just one Economics 101 lesson: the model of a competitive market driven by supply and demand.
If we were to redesign Economics 101, what would it look like? One possibility is to begin not with abstract models, but with the real world. How do companies use technology to produce goods, and how are those companies organized? How are products and services distributed, and how do manufacturers, intermediaries, and retailers set prices? How are wages determined — not in the theoretical model, but in real life? What factors determine the set of opportunities available to different people on different parts of the planet?...
Connecting the dots between Adam Smith and Donald Trump.

The Chronicle of Higher Eduation
What’s Wrong With Econ 101
James Kwak | Associate Professor of Law at the University of Connecticut School of Law

Tuesday, December 27, 2016

David Glasner — Why Hayek Was not a Conservative

At the end of his classic treatise The Constitution of Liberty, F. A. Hayek added a postscript entitled “Why I am not a Conservative.” Like everything he wrote, what Hayek has to say about the weaknesses of conservatism can be read with profit even by those who disagree with his arguments. The following passage, for a number of reasons, seems especially apt and relevant now, some 55 years after it was written.…
Uneasy Money
Why Hayek Was not a Conservative
David Glasner | Economist at the Federal Trade Commission

Sunday, September 11, 2016

Chris Dillow — Meritocracy vs freedom

Theresa May said yesterday:
I want Britain to be the world’s great meritocracy – a country where everyone has a fair chance to go as far as their talent and their hard work will allow.
Of course, we lefties don’t like this: we believe a greater equality of outcome is more feasible and desirable than meritocracy. What’s insufficiently appreciated, however, is that Ms May’s vision should also disquiet the free-market right, because meritocracy is incompatible with freedom.
Just think what a true meritocracy would look like.…
Just deserts and meritocracy are myths of liberal ideology. But May is a conservative, you say. Conservatism is based on economic liberalism as the basis of political liberalism.

Stumbling and Mumbling
Meritocracy vs freedom
Chris Dillow | Investors Chronicle

Saturday, July 23, 2016

Monday, April 18, 2016

James Kwak — The Root of All Our Problems?

A friend pointed me toward an op-ed in The Guardian by George Monbiot titled “Neoliberalism—The Ideology at the Root of All Our Problems.” The basic argument is that there is an ideology that has had a pervasive influence on the shaping of the contemporary world. Its policy program includes “massive tax cuts for the rich, the crushing of trade unions, deregulation, privatisation, outsourcing and competition in public services.” Monbiot calls this cocktail “neoliberalism” (more on the name later). 
There’s a lot in the article that I agree with. The political and economic takeover of the Western world by the super-wealthy was not accomplished by force, nor by rich people simply demanding a larger slice of the proverbial pie. Instead, it happened because many people—particularly in the media, the think tank intelligentsia, and the political community—internalized the idea that competitive markets provided the solution to all problems. (The idea that unfettered capital markets and financial innovation would be good for everyone, which helped produce the financial crisis, is only a special case of this larger phenomenon.)…
Baseline Scenario

Thursday, April 7, 2016

Brad DeLong — Why Did Keynes Write "In the Long Run We Are All Dead"?


The definitive explanation and its misrepresentation.

It's Keynes statement of what later came to be called "the Lucas Critique."

Grasping Reality
One Last April-Fools Note on Niall Ferguson: Why Did Keynes Write "In the Long Run We Are All Dead"?
Brad DeLong | Professor of Economics, UCAL Berkeley

UPDATE:

Peter Dorman comments

Econospeak
How Long Before You Have to Order a Refill for the Keynes Day Planner?
Peter Dorman | Professor of Political Economy, The Evergreen State College

Monday, February 22, 2016

David Sloan Wilson — The Libertarian Economist Friedrich Hayek Gets a Makeover


David Sloan Wilson likes Hayek as a pioneer and points out that Hayek did not write the bible of economics. Hayek needs to be updated.

Evonomics
The Libertarian Economist Friedrich Hayek Gets a Makeover
David Sloan Wilson | SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo

Saturday, February 20, 2016

Alexander Douglas — Hayek was wrong because Girard was right


Weekend reading.
Girard’s starting point was an understanding of human desire. To understand it, he turned to the best possible sources – the great stories around which human civilizations have been organized. He wrote studies of Proust, Dostoevsky, the Greek myths, the Brahmanas of Vedic India, Shakespeare, and the Book of Job.
Girard understood that, other than the desire for basic necessities, human desire is almost entirely mimetic. One person wants X because somebody else – a mimetic model – wants X. It is entirely irrelevant that there is as much and as good outside the scope of the model’s desire. What the desiring subject wants is what the model wants, not something else equivalent in terms of utility.
It is not hard to see that this leads inevitably to violence. Desires of different subjects are determined to fix upon the same rivalrous goods. Worse, there is a mechanism that exacerbates desires past the point where reasonable agreement remains an option.…
The inevitable convergence of human desires on rivalrous goods explains the prevalence of what economists call ‘shortages’. Economists explain shortages by the failure of prices to adjust to the point where supply equals demand. But their explanations assume that human desires are fixed. Girard shows that, on the contrary, desires increase exponentially in intensity, until shortage is converted into violent, obsessive rivalry.…
It was well known to some of the earliest Western social scientists that desire is mimetic. Mimetic desire plays a crucial role in Hobbes’s explanation of the ruthless violence of the ‘state of nature’. …
If desire is, through the mechanism of mimesis, so inexorably geared towards violence, how has society survived at all? Certainly Hobbes’s theory of the transition from the state of nature into civil society does not provide an adequate reply; Spinoza gave powerful arguments against the idea that civil society brings an end to the violent condition of rivalry that defines the state of nature.
Girard discovered the answer. Society has survived because it has developed a mechanism for concentrating violence on a limited number of victims. This he called the “scapegoating mechanism”. In fact the scapegoating mechanism exploits the very mimetic mechanisms that render it necessary for society’s survival.…
A very interesting piece that I suggest reading in full.

Origin of Specious
Hayek was wrong because Girard was right
Alexander Douglas | Lecturer in Philosophy at Heythrop College, London

In conjunction with this, I would recommend also reading Bertrand Russell's Nobel lecture, What Desires Are Politically Important? Russell mentions "four in particular, which we can label acquisitiveness, rivalry, vanity, and love of power." Alternatively they can be called "greed," "covetousness," "egotism or pride," and "lust for power." They can be reduced to self-interest and self-importance — "me and mine."

These are natural dispositions of human beings in that they are artifacts of evolution. Ancient sages knew this. Perennial wisdom is about sublimating the evolutionary residual and transforming them into fully human desires. We are able to work with what we have been given and improve upon it.

Humans are capable of appreciating universality. This manifests as knowledge of universals as the basis of "science, which just means "true knowledge.

Universality also manifests as universal unconditional appreciation for that which is universal — love. "True love" as universal and unconditional is love of being as such that manifests as unconditional love for all beings.

The ancients distinguished between sense appetite, which is lust (conditional) for the particular, and rational appetite, which is love (unconditional) for the universal — being as such. Being is said to be "true" in that it is intelligible and "good" is that it is appetible. Reason is capable of knowing being as universal, and the rational appetite is capable of loving being as universal. In knowing being as universal one knows one's true nature and in loving being as universal one appreciates one's true nature.

The process of self-realization involves the deepening of this knowledge and love until they converge as one, for being is one. These are not just words or abstractions. The sages emphasized on the basis of their own experience that this can be experienced. It can be experienced by anyone since it is universal and undifferentiated.

Initially this process manifests biologically as the urge to survive as an organism and reproduce. That urge leads to the development of different types of response from the most primitive through tropism at the vegetative level to the more complex affect at the animal level. The most advanced state is the human level with the variegated web of human desire over a range from very particular to highly universal.

The goal is full appreciation of unity in diversity expressed in total living that transcends living in a state of separation. To be separated is to be alienated from one's own nature, which is universal. To love truly is to appreciate the unity of being.

Evolution to the human level involved a progressive development of the individual capacity to appreciate universality and to scale it socially. This is the history of the development of the level of collective consciousness.

The level of individual consciousness scaled up socially determines the level of collective consciousness. This manifests in types and patterns of social behavior, institutional arrangements, cultures and civilizations.

If development of the level of individual consciousness can be scaled socially, then social behavior can become more universal and less determined by self-interest and self-importance — "me and mine" — egoism that involves alienation. Egoism involves alienation that also involves dissatisfaction and frustration. This impels those experiencing separation and alienation to selfish behavior, which if not satisfied, manifests as anger and leads to violence.

One solution is to discourage negative social behavior, for example, through customs, moral codes and positive law that bridle egoism. Disincentives are required in proportion to how base the level of consciousness may be.

Conversely, incentives are based on improving the level of consciousness. The positive solution is to raise the level of individual consciousness sufficiently to transform the level of collective consciousness.

This is the basis of the perennial wisdom. The positive incentives are peace and fulfillment. The process involves increasing appreciating greater universality by attenuating the obstacles to its realization, since nothing needs to be added.

This is an outcome of what psychology now calls "self-actualization." Maslow put self-actualization at the apex of a pyramid of needs, suggesting a ladder to be mounted. I would approach needs in terms of a constellation rather than a ladder. All needs are can be integrated into total living simultaneously through a holistic approach. History shows that this can be accomplished individually and in limited groups, often closed. What remains is scaling it up socially.

So while I would agree with the analysis of Girard and Russell regarding politically important desires, neither humans as individuals nor humanity as a social species are stuck there.

Sunday, October 25, 2015

Steve Keen — Economists Prove That Capitalism Is Unnecessary

Actually they’ve done no such thing. But they do effectively assume that it’s unnecessary all the time...
Hayek’s main target here were socialists who believed that a complex economy could be centrally planned—thus doing away with markets institutionally. But he also criticized his mainstream rivals for assuming the existence of all-seeing, all-knowing “economic agents” to overcome mathematical problems in their equilibrium-obsessed models of the economy. Here he was actually in agreement with his great rival Keynes, since they both said that the only way equilibrium could be achieved would be if people’s expectations about the future were both shared and correct.…
Forbes
Economists Prove That Capitalism Is Unnecessary
Steve Keen | 

Monday, August 17, 2015

Is Economics Built On A "Monumental Mistake?" — Jag Bhalla in conversation with David Sloan Wilson

JB: You’ve called an idea that’s cherished in economics “a monumental mistake.” Specifically, the belief that Adam Smith’s “invisible hand” ensures markets self-organize for the best overall outcomes.
Biological self-organization — Darwin’s “invisible hand” — often delivers disaster. What can self-organization, or spontaneous order, in biology teach economics?

DSW: Self-organization isn’t intrinsically good (it can be functional or dysfunctional).…
Economists will never get it right until they switch their mentality from physics to evolution (see Newton pattern vs. Darwin pattern).
Big Think
Is Economics Built On A "Monumental Mistake?"
Jag Bhalla in conversation with David Sloan Wilson

Monday, July 20, 2015

James Kwak — Friedrich Hayek Supported a Guaranteed Minimum Income

“We shall again take for granted the availability of a system of public relief which provides a uniform minimum for all instances of proved need, so that no member of the community need be in want of food or shelter.”
That’s from The Constitution of Liberty, “definitive edition,” p. 424. Yes, it comes as part of Hayek’s argument against mandatory state unemployment insurance. But it reflects a fundamental understanding that no one should go without food or shelter, and that it is the duty of the government to ensure this minimum level of existence. “The necessity of some such arrangement in an industrial society is unquestioned,” he wrote (p. 405).… 
… on the questions of welfare and government intervention in insurance markets, he was to the left of the entire Republican Party today.
Baseline Scenario
Friedrich Hayek Supported a Guaranteed Minimum Income
James Kwak | Associate Professor of Law at the University of Connecticut School of Law