Friday, March 15, 2013

Lord Keynes — Austrians Should Read their Mises

Mises in Interventionism: An Economic Analysis:
If within a society based on private ownership of the means of production some of these means are publicly owned and operated, this still does not make for a mixed system which would combine socialism and private property. As long as only certain individual enterprises are publicly owned, the remaining being privately owned, the characteristics of the market economy which determine economic activity remain essentially unimpaired. The publicly owned enterprises, too, as buyers of raw materials, semi-finished goods, and labor, and as sellers of goods and services, must fit into the mechanism of the market economy; they are subject to the same laws of the market. In order to maintain their position they, too, have to strive after profits or at least to avoid losses.” (Mises 1998: 5)
Social Democracy For The 21St Century
Austrians Should Read their Mises
Lord Keynes

3 comments:

Unknown said...

The publicly owned enterprises, too, as buyers of raw materials, semi-finished goods, and labor, and as sellers of goods and services, must fit into the mechanism of the market economy; they are subject to the same laws of the market. Mises [bold added]

No, they are not since a monetarily sovereign government has the ability to create money (by spending it into existence) and to destroy it (by taxation).

In order to maintain their position they, too, have to strive after profits or at least to avoid losses.” mises

Wrong. A static, or worse,shrinkingmoney supply would encourage risk-free money hoarding. But progress requires taking risks, not money hoarding. Also, the current system allows the banks to drive people into debt (via negative real interest rates). But where shall the interest come from if not from deficit spending by the monetary sovereign?

Tom Hickey said...

The actual problem is assuming "laws of the market." These are aprioris that are not backed by evidence other than by selecting special cases where as a law claims to be applicable to the general case. Economists have attempted unsuccessfully to create at economic theory similar to classical physics with laws and they have not succeeded in doing so other than by constantly adapting the model ad hod to special cases that crop up inconveniently, similar to the way Ptolemaic astronomy added epicycles.

Bob Roddis said...

I fail to see what's new here. If the government owns all of the stock of a company which ACTUALLY OPERATES on a profit and loss basis, the company will go out of business if it suffers perpetual losses. But generally, government owned companies are not allowed to fail and go out of business due to political concerns.

A government owned company must engage in rational and sustainable economic calculation if is going to know how to properly employ its assets so as to consistently have profits. Further, if the line of production is profitable, there is no reason for it to be owned or run by the government.