There's a common theme in these three examples. The claim that individuals can possess extensive knowledge is also a claim to power and wealth; CEOs, fund managers and politicians all say: "trust us, because we know better."
In this sense, Hayek's message has shifted. Whereas it used to support dominant western institutions, it now undermines them. For this reason, it might be no coincidence that the question "what are the limits of our economic knowledge?" is rarely asked nowadays.
Is there a scale at which the ability to manage an organization or to foresee outcomes breaks down owing to the sheer volume and complexity of information?
Chris Dillow | Investors Chronicle
Hayek, Friedman, and the Illusions of Conservative Economics
ReplyDeleteBy Robert M. Solow
http://www.newrepublic.com/article/books-and-arts/magazine/110196/hayek-friedman-and-the-illusions-conservative-economics#
Solow:
ReplyDeleteIf laissez-faire could succeed only under narrow conditions, he proposed to re-create those conditions: ruthlessly suppress monopoly and even bigness, institute a seriously progressive tax system to reduce inequality and poverty, and so on.
If “monopoly” is ruthlessly suppressed and there is a seriously “progressive” tax system, that system is certainly not “laissez faire”. If a society has a central bank and a monopoly fiat money system while engaging in "monetarist" policy, that system is certainly not “laissez faire”.
For over 42 years, I have been hunting for that first non-Austrian who understands Austrian concepts. Neither Mr. Solow nor Mr. Dillow have a clue.
The subject about which Mr. Dillow is stumbling and mumbling was addressed by Rothbard in 1963:
ReplyDeleteThe reason that a socialist economy cannot calculate is not that it is socialist, but because a single agent owns and directs all resources. Expanding on this point in his 1976 essay on “Ludwig von Mises and Economic Calculation Under Socialism,” Rothbard explains:
There is one vital but neglected area where the Mises analysis of economic calculation needs to be expanded. For in a profound sense, the theory is not about socialism at all! Instead, it applies to any situation where one group has acquired control of the means of production over a large area—or, in a strict sense, throughout the world. On this particular aspect of socialism, it doesn’t matter whether this unitary control has come about through the coercive expropriation brought about by socialism or by voluntary processes on the free market. For what the Mises theory focuses on is not simply the numerous inefficiencies of the political as compared to the profit-making market process, but the fact that a market for capital goods has disappeared. This means that, just as socialist central planning could not calculate economically, no One Big Firm could own or control the entire economy. The Mises analysis applies to any situation where a market for capital goods has disappeared in a complex industrial economy, whether because of socialism or because of a giant merger into One Big Firm or One Big Cartel. (Rothbard, 1976, p. 75)
The Mises analysis thus applies to any situation where the market for a particular capital good disappears because a firm has become so large that it is the unique producer and user of that capital good. As we have seen, such a firm will not be viable.
Economic Calculation and the limits of Organization, page 15-16
http://tinyurl.com/qdqp9wb
I have come to the conclusion that statists simply do not want to understand the concept of economic calculation because it destroys once and for all any prospect of their authoritarian dreams.
Nurse!
ReplyDeleteAs soon as I submit that statists are emotionally unwilling and unable to address Austrian and libertarian concepts, an unpaid focus group miraculously appears for free.
ReplyDeleteInteresting.
As soon as I submit that statists are emotionally unwilling and unable to address Austrian and libertarian concepts, an unpaid focus group miraculously appears for free.
ReplyDeleteInteresting.
Says the troll.
Focus group? What focus group?
ReplyDeleteThe 'focus group' is aka 'people with brains'
ReplyDelete:p