The state is not external to the people, enterprises and other institutions. I think that it is wrong to divide state and market. In modern states, they are intertwined. Maybe this topic should go in my course to create a debate about what terminology to use (dichotomy of state and market) and what we recognize as (economic) “science” over the centuries.The view that market imperfections result chiefly from the side of the state versus the market, that the market and state can be disentangled, and reducing the influence of the state decreases market imperfections is an article of faith of economic liberalism. It is a foundational assumption that is regarded as self-evident. That's doing speculative philosophy, not empirical science.
Von Mises and the Position of the State in the Market
Dirk Ehnts | Berlin School for Economics and Law
6 comments:
Von Mises was ignorant about the role played by reserve accounting and how money can be created through a credit/debt relation by both government and commercial banks and how these two processes can affect exchange ratios:-
http://estes.levy.org/pubs/wp244.pdf
https://www.ecb.europa.eu/press/pr/date/2015/html/pr150122_1.en.html
Schofield if Von Mises had only been ignorant about that...
An other fascist dressed as libertardian who didn't understand anything about money or economies doing sophistry.
I think there is a tendency in economics (not just on the right) to overlook what is the quite central role of the state in a capitalist economy. Sometimes the simplification is worthwhile for analyzing a particular aspect of the economy, but once we wish to understand macro policy alternatives or the system as a whole, ignoring the state and the capacity of the state sets the analysis off on the wrong foot from the beginning.
There is often a motive for ignoring or minimizing the role of the state, of course, on both the left and the right. Part of the reason MMT seems to ruffle feathers may be that it places the relationship between government and non-government at the heart of macro and monetary analysis. It is the correct starting point, IMO, but not necessarily a popular one.
Exactly, Peter.
This is a reason that "political economy" is more descriptive then macroeconomics. The conventional view is the macro is scaled up micro, in which government intrudes if it is not put on a short leash. The accurate view is the government is the most important institution in nations. Failing to include government as not only integral to the system but also the dominant institution in the system leads to nonsense economically and dangerous nonsense politically. The assumptions of conventional economics are based on wishful thinking instead of reality.
The view that market imperfections result chiefly from the side of the state versus the market, that the market and state can be disentangled, and reducing the influence of the state decreases market imperfections is an article of faith of economic liberalism. It is a foundational assumption that is regarded as self-evident. That's doing speculative philosophy, not empirical science.
Since you cannot point to that time in history where the market failed free of interventionist violence (which was the self-evident cause of any problems), you statists are the ones lacking the empirical evidence.
The idea that in time of old — long forgotten, having disappeared into the mists of prehistory — everyone was good, treated everyone else fairly and didn't cheat is naïve as is the myth that the people who didn't play by the rules were soon rejected by the market, which kept everyone straight.
There was no time in history that the market was "free" of the state, since orderly markets depend on law, and law is institutional. The fundamental legal institution is government. In places that there was no law, there was lawlessness.IN ancient Greece, this is was the city state and those who did not live under law were considered subhuman barbarians.
You are a lawyer, Bob. You know this. The rule of law is one of the crowning achievements of civilization, and popular sovereignty as the idea that those who live under the law have a voice in setting the law is a crowning achievement of Western civilization.
Today, most lawyers are involved in civil matters, much of it having to do with business and finance, rather than criminal matters.
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