The point of the paper is that while Hayek was on to some good things, he let his liberal ideology run away with him, making claims that are not substantiated by his economic work.
WCEG — The Equitablog
Must-Read: Samuel Bowles, Alan Kirman, and Rajiv Sethi*: Friedrich Hayek and the Market Algorithm
Brad DeLong
* We thank Jeffrey Friedman, David Glasner, Gordon Hanson, and Timothy Taylor for their contributions to this essay and the Santa Fe Institute for providing an ideal environment for the collaboration that resulted in this paper.
Markets can promote prosperity but can also generate crises.
ReplyDeleteNo they don't. Funny money and fiscal "stimulus" inject violence, theft and fraud into the pricing system distorting the price (information) system and making people think that there is more and/or a different array of "demand" than there actually is based upon actual wants, needs and resources. That is what causes the crises. Keynesianism supposedly tries to solve a problem that does not actually exist while causing the problem it claims it is seeking to cure.
The US and UK are laissez faire???? That is THE ARGUMENT against laissez faire???? Beyond pitiful.
ReplyDeleteAs it happens, most high-income countries have grown institutions that sharply constrain the operation of markets in many spheres, with the delivery of childhood education, health, and old-age pensions being prime examples. Economies with strong trade unions, large welfare states, and substantial regulation of the economy— all of which Hayek vociferously opposed—score well on measures of democracy, civil liberties, and innovativeness developed by the World Bank, Freedom House, and Bloomberg (World Bank 2017; Freedom House 2017; Jamrisko and Lu 2017). Indeed, the Nordic social democracies do slightly better by these measures, for example, than do the more laissez faire nations such as the United Kingdom and the United States.
Again, I can say that no non-Austrian has the slightest familiarity with basic Austrian concepts and analysis. These guys clearly do not.
Polanyi definitively argued why laissez faire systems look exactly like what we have now: they are unnatural to human societies.
DeleteBecause they are unnatural the coercive power of the state is required to bend society into an accomodative role. This inevitably generates social resistance, necessitating further government intervention to maintain and stabilize those same markets. Laissez Faire inevitably leads to total economic centralization and destruction of liberty as individuals, their relationships and their property are forcibly commoditized.
"Does anyone else see a parallel between Hayek's view of markets as information systems that generate natural spontaneous order and intelligent design arguments in evolutionary theory, "
ReplyDeleteUh, no.... I see a parallel between it and Darwin's theory of no system design at all though...
Tom,
ReplyDelete"God created man in His image" is a deterministic statement not a stochastic statement...
It is opposite "man evolved from worms by random chance mutation...." which relies on stochastics...
Today's problem is the that our elites are all drunk on continuous rounds of Darwin-Ayn Rand cocktails...
Darwin doesn't assume a spontaneously arising natural order that optimizes. Hayek does. Optimization is a philosophical assumption that is not falsifiable and is also questionable empirically. Moreover, it also lacks firm theoretical justification.
ReplyDeleteIt's deus ex machina.
"God created man in His image" is a deterministic statement not a stochastic statement...
ReplyDeleteIt a nonsense scientifically. It doesn't conform to the rules of the logic of description.
It's either purely mythological or it has a symbolic ("poetic") interpretation. Various symbolic interpretations have been provided in biblical exegesis and hermeneutics.
Libertarian and Austrian analysis (to which Hayek supplied some important analysis) presumes a regime of private property protections for bodies and property and a prohibition on the initiation of violence. People are then a) safe in the present and b) they and their plans for the future are safe now and into the future. The dispute is between that scenario and the scenario where Sheriff Arpaio, Trump, Hillary, Castro or Stalin boss everyone around according to their plan with no or limited protection for the non-boss individuals. The MMTers have thrown in with the latter group of thugs.
ReplyDeleteTo compare human beings under the “no-violence” scenario with inanimate molecules is ridiculous as is calling it “Darwinian”. This is especially so when the alternative to “no-violence” is a situation where even the MMT money supply must be propped up by a real threat of violence against non-violent competitors. “Sovereign money” at the point of a gun (all to solve problems that don’t otherwise exist) sounds pretty “Darwinian” and ad hoc to me.
All currencies are propped up by the force of the state. Right-libertarianism is fundamentally undone by its contradictory reliance upon coercion to create "freedom."
DeleteIt's not intended to be an empirical explanation and neither is evolutionism btw...
ReplyDeleteEvolutionism is rationalist... same as monetarism... both are rationalist theories..
ReplyDeleteUh, no.
ReplyDeleteScientific theories are logical systems, usually expressed formal but not necessarily, that are general descriptions in a model that is purportedly about about facts in the observable world, hence testable empirically. While no amount of facts, which are contingent on observation, can confirm a general statement, counter-instances falsify general statements.
Even though theories cannot be confirmed by facts, when facts uniformly correlate to theory, the assumptions are received by the scientific community as being "scientific laws" or "laws of nature," e.g., the laws of thermodynamics based on conservation.
Mendel's laws of genetics explaining inheritance are considered scientific laws in biology. Darwin's evolutionary theory combined with Mendel's work in genetics ("the modern synthesis) and subsequent research (subsequent syntheses) put evolutionary theory on a similar level as the laws of thermodynamics in physics as far and away the best explanation in the field.
The bible and theology mined from it are nothing like this. Comparing them on the same level is a category error.
Evolutionism is rationalist... same as monetarism... both are rationalist theories..
ReplyDeleteTheory is always "rationalist" in that theories are based on assumptions that are stipulated along with formation and transformation rules that regulate generation of theorems in logically coherent systems that may or may not be formalized. Theories that purport to represent reality that can be tested wrt to observations, either direct or indirect, are scientific theories. Theories that cannot be tested empirically are philosophical theories.
There is no "theory" set forth in scripture. There are many interpretations of scripture and arguments over what speaks for and against them. But there is no way of testing them in any way similar to science.
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ReplyDelete"There is no "theory" set forth in scripture. There are many interpretations of scripture and arguments over what speaks for and against them. But there is no way of testing them in any way similar to science."
ReplyDeleteI don't think you can categorically state there is no theory embedded in religion. It ties itself up in metaphors and pleadings but at root it's concerned with social psychology namely the chief environment human beings inhabit is the human group and this group exists because of the reciprocity found there. The reciprocity or lack of is built in biologically in terms of positive and negative chemical production, for example, oxytocin and cortisol. Attachment and Coregulation Theory obviously "tests" the existence or lack of this reciprocity effect. Indeed the transition from self-interest to selfishness can be viewed as a reaction against a lack of reciprocity occurring whilst infants (the attachment and caregiving motivations combined). Religions in an elementary way point out the importance of having a clear understanding of the need for human beings to engage in reciprocity with each other. This can loosely be labelled theory.
That is a very broad definition of theory, Schofield. Some explication is needed.
ReplyDeleteAccording to Aristotle speculation begins in wonder or puzzlement. The word to speculate (theorize) in Greek is from theorein and theoria. Puzzlement is aporia.
For men were first led to study philosophy, as indeed they are today, by wonder. Now, he who is perplexed and wonders believes himself to be ignorant ... they took to philosophy to escape ignorance . — Aristotle, Metaphysics 982b, tr. A.E. Taylor
Aristotle likely got this idea from his teacher Plato or his teacher's teacher Socrates.
SOCRATES: I see, my dear Theaetetus, that Theodorus had a true insight into your nature when he said that you were a philosopher; for wonder is the feeling of a philosopher, and philosophy begins in wonder. — Plato, Theaetetus 155c-d, tr. by B. Jowett.
Philosophical speculation in the sense of providing a rational account is theorein (to theorize) and (theoria.
Heidegger set for the etymology of these words thus .
Having shown how science came to establish itself as a ‘theory’ which takes ‘the real’ as mere actuality or factuality, and specifically as the causally or operatively established ‘objectivity’ of things [Gegenständlichkeit], Heidegger now returns to consider the modern term ‘theory’3 in the earlier and more original sense expressed by the Greek verb theorein and the Greek noun theoria.
To begin with, Heidegger points out that “The Greek verb theorein grew out of the coalescing of two root words, thea and horan. Thea (cf. ‘theatre’) is the outward look, the aspect, in which something shows itself …. Plato names this aspect in which what presences shows what it is, eidos.” It is from the Greek eidos that the English word ‘idea’ derives - even though ‘ideas’ are still associated only with ‘concepts’ in the ‘mind’ and not with directly perceived aspects of things themselves – their ‘look’.
Hence the relevance of the second root of the word theorein – horan - which Heidegger translates as meaning “to look at something attentively, to look it over, to view it closely.” For “Thus it follows that theorein is thean horan, to look attentively [horan] on the outward appearance [thea] wherein what presences becomes visible, and, through such sight – seeing – to linger with it”.
continued
continuation
ReplyDeleteThis however, marks only the beginning of Heidegger’s profound reflections on what he describes as the “lofty and mysterious meaning” of theorein and theoria. For whereas today, we understand ‘theories’ as more or less ‘lofty’ intellectual models or representations of ‘the real’, Heidegger reminds us of the Greek understanding of theorein – not as ‘theory’ but as a way of life: “That particular way of life (bios) that receives its determination from theorein and devotes itself to it, the Greeks call bios theoretikos, the way of life of the beholder, the one who looks upon the pure shining-forth of what presences. In contrast to this, bios praktikos is the way of life that is dedicated to action and productivity.”
As Heidegger puts it, for the Greeks “Theoria, in itself, and not through the utility attaching to it, is the consummate form of human existence. For theoria is pure relationship to whatever presences, to those appearances, that in their radiance, concern man in that they bring the presence of the gods to shine forth.”. Thus it is that “…When differently stressed, the two root words thea and orao can read thea and ora. Thea is goddess…ora signifies the respect we have, the honour and esteem we bestow.”
From this lightning bolt of profound insight Heidegger concludes: “If we now think the word theoria in the context of the meanings of the words just cited, then theoria is the reverent paying heed to the unconcealment (aletheia) of what presences. Theory in the old, and that means the early but by no means the obsolete sense, is the beholding that watches over truth. Our old high German word wara (whence wahr [true], wahren, and Wahrheit [truth] goes back to the same stem as the Greek horao, ora, wora.” As indeed, do the English words ‘aware’ and ‘awareness’. Indeed they go even further back, to the Proto-Indo-European (PIE) root wer – a root common not only to the words awareness and Wahrheit [‘truth’] but also to the words ‘worth’, ‘revere’ and worship.
The first "theories" were mythologically based, generally embedded in religions. They involved the numinous, which historians of religion regard as the basis of religions. Prophecy came later. The numinous was elucidated through teaching stories, the technical word for which is "myth," from Greek "mythos" meaning story. Myths as teaching stories were meant as elucidations rather than accounts or explanations in the modern sense. They were metaphors, allegories and analogies based on the luminosity of numinosity.
At the time of the rise of Greek philosophy in the West in Asia Minor, Thales of Miletus provided the first causal account when he opined that "all things are of water." This was the begging of philosophy that reached its peak intellectually in Plato and Aristotle, who laid down the foundations of the Western intellectual tradition by effecting a shift from mythological accounts to philosophical accounts based on first principles rather than teaching stories, which is what myths are.
The next great step was taken in the development of "natural philosophy" into modern science, which began with Galileo, Brahe, Copernicus, Kepler, etc. and culminated in the classical physics of Newton that became the standard of modern science. True knowledge would not longer be based on either teaching stories or first principles but rather a combination of formal models and empirical testing.
So while it is not wrong to say that mythological philosophical accounts are "theories", there is a world of difference between such theories and scientific theories, and the history is very clear on this.
BTW, I don't want to suggest that I agree with the view that science has a monopoly on "true knowledge." That vastly overstates the case.
ReplyDeleteThere is poetic and philosophical "truth" also.
Different aspects of "truth" are based on different methods and different criteria.
Taking science alone as "true knowledge" or the sole or even superior criterion of truth would result in a poorer state of the world.
I would also argue that there is also a level of truth that can be examined purely naturalistically based on testimony and reports that indicates that knowledge is structured in consciousness and that there are different levels of consciousness, so that truth is different in different states of consciousness.
But these aspects of truth are categorically different, although there is some overlap in that the boundaries of categories are fuzzy in places. Conflating them results in ambiguity and confusion.
I accept that my definition is broad by including "religious truths" but in being attempts to "make sense" of the world they would appear to come from the same motivation for scientific theory. If one of the "religious truths" that has been constantly pushed down the ages is the need for human beings to engage in greater reciprocity with each other then what was "instinctual theory" is now proving to be verifiable, for example:-
ReplyDeletehttps://www.ncbi.nlm.nih.gov/pmc/articles/PMC4375548/
Developing the idea of "instinctual theory" or "instinctual belief" I forget the source but I recall a scientist arguing that first you had the instinct that something was so and explained a mystery and then you set about empirically to prove through testing that your instinct was right.
ReplyDeleteI accept that my definition is broad by including "religious truths" but in being attempts to "make sense" of the world they would appear to come from the same motivation for scientific theory. If one of the "religious truths" that has been constantly pushed down the ages is the need for human beings to engage in greater reciprocity with each other then what was "instinctual theory" is now proving to be verifiable, for example
ReplyDeleteYes, this is how mythology preceded philosophy and philosophy preceded science. The progression is summed up in Feynman's quote about science being the attempt to avoid fooling ourselves.
But instinctual "truth" doesn't make either mythology, folk lore or philosophy "scientific." A lot of pharmaceuticals were originally identified and used on traditional medicine, out of which grew herbology, for example. Some of these systems were highly developed such as Indian Ayurveda and Traditional Chinese Medicine (TCM). Regardless of systematization, this knowledge regarded as pre-scientific in the way that the term "science" is ordinary used by scientists. Sometime it is argued that such systems are scientific under the concept of science as an organized body of knowledge, e.g., "spiritual science." But most contemporary scientists and philosophers of science don't buy that, although I think personally there is some justification for it. But I am a "fringe" character.
Developing the idea of "instinctual theory" or "instinctual belief" I forget the source but I recall a scientist arguing that first you had the instinct that something was so and explained a mystery and then you set about empirically to prove through testing that your instinct was right.
This is how discovery often works rather than through assumptions derived from induction. C. S. Peirce called it "abduction," using "abduction" in a somewhat different sense than it is usually used contemporaneously, where it signifies reasoning to the best explanation. Karl Popper addressed this in The Logic of Scientific Discovery (PDF ) IIRC. Deduction begins with priors.
Tom I'm not trying to argue that "instinctual truth" employs "scientific method" merely that there's a thread there running down through human history. So, for example, long ago religions started to make a big deal out of the importance of human beings engaging in reciprocity with each other and we can follow that down through Attachment Theory which did employ scientific method to verify the idea through the "Strange Situation" and even further through Affective Neuroscience scientific method verifications including Coregulation or Social Baseline Theory experiments. Why should we be interested in reciprocity? Because we can link it to money creation.
ReplyDeleteI agree that there is such continuity as you describe, and not only this area.
ReplyDeleteThese continuities either go unnoticed until science discovers them, or else they are noticed but not explained rigorously in terms of theory and evidence, which what science does. Mythological accounts and philosophical explanation are not rigorous in the sense of being formalized, ideally in math, or substantiated by evidence and experiment.
The differences among the different categories of account and methods of explanation are visible historically and have been investigated in depth by scholars. There is general agreement about this, with some controversy about some details. However, it is clear when and where mythological explanations began to be replaced by philosophical ones in the Axial Age, and philosophical ones by scientific ones at the time of the Scientific Revolution.
Similarly, there are three periods in intellectual history in the West. In the first period the emphasis on what is — metaphysics. This is the subject of ancient philosophy that culminated in Plato and Aristotle.
ReplyDeleteIn the second period, the emphasis shifted to what we can know about what is — epistemology. This is the subject of modern philosophy that was initiated by Descartes and culminated in Kant and persisted in phenomenology as a method. Phenomenology is an aspect of contemporary philosophy.
In the third period, the emphasis shifted to what can be said about what we know — philosophy of language and analytic philosophy, and Post Modern philosophy. This is the other major aspect of contemporary philosophy.
Another aspect of contemporary philosophy is the integration of philosophical speculation with scientific method.
Some good points there, Ben.
ReplyDeleteOur society is like a club and you're expected to pay membership fees. Now, it is unfair that you have no say about the club you are born into, but no one is stopping a person from leaving this club if they don't want to pay the membership fees. But to leave home and family is hard, I do agree. It's unfair, but it is also unfair if a family in a street refuses to pay its taxes but still gets the benefits of the street getting cleaned, the local police force, the law and order, the judiciary, the army, the regulations that ensures you have a right to private property, or that your neighbours can't party all day and all night, etc.
Anyway, it isn't just the 'big, bad, government' that will come after you If you didn't pay your taxes, but your neighbors as will. In fact, many of your neighbors will demand that the government do something about the 'free riders ' in their street.