Arnold Kling  

Hayek Said the Sky is Blue

Boettke-Caplan Debate on Youtu... A Footnote to the Economics of...

My favorite line from Bryan's debate about Austrian economics.

Substantively, though, I would disagree with Bryan on the issue of entrepreneurship. I do not think of entrepreneurship in terms of search theory. In From Poverty to Prosperity, we describe the role of entrepreneurs as overcoming resistance to change.

I also recommend Boettke's answer to Alex Tabarrok's question in this segment. He chides Austrians for betting on Clower and Leijonhufvud rather than Lucas. One can argue that I am making a similar bet. However, don't push me too hard on what Clower and Leijonhufvud really meant. I have a hard enough time keeping straight what I really mean.

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CATEGORIES: Austrian Economics

COMMENTS (11 to date)
Eric H writes:

But I wanted to publish in "Everyone Thinks I'm Insano Home Journal"...

dullgeek writes:
I do not think of entrepreneurship in terms of search theory.
I've often attributed a quote to you that I remember reading in one of your blog posts or possibly on TCSDaily. I can't find the article anymore, here's the quote "Markets are a discovery process".
  1. Is the attribution right?
  2. If so, how is that different from entrepeneurship as search theory?
Greg Ransom writes:

It may be a funny line, but it's a dishonest argument.

Greg Ransom writes:

Hayek explained how there was a many-many problem blocking the reduction of sensory categories like "blue" to physical categories like particular wave lengths of light.

This argument is also in Kuhn, and similar many-many arguments against reduction are found in David Hull.

This stuff is hard and a lot of people don't understand the lessons to be learned from it for all sorts of intellectual endeavors.

The same can be said about Hayek's knowledge problem and the incompetence of most economists when it comes to understanding the lessons to be learned from Hayek's work on in this area. Compare Kirzner on Hurwicz' Nobel Prize winning work largely inspired by Hayek's work in his area.

Greg Ransom writes:

Caplan's "blue sky" argument is essentially dishonest because what actually happens is more like this: "most people say the world is flat, you've given an argument for why the world is round and you've calculated its circumference -- and in doing this your argument has the exact same form as an argument first provided by Hayek (only it turns out Hayek did it better, and you are falsifying your answer in particular ways, such as c,d, and f)."

Greg Ransom writes:

Or it goes something like this, "most people say the world is flat, but you've produced sophisticated technical work explicitly referencing Hayek or explicitly inspired by a train of work in economics by Hayek's adding at the margin to an assumed background understanding of the larger explanatory project of economics were Hayek's work sits in the middle of that background understanding -- except there are unsolved problems getting your formal technical work to work consistently with this background understanding -- and some of these problems are actually insuperable, and the better job of it is actually done by the assumed larger background explanatory project, rather than by your fancy formalism (which is GREAT as a project in publish or perish, but not so much at contributing to the larger project we actually care about)."


Greg Ransom writes:

"the sky is blue" can also simply mean "hey, welcome to the party -- the water is fine and the pool is big, have fun .. ".

George writes:

[Can people who aren't Greg Ransom still comment?]

Toward the end of the "Blue Sky" passage, Bryan starts waving his right hand in a big circle. Was this an attempt to cheat by using Jedi mind tricks? If so, did it work? Or was the audience mostly Toydarians?

Vangel writes:

The argument seems to be that one should go with the more popular theory, even when it is wrong.

Vasile writes:

Re: "Markets are a discovery process"

"Competition as a discovery procedure" is the (translated) title of a Hayek's lecture given in 1968.

And it starts with:

It would not be easy to defend macroeconomics against the charge that for 40 or 50 years they have investigated competition primarily under assumptions which, if they were actually true, would make competition completely useless and uninteresting.

I'll keep my statement about the appropriateness of the "Blue Sky" putdown until I watch the debate. If.

Jorge Landivar writes:

"we describe the role of entrepreneurs as overcoming resistance to change. "

I think I have to disagree there. The role of entrepreneurs is one of a genetic algorithm for finding the right answer. Entrepreneurs push and take the risks. We end up with winners and losers. The winners continue and carry on their ideas and methods.

This is why bailouts, corruption, and politicization are so incredibly bad and dangerous for the economy. They change the economic calculation that is happening, by changing what it means to be a winner and a loser.

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