Arnold Kling  

Austrian Resurgence

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The Wall Street Journal profiles GMU's Pete Boettke.

The resurgence of Austrian economics does have its hazards, Mr. Boettke says. The antigovernment fervor on cable-television shows and the Internet may have popularized its theories, but it also "reinforces the idea to critics that these are crackpot ideas," he said...

Mr. Hayek rightly warned of the dangers of central planning, Mr. Boettke says, but "he didn't give a prescription for how to move from 'serfdom' back."

Read the whole thing.

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CATEGORIES: Austrian Economics

COMMENTS (5 to date)
Doc Merlin writes:

So, we need a guide. "From serfdom to Freedom." Hrm, some ideas on how to do such a thing would be great.

"Kristian" writes:

It remains a fact that the only "positive" theory of a libertarian revolution is SEK3's agorism.

Rebecca Burlingame writes:

Doc, we need your help, before Austrian theory succumbs to the nonsense of TV! A book is in order from you, no?

David B. Collum writes:

My read of Hayek's work says that he was a fan of rules. He even alludes to the merits of rules that are seemingly arbitrary. I always interpreted this view articulate in "The Fatal Conceit" as a deep seated belief that you do indeed need a referee with a whistle on the field and you need rules that do not change. It doesn't matter if the field is 100 yds long, only that the length is a constant.

So, in my opinion, the risk is that Austrians get hung with the anarchy label. Rules are good; commandeering the machinery of government to tilt the playing field in your favor is not.

Curt Doolittle writes:

Back From Serfdom?

(Apologies for length.)

Hayek didn't solve the problem of social science. He gave us the right warning but no meaningful prescription other than to rely upon what we already knew.

Liberty is the desire of the minority, because the minority participates in the market. The majority lives off it, but does not participate in it, and is often frightened of it, or simply wants to avoid the dirty reality of building one's life to understand and satisfy the wants of others, and to risk one's capital to test one's judgement.

Mises, Hayek and Parsons all failed. The conservative sentiment remains a sentiment only, and not an unarticulated rational philosophy. It remains allegorical and historical. This is why it cannot easily win a rational battle against the various forms of positivism aligned with marxist and collectivist sentiments.

Austrian calculation and incentives combined with human cognitive biases and the properties of memory are a necessary and sufficient means of articulating the conservative and libertarian sentiments into a rational political order.

The structure of the answer to our problem is in Austrian Theory. It's just incomplete. Because our political methods rely upon debate and rhetoric without sufficient data of the right kind and complexity that would allow us to move beyond the convenient contrivance of the DSEM model and to permit human beings to rationally make political decisions based upon something other than the tyranny of the majority resolved through the artifice of irrational sentimental political debate, unbounded by the practicality of hard money, and the difficulty of borrowing hard money.

Calculation and Incentives are why the Recalculation Story is the correct analogy. But without rational, causal, articulation, it remains an allegory, and is an insufficient argument relying on explanatory power, rather than causal definitions.

There must be a way to combine knowledge of a nation's market practitioners the way that the market does, and put it in the hands of politicians. We need politicians because if we are to pool our resources (if only to defend ourselves and our property from the barbarians and the proletariat) then there is a scarcity of resources to apply to infinite political choices.

Past civilizations failed because law, rhetoric, bureaucracy and religion were insufficient means of coordinating a large division of knowledge and labor. They failed to create property and institutions sufficient for managing their resources and for forecasting their use.

Thankfully, we already have the model of banking and credit. We've just allowed banking and credit to embrace precisely what we have warned politicians from embracing: the error of aggregation, called 'pooling' in fixed categories inherent in our current accounting technology, which is further enabled by an erroneous application of probabilism that violates the primary principle of property: it's dependence upon knowledge of it's dynamic utility.

This is too deep a topic for a posting: Hayek identified the problem but not the solution. We have a solution. We have the technology to implement it. It's implementing it that's now the problem. The fundamental problem for any civilization is increasing the granularity of economic calculation and keeping the temporal pace of their categories of measurement with the dynamism of their utility. In addition, if we are to have the self-insuring system of fiat money, then we must also have a means of capturing knowledge of lenders, and practitioners that was inherent in hard money. Then, possessed of that means, alter our form of government to take advantage of that knowledge.

So Hayek was right. Kling is right. But they answer to WHY they are right has not yet been articulated.

And the truth is, that since freedom is a minority sentiment, it is very difficult for such changes to be implemented in a polity. Even if it would satisfy the opposing side's materialist desires. Because it would not satisfy their desires for status parity.

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