He writes: "There are two types of people: those who read Hayek and Bastiat and think 'wow,' and those who think 'meh.'"
He's talking about The Uses of Knowledge in Society and What is Seen and Unseen.
I definitely see where he's coming from. And I think it largely depends on whether you come across Hayek and Bastiat before or after you know a respectable amount of economics.
They write about important
issues, to be sure. But from the perspective of an economist, they write about issues that are pedestrian insofar as they already form the core of an economists' view of things. Bastiat at least had the advantage of coming well before the modern work on opportunity cost, but Hayek's point had been made many, many times. What Hayek could be said to have added is a little poetry and re-enchantment, perhaps.
So if you already know a respectable amount of economics, and you see these guys say it once again, your thought is more likely to be "meh".
If you are introduced to economics through blogs or people that like Hayek and Bastiat a lot, perhaps the reaction is more likely to be "wow".
That's fine. Economics is an exciting field so its good that people find it exciting when they come across these authors.
The trouble comes in, I think, when those promoters of Hayek and Bastiat tie economic science to political libertarianism and when they tie these ideas to the idea that "mainstream economists" reject Hayek and Bastiats' points.
Tuesday, October 16, 2012
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Hayek's thesis in "The Use of Knowledge in Society" was unique at the time he wrote it, so this sentence is completely misleading,
ReplyDelete"Bastiat at least had the advantage of coming well before the modern work on opportunity cost, but Hayek's point had been made many, many times."
Well, I think both "What Is Seen and Unseen" and "The Use of Knowledge in Society" are great. "The Use of Knowledge of Society" is the good markets-are-powerful Hayek--as opposed to the bad markets-are-feeble-and-can't-adjust business cycle Hayek or the very bad let's-shoot-lots-of-people-in-stadiums Pinochet-loving Hayek. And Bastiat--he believes in expansionary fiscal policy to cure high unemployment...
ReplyDeleteBrad DeLong
"They write about important issues, to be sure. But from the perspective of an economist, they write about issues that are pedestrian insofar as they already form the core of an economists' view of things. "
ReplyDeleteSame with Keynes. Same with Menger. Same with Walras. Same with Fisher. Same with etc etc. All dead economists who contributed in their day have been absorbed into the discipline and now seem pedestrian. I'm not sure why you single out Hayek.
My point, at least, is that Hayek doesn't seem to have been developed on.
DeleteDaniel, did you read Blaug’s article “Hayek Revisited”? He might have a similar point to yours:
ReplyDelete“(…) why did his interest in the concept of spontaneous order and the history of the doctrine of unintended social consequences undergo very little development after the 1960s? All of his political writings are in fact amazingly repetitious, exploring a small number of big themes which, however, are not further refined or extended in new contexts. As organizing concepts, Hayek himself failed to realize them.” (p. 53)
http://www.tandfonline.com/doi/abs/10.1080/08913819308443288#preview
The point of Hayek's "Uses of Knowledge in Society" is to restate points made by earlier marginalist economists without leaving open obvious problems by making too many assumptions. Most importantly, he makes the point about prices signaling without depending on overall general equilibrium, on perfect markets or on the labour theory of value. As I understand it earlier statements of the same idea are either quite woolly or depend on one or the other of these ideas.
ReplyDelete"The point of Hayek's "Uses of Knowledge in Society" is to restate points made by earlier marginalist economists without leaving open obvious problems by making too many assumptions. Most importantly, he makes the point about prices signaling without depending on overall general equilibrium, on perfect markets or on the labour theory of value. As I understand it earlier statements of the same idea are either quite woolly or depend on one or the other of these ideas."
DeleteI think this is especially important important given that many textbook authors think that what authors like Hayek and Smith have been saying has been impeccably stated and summarised by the Welfare theorems of General Equilibrium Theory and thus their veracity naturally subject only to the very same strong assumptions regarding market structure and agent's perfect knowledge and "rationality." This is ironic given the efforts of authors like Vernon Smith to show just how far a mis-interpretation this is, and rather how Smith's and Hayek's vision of a market coordinating actions and allowing for the emergence of prices among mutually mal-informed traders in sparsely populated markets nevertheless actually has a far greater congruency with the findings of experimentalists over the past few decades. He makes this point very well I think in his paper on what he calls the Hayek Hypothesis. ( See Smith, Vernon L. “Markets as Economizers of Information: Experimental Examination of the “Hayek Hypothesis”.” Economic Inquiry XX (April 1982): 165–179.)
That many Austrians have not picked up on this (Peter Boettke is a notable exception) very much perhaps can be explained by an unfortunate reluctance to look into the experimental literature influenced by their belief in the praxeological method (though I see no reason why this should necessarily be the case).