Then I have a slide at the end to motivate discussion until the end of class. I thought you all might be interested in it. We talked about Vernon Smith when we discussed "modern Smithians" in the Adam Smith lectures, so they are familiar with constructivist vs. ecological rationality.
The important things for me are for them to understand Hayek is making more than just a libertarian claim - he's making a claim about spontaneous order and planning. Second, I want them to just think through all the things economists have said that we've discussed and how it applies to the Fatal Conceit quote, and third I want to challenge them to not take Hayek at face value.
Exactly why isn't a radical change to the evolved social order like libertarianism in flat contradiction of the point Hayek is trying to communicate here?!?!
Most of the lecture is straight up ABCT, but I think this will be a discussion they will be more interested in ending with.
I do think it is somewhat ironic for Hayek to say that, given how ABCT names the blunder of the monetary authority as the cause of the boom-and-bust, yet doesn't quite explain the recovery process very well. This is why I think ABCT is better described as ABCS (Austrian Business Cycle Scenario).
ReplyDeleteIn any case - I don't claim to be an expert on Hayek, but isn't there some dispute over the final product of the The Fatal Conceit?
#2 is a leading question intended to implant the idea that it is indeed ironic for Hayek to have said that. It's fine with me if you believe that it was, but shouldn't an educator avoid making statements that carry that level of subjectivity?
ReplyDeleteOf course it's leading! How else would I get them where I wanted them to go?
DeleteI ask leading questions all the time. On this particular leading question (unlike any other leading question I've asked this semester), I did preface with a sheepish "this may be my own political philosophy shining through, but..."
I'm fairly comfortable with how it all went. We raise criticisms of everyone we cover, except maybe some obscure guy like Dupuit that I spent one slide on.
I agree with Ryan's goal, but it is unattainable. Just by picking certain economists, a history of thought course has a bias.
Deleteeconpointofview.com -- I agree that total objectivity is an impossible ideal, but disagree that this fact makes it something that ought not be aspired to. Some forms of bias are easy to avoid.
DeleteIn what sense do you think I'm biased?
DeleteAm I biased because I'm presenting the Lucas Critique the last day of class?
This whole line of argument is stupid I think. Maybe you disagree with the case but I think that's different from saying that my point is subjective. It's not subjective at all. Subjective is "I think Hayek has beautiful prose".
With regard to history and bias...isn't there some degree of bias that is inherent in many types of accounts? (I'm no psychologist, but IIRC, the human memory tends to interpret experience in relation to the self, and can be selective. This selectivity tends to overemphasize some aspects and underemphasize other matters.)
DeleteFollowing up on Ryan's question, I wonder Daniel when you are explaining Austrian theory, do you move your hand around in circles next to your head and go, "Coo coo, coo coo." ?
ReplyDeleteOf course, I am sure you would not have thought the way I taught Keynes or Sraffa to my Hillsdale students was objective, either! I am being serious, I am sure we both think we are being neutral and that we both would disagree that the other guy was, in fact, neutral.
I danced around the room when I said "coo coo, coo coo". I find a dynamic classroom helps learning.
DeleteSeriously though, there were some things that I criticized and some things I didn't like any of our talks. I think I stuck fairly close to the literature on that though. I said the Cantillon effects hold up better to criticism than Ricardo effects which I think is a fair reading of the last three quarters of a century or so. I made the case that it is stronger as a capital theory than it is as a business cycle theory, which I think is me being generous relative to what the literature says.
DeleteI did present the plucking model but not the response to it. I presented the co-movement counter-argument, but DID present Garrison's response to that.
At the beginning I gave a lay of the land of the history of the Austrian school (1st, 2nd, 3rd gen and modern splits), which was all positive. I did caution that a lot of what's out on the internet today is outside the perimeter of peer review, often done by amateurs, so that you need to be more careful in your consumption of this sort of economics. I also said you have to be careful because it is tied up in political ideology in a way that most other schools of thought aren't. But I emphasized there is excellent positive Austrian science out there - just that you need to be aware of what you are reading.
Not sure you were looking for all that but you may be interested in it.
How can Austrian science be "tied up" in political ideology? Is it not a wertfrei science? It may be that those who are Austrian economists tend to be affiliated with a particular political philosophy, but this doesn't mean that the science of Austrian economics is itself tied up with political philosophy.
DeleteHumility is the answer to your worry, Bob.
Delete@Ben Busby: "How can Austrian science be "tied up" in political ideology? Is it not a wertfrei science?"
Delete"Claims to be" does not equate to "is."
"At the beginning I gave a lay of the land of the history of the Austrian school (1st, 2nd, 3rd gen and modern splits), which was all positive. I did caution that a lot of what's out on the internet today is outside the perimeter of peer review, often done by amateurs, so that you need to be more careful in your consumption of this sort of economics. I also said you have to be careful because it is tied up in political ideology in a way that most other schools of thought aren't. But I emphasized there is excellent positive Austrian science out there - just that you need to be aware of what you are reading."
DeleteExcellent. You are doing a great job of teaching how one ought to in a disputed realm. Unlike, say, professors I know of who give students extra credit for attending FEE lectures, which is clearly advocacy, not teaching.
I can't help but feel this isn't a very careful reading of Hayek. Having just taught about the entirety of the CoL, one of the frustrations many of my students had was how little he gave in terms of specific policy prescriptions, sticking instead to general principles and whathe application of them might look like, always emphasizing that the specific application will depend on the circumstances of the particular situation.
ReplyDeleteIn both Individualism, True and False, and in the CoL postscript, he emphasizes the importance of starting reform efforts from the present state of affairs. Much unlike Friedman, who comes in with all sorts of specific policy recommendations without any worry about context.
Hayek's quote can certainly apply to a large swath of Libertarianism, but I think you've left your students with an inaccurate description of Hayek. Which is fine if you want to use Hayek as a representative of 'Libertarianism' but problematic if you were aiming at accurately conveying Hayek (not that Hayek was always perfectly consistent, but there is more hedging in Hayek than most people I've read-a source of a lot of consternation among his contemporary allies).
Not that a careful approach leads to a careful reading. As I read through the history of Urban Planning, I see all sorts of examples of people doing careful complex social analysis, only to have people with values completely antithetical to the analyst pick up a few ideas and ignore everything underlying it. That's why you get authoritarian governments I implementing the ideas of anarchists (with results about what you would expect).
DeleteI'm a little confused (or maybe you're confused about what we discussed). We talked at length about gradual, case-specific change. We talked about the frictions with other Austrians on this point. We talked about the generality norm which is at least somewhat related to your issue of general principles applied to specific cases when making decisions.
DeleteSo I don't think I'm inaccurately presenting Hayek. We mad a big deal of all this stuff (even given that most of the lecture was on business cycle theory!). I don't see how you can talk about Hayek's political philosophy without reviewing these things.
I am guessing you and I just disagree on how, even while making these points, Hayek prescribes a far more radical change than many of the people he was criticizing on these grounds. That is indeed ironic.
He's obviously no Rothbard. He obviously talks at length about this stuff (that's the whole point of raising the suspicion of constructivist rationality).
You seem to think I'm arguing against the idea that he made these points, and I'm not sure why. That was the whole point of the slide and the discussion.
IN FACT, I think the best evidence that I made precisely the point that you are suggesting I didn't is that as the discussion went on some students were suggesting he would support the bailouts because he did not want a radical departure from a given social order!!! At that point I had to reel it back and say that we are probably on thin ice and have pushed it too far if we're arguing that he would have supported the bailouts (maybe I'm wrong on that).
DeleteSo no, I think we covered your points just fine.
I think you just disagree with me that there's some lingering irony here.
Insert Pinochet reference, you know?
When Margaret Thatcher has to walk you back and remind you that we need to keep the emergent democratic institutions in mind and let good policies evolve slowly, it is not crazy for me to argue that there is some irony in Hayek making these points, given Hayek's own policy views.
Hayek may likely have opposed the bailouts, but I don't think his political philosophy proscribes them. As long as he was convinced the bailout was aimed at improving the well being of people in general rather than the people being bailed out in particular, and as long as the discretionary authority was triggered by some objective standard or some vote rule, he allows quite a bit of discretionary authority in emergencies. In other words, if the bailouts were aimed at saving the institution of financial intermediation rather than helping out particular firms, they would be allowed in his system. The same way he allows the possibility of a military draft in particular circumstances.
DeleteA Hayekian opposition to the bailouts would have had to be fought on the facts of the bailout outcomes versus the counterfactual. If the average person would have been better off with short term discretionary authority to spend, Hayek has no grounds of opposition. He might fight on the counterfactual, and question the possible quality of the response, but if those hurdles are passed he has little ground to oppose the bailouts.
If Hayek were a Keynesian in macroeconomic beliefs, he would have different positions on the role of the state in macro, at least as far as his political philosophy is concerned.
He may very well have been inconsistent re: Pinochet, and your description of the lecture seems fair. I was going off your comment that you mostly covered ABCT. My apologies for the misunderstanding.
The point of this slide was to get at all the issues you raise - that line and a motivating point tying it back to Smith and cosntructivist rationality tees up a lot of that conversation, doesn't it? That was the intent at least and that's when it came up in discussion. Clearly we didn't go into the detail you guys did, but we had been over constructivist and ecological rationality before and emergent order in Smith, so the concepts weren't new to them either - they were able to pick up where we had left off elsewhere.
DeleteI was frustrated with myself - I blanked and couldn't come up with the term "generality norm" in the middle of class. But did discuss the concept :)
DeleteThe argument about exactly *what* is appropriately dealt with by evolution and what is fair game for design is very tricky. There are very different views on the subject. Ever since Hayek there have been papers written about this taking very different views, often in complex ways. In some ways the debate mirrors a debate on evolution itself, that is, are mechanisms that produce evolution also evolved? It's something that deserves much more time than people give it.
DeleteWe can agree that President Maduro seizing toilet paper factories is on the wrong track. But, what about the healthcare.gov exchange in Obamacare? Is that too much top-down design?
"Exactly why isn't a radical change to the evolved social order like libertarianism in flat contradiction of the point Hayek is trying to communicate here?!?!"
ReplyDeleteI'm wondering if you think that this argument would apply just as easily to liberalism 400 years ago, democracy 300 years ago, abolition 200 years ago, or the welfare state 100 years ago? I very much think of libertarianism as much, much less radical than any of these, but a 17th century Hayek would certainly be expected to be a liberal, an 18th century Hayek certainly a democrat, a 19th century Hayek certainly an abolitionist, and a 20th century DID very much support a welfare state. I don't really see how it would not be expected that a 21st century be a libertarian.
"Exactly why isn't a radical change to the evolved social order like libertarianism in flat contradiction of the point Hayek is trying to communicate here?!?!"
ReplyDeleteOh, I don't know, maybe it is because he's referring to a positive science rather than norms, or that he isn't attempting to cross the is/ought gap as you are here. Or perhaps it's because Hayek wasn't a libertarian, or that maybe he wasn't the clearest thinker in political philosophy. Then again, maybe you aren't the clearest thinker, perhaps you're injecting your ideology into a incompatible realm, or you're just dishonest.
There's lots of moving parts here, so who knows? But one thing that I do know is that you have just wasted about 5 minutes of my time. Good day.
Somebody's in a mood today...
DeleteNice slides!
ReplyDelete"Exactly why isn't a radical change to the evolved social order like libertarianism in flat contradiction of the point Hayek is trying to communicate here?!?!"
ReplyDeleteYou are absolutely right, it is.