Wednesday, July 24, 2013

I think this really qualifies as irony

"But, except among Marxists, who remain amongt the most historically literate among political economists, however, the Austrian argument that suppression of market institutions inexorably produces calculation chaos remains unfamiliar to mainstream economists..." -- John Gray, "Contactarian Method"

This is something I've noted often in the past: Marxists understand the importance of Mises and Hayek far more than do most mainstream economists.


  1. Hazlitt wrote:

    On the basis of this single achievement, the late Oscar Lange, a Marxist economist who later became a member of the Polish Politburo, once proposed that future socialists erect a statue to Ludwig von Mises. Said Lange: “It was his powerful challenge that forced the socialists to recognize the importance of an adequate system of economic accounting to guide the allocation of resources in a socialist economy.”

  2. After citing Keynes rant about stupid speculators and a disobedient business world Hazlitt writes:

    „… Keynes does not flinch from drawing the logical conclusion: “I [Keynes] conclude that the duty of ordering the current volume of investment cannot safely be left in private hands” (p,320).

    Whoever controls investment controls the directions and nature of production – decides what is to be made and sold and what is not, what consumers are to be permitted to have and in what volume. And Keynes does not shrink from this corollary wither (except for a certain lack of clarity and candor) but begins to talk lightly of supporting “all sorts of policies for increasing the propensity to consume” (p. 325), and redistributing the wealth. “in existing condition … where the volume of investment is unplanned and uncontrolled, subject to the vagaries of the marginal efficiency of capital as determined by the private judgment of individuals ignorant or speculative” the least he would support is “a socially controlled rate of investment” (pp. 324-325).

    All this implies, once more, not only that entrepreneurs, businessmen, investors, and speculators are ignorant, mercurial, and irresponsible, but that there exists a class of people (perhaps economists very much resembling Lord Keynes) who are completely informed, rational, balanced, wise, who have means of knowing at all times exactly how much investment is needed and in exactly what amounts it should be allocated to exactly which industries and projects, and that these managers are above corruption and above any interest in the outcome of the next election.“ Hazlitt TFotNE (page 323 -324)

    Obviously a point that Marxists really have better understood than Keynesians (Marxists at least try to answer that question), it seems even to this day. My search for the process that explains how at least this “socially controlling of the rate of investment” should actually work and set up a capital structure in accordance with the value scales of the market participants was completely in vain so far*1. Nothing in Keynes GT, or no answer from any proponent like Daniel Kuehn or of our blogger “Lord Keynes” so far when I already repeatedly asked that question with different phrasing. Well I keep on looking in Hicks and Samuelsson next.

    *1 I obviously assume that Keynesians at least admit that (yet I rarely hear them pointing this out, rather the opposite with their suggestions that even investing in fake alien defense systems were beneficial now) the structure of capital is important, and that it actually matters a lot if you build air-cons for Alaska and heating systems for Hawaii or the other way around.

  3. *wither* should be *either* of course...


Killing the Spirit

"The more fervently all human energies are thrown into the great enterprise of salvation through world -- immanent action, the farther...