Re: Austrians and markets
What certain institutions does Science lack that markets have? _ John-Charles Bradbury, Ph.D. Department of Economics The University of the South 735 University Ave. Sewanee, TN 37383 -1000 Phone: (931) 598-1721 Fax: (931) 598-1145 E-mail: [EMAIL PROTECTED] - Original Message - From: Peter Boettke [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Monday, November 26, 2001 9:19 AM Subject: Re: Austrians and markets Mark, I am surprised you would be making this argument ... do you believe that the market for legislation is efficient because it exists? Whatever is, isn't necessarily efficient. The market for ideas in economics is a distorted market. Fads and fashions come and go all the time. Science is not like a market because it lacks certain institutions which are the backdrop against which markets operate. Nobody ever said individuals pursuing their self interest, under whatever conceivable set of institutions you could imagine, would generate a desirable social order. The invisible hand postulate is specified within an institutional environment. Of course, some really fascinating research has been done on the application of invisible hand processes to the framework itself. I have a paper with Bill Butos which examines the nature of science and its relationship to entrepreneurship and if anyone is interested just send me an email and I will send you the attached file. Pete Boettke
Re: Austrians and markets
The institutions of property, prices and profit and loss are at best approximated in science --- we have at best attenuated property rights, etc. The coin of the realm in science is pretige and reputation. It is not necessarily a cash nexus, though of course some drug research etc. does have this implication -- but we were talking about economic science originally. I highly recommend Kenneth Boulding's work on the waste of resources in intellectual markets --- paper can be found in his Collected Writings edited by Fred Glahey. Pete Prof. Peter J. Boettke, Deputy Director James M. Buchanan Center for Political Economy Department of Economics, MSN 3G4 George Mason University Fairfax, VA 22030 Phone: 703-993-1149 FAX: 703-993-1133 Email: [EMAIL PROTECTED] HomePage: http://www.gmu.edu/departments/economics/pboettke Editor, THE REVIEW OF AUSTRIAN ECONOMICS
RE: Austrians and markets
Actually, I am not making (or trying to make) an argument, I am simply interested in responses from this list given the range of ideologies. I agree wholly with previous statements made on this list that Austrian economics has made large contributions to economics. My question deals more with one I posed to Don Lavoie last year: Is there a need to differentiate Austrian economics from the rest of the profession? I understand and accept Pete Boettke's arguments, most notable of them pertaining to the sins of omission and commission. But is there a viable market niche for Austrian economics? This might simply be deemed an empirical question, so I ask in large part because there are really only two schools that specialize in Austrian economics for undergraduates and only one for graduates, at least that I am aware of. (By specialize I mean that they promote it as one of their market niches, not just that they offer a course or it is promoted as part of a larger class.) Does this limit the choices of these students when they graduate, either as undergrads or grads? In a similar vein, there is a market niche for the Libertarian party, but obviously it is not a viable party in that it can never sell itself well enough to garner more than one percent of the vote, notwithstanding that I fully believe their tenets. Does maintaining their separatism help or does it hinder good ideas from being incorporated into mainstream thought? Mark Steckbeck On 11/26/01 10:19 AM, Peter Boettke [EMAIL PROTECTED] wrote: Mark, I am surprised you would be making this argument ... do you believe that the market for legislation is efficient because it exists? Whatever is, isn't necessarily efficient. The market for ideas in economics is a distorted market. Fads and fashions come and go all the time. Science is not like a market because it lacks certain institutions which are the backdrop against which markets operate. Nobody ever said individuals pursuing their self interest, under whatever conceivable set of institutions you could imagine, would generate a desirable social order. The invisible hand postulate is specified within an institutional environment. Of course, some really fascinating research has been done on the application of invisible hand processes to the framework itself. I have a paper with Bill Butos which examines the nature of science and its relationship to entrepreneurship and if anyone is interested just send me an email and I will send you the attached file. Pete Boettke -- End of Forwarded Message
Re: Austrians and markets
Hello? If the history of the twentieth century is not an undeniable argument against the hypothesis that the market for social science is not efficient then what is? Alex -- Dr. Alexander Tabarrok Vice President and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621-1428 Tel. 510-632-1366, FAX: 510-568-6040 Email: [EMAIL PROTECTED]
Re: Austrians and markets
What do you mean by the history of the 20th century being an argument for efficiency? Keynesianism --- 1930-1980 --- pretty good run. Market socialism --- 1936-1985 --- pretty good run. Market failure theory, with a benevolent despot --- 1920s -- 1960s --- pretty good run. I am confused. Do you think that market oriented ideas rule the academy today? Do you think that the economics that is published in the AER today is better than the economics published in the J of Law and Econ in the 1960s? Is progress in economics clearly evident? The above three examples were given in the realm of ideas, how about the staying power of these ideas in the policy world --- Asian crisis --- what is the popular policy wonk explanation --- a Keynesian one; how about environmental goods? --- market socialist proposals. Do you all really believe public choice is in the blood of every economic theory penned now-a-days? Lets move on from economics --- how about political science, sociology, anthropology, history? Of course there have been good trends that we like, but there have also been a lot of bad trends --- extreme versions of post modernism come to mind!!! I am confused by the standard of success --- predictive power? acceptance by the mainstream? illumination? policy impact? WHAT IS THE MEANING OF EFFICIENCY IN THIS CONTEXT? And by the way, if you were to name 5 economists who influenced the direction of economic policy away from the failed policies of the past who would they be? Here is my list: Mises, Hayek, Friedman, Buchanan and Coase. Note that only Mises is not a Nobel Prize winner --- 3 of the names could be claimed to be Austrians and a fourth was a student of Hayek (Coase) and a fifth was a life-long friend and involved with the Mont Pelerin Society with Hayek. Not bad for a school of thought which has nothing to say.
Re: Austrians and markets
Yes, I was refering to the Boulding article you mention -- perhaps we read it differently. Second, I think there are several reasons why Austrians have difficulities --- some self-induced, others as a consequence of other issues. Public choice scholars should realize that for a long period of time, public choice scholars were wedded out of the process --- consider the situation at UVA --- as well. Memory shouldn't be so short. Gordon Tullock published a book a few years ago made up of his rejected pieces --- as he has said on more than one occassion, his original rent seeking piece took for ever to get published and when it did it was in the Western Economic Journal -- not exactly a hotbed of prestige. So fads and fashions are cyclical. Austrian arguments at one time were more widely accepted -- say in the 1930s, and they have been resurrected a bit in the 1980s with the collapse of socialism. As one indicator, look at the articles in the JEL that address Austrian arguments since the mid-1980s --- Kornai's piece on reform in Hungry, Heilbroner's piece on modern economic thought, White and Selgin on Free Banking, Caldwell on Hayek, and Kirzner on the Austrian theory, and even this past year the paper by Ostroy on the market and creative competition. So by that representation, the claim that Austrians have been shut down in the professional discourse is dubious. No doubt a certain style of Austrianism has been shut down, but for good reasons largely. Nevertheless, it is true that Austrians have a difficult time getting a hearing and that is because: (a) they reject the standard language of economics and its method --- along with McCloskey Austrians have long argued that statistical significance and economic significance are not the same thing (making neither one very popular); and (b) they tend to focus their attention on big think questions which few scholars are really capable of doing anything with --- the fact that a Hayek or Mises, or a Buchanan or a Sen, or an Adam Smith, can tackle the big ideological questions doesn't mean that people who read them can do so in a progressive research program fashion. Thus, many individuals attracted to Austrian economics attempt to tackle questions which they cannot really address given their talents and experience. We would do better if people took smaller projects and did them in a serious manner --- I would opt here for more economic history being written by Austrian inspired folk, and more detailed institutional analysis in the policy work. Third, the market for economic ideas is not a market in the same way that the market for computer software is. This is an empirical claim on my part, and the reasons I would give is that in academic life (following Bryan Caplan) people don't have to pay for holding rather silly ideas. Paul Krugman, who by any measure is a more successful economist than any free market guy currently working in the academy, wrote after September 11th that the attack might actually be good for the US economy. OK -- so much for good economics winning the day. Krugman has taught where? --- MIT, Stanford, Princeton, and he has won what? --- the JB Clark Award. OK --- Joseph Stiglitz is the most important theorist of his generation (something I actually think he deserves credit for), but nevertheless, he has argued that the minimum wage does not present a problem (actually he argued that in his position as a politician while in his textbook he presents the standard argument), but he did seriously argue that capital controls would solve the world financial problems. He has taught where? Yale, Princeton, Stanford, Columbia. He has won what? JB Clark, and Nobel. Do you really think that Mancur Olson, Gordon Tullock, James Buchanan, Ronald Coase, etc. have had the sort of academic prestige throughout their careers as say William Baumol?! Of course not. Olson was denied tenure and had to leave academics before U of Maryland picked him up, Tullock, Buchanan and Coase were basically forced out of UVA. Why? Because they were bad economists?! No, because of fads and fashions and the politics of prestige within the academy. So the Austrians, with the loss of the NYU program, no longer have a presence at a major research university --- only GMU (and even there it is diminshed from what it once was). Does this mean the Austrians have somehow failed the market test. Well, yes and no. At the same time this has happened, a stream of Austrian books have been produced -- some of which have even gotten some pretty good recognition. Articles by Austrian scholars appear in journals all the time --- maybe not in the AER, but in the professional journals. Some Austrians even get some wide recognition within the profession and Austrian arguments are recognized by leading scholars as having some merit --- I am particularly thinking here of Andrei Shleifer who in my opinion is doing the most interesting market-oriented work in a major
Re: Austrians and markets
Don't you think there is a difference between efficiency in the intellectual arena and truth? I think that intellectual institutions are fairly good at allocating resources to efficiently produce normal science - ie, science that refines and explores a given view of the world. Truth may require abandoning a whole viewpoint - and that seems on the surface, at least, to be a very inefficient activity. Fabio On Mon, 26 Nov 2001, Alex Tabarrok wrote: Hello? If the history of the twentieth century is not an undeniable argument against the hypothesis that the market for social science is not efficient then what is? Alex
Re: Austrians and markets
Sorry, double negatives confuse me. I mean of course that the history of the twentieth century (Marxist-Leinism, communism, fascism etc.) is an argument against the efficiency of the market in social science. alex Alex Tabarrok wrote: Hello? If the history of the twentieth century is not an undeniable argument against the hypothesis that the market for social science is not efficient then what is? Alex -- Dr. Alexander Tabarrok Vice President and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621-1428 Tel. 510-632-1366, FAX: 510-568-6040 Email: [EMAIL PROTECTED]
Re: Austrians and markets
From: Mark Steckbeck [EMAIL PROTECTED] Reply-To: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: Austrians and markets Date: Sun, 18 Nov 2001 10:32:32 -0500 A colleague who had run and managed businesses in a previous life recently asked me to name a management strategy based on Austrian theory. There are numerous possible answers such as spontaneous order and all but, after considering that another colleague who happens to be both a musician and an avid Austrian once told me that the market for music was wholly inept and inefficient in that it did not see the best musicians rise to the top--namely I suppose, him--as well as the recent post by Dan Klein pertaining to changing the name of the school (let's put the old wine in new wineskins), the following struck me: If Austrians believe in the sanctity of the market and market outcomes, how do they view the fact that the market is repudiating Austrian theory and methodology? By the market, do you mean the market for economic ideas? If so, then that's largely untrue. You can't teach econ. above the high school level without marginal utility, for instance. Any serious discussion of socialism, as a means of exchanging goods and services, has to include Hayek's commentary (not a strict Austrian, I know, but still). I would argue that the areas in which Austrian theory has not made headway (business cycle theory, for instance) are, surprise!, areas where Austrian theory is not preferred to other theories. In other words, vindicating the Austrian view, in a meta-economical sense. -JP _ Get your FREE download of MSN Explorer at http://explorer.msn.com/intl.asp
Re: Austrians and markets
I'll rephrase what Sherwin Rosen said in some speeches and articles before his death. He argued that Austrian economics includes a number of ideas, which have varying degrees of acceptance in the market place of ideas. The subjective theory of value is accepted by most economists as are other Austrian concepts such as the price as a signal concept. Some ideas are too big for currrent economics to handle. The idea of a spontaneous moral and economic order is one such big idea. Caplan (where is Bryan when you need him?) has a similar take. He also says that many Austrian ideas have been accepted in mainstream economics but that other ideas are untenable and difficult to defend, like the outright rejection of all mathematical economics. If you take Rosen and Caplan together, then the answer they suggest is that Austrian economics has gotten what it deserves - we take the good and drop the bad. Fabio If Austrians believe in the sanctity of the market and market outcomes, how do they view the fact that the market is repudiating Austrian theory and methodology?
Re: Austrians and markets
--- Mark Steckbeck [EMAIL PROTECTED] wrote: the recent post by Dan Klein pertaining to changing the name of the school (let's put the old wine in new wineskins) Mark Steckbeck I think your interpretation of Dan Klein's proposal is not what he intended. As I understand it, the proposal is not just to rename the school, but to create a new movement composed of Austrians as well as other pro-freedom scholars not affiliated with Austrianism, but also also not glued to the mainstream formalist methodology. The institutions (societies, journals) would be based some of the current Austrian ones because these are the major free-market ones that currently exist and that could create the basis for the new movement. This would not just be a new wineskin but a new vintage of wine. Fred Foldvary = [EMAIL PROTECTED] __ Do You Yahoo!? Find the one for you at Yahoo! Personals http://personals.yahoo.com
