Michael Emmett Brady, “Comparing J.M. Keynes’s and F. Von Hayek’s Differing Definitions of Uncertainty as it Relates to Knowledge,” January 30, 2011.This examines and compares Keynes’s concept of uncertainty with that of Hayek.
Michael Emmett Brady argues that Hayek’s concept of uncertainty and the role of knowledge are quite distinct from that of fundamental uncertainty as defined by Frank Knight and Keynes:
“Uncertainty for Hayek means that each individual decision maker only has a small piece of the puzzle. However, as a whole, the aggregated set of all decision makers have a complete set of all relevant knowledge. There are no pieces missing, lacking or unavailable from the puzzle. Market prices organize and synthesize the aggregate amount of knowledge so that market price signals, understood only by savvy, knowledgeable entrepreneurs, [eliminate] … any uncertainty.” (p. 14)Brady charges that the “Austrian use of the term ... uncertainty actually means dispersed knowledge” (p. 16), which bears further investigation.
“Keynes, Knight and Schumpeter deny Hayek’s claim that the market generates price vectors which concentrate the knowledge so that savvy, knowledgeable entrepreneurs can act on this information and solve the problem of uncertainty. Uncertainty means vital important information is missing. Pieces from the puzzle are missing and will not turn up in the future” (p. 14).
“Hayek could not accept the standard concept of uncertainty as defined by Keynes, Knight and Schumpeter because it would then be impossible for market prices to concentrate knowledge that did not exist. In conclusion, nowhere in any of Hayek’s three articles on Knowledge in Economics in 1937, 1945 and 1947 does Hayek deal with the standard view that uncertainty means knowledge that is not there.” (p. 15).
One of Brady’s major conclusions is confirmed by other scholars who have also noted that the Austrian view of knowledge as fragmented and dispersed through market prices ignores the fact that a great deal of needed knowledge for investment decisions today does not yet exist (Hoogduin 1987: 61), and that the “market process” of Austrian theory is not capable of solving the knowledge problem, given that so much information about future relevant states has yet to be created when decisions are made in the present (Hoogduin 1987: 63). The inability of a decentralised market process to co-ordinate with reliable consistency what dispersed knowledge that does exist, when so much relevant knowledge does not exist with respect to a future that has yet to be created, is a fundamental insight of Post Keynesian economics (Dunn 2008: 140). The Hayekian view of the market as a co-ordinating mechanism in a type of evolutionary process that is capable of dealing with uncertainty and dispersed knowledge is therefore subject to serious criticism. Subjective expectations throw a spanner into the works of this view of the market, as does the non-existence at present of relevant information created in the future.
Brady also discusses G. L. S. Shackle’s break with Hayek over the issue of uncertainty, and points out Shackle saw that “Hayek’s discussion of uncertainty excluded by definition the existence of knowledge that would be unavailable to the entrepreneur.” (p. 8).
BIBLIOGRAPHY
Brady, Michael Emmett. “Comparing J.M. Keynes’s and F. Von Hayek’s Differing Definitions of Uncertainty as it Relates to Knowledge,” January 30, 2011.
Dunn, S. P. 2008. The ‘Uncertain’ Foundations of Post Keynesian Economics, Routledge, London.
Glickman, M. 2003. “Uncertainty,” in J. E. King (ed.), The Elgar Companion to Post Keynesian Economics, E. Elgar Pub., Cheltenham, UK and Northhampton, MA. 366–370.
Hayek, F. A. von. 1945. “The Use of Knowledge in Society,” American Economic Review 35.4: 519–530.
Hoogduin, L. 1987. “On the Difference between the Keynesian, Knightian and the ‘Classical’ Analysis of Uncertainty and the Development of a More General Monetary Theory,” De Economist 135.1: 52–65.
Schinckus, C. 2009. “Economic Uncertainty and Econophysics,” Physica A 388.20: 4415–4423.
The Austrian approach to me appears to be to redefine terms Orwellian style.
ReplyDeleteIt's a fundamental truth of reality that even in aggregate there are thing about the future that are unknown.
LK - thinking about your recent posts defending FRB from Rothbardian accusations of fraud.
ReplyDeleteWhat about maturity transformation - isn't a key argument here that the private non-bank sector desires to hold assets on demand but have long-term liabilities, meaning that FRB simply accommodates this desire by providing the maturity transformation required by the private sector?
I wonder how Rothbardians respond to this point.
Michael Emmett Brady's work has also recently appeared on Gavin Kennedy's "Adam Smith's Lost Legacy" blog.
ReplyDeletehttp://adamsmithslostlegacy.blogspot.com/2011/10/adam-smith-jeremy-bentham-and-keynes.html
Also, Lord Keynes, what do you know about the econophysicists who publish in Physica A (well, they don't just publish in Physica A, but that's the journal I'm mainly familiar with in which they publish in)? What do you make of the econophysicists?
ReplyDeleteNeil:
ReplyDeleteIt's a fundamental truth of reality that even in aggregate there are thing about the future that are unknown.
Austrians do not hold that lack of knowledge of the future can be eliminated. The Austrian principle of human action implies lack of knowledge of the world in both the future and the present.
In Mises' "Human Action" he devotes a chapter to uncertainty, and incorporates the Knightian conception of uncertainty into the general framework of action.
That human actors will forever be uncertain about the future can only be derived through praxeological reasoning, either intentionally, or unintentionally as does Knight, Keynes, and Schumpeter. It is a serious straw man to claim that Austrians deny the Knightian conception of uncertainty.
What Brady is doing is merely making a semantics arguments. He is complaining that Hayek used the "uncertainty" to represent what an individual does not know in relation to what is known in total by everyone, dispersed throughout society.
Hayek, of course, recognized that there exists "vital important information" that is not known by anyone. But this fact is already implied in the framework of praxeology. To say to Hayek "But there exists information NOBODY knows!" does not constitute any refutation of the free market, or even Hayek's use of knowledge framework. That there exists information that nobody knows, obviously applies to EVERYONE ON EARTH, including the individuals in the government. This should not need to be said, but no government can overcome the Knightian conception of uncertainty, because they too are human actors, and they too are not omnipotent.
No Austrian claims that the Knightian conception of uncertainty can ever be overcome by anyone. We are all human actors, and action presupposes uncertainty. If there is anyone who is violating this truth, it is LK, for in his last post he claimed that governments can overcome uncertainty. For you to sit there and say that it is the Austrians who are guilty of denying uncertainty, is truly the height of hubristic hypocrisy.
Anders:
ReplyDeleteI wonder how Rothbardians respond to this point.
They would respond by saying you can't have your cake and eat it too. If people desired to both retain ownership of and sell their property at the same time, and signed a contract with someone saying as much, the Rothbardian would say it is a contract that is utterly null and void. It is like claiming a contract on the sale of square circles is enforceable. Contradictory contracts cannot be enforced.
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ReplyDeleteLK:
Austrians do not "ignore" that there exists information in the world that nobody on Earth knows. Indeed, Austrians are the only economists who are even explicitly aware of the rational foundation for such a conclusion.
In addition, Austrians do not hold that the price system can "solve the knowledge problem", i.e. enable humans to become omniscient Gods. It's almost as if Brady is uncomfortable with the fact that humans are not omniscient, and then turns to the Austrians, reads what they have to offer, and then realizes that the Austrians too are unable to propose a system that can "solve the knowledge problem", i.e. enable humans to become omniscient Gods, so LK ignorantly believes that this constitutes a valid attack against the Austrian worldview, totally oblivious to the fact that the kind of "knowledge problem" he is talking about can't be solved by any mortal human who acts, so it actually constitutes a factor of reality, it is not a specific attack on any worldview other than one that presumes humans are, or can be, omniscient.
The irony here is that it is precisely LK's worldview that is closest to this presumption. LK believes that men with guns are able to see the future better than millions if not billions of other people, such that they can make more "accurate" decisions regarding what interest rates ought to be, and what the supply of money ought to be.
Hayek's argument on uncertainty here is that those who are tasked with any level of central economic planning, including central banks, including government bureaucrats targeting economic aggregates with their spending, are not only subject to the Knightian conception of uncertainty, but they are also subject to the Hayekian conception of uncertainty, in that central planners, because they do not know and can never know the information that IS in fact known by individuals across the economy in a dispersed fashion, which means the free market price system, which communicates KNOWN information, including individual subjective preferences, is SUPERIOR to central economic planning.
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ReplyDeleteLK:
Before you have a conniption, yes, I realize that nobody here is advocating for total central economic planning. But Hayek's insight applies to ANY level of central planning, including a free market economy in everything except money production, or a free market in everything except security and protection, or a free market in everything except education, and so on.
This ridiculous post of yours is nothing but a giant red herring that pretends Hayek's knowledge problem somehow ignores uncertainty in the Knightian sense, which means that Hayek represents no barrier to the dogmatic socialists who are fixated on overcoming human lack of omniscience through central planning.
I don't know what's more sad. The fact that LK doesn't realize that it is he who is committing the unforgivable error of presuming that individuals can become omniscient, i.e. his prior post "How can government overcome uncertainty?", or that he believes Austrians presume that the price system, indeed any system, can overcome our lack of omniscience, or that they "ignore" lack of omniscience.
It is precisely the Austrians, and the Austrians only, who have an explicitly rational foundation for the truth that humans lack omniscience. Lack of omniscience, as Mises has shown, is a logical category of action. That Hayek used the word "uncertainty" in a different way than Knight, is due to the fact that Hayek takes the Knightian conception of uncertainty for granted, because it's literally engrained in human action itself, which he got from Mises, and he then introduced a different conception of uncertainty, one that actually can be overcome, one that is capable of being acted upon by humans and eliminated.
It is silly to constantly worry about cosmic uncertainty, because once it is understood, there is no further need to dwell on it. As long as everything one argues does not contradict that fact, then it is not necessary to keep dwelling on it. The constant dwelling on it is more a product of one's psychological disposition founded upon a lack of rational foundation for it, if anything else. Those who cannot clearly comprehend why humans are not omniscient, who do not always keep it in the back of their mind, will constantly run up against it in frustration, exactly like LK does, which is why he desperately hopes government can overcome it. Who else would write a post called "Can government overcome uncertainty?" in then proceed to attempt to explain how it can, but someone utterly clueless about the nature of the foundation for lack of omniscience?
"But Hayek's insight applies to ANY level of central planning, including a free market economy in everything except money production, or a free market in everything except security and protection, or a free market in everything except education, and so on."
ReplyDeleteYou then have a bizarre contradiction: Rothbard argues that monopolies that arise on the free market are valid.
So now any market where a monopoly arose in an imaginary Rothbardian world would in fact be engaged in impossible "central planning"? You are saying that monopolies couldn't exist in a Rothbardian world. Is that correct?
"The fact that LK doesn't realize that it is he who is committing the unforgivable error of presuming that individuals can become omniscient,"
ReplyDeleteThat is a stupid straw man. Intervention to influence the state of a non-ergodic stochastic system (like a decentralised market economy) does not require omniscience.
"In addition, Austrians do not hold that the price system can "solve the knowledge problem", i.e. enable humans to become omniscient Gods."
ReplyDeleteAnother ridiculous invention.
I have already discussed the crucial concept - the non-ergodic stochastic system - here:
http://socialdemocracy21stcentury.blogspot.com/2011/03/uncertainty-and-non-ergodic-stochastic.html
"Certain types of phenomena in our universe are what mathematicians call non-ergodic stochastic systems. The concept of radical uncertainty applies to such systems, like medium term weather events, financial markets, and economies, and other natural systems studied in physics.
In these systems, past data is not a useful tool for predicting the future state of the system and the problem of induction is particularly acute.
But the fundamental point is that it is still possible for a powerful agency or entity to reduce uncertainty in these systems, or at least in theory in some of them. It is entirely possible that in the future – with a far more advanced human civilization – we could use technology to control local, regional or perhaps even global weather.
And even today a powerful entity like the government can intervene to reduce uncertainty in the non-ergodic stochastic system we call the economy."
Such interventions do not need an omniscient knowledge of everything. In doing them, you are "inventing" the future, driving the state of the system.
The dispersed knowledge is the only knowledge there is. Uncertainty cannot be eliminated. The dispersed actors use their dispersed knowledge when they make purchases. The resulting prices are the best information of everyone's subjective values. That's just the way reality is. Stop fighting reality. Without those prices, you have the socialist calculation problem. Keynesian policies distort those prices and thus the conveyance of the essential information about everyone's subjective values. Government overseers cannot possibly acquire the necessary but essential and dispersed knowledge.
ReplyDeleteThis critique of the Austrians is old and tiresome.
It's just not that complicated.
@Pete "you can't have your cake and eat it too"
ReplyDeleteIf private sector net borrowers seek long-term liabilities, and private sector net creditors seek to maintain a good proportion of their assets in short-term form, you either accept FRB or else you thwart one or other of the debtors or creditors.
Your anti-FRB approach would seem to have the consequences that either (a) demand deposits are banned as a fraudulent product, in which case net creditors will hold their short-term assets as notes and coins, reducing the funding available for corporate investment, or (b) demand deposits are permitted but the corresponding bank assets are stipulated to be also short-term - which will be of little use to corporates.
Which is it?
Separately, I assume that you generally dislike the state, but is it not a 'solution' for you to have the govt guarantee all demand deposits in return for a fee from the banks?
"The dispersed knowledge is the only knowledge there is."
ReplyDeleteSounds like you didn't even read the post.
"the “market process” of Austrian theory is not capable of solving the knowledge problem, given that so much information about future relevant states has yet to be created when decisions are made in the present".
Present prices do not communicate that knowledge. Expectations are subjective.
Money is never non-neutral, and prices and wages themselves inflexible. And even if they were, shifting liquidity preference, the failure of Say's law, and the instability of investment destroy any reliable/consistent tendency to plan/pattern coordination, the Austrian replacement for neoclassical equilibrium.
"Government overseers cannot possibly acquire the necessary but essential and dispersed knowledge."
They don't need to. Their job is, in Lachmann's words, to provide "intervention for stability":
“Because of his focus on uncertainty, Lachmann came to doubt that, in a laissez-faire society, entrepreneurs would be able to achieve any consistent meshing of their plans. The economy, instead of possessing a tendency toward equilibrium, was instead likely to careen out of control at any time. Lachmann thought that the government had a role to play in stabilizing the economic system and increasing the coordination of entrepreneurial plans. We call his position ‘intervention for stability.’” (Callahan 2004: 293).
This critique of the Austrians is old and tiresome.
Get your facts right. It is a critique of Rothbardian Austrians/anarcho-capitalists and moderate subjectivists Austrians like Kirzner.
The Lachmann wing of the Austrian school isn't subject to it: the non-existence of a tendency toward plan/pattern coordination is essentially their own view too.
LK:
ReplyDelete"But Hayek's insight applies to ANY level of central planning, including a free market economy in everything except money production, or a free market in everything except security and protection, or a free market in everything except education, and so on."
You then have a bizarre contradiction: Rothbard argues that monopolies that arise on the free market are valid.
LOL, what utter garbage and what a nonsensical red herring.
No, what Rothbard said about monopolies are not applicable to what I just said about central economic planning institutions like central banks, the department of education, etc.
Monopolies that arise in the free market are not institutions that plan the economy as a whole to a positive degree. They plan the economy as a whole with exactly zero degree.
In addition, even if for argument's sake the free market process generated a single producer of shoes, or potatoes, that doesn't mean that the Hayekian knowledge problem no longer applies to them. It still does.
Central banks on the other hand are central economic planning institutions. Their monopoly is not founded upon the free market process, but upon state violence. Their goal is to "manage aggregate employment" and "manage aggregate interest rates" and "manage aggregate purchasing power of money" etc. The Hayekian knowledge problem DOES apply to them because their decisions are based on OVERRULING individual choice in the market process, so that all individuals do something other than what they would have done had they been free to act on their share of dispersed knowledge that exists in society.
In other words, only if money production itself was a part of the market process, can the "correct" interest rates, money supply, and purchasing power of money exist. This is because no single individual can know all of the dispersed knowledge that exists in society that would make their economic planning decisions superior to the decisions of the individuals who carry the dispersed knowledge themselves.
LK:
ReplyDeleteSo now any market where a monopoly arose in an imaginary Rothbardian world would in fact be engaged in impossible "central planning"?
No, because a free market monopoly is not overruling individual market decisions based on dispersed knowledge. It is a product of such dispersed knowledge. This is why monopolies in a free market are fleeting and temporary. They happen by the collective choices of various individuals with dispersed knowledge. They are not imposed by force, they are not planning the economy as a whole. The individuals in the economy are generating the monopoly by their voluntary purchasing patterns based on their particular preferences, which is a part of what constitutes knowledge in the Hayekian framework.
You are saying that monopolies couldn't exist in a Rothbardian world. Is that correct?
No, that is not correct. Free market monopolies are not central planning institutions. Central banking, the department of education, the department of defense, these are central planning institutions because they overrule individual economic freedom.
A person cannot plan a whole economy unless they overrule individual economic freedom.
"The fact that LK doesn't realize that it is he who is committing the unforgivable error of presuming that individuals can become omniscient,"
That is a stupid straw man. Intervention to influence the state of a non-ergodic stochastic system (like a decentralised market economy) does not require omniscience.
First, a "non-argodic stochastic system" is what an interventionist market is. A state cannot overcome the fact that social life is a non-ergodic stochastic process. After all, the government is COMPOSED of individual humans as well, and so the individuals in the government are subject to fundamental uncertainty, and they are limited to subjective expectations.
This is the reality of human life. Throwing a gun and a printing press of money into someone's hands, won't change this fact.
Second, I said that intervention requires omniscience if central planners are going to make decisions based on knowledge that is superior to what exists in dispersion in a market economy. And, in order for a central banker to make a more informed decision, which is the whole justification for it, the central planner MUST know not only at least as much as the dispersed knowledge that exists in the economy, which already requires omniscience right there, but they also have to know MORE than that, because a justification of central banking is that it IMPROVES a market economy. In order for a central planner to improve a market economy, they must have superior information. They must know not only what is known by everyone already, but they have to know more than what is known by everybody as well. All this necessarily implies omniscience.
Only an omniscient entity can know what is known by every human being at any given time.
LK:
ReplyDelete"In addition, Austrians do not hold that the price system can "solve the knowledge problem", i.e. enable humans to become omniscient Gods."
Another ridiculous invention.
I have already discussed the crucial concept - the non-ergodic stochastic system - here:
That was for Neil, not you. Pay attention. The poster "Neil" said:
"The Austrian approach to me appears to be to redefine terms Orwellian style."
"It's a fundamental truth of reality that even in aggregate there are thing about the future that are unknown."
He said that as if Austrians don't know the truth of reality that there always exists information that is unknown. Humans, ALL humans, including the humans in the state, are so limited.
"Certain types of phenomena in our universe are what mathematicians call non-ergodic stochastic systems. The concept of radical uncertainty applies to such systems, like medium term weather events, financial markets, and economies, and other natural systems studied in physics.
The state is composed of humans, subject to ALL the exact same limitations as market participants. The only difference is that the individuals who use the political process use violence to accomplish their goals, whereas individuals in the market process use voluntary exchange to accomplish their goals.
Everyone are humans. There is no such thing as a place called the market or a place called the government. There is only individuals who act, and some humans act using violence according to violating consent, whereas other individuals act using peace according to consent. That's it. The state is just a select group of individuals who use a systematic process of violence to accomplish their goals. They do not escape the reality of human life. They do not escape the reality of "non-ergodic stochastic" social phenomena.
We are all subjected to the same exact logical categories of action.
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ReplyDeleteLK:
In these systems, past data is not a useful tool for predicting the future state of the system and the problem of induction is particularly acute.
But the fundamental point is that it is still possible for a powerful agency or entity to reduce uncertainty in these systems, or at least in theory in some of them.
Sure, it is possible for a powerful entity to make human life rigid and to bring change to an end. Mises spoke in depth about people who think exactly like you, and he demolished these demagogues with a good dose of rationalist philosophy.
You want a "powerful entity." Do you know where such an ideology comes from? Do you know the intellectual roots of what you believe? I'll tell you. Your worldview is based on a desire to want God to be put on Earth, to rid human life of change and uncertainty. To alleviate us all from our limited temporal existence so that we don't have to fear not knowing what happens tomorrow. To want to bring heaven down to Earth.
You can deny this all you want. You can say this is not what you mean. But the reality of your worldview is straight out of the pages of ancient religious texts. The only difference is that your mysticism is secularized.
Plotinus, the originator of this mystical worldview, held that humans can overcome the reality of their own bodies by negating everything they know, feel, and touch. To completely escape from everything that exists. Only then will humans reach their true reality of oneness with the unchanging and certain absolute, "the one."
Hegel took this mysticism and believed God existed in all men already, and that humanity will be set forth to Utopia via strong historical figures who put into motion successive stages of history, marching us towards prosperity.
Marx took this mysticism and believed that the one existed in all physical material, and in a one-dimensional manner influenced all humanity to eventually become communist, and the means by which to get there is the proletariats, via a bloody revolution.
cont'd
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ReplyDeleteLK:
You have taken the mysticism out of Keynes' religious texts, and believe that the individuals elected by the majority are our best chance to get to Utopia, subject of course to an arbitrary set of principles that your worldview cannot consistently accommodate, as well as a mish mash of muddle-headed concepts of individual rights.
You believe that individuals who are armed with SWAT teams and have money printing presses can do anything other than hamper civilization with this mystical devotion to zero change, and zero uncertainty, and rigidity.
Can't you see that what you really want is to bring human history to an end, by ending human action and thus change and thus uncertainty? That is exactly why in one of your prior posts you called for the state to stop economic changes that require labor reallocation and temporary unemployment. You said that here is a "good reason" for the state to "intervene" and prevent changes from occurring by keeping people in their current situations.
But human life is a reality of constant change. Demagogues who have never learned rationalist philosophy are utterly terrified at reality because they can't handle change. They can only fear changes because their worldview holds that the absoluten, the one, no change, no ACTION, to be the preferred existence. But it's not an existence for humanity. The only way to achieve what you want is for the human race to cease existing. No existence is the only way that there can be no human change and no uncertainty.
You people are what I consider to be the cult of death. The only difference between you and totalitarians who try to make human life absolutely rigid and unchanging, is the level of violence you wish to wield upon innocent human beings. You are a pickpocket. Stalin was a grand larcenist. The US state is "progressing" to Stalinism every day. And your cult of death approves of it because you think you will finally have no change, i.e. "peace."
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ReplyDeleteLK:
It is entirely possible that in the future – with a far more advanced human civilization – we could use technology to control local, regional or perhaps even global weather.
Humans controlling the weather on the basis of induction from empirical data is one thing. Individual humans controlling other individual humans is quite another. Humans don't operate according to constant causal operative factors. The non-human physical world however can be presumed to behave in this way (although too many people go too far in this).
It's telling that you can only look to the future when you talk about centralized planning. It's because it cannot ever succeed in doing what it is meant to do on Earth. It can only "make sense" in your mind, where you are "free" to think and believe anything you want.
And even today a powerful entity like the government can intervene to reduce uncertainty in the non-ergodic stochastic system we call the economy.
False. Violence does not reduce uncertainty. It just stops people from learning, and thus stagnates whatever uncertainty exists and perpetuates it.
The government is also composed of individuals, and the government is also a part of the "non-ergodic stochastic system" YOU call "the economy."
Just because the government can wield "power", that doesn't mean that they have the power to change reality or reduce uncertainty. Uncertainty can only be reduced through learning about reality. The only power the government has is to use physical force. You might believe that violence is more powerful than ideas, but it isn't. Ideas are more powerful than standing armies.
Reducing uncertainty is but a means to accomplish particular ends. Whose ends are you talking about? You can't be talking about the ends of individual market actors, because their ends are squashed by the state when the state initiates violence in what you call attempts to reduce uncertainty. You therefore can only be talking about the ends of those in the state, which of course means you want the individuals in the state to be able to achieve their ends, using the individuals not in the state as their means, by initiating force against them if need be, thus reducing their ability to learn and thus their ability to reduce their own uncertainty.
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ReplyDeleteLK:
Introducing violence into society not only stagnates whatever certainty exists, but it also DESTROYS certainty, and thus INCREASES uncertainty. This is because knowledge must be continually freely communicated and freely spread through voluntary actions, if knowledge is going to be retained, let alone increased. With violence, knowledge is lost. This is why such little knowledge exists from ancient times. Violence was so prevalent in human life for thousands of years, that much knowledge was lost forever. It was only until violence against the individual was drastically reduced during the enlightenment that knowledge began to accumulate at a rapid pace. But we have since moved away from it on account of the re-introduction of violence-based philosophy. You are a stooge in this process.
What enables people to know the most, and thus reduce their own uncertainty to the maximum, is if individuals are free to act, free to interact with each other, free to exchange with each other, and free to learn from and teach each other. The more knowledge people have, the less fundamental uncertainty in the Knightian sense they will have. There is no other way to reduce uncertainty than through more knowledge. A "powerful institution" that wields violence will not do it. It will in fact destroy any chance of it.
Every wonder why China has been rapidly growing since the 1970s? It's because the Chinese government has been shrinking the amount of violence they initiate against individual Chinese citizens.
Ever wonder why the US have been stagnating since the 1970s? It's because the US government has been increasing the amount of violence they initiate against individual Americans.
Keynesianism is nothing but a justification for increasing state violence, in the name of ridiculously uninformed mystical and muddle headed beliefs.
Violence does not enable people to learn more about reality, and thus does not enable a reduction of uncertainty.
Peace enables people to learn about reality, and thus peace does enable a reduction of uncertainty.
It is no improvement to reduce uncertainty about other human being's innovations, by stopping innovations, and by hurting innocent people. Don't deny that you want to stop innovations, because you have claimed many times that whenever there is an innovation, every time there is a need to re-allocate labor and resources, the state is supposed to step in and stop it, by printing money and spending it, so that resources and labor are kept in their old orientations despite the innovations.
Your worldview contains ZERO understanding of economic calculation, or of entrepreneurship. Your worldview is nothing but statism gone mad.
LK:
ReplyDeleteSuch interventions do not need an omniscient knowledge of everything. In doing them, you are "inventing" the future, driving the state of the system.
If I were to use force against you, thus preventing you from interacting with the world you see fit, and thus preventing you in learning about the world as you see fit, yes, I will succeed in reducing the uncertainty I have about any economic effects that the introduction of potential new knowledge from you that would have been created, new knowledge and new effects which would have enabled me to learn more about reality and thus reduce my uncertainty more, but is instead squashed because I'd rather live in a stagnating world of no change, and call that a reduction of uncertainty?
That makes no sense.
("Straw man!" LOL)
Uncertainty is not reduced by violence. Uncertainty is a mental category. It can only be reduced by more knowledge. Violence will only succeed in preventing you from having to think and learn, so that it only appears to you that there is less uncertainty. It won't actually reduce uncertainty. You will in fact have more uncertainty because your lack of knowledge would be greater than it otherwise would have been had you not used force against others and enabled them to learn, and thus discover new knowledge about the world. Only individuals can retain knowledge. You can't increase the amount of known information by preventing individuals from learning. By numbing some people down by the state initiating violence against other people, you will only cause a double negative in the realm of knowledge acquisition. You will reduce the ability of the victims from learning more, by depriving them of the means to learn more, and you will reduce the ability of the beneficiaries in learning more, by depriving them of experiencing the effects of their and other people's knowledge and actions.
For example, buy stealing from a rich person, you prevent that rich person from the means to experience and thus learn about reality. By giving the stolen loot to another person, you are preventing them from experiencing and thus learning from the effects of their current knowledge and actions. This is why more and more rich people are becoming cynical and why more and more poor people are becoming unthankful. Statism absolutely corrupts human life.
Anders:
ReplyDeleteIf private sector net borrowers seek long-term liabilities, and private sector net creditors seek to maintain a good proportion of their assets in short-term form, you either accept FRB or else you thwart one or other of the debtors or creditors.
If an individual seeks long term liabilities, then the must acquire ownership, which means someone else must give up ownership.
Your anti-FRB approach would seem to have the consequences that either (a) demand deposits are banned as a fraudulent product, in which case net creditors will hold their short-term assets as notes and coins, reducing the funding available for corporate investment, or (b) demand deposits are permitted but the corresponding bank assets are stipulated to be also short-term - which will be of little use to corporates.
Which is it?
For me, FRB is fraud. I think this because of the fraudulent way it has been historically practised, and the fact that it leads to contradictory contracts that are unenforceable.
For other free market advocates, they don't think it's fraud but they expect that those engaging in it must accept losses due to bank runs or bank failures. They think if people are going to be misled and sign into contradictory contracts, it must be their loss.
LK however is totally out to lunch. He not only believes FRB is not fraud, but he won't even advocate the logical response to it if it weren't fraud. He won't advocate that debt be defaulted or liquidated, which is the logical response to legitimate debt contracts. No, he advocates for stealing money and/or purchasing power from random people to bail out those who engage in FRB. In other words, he wants 100% reserve banking, but the reserves are not supposed to come from the depositors themselves, but rather, they are supposed to be stolen from those who do not hold accounts at a given bank that engages in FRB and fails. The depositors and bankers at an FRB bank are to be bailed out by the state stealing money from people who have nothing to do with that FRB bank.
And hilariously, LK complains about "property rights" when he defends FRB. It is a biggest load of crap I've ever seen.
Separately, I assume that you generally dislike the state, but is it not a 'solution' for you to have the govt guarantee all demand deposits in return for a fee from the banks?
It is not a solution, because it doesn't stop the business cycle but only exacerbates it. It is not based on justice, but injustice. It is based on violence, not peace. It destroys prosperity, it doesn't create it (since increasing the number of property titles but not property does not increase wealth).
The fact that most of your overlong posts above just reduce to moral objections to state intervention (presumably on the basis of your propertarian ethics from Hoppe's argumentation ethic) suggests you have no real economic arguments.
ReplyDelete"Violence does not reduce uncertainty. It just stops people from learning, and thus stagnates whatever uncertainty exists and perpetuates it."
ReplyDeleteThe government engages in deficit spending to end a depression, where its deficit is covered by $for$ bond issues freely and voluntarily bought by investors. The people the state hires are free to accept jobs and quit when they like.
Explain where the "violence" is in this process.
"You want a "powerful entity." Do you know where such an ideology comes from? Do you know the intellectual roots of what you believe? I'll tell you. Your worldview is based on a desire to want God to be put on Earth, to rid human life of change and uncertainty. To alleviate us all from our limited temporal existence so that we don't have to fear not knowing what happens tomorrow. To want to bring heaven down to Earth."
ReplyDeleteversus submitting to the blind shoving of an omniscient and infallible "invisible hand" - even it its outcomes cause suffering, because morality is DEFINED by said hand's action?
that sounds a lot more religious in its implication to me
"It's telling that you can only look to the future when you talk about centralized planning. It's because it cannot ever succeed in doing what it is meant to do on Earth."
ReplyDeleteFunny how the command economies of the US, the UK, Canada, Australia etc. were extraordinarily successful and won WWII against the Axis powers by very large annual increases in production as planning was implemented. Funny how the US never experienced hyperinflation or economic collapse in those years, despite the extreme central planning, wage and price controls, and monetisation of large parts of the budget deficits.
LK:
ReplyDeleteMoney is never non-neutral, and prices and wages themselves inflexible.
That money is never non-neutral, is precisely one of the backbones of ABCT.
Prices and wages are not inflexible. They are flexible. It's why introducing more money into the economy raises prices, and why credit expansion created deflation lowers prices.
The fact that the state and central bank constantly interferes with the price system in order to make prices stable, especially wages, should make only a total idiot believe prices are "naturally rigid in the market.
At any rate, "inflexibility" is a vague concept. For inflexible compared to what exactly? A world where all prices change instantaneously to every single new piece of information that arises? No Austrian would claim that is what prices should do, or must do if the free market is to "work." It is precisely the fact that prices don't instantly adjust to every bit of new information that underlies the entire Austrian explanation of entrepreneurship. Entrepreneurs in the Austrian framework perform the vital function of searching out and exploiting price discrepencies, between prices of factors of production and prices of output of production, which is what Mises termed entrepreneurial profit. It is precisely because prices aren't constant, and reside in the sphere of human action, which is messy and error prone, GOVERNMENT INCLUDED, that makes entrepreneurial profit possible. Again Mises in Human Action dealt with this, which you would have known HAD YOU READ IT.
The fact that most of your overlong posts above just reduce to moral objections to state intervention (presumably on the basis of your propertarian ethics from Hoppe's argumentation ethic) suggests you have no real economic arguments.
ReplyDeleteThe fact that all of your arguments reduce to moral arguments, and the fact that you can only evade my economics arguments by pretending that they are moral arguments, only shows you have no real economics arguments.
"Violence does not reduce uncertainty. It just stops people from learning, and thus stagnates whatever uncertainty exists and perpetuates it."
The government engages in deficit spending to end a depression, where its deficit is covered by $for$ bond issues freely and voluntarily bought by investors. The people the state hires are free to accept jobs and quit when they like.
Explain where the "violence" is in this process.
It's already been explained to you many times LK. You just keep denying it because you don't think coercing innocent people is violent if it means helping someone else.
The violence occurs when:
The state steals money from people in order to pay those "employees."
The state steals money from people in order to pay back the loan.
The government doesn't produce anything. Once it takes money in, either through taxation or borrowing, and then spends it, it has no means by which to replace those funds. It must go out and acquire a FRESH new source of funds if it wants to keep spending, or, in the case of debt, pay back debt.
People who lend money to government do so with the expectation that the government will tax people in order to pay back the principle plus interest. If the government could not steal from people, or did not steal from people, then money lent to the government will be just a loan to a private entity, that must offer goods and services in exchange to others in order to earn enough money to pay back the loan. In this case, the interest rates on loans to governments would be far higher.
The fact that you can only pretend that the government only borrows when it "stimulates" the economy, instead of what it actually does, which is tax people and initiate violence against those who engage in non-violent acts, only proves that your worldview is based on violence. It is IMPOSSIBLE for a state to be financed with nothing but loans. If a state were to operate by seeking loans, and then paying off those loans by taking on more loans, would be just another Ponzi scheme that will eventually collapse.
You Keynesians are calling for violence even when you call for "peaceful" loans to the government to finance Keynesian spending. It is impossible for any agency to exist perpetually through debt financing only. Governments are no different in this respect.
So it's a dumb red herring of you to feign surprise and ask where the violence is in debt financing. It's when the debt must be paid back.
But you'd be lying through your teeth if you say that you only advocate for governments to be financed only by debt.
Anonymous @ OCTOBER 12, 2011 9:17 AM:
ReplyDeleteGive yourself a handle please.
versus submitting to the blind shoving of an omniscient and infallible "invisible hand" - even it its outcomes cause suffering, because morality is DEFINED by said hand's action?
No, not versus an invisible hand. By the hands of millions or however many people interact with each other peacefully through voluntary exchange of private property.
that sounds a lot more religious in its implication to me
If all you can do is attack a straw man based on a false dichotomy, then you're points are moot.
@Pete - so you would ban demand deposits. Presumably you would agree that this would result in most assets which are currently held as deposits, being held as notes and coins instead. Doesn't this result in a huge loss of funding for the economy's private borrowers? It sounds disastrous.
ReplyDelete"Statism absolutely corrupts human life"
ReplyDeleteLOL. I guess all of known history is full of absolutely corrupt lives. Since you're so corrupt, Pete, how can you stand in judgement of all mankind? After all, you lived your whole life in a corrupt society... it must have damaged your intellect in some way.
Seriously, Pete, do you ever look up from man, economy and state for a glance at the world around you? You know, to take a break from all the axioms and look to see whether the books make sense of life as experienced outside them?
"The fact that you can only pretend that the government only borrows when it "stimulates" the economy, instead of what it actually does, which is tax people and initiate violence against those who engage in non-violent acts, only proves that your worldview is based on violence"
ReplyDeleteSo it is just back to the tired argument about the ethics of taxing a minority of people.
As long as we're loosely on the subject of Hoppe, does anyone know if he ever responded to this critique by Murphy and Callahan?
ReplyDeletehttp://mises.org/journals/jls/20_2/20_2_3.pdf
Checked his site's list of recent publications, but I haven't seen anything.
"The fact that the state and central bank constantly interferes with the price system in order to make prices stable, especially wages, should make only a total idiot believe prices are "naturally rigid in the market."
ReplyDeleteWith respect to wages, the empirical evidence does not support that, as I have said before:
"People in general object to having their nominal wages cut. Even managers often dislike across-the-board pay cuts. Recent studies suggest that employers avoid pay cuts because they diminish workers’ morale, and then falling morale reduces productivity"
Bewley, T. F. 1999. Why Wages Don’t Fall During a Recession, Harvard University Press, Cambridge, MA.
http://socialdemocracy21stcentury.blogspot.com/2009/08/deflation-and-business-cycle-is-their.html
"As long as we're loosely on the subject of Hoppe, does anyone know if he ever responded to this critique by Murphy and Callahan?"
ReplyDeleteI am not aware of one. If people can find a response by Hoppe I would be interested to read it.
@Pete:
ReplyDeleteYou use the phrase "free market monopoly".
This is a contradiction in terms, like "four sided triangle". If one legal entity has a monopoly on the production and sale of any commodity then there is no "market". The monopolists sets whatever prices they wish.
You also assert that "monopolies in a free market are fleeting and temporary".
No they are not. Ever hear of Standard Oil? The only reason Standard Oil disappeared was because the US government intervened and broke it up in 1911.
Where markets exist they are creations of the state. Markets require the institution of private property. Private property cannot exist without the state to back it up.
"The fact that the state and central bank constantly interferes with the price system in order to make prices stable, especially wages, should make only a total idiot believe prices are "naturally rigid in the market."
ReplyDeleteWith respect to wages, the empirical evidence does not support that, as I have said before:
"People in general object to having their nominal wages cut. Even managers often dislike across-the-board pay cuts. Recent studies suggest that employers avoid pay cuts because they diminish workers’ morale, and then falling morale reduces productivity."
And you just lap it up because it is consistent with your narrative. Wonderful.
Getting laid off for refusing a pay cut would lower "worker morale" even more, you know.
Those who were polled by Bewley, include employers who can afford to pay the wage rates that they say they would have liked to reduce.
Bewley conducted informal, unstructured interviews with managers, workers, union representatives (who will ALWAYS claim that lowering wages decreases productivity, as a means to cajole employers into paying more wages), labor counsellors, etc in "how they saw things." This isn't rigorous. It isn't quantitative. It is a worker saying anything he wants to someone will listen, and employers who say anything he wants to someone who will listen.
Their "testimonies" do not constitute a firm foundation for what they actually DO. A worker could SAY that a pay cut would lower his morale and productivity, but that doesn't mean it WILL if he did get a pay cut. There are numerous cases of workers who accept a pay cut because they know the choice is between the company going bankrupt and losing their job, to accepting a pay cut and retaining the same productivity, or else they'll get fired for someone who is eager to accept lower wages and who will work hard. One can find anecdotals for everything.
Of course, unions stand in the way of decreased unemployment through wage cuts, because they utilize, you guessed it, government violence to prevent employers from trading with currently unemployed workers for lower wages. Those unemployed workers can only "go through the union" before they get hired, which of course means the unions can keep the supply of labor artificially low and thus keep their wage price artificially high, and thus exacerbate the unemployment.
Then there is the 99 week unemployment benefits from the government, financed of course by more violent theft, which further prevents wage rates from falling.
Bewley's study is really nothing but anecdotals from 336 people, and it wasn't even a representative sample.
At root, if "worker morale" were really a reason a worker would be against a pay cut, and that did accompany wage rigidity, then he could only be guided by his emotions like that if the hard core principles of economic laws allow him to. If the economic laws manifested themselves in his getting fired if he doesn't accept a pay cut, because the employer can replace him with someone from the unemployed pool of workers, which WAS the context I made my argument before, then he would find more morale in being employed at a lower rate than not being employed at all.
Sorry, but your response doesn't constitute a good enough response.
The wage rates that are being referred to when the issue of "wage rate inflexibility causes unemployment" comes into play, is when there is unemployment, and employers are not able to pay the prevailing wage rates for everyone able and willing to work, but rather only a portion of the potential workforce. Here, unemployment COULD fall if wage rates fall, and employers along with able and willing potential workers are not able to get together and trade.
One has to ask why able and willing employers and potential workers are not trading, not why able and willing employers and workers on the dole are not trading. We know why they aren't trading.
"As long as we're loosely on the subject of Hoppe, does anyone know if he ever responded to this critique by Murphy and Callahan?"
ReplyDeleteHoppe has responded to criticisms at the end of his book "The Economics and Ethics of Private Property."
As for Murphy and Callahan's critique, Stephen Kinsella has written a scathing rebuttal here:
http://www.anti-state.com/article.php?article_id=312
TJ:
ReplyDeleteIt depends on how one defines "monopoly."
If we define it with the "weak" form, that is, merely a single seller of some good in a particular area of the world economy, then free markets can potentially create them, but they would be subjected to all the market forces of a seller in a multiple seller setting.
If we define it with the "strong" form, that is, a government granted privilege, where the government uses violence to stop competition, then yes, the term "free market monopoly" is a contradiction.
I used the weak form of monopoly, because LK brought up Rothbard's discussion on monopolies, and LK referred to the existence of a single seller, which I interpreted as the weak form of monopoly. Rothbard also distinguished between the two types of monopolies.
More importantly, your knowledge of history is way off. Standard Oil was CONSTANTLY frustrated by competitors taking away their market share. It wasn't until Standard Oil succeeded in getting government protection, "for the good of society", did Standard Oil start succeeding in buying up more and more competition who were legally prevented from competing freely.
Finally, you're totally out to lunch when you say that markets are creations of the state. That's utter garbage. Markets are the creations of freely acting individuals who trade with each other, without any controller above and without any direction from above.
Yes, markets require institutions of private property, but private property PRECEDES the state. The state doesn't "back it up." The state VIOLATES private property. The state is society's largest institution of private property violations.
The state cannot come into existence unless some individuals declare a territorial monopoly on security and protection, and taxation of previously existing private property owners.
Private property is not a creation of the state. Marx was wrong.
Argosy:
ReplyDeleteLOL. I guess all of known history is full of absolutely corrupt lives.
Not for those who reject the state and live peaceful lives, which is the majority of people, or else taxation would not have to be backed by violence.
Since you're so corrupt, Pete, how can you stand in judgement of all mankind?
You're corrupt, not me. You call for violence against innocent people. I don't.
I can stand in judgment of all mankind because I adhere to rational principles that create a peaceful and productive society.
People like you are society's destroyers.
After all, you lived your whole life in a corrupt society... it must have damaged your intellect in some way.
Statism corrupts human life, but not all humans. It's the only reason there is social change. If everyone were followers like you, society wouldn't move because the followers would have nobody to follow.
Seriously, Pete, do you ever look up from man, economy and state for a glance at the world around you?
I don't particularly enjoy Man, Economy and State. I think Rothbard's other works are better. For economic treatises, Capitalism by Reisman is the best, IMO.
You know, to take a break from all the axioms and look to see whether the books make sense of life as experienced outside them?
Oh you mean you want to corrupt me too? LOL. As a matter of fact, I have improved my ability to understand the world to immeasurable degrees because of all the books I have read. You clearly have not read the books you choose to criticize, whereas I have. That makes me superior to you.
"Their "testimonies" do not constitute a firm foundation for what they actually DO. A worker could SAY that a pay cut would lower his morale and productivity, but that doesn't mean it WILL if he did get a pay cut."
ReplyDeleteSo now the Rothardian repsonse is: the "results of interviews of more than 300 businesspeople, labor leaders, counselors of the unemployed, and business consultants in the northeastern United States during the recession of the early 1990s" mean nothing and convey no important empirical evidence just because the Rothardian says so. Case closed! Let's all move on!
http://cowles.econ.yale.edu/news/bewley/tfb_02_jse_review.htm
Interview with Nicholas Wapshott on Keynes vs Hayek
ReplyDeletehttp://archives.kpfa.org/data/20111013-Thu1000.mp3
starting at 6 min
So now the Rothardian repsonse is: the "results of interviews of more than 300 businesspeople, labor leaders, counselors of the unemployed, and business consultants in the northeastern United States during the recession of the early 1990s" mean nothing
ReplyDeleteThey mean nothing to this economics debate. They certainly mean something to psychologists.
and convey no important empirical evidence just because the Rothardian says so. Case closed! Let's all move on!
No, it's more like people will say all sorts of things in informal interviews if someone will listen to them, but it is only through people's ACTIONS that we can know for sure. Since the context is wage rates and unemployment, the actions must be directly related to wage rates and labor, not what an unrepresented 336 people say in interviews.
You have to provide an economics theory, not just point to what can only be called heresay.
Oh, and I was giving a "Pete" response, not a "Rothbardian" response. Unlike you, I don't need to consider myself a member of some group before my arguments have weight. My arguments stand alone.
ReplyDeleteI hold Rothbard to be wrong about many things, so calling me Rothbardian is false. I hold Rothbard to be wrong about who is responsible for the production of goods, the role of capitalists, among other things. I'm not Rothbardian. I do happen to agree with him on many things though.
You can call me "Peterian", because that would be most accurate.
I can stand in judgment of all mankind because I adhere to rational principles that create a peaceful and productive society.
ReplyDelete-Pete
I'm gonna put that in a frame and hang it on my wall. Is there a site where I can purchase some autographed photos or T-shirts?
Time for a new handle-- 'pete' has jumped the shark. Are you the slightest bit aware of what you sound like? Oh my god. LOL.
..those who reject the state and live peaceful lives, which is the majority of people, or else taxation would not have to be backed by violence.
So if the mass of people accepted the state and lived violent lives, Taxes would not have to be backed by violence? What are you trying to say here?
"You can call me "Peterian", because that would be most accurate."
Okay, Peterian.
Thanks for the link, Clonal, but I was unable to download the mp3 file. I was glad to find that I was able to stream the file here:
ReplyDeletehttp://www.kpfa.org/archive/id/74175
It sounds pretty good to begin with, so thanks again.
Pete,
ReplyDeleteI have a question for you: are you maybe "Waah" from reddit? Because your writing style seems similar.
@Pete: Ever wonder why the US have been stagnating since the 1970s? It's because the US government has been increasing the amount of violence they initiate against individual Americans.
ReplyDeleteKeynesianism is nothing but a justification for increasing state violence, in the name of ridiculously uninformed mystical and muddle headed beliefs.
But this seems to be an argument for Keynesian economics & policy! For you seem to be saying that just as Keynesian economics & policy was abandoned, while free-marketism was extolled and practiced (yes, not as much as you'd like, but more than before) the state became more violent.
I guess if the devil Keynes is out there front & center, the mighty entrepreneurs will be awake enough to resist his & others' evil works. But if they begin to get their own way, our capitalist benefactors will fall asleep & let the evil state wreak its universal malevolence.
Lead us into temptation & deliver us from Good!
Argosy:
ReplyDelete"I can stand in judgment of all mankind because I adhere to rational principles that create a peaceful and productive society.
-Pete"
I'm gonna put that in a frame and hang it on my wall. Is there a site where I can purchase some autographed photos or T-shirts?
Every individual can stand in judgment of all mankind if they adhere to rational principles that create a peaceful and productive society.
Time for a new handle-- 'pete' has jumped the shark. Are you the slightest bit aware of what you sound like? Oh my god. LOL.
Judgment is an intellectual affair. EVERY individual on Earth makes an intellectual judgment on the state of mankind.
Why are you so afraid? Why are you so afraid of thinking?
"..those who reject the state and live peaceful lives, which is the majority of people, or else taxation would not have to be backed by violence."
So if the mass of people accepted the state and lived violent lives, Taxes would not have to be backed by violence?
There is no "the" mass of people. There is always only individuals, each with their own plans for themselves, each with their own goals.
Some may overlap with others, some may offset with others and thus enabling an exchange.
But the state CANNOT be "accepted by the mass of people." No individual would ever voluntarily surrender the decision-making for their own body and property, to another individual unilaterally. Only initiating violence can do it. Secondly, no individual has the right to demand that others pay and solicit the same group of people they do for protection and security.
The state is not a natural, voluntary institution in society. It is really nothing but a criminal gang writ large.
Without initiating violence, states are impossible to form.
Calgacus:
ReplyDeleteBut this seems to be an argument for Keynesian economics & policy! For you seem to be saying that just as Keynesian economics & policy was abandoned, while free-marketism was extolled and practiced (yes, not as much as you'd like, but more than before) the state became more violent.
No, It's saying the exact opposite.
"Free-marketism" has been substantially REDUCED over the last 30 years, not "extolled and practiced." What you're saying is a myth perpetuated by socialists of all stripes into making people believe that all the social problems that exists are primarily the fault of the free market.
Nothing could be further from the truth.
Over the last 30 years (actually it goes back much further), The Federal Register, which tallies the number of regulations, has skyrocketed in size. The number of pages in the 2010 register for example totalled 81,405 pages. The Code of Federal Regulations (CFR) is the regulatory equivalent of a statute book that includes only the text of existing regulations. The number of pages in the 2007 edition totalled 145,816 pages, and has since substantially increased again after to the government caused financial collapse of 2008.
In a laissez-faire, free market economy, the Federal Register and Code of Federal Regulations would have a total number of pages of ZERO.
We are living in a society that is literally going the exact opposite direction you think it's going.
Your conception of history and of current reality is literally the opposite of fact.
"No individual would ever voluntarily surrender the decision-making for their own body and property, to another individual unilaterally."
ReplyDeleteGod, have you ever lived in the real world? Ever met a couple with one partner who lets the other partner make all their important decisions for them?
And you don't surrender "decision-making for your own body" to the state. We live in a liberal society where individual rights are in fact afforded a great degree of protection (even more so in some Western European states), so even that charge is rubbish.
The number of pages in the 2010 register for example totalled 81,405 pages. The Code of Federal Regulations (CFR) is the regulatory equivalent of a statute book that includes only the text of existing regulations. The number of pages in the 2007 edition totalled 145,816 pages, and has since substantially increased again after to the government caused financial collapse of 2008.
ReplyDeletePeterian,
If word count were the measure of scholarship and knowledge as well as regulation, you must be one of the greatest comment thread trolls known to man.
"Secondly, no individual has the right to demand that others pay and solicit the same group of people they do for protection and security."
ReplyDeleteOnly under nonsensical libertarian ethics - natural rights or Hoppe's argumentation ethic, both of which lack serious justification.
"'Free-marketism' has been substantially REDUCED over the last 30 years ..."
What rubbish. Obviously the mass privatisations of nationalised industry, deregulation, abandonment of high employment policies, floating of exchange rates, abolition of capital controls, attack on and severe weaking of trade unions, etc. in many countries over the past 30 years have all escaped your notice.
"In a laissez-faire, free market economy, the Federal Register and Code of Federal Regulations would have a total number of pages of ZERO."
Legerdemain and changing the goal posts. Of course, no fantasy, imaginary anarcho-capitalist world has ever existed. But that's not what you were arguing above: you were trying to assert the idea that "Free-marketism' has been substantially REDUCED over the last 30 years" - a different thing.
"No individual would ever voluntarily surrender the decision-making for their own body and property, to another individual unilaterally."
ReplyDeleteGod, have you ever lived in the real world? Ever met a couple with one partner who lets the other partner make all their important decisions for them?
First, there is a huge difference between couples, and citizens and the state. Even in couples relationships, they will not surrender final authority over how much the other takes from them, or what laws to impose on them. In couples where one individual allows another to make the financial decisions, always retains ultimate authority over their own body and their own property. At any time, they can revoke this delegation of decision making.
Under statism, an individual citizen cannot revoke any alleged delegation to the state. The state unilaterally retains authority to tax and to impose laws, whether the individual consents to it or not.
So your analogy is total garbage
And you don't surrender "decision-making for your own body" to the state. We live in a liberal society where individual rights are in fact afforded a great degree of protection (even more so in some Western European states), so even that charge is rubbish.
I never said that an individual does surrender decision making for their own body to the state. That's the whole point. The state violently imposes their rule and decision making over an individual's body and property.
That western states do not violate as many individual rights as other states, does not mean that western states do not impose decision making to a positive degree on the individual.
In western societies, states impose decision making on how people treat their own bodies in all sorts of ways. From food (raw milk) to drugs ("illegal" narcotics) to licensing (doctors, etc) to all other aspects of life, the state imposes authority on final decision making with the individual's body. Then there is the decision making on an individual's property, from all the regulations, and it only makes your belief absurd that the individual is not forced by the state to surrender decision making for their own bodies and property.
Argosy:
ReplyDeletePeterian,
If word count were the measure of scholarship and knowledge as well as regulation, you must be one of the greatest comment thread trolls known to man.
Glad that you agree that regulations have increased, not decreased, in the last 30 years. To bad that you didn't take it well and felt obligated to engage in ad hominem.
"Secondly, no individual has the right to demand that others pay and solicit the same group of people they do for protection and security."
ReplyDeleteOnly under nonsensical libertarian ethics - natural rights or Hoppe's argumentation ethic, both of which lack serious justification.
But adhere to libertarian ethics on this one, because you would hold that I would not have the right to demand that you abstain from paying and soliciting the current state or any other state you choose, and instead pay and solicit the security and protection services from the people I support.
"'Free-marketism' has been substantially REDUCED over the last 30 years ..."
What rubbish. Obviously the mass privatisations of nationalised industry, deregulation, abandonment of high employment policies, floating of exchange rates, abolition of capital controls, attack on and severe weaking of trade unions, etc. in many countries over the past 30 years have all escaped your notice.
False. There has been an increase in regulations, and an increase in financial control. Going off the gold standard in 1971 for example was an increase in the states ability to create money for itself, which is an increase in control over money and hence over the economy.
There has not been an abandonment of high employment policies. There has been a substantial increase in high employment policies. The fact that employment is not doing what the state wants it to do does not mean that it has abandoned high employment policies. It means the government is messing the economy up to such a degree that the private sector is not able to accommodate full employment.
The number of regulations in the Federal Register has increased multiple-fold in the last 30 years.
"In a laissez-faire, free market economy, the Federal Register and Code of Federal Regulations would have a total number of pages of ZERO."
Legerdemain and changing the goal posts.
No, it's not changing of any goal posts. You seem to not understand what a free market actually is. You think the massively hampered economy we have is closer to laissez faire. That is nonsense.
A free market economy is hands off. There would be no FDA, HUD, DoE, or any of the other thousand alphabet soup agencies.
Of course, no fantasy, imaginary anarcho-capitalist world has ever existed.
Irrelevant. Prior to 1700 AD you could say that slave emancipation has never existed, or prior to 1800 AD you could say that women's suffrage never existed, or prior to 400 BC and Greek democracy you could say that democracy has never existed.
All this means NOTHING about economic theory and what people are capable of if they adopt the ideas.
History does not prove anything other than what ideas people have had in the past, and what actions people have taken in the past.
But that's not what you were arguing above: you were trying to assert the idea that "Free-marketism' has been substantially REDUCED over the last 30 years" - a different thing.
It has been substantially reduced. You are just so blind to it because anything less than communism means we have primarily laissez faire. It's so bad today that little girls can't even sell lemonade on the street without the state giving expressed permission. People are getting arrested for growing their own food on their own property.
Only a propagandist demagogue who wants to spew an agenda would claim that "free marketism" has been increased over the last 30 years.
"There has not been an abandonment of high employment policies. There has been a substantial increase in high employment policies."
ReplyDelete"There has been a substantial increase in high employment policies"?? Even though states all over the world abandoned fiscal policy as a way of maintaining high employment?
Keep spinning your fairy tales. The sheer brazenness of your lies speaks volumes.
"Under statism, an individual citizen cannot revoke any alleged delegation to the state."
ReplyDeleteThis is like complaining that the state "oppresses" you because it does not let you violate your neighbour's property rights. The laws of the community are not just able to be "revoked" at will by the individual.
Go and have a cry about it.
Brady also argues that Post-Keynesians are wrong and Samuelson is right (with respect to Keynes).
ReplyDeleteMost authors you praise Lord Keynes (especially Paul Davidson), he has buried in his reviews.
@Anonymous: In fairness, while Brady does hold a high opinion of Paul A. Samuelson, he has criticised Samuelson before, both in published articles and over his posts on Amazon.com.
ReplyDelete@Blue Aurora
ReplyDeletehttp://www.amazon.com/Economics-Original-1948-Paul-Samuelson/product-reviews/0070747415/ref=cm_cr_pr_hist_5?ie=UTF8&showViewpoints=0&filterBy=addFiveStar
This is his review of Samuelson's original book. I didn't say that he didn't criticise Samuelson (though he does call him, after Smith and Keynes, the 3rd greatest economist ever!).
He does think that Post-Keynesian macro is bullshit to the extreme which is what I think is relevant for this blog (which promotes Post-Keynesian macro)
It is simple to demonstrate the intellectual bankruptcy of Paul Davidson's macroeconomic D-Z model ,which can be traced back to Sydney Weintraub and Dennis Robertson in the mid 1950's.
ReplyDeleteDavidson ,as well as all of his adherents at the JPKE,define the aggregate supply function,Z, to be equal to pO ,where p is an expected price and O is real output.O is a function of the variable input, N,where N=labor.The capital stock is held fixed.The production function is thus a function of the variable input, N , and a fixed input,capital.The production function simplifies to O=f(N).Under diminishing returns to labor,the first derivative, dO/dN,is >0 and the second derivative is less than 0.This curve must be a CONCAVE curve.Keynes also used the case of constant returns to labor.The first derivative is a constant and the second derivative equals 0.This curve must be an upward sloping LINEAR line.Paul Davidson's Z curve is an upward sloping CONVEX curve.This is mathematically impossible,given that N is defined on the abscissa and Z is on the ordinate.
Davidson's baloney-nonsense model shows only one employment -unemployment equilibrium.All other positions are disequilibriums.Keynes's theoretical exposition in chapter 20 of the GT proves mathematically that there is a set of unemployment equilibriums.This set of unemployment equilibriums includes the limiting case of the neoclassical employment equilibrium.This curve is the locus of the intersections of a set of D,aggregate demand function, and Z,aggregate supply function,functions .Keynes called the locus or set ooof these intersections the Aggregsate Supply Curve(ASC).It has nothing to do with Davidson's Z function.
Davidson has been trying to cover this massive error up since it was exposed by Don Patinkin,who also got his analysis wrong,in HOPE in 1989.
Michael Emmett Brady