“The Origins of Neoliberalism Part IV: A Map of Hayek’s Delusion,” January 30, 2013.One crucial point brought out here is how Hayek’s research program in economics essentially failed by the 1940s, and he turned to political and ideological posturing, in, for example, the Mont Pelerin Society.
Why did Hayek virtually give up on serious technical work in economics, you might ask?
The answer is given eloquently by Ingrao:
“The very critique of general equilibrium theory that Hayek advanced … undermined his own research project on equilibrium and [sc. the] business cycle as structured in the early 1930s. In the programme to build a dynamic approach inspired by general equilibrium theory (such was the original intention and aspiration), reconciliation between equilibrium and cycle proved impossible, since there appeared to be no way to incorporate disappointed expectations and change into equilibrium models. The result was reached by Hayek himself as also by Lindahl and Hicks, while they were rethinking a common core of analytical questions about equilibrium left open by the Lausanne school. It turned out to be not the provisional weakness of an incomplete research project, but a substantial theoretical difficulty, which brought the project to a dead end. In 1937 Hayek’s efforts to embody expectations and change in the structure of equilibrium models was not so much a solution to the insoluble problem as the beginning of new investigation, which brought Hayek practically to abandon the equilibrium scaffolding.When Hayek’s economics essentially failed, he turned to a different program: social and political theorising.
In the 1940s Hayek’s research project ran aground due to difficulties in the theory of capital. A Pure Theory of Capital … marked another critical point on the ambitious path to merging equilibrium and cycle, starting from the Austrian vision of capital as investment of resources in structured time sequences. Complexity prevailed and Hayek gave up the project to incorporate monetary theory into his capital theory ... Meanwhile Hayek was moving in other directions, new tasks absorbed him, leaving the earlier research programme to take second place in his mind. Actually, it was never resumed.” (Ingrao 2005: 244–245).
BIBLIOGRAPHY
Ingrao, B. 2005. “When the Abyss Yawns and After. The Correspondence between Keynes and Hayek,” in M. C. Marcuzzo and A. Roselli (eds.), Economists in Cambridge. A Study Through their Correspondence, 1907–1946. Routledge, London. 236-256.
Thanks, LK
ReplyDeleteI think Hayek was completely flummoxed from the moment Keynes started publishing serious work -- by the early 1930s he's already engaged in bizarre hermeneutic readings of Keynes:
"Dr. Hayek has invited me to clear up some ambiguities of terminology which he finds in my Treatise on Money, and also other
matters. As he frankly says, he has found his difference with me difficult to explain. He is sure that my conclusions are wrong (though he does not clearly state which conclusions), but he finds it "extremely difficult to demonstrate the exact point of disagreement and to state his objections." He feels that my analysis leaves out essential things, but he declares that " it is not at all easy to detect the flaw in the argument." What he has done, therefore, is to pick over the precise words I have used with a view to discovering some verbal contradiction or insidious ambiguity." (Keynes, "The Pure Theory of Interest")
Thank you Philip!Execellent program and your qoute from Keynes about how Hayek crititized and read Treatise of Money is almost archetypical of how an Austrian Libertarian today react if one engage in a debate about some economic book or whatever issue A) "He feels that my analysis leaves out essential things" -B)"he finds it difficult to demonstrate the exact point of disagreement and to state his objections." C) "What he has done, therefore, is to pick over the precise words I have used with a view to discovering some verbal contradiction or insidious ambiguity." !!I never read this one from Keynes but this is simply brilliant!If one lay to that a ugly language,fanatism and capital letters it´s a spot on,description of the ordinary follower of the Austrian school!
DeleteYes, spot on.
DeleteNotice how Hayek never even seriously bothered to refute the General Theory.
By the time of Road to Serfdom he was endorsing Keynesian stimulus in a depression (whether honestly or tactically to avoid looking like a lunatic, as he had in the early '30s), and even his realisation that Walrasian GE theory was flawed was essentially moving him in the direction of Keynes's ideas, though Hayek persisted in dogmatic worship of extreme free market theology despite this.
Have you seen this?
DeleteIt seems the key Austrian Libertarian,hater of as well UN and all sort of federal goverment and regulation of enterprize sue his fans.This is pretty funny.I wonder how his fanatic fan-club on this site react to this?
Ron Paul, Runs to the UN to Fight His Supporters
https://www.youtube.com/watch?v=guqqru3l5Uo
"Ron Paul sues supporters for control of RonPaul.com
Ron Paul supporters are angry and confused about a complaint Paul filed with the World Intellectual Property Organization, an agency of the U.N., in attempt to regain control of RonPaul.com and RonPaul.org. "
http://www.alternet.org/progressive-wire/ron-paul-sues-supporters-control-ronpaulcom
"When Hayek’s economics essentially failed, he turned to a different program: social and political theorising."
ReplyDeleteIf only that was what he had done. My view is that he turned to infrastructure development for neoliberal propaganda. Starting with The Road To Serfdom and the Montpellier Society. Hayek constructed a neoliberal political mythology: calling it theorizing is as wrong as calling any religious viewpoint theorizing. Grotesquely myopic "theories" aren't really theories.
Yes, I did say "political and ideological posturing" above - probably a more accurate way of describing it, though I do think Hayek was sincere in these beliefs, if wrong.
DeleteOne point I did not mention above is that it is often forgotten how much Hayek did in fact concede to Keynes by the 1940s:
http://socialdemocracy21stcentury.blogspot.com/2011/09/did-hayek-advocate-public-works-in.html
Whether that concession was sincere or just tactical, I don't know.
Hayek might also have realized that it is easier to make unsubstantiated claims in political science and philosophy than to make in economics.
ReplyDelete