tag:blogger.com,1999:blog-6245381193993153721.post7223845640483844749..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Keynes on Economic CalculationLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-6245381193993153721.post-3252260529741665752014-09-20T13:26:53.242-07:002014-09-20T13:26:53.242-07:00He has to clearly define his terms or it will cont...He has to clearly define his terms or it will continue to be impossible to have a meaningful argument with him. You should not argue with him until he has clearly defined his terms.Philippenoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-30593885669992441862014-09-20T13:03:59.696-07:002014-09-20T13:03:59.696-07:00I fear you are asking in vain, Philippe.
But it w...I fear you are asking in vain, Philippe.<br /><br />But it would interesting to see how he explains 'undistorted prices" if he doesn't think any flexible price system or tendency to market clearing is important.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-77071839268761708462014-09-20T12:02:16.513-07:002014-09-20T12:02:16.513-07:00Bob,
please explain clearly what you mean by '...Bob,<br /><br />please explain clearly what you mean by 'undistorted prices'. <br /><br />Please explain clearly what you mean by 'artificial, misleading and unsustainable prices'. <br /><br />Please use precise language.<br /><br />Thanks.Philippenoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-65750485091623815422014-09-20T11:07:00.654-07:002014-09-20T11:07:00.654-07:00Finally here is what actual Austrian economists sa...Finally here is what actual Austrian economists say:<br /><br /><i>“An equilibrium price is one in which quantity supplied equals quantity demanded. Graphically, it occurs at the intersection of the supply and demand curves. The market tends toward equilibrium: If the current price is above the equilibrium price, there is an excess supply (‘surplus’) and sellers reduce their asking price. If the current price is below the equilibrium price, there is an excess demand (‘shortage’) and buyers increase their offer price.”</i> (Murphy 2006: 19–20).<br /><br /><i>“The concept of a glut for a single good is easy enough to understand: there is more supply on the market than demand at the offered price. A glut can be alleviated by a fall in the price of that good. The producers of the good may take a loss if the market price is below their costs, <b>but the market can always clear at some price.”</b></i><br />Blumen, Robert. 2014. “Say’s Law and the Permanent Recession,” Mises Daily, February 28,<br />http://www.mises.org/daily/6676/Says-Law-and-the-Permanent-Recession<br /><br /><i>"The market operates by shifting the height of prices so that again and again demand and supply will tend to coincide. If demand for a good goes up, then its price rises, and this price rise leads to an increase in supply. Entrepreneurs try to produce those goods the sale of which offers them the highest possible gain. They expand production of any particular item up to the point at which it ceases to be profitable.”</i> (Mises 2006 [1931]: 156–157).<br /><br /><i>"The market process will tend to establish a price that clears the market: all sellers willing to sell at the market price will be able to do so, and all buyers willing to buy at that price will also be able to do so. …. If these dynamics of supply and demand change, the market process will adjust the price to the new realities.”</i> (Callahan 2004: 76).<br /><br /><i>"Mises conceives the market process as coordinative, ‘the essence of coordination of all elements of supply and demand.’ This means that the structure of realized (disequilibrium) prices, which continually emerges in the course of the market process and whose elements are employed for monetary calculation, performs the indispensable function of clearing all markets and, in the process, coordinating the productive employments and combinations of all resources with one another and with the anticipated preferences of consumers.” </i> (Salerno 1993: 124).<br />Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-78285905634051314902014-09-20T11:02:04.734-07:002014-09-20T11:02:04.734-07:00As usual roddis, your answer is just a pathetic ev...As usual roddis, your answer is just a pathetic evasion. <br /><br />Is your answer:<br /><br />(1) that it is not a "fundamental" idea, but some derivative idea that does not have to be true of market economies? or<br /><br />(2) that is not an important idea in any sense? or <br /><br />(3) that it is not a "fundamental" idea, but some *important* derivative idea that must be true for the Austrian theory of economic coordination to work?<br />-------------------<br />If (1), you're utterly ignorant, and have no idea what your talking about. <br /><br />If there is no tendency towards market clearing prices and wages, the Austrian theory of economic coordination collapses.<br /><br />Same for (2). <br /><br />On (3), you'd still be wrong: because it is a fundamental theory. It is the essence of Austrian price theory and the basis of Austrian theory of economic coordination.<br /><br />If (1) or (2), it is quite clear that whenever you speak of "Austrian theory", it is simply some bizarre, incoherent gibberish of your own invention, and has little relation to <i>actual</i> Austrian theory.<br /><br />You are clearly an ignoramus, a half-wit and an idiot, and it is no wonder nobody takes you seriously.<br /><br />I imagine you are an embarrassment to most actual Austrian economists, who would cringe when they read your harebrained ramblings. Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-15156738174000231132014-09-20T10:28:48.706-07:002014-09-20T10:28:48.706-07:00No. The idea is derivative. Undistorted prices w...No. The idea is derivative. Undistorted prices will tend to promote more successful plans, both long term and short term. When mistakes are made, they will have to be resolved quickly because there will be no artificial subsidy or bailout for the entrepreneur or consumer who has made errors. Fewer mistakes will be made than under a regime of artificial credit expansion which induces artificial, misleading and unsustainable prices. <br /><br />I’ve answered this question so many times before. There is nothing in praxeology that says that humans must value monetary gratification over other types of gratification. See Rothbard on extreme a priori-ism.<br /><br />Further, Wicksell and the Austrians have quite a different view of the nature of interest and the nature and source of prices themselves. See KNUT WICKSELL AND LUDWIG VON MISES ON MONEY, INTEREST AND PRICE DYNAMICS BY AGNÈS FESTRÉ*<br /><br />http://halshs.archives-ouvertes.fr/docs/00/27/23/99/PDF/Festre_WicksellMises_revised_version_def3.pdf<br /><br />Finally, the insights provided from the socialist calculation debate led to a refinement over the decades of the Austrian explanation view of the market process as a process of discovery. Old quotes from the 20s and 30s are less refined that later explanations. See:<br /><br />The Economic Calculation Debate: Lessons for Austrians<br />Israel M. Kirzner<br /><br />http://mises.org/journals/rae/pdf/rae2_1_1.pdf<br /><br />Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-92197662323061605312014-09-20T04:35:57.581-07:002014-09-20T04:35:57.581-07:00Clearly you are not capable of answering it.
Conc...Clearly you are not capable of answering it.<br /><br />Conclusion: Roddis does not understand basic Austrian theories and concepts.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-26705923712746488432014-09-20T04:35:02.601-07:002014-09-20T04:35:02.601-07:00If he explained it, it would be clear to everyone ...If he explained it, it would be clear to everyone that he has no idea about Austrian concepts!Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-46605517055620459322014-09-19T11:32:26.454-07:002014-09-19T11:32:26.454-07:00Hayek on 'economic calculation':
"It...Hayek on 'economic calculation':<br /><br />"It seems to me that the decisive factor that would create a general preference for a currency stable in value would be that only in such a currency is a realistic calculation possible, and therefore in the long run a successful choice between alternative currencies for use in production and trade. In particular, the chief task of accounting, to ensure that the stock of capital of the business is not eaten into and only true net gains shown as profits available for disposal by the shareholders, can be realised only if the value of the unit of account is approximately stable. <br /><br />An attempt to explain further why <b>successful economic calculation is possible only with a stable value of money</b> raises the question of what precisely we mean by 'the value of money' and the various respects in which it may be kept stable. This we must leave to Section XIII. For the present we content ourselves with the empirical fact that effective capital maintenance and cost control is possible only if accounts are kept in a unit that in some sense remains tolerably stable." (p.69)<br /><br />"The reason why people will tend to prefer a currency with a value stable in terms of commodities will thus be that it will help them to minimise the effects of the unavoidable uncertainty about price movements because the effect of errors in opposite directions will tend to cancel each other out. This cancelling will not take place if the median around which the deviation of individual prices clusters is not zero but some unknown magnitude". (p.74)<br /><br />Friedrich Hayek, 'The Denationalisation of Money' (1974)<br /><br />https://mises.org/books/denationalisation.pdfPhilnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-29156189512701022882014-09-19T11:02:14.227-07:002014-09-19T11:02:14.227-07:00Bob,
please explain clearly what you mean by the ...Bob,<br /><br />please explain clearly what you mean by the term 'economic calculation', and what you mean by the term 'economic miscalculation'. <br /><br />Please use precise language.<br /><br />Thanks.Philnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-55198720489595348112014-09-19T10:45:36.210-07:002014-09-19T10:45:36.210-07:00Are you capable of giving a yes/no answer to this ...Are you capable of giving a yes/no answer to this question:<br /><br />“Is the idea of a tendency towards market clearing wages and prices by human action (even if the whole economy never reaches Mises’s final state of rest equilibrium) a fundamentally important part of the Austrian theory of economic coordination?”<br />----------------<br />Or are you just what you appear to be: an ignorant loud-mouth, who does not understand basic Austrian theories and concepts?Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-17239492834679235102014-09-19T10:36:39.869-07:002014-09-19T10:36:39.869-07:00I think we have a stand-off here. You go the publi...I think we have a stand-off here. You go the public with your version and I'll go with mine.Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-36295926097867627222014-09-19T10:19:31.141-07:002014-09-19T10:19:31.141-07:00Oh, and you're still so ignorant that you cann...Oh, and you're still so ignorant that you cannot give a simple yes/no answer to this question:<br /><br />“Is the idea of a tendency towards market clearing wages and prices by human action (even if the whole economy never reaches Mises’s final state of rest equilibrium) a fundamentally important part of the Austrian theory of economic coordination?”<br /><br />Yes or no?<br /><br />Care to answer?Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-72151249313791430292014-09-19T10:17:28.912-07:002014-09-19T10:17:28.912-07:00No, roddis, Post Keynesians understand the issues:...No, roddis, Post Keynesians understand the issues: they just don't agree the Austrian theory works, and have counterarguments that refute you.<br /><br />Of course, you are too stupid and too ignorant to engage with these arguments. <br /><br />And, in point of fact, you are confusing the issue of economic <i>calculation</i> with the issue of economic <i>coordination</i>.<br /><br />Misesian economic calculation means:<br /><br />(1) an economy has money prices for capital goods and consumer goods, and <br /><br />(2) businesses calculate profits and losses with money prices and the economy has a relatively stable purchasing power for money: as Mises says, "For the sake of economic calculation ALL that is needed is to avoid great and abrupt fluctuations in the supply of money."<br />-----------------<br />Modern Keynesian economies have economic calculation.<br /><br />By contrast, you are complaining that endogenous money, or deficit spending, or central banks distort the (imaginary) Wicksellian unique natural rate of interest, *distort* wages and prices and cause *alleged* inter-temporal miscoordination via Austrian business cycles.<br /><br />No, they don't, because<br /><br />(1) the Wicksellian unique natural rate of interest cannot even be defined outside a 1 commodity world<br /><br />(2) Wicksellian loanable funds is rubbish<br /><br />(3) investment isn't a simple function of interest rates<br /><br />(4) most prices are relatively inflexible with respect to demand changes anyway<br /><br />(5) the whole notion that flexible wages and prices would lead to a tendency to Mises' final state of rest and hence economy-wide economic coordination -- with a tendency to clearing of the labour markets and product markets -- is false.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-57455263215405490052014-09-19T09:52:42.984-07:002014-09-19T09:52:42.984-07:00That they do not understand economic calculation i...That they do not understand economic calculation is demonstrated by the fact that they do not understand economic MISCALCULATION caused by Keynesian-style policies and/or artificial credit expansion. False prices and all that (to coin a phrase). The Keynesian analysis ignores and suppresses how the problems it seeks to cure actually came about. Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-40608273167978892442014-09-19T09:22:45.722-07:002014-09-19T09:22:45.722-07:00"no non-Austrian in human history has ever un..."no non-Austrian in human history has ever understood economic calculation!" -- or some such idiocy.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-57167647918519877972014-09-19T09:12:06.171-07:002014-09-19T09:12:06.171-07:00"rapid and unexpected deflation ... cause[s] ..."rapid and unexpected deflation ... cause[s] serious problems in a market economy and to the plans and calculations of business people." Sounds just like Friedman. <br />I eagerly await Bob Roddis's rebuttal. Ken Bhttps://www.blogger.com/profile/08207803092348071005noreply@blogger.com