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« What Would Hayek Say? Perhaps the Hayek Chair Can Tell Us | Main | Has the World Gone Completely Mad (Again)? »


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By the way, I would never claim that Scrabble really is a capital goods structure.

It is a consumer good.

And there's more. The Kirznerian entrepreneur sees the higher-point score opportunities and tries to sieze them. (Heck, he could even trade his letters with the bag in such an attempt.)

David Harper is using a layercake as an analogy. His paper is available at:

Look at the October 20th posting.

It's a great example of spontaneous emergent order!

Throw in the possibility of new letters and the occasional dropping of existing ones, and it seems like a good analogy.

I think it's good enough to get that light bulb to start appearing over people's heads.


My wife and I play Scrabble almost every evening, so I like the idea of using it for purposes of analogy.

I would suggest that it brings out:

1) Spontaneous Order -- one cannot predict the interdependent structure of the word combinations that specific take shape on the board at the beginning or through most of the plays of the game.

2) Path-Dependency -- the word-complementarity that emerges as the play goes on is dependent on the plays that have preceded it. Once the pattern has begun to take on a configuration in one segment or corner of the board, you are stuck often with it, and partly limited to move in particular directions in terms of future plays. Some become deadends that cannot be played -- surely an element of unintended consequences, since one never "plans" to deadend oneself, or even necessarily desire to do that to the development of the game in general.

3) Innovative Creativity -- the letters come out of the bag randomly, but are themselves limited by the letters already drawn. The decision-maker has to then apply his language knowledge to create words that fit "hanging" letters to which new words may be attached. Original words can take on new meanings. For example, one plays the word "mark." But with the right letters that can be made into "market" on a follow-up play.

And the player must try to do so in the context of the boxes on the board would result in him having a "double word" or a "triple word" score, or a "double letter" or "triple letter" score. All of these are instances of "alertness" to opportunities, and expectations of likely moves of your opponents that come before yours.

Like all analogies, it has its limits -- for example, Scrabble, it seems to me, does not have higher and lowers order goods on the board. Though I understand your suggestion that the letters in the bag are higher order goods -- raw materials -- that can be turned into lower order goods -- specific word "commodities" that one uses the letter resources to "produce."

It has no price system -- other than the "payoffs" from the points made from the plays. One could say that the boxes with higher pay-offs if used are more profitable "relative prices" that guide the incentives to design word combinations in certain directions, based on the preceeding plays.

Anyway, a very creative way of seeing the logic of some Austrian concepts in a game context. Thanks for suggesting this, Dave.

By the way, I recall back in the late 1970s, Lachmann being given a kaleidoscope by some of the NYU Austrian students one year because of his frequent references to Shackle's use of the term. He held it in his hands and turned the device, but he seemed somewhat uncertain which end he was supposed to look through.

The concept of a future kaleidoscope was imaginable, but its proper use clearly was not knowable -- to play off another one of Shackle's phrases that Lachmann especially liked to use.

Richard Ebeling

Thanks for further consideration, Richard. I had thought of some of these things after I posted -- no prices, and also path dependency but didn't think of that explicitly. Your fine comments will help me further develop the metaphor.

I'm still chuckling about Lachmann!

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