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I must agree with you concerning Mises/Hayek dehomogenization thesis. Although I generally tend to agree more with Salerno and co. than with you, I think they have overblown the differences between Mises and Hayek about economic calculation. You cited in one of your linked articles Hayek from his paper "Socialist debate - competitive "solution" ". In the same paper he employs completely Misesian argument of impossibility to calculate costs in absence of market prices. Since price competition is not available anymore, manager of market socialist enterprise would not be able to produce cost-effectively even if he wanted to do so, because, he would not know what are least marginal costs at which such and such quantity of the given good can be produced. In that paper Hayek virtually enlists all crucial arguments from Human Action against market socialism, such as impossibility to determine where investment should be made, in what branch, where decreased, where new plant opened, with which ratio capital-labor etc, all genuinely praxeological concerns. I was initially convinced by Hope and Salerno in validity of dehomogenization thesis, and was really amazed to discover completely and doctrinary pure Misesian calculation arguments in "mature" Hayek, from I think 1940.

I think that both Mises's impossibility theorem and credit cycle theory were formulated in its state-of-art form by Hayek.


Steve, you'll address Hulsmann's work on the dehomogenization debate soon, right?


Steve, if I'm not mistaken, Joe was quoting an excerpt from a paper of his written in 1995, before your publications that you cite here.

Does anyone else think someone from GMU should write a paper entitled, "Hoppe and Salerno, Pasteurized"?

Stephan - you are correct. The formatting of Joe's post confused me. Upon rereading, it is clear that the second half is from a paper written before my two pieces came out. I will alter my original post accordingly.

Steve, you write that there is little discussion of dehomogenization. My piece with Briggeman on Kirzner, to appear in J Priv Ent, and my EJW piece on "Our Economics" cite and touch on it.

I like dehomogenization. I say Hayek is closer to Smith than to Mises.

Joe's and my dehomogenizations would probably differ somewhat, but would be parallel.

We differ in evaluation of the differentiated products. Joe prefers Mises, I prefer Hayek.

Just thinking out loud here:

Does anyone think that dehomogenization of Mises and Hayek might advance Austrian economics? I've spoken to many economists throughout my schooling who, I get the sense, would accept a Hayekian paradigm if they felt they could do it without accepting Mises.

Or it could be wholly unproductive. I don't know.

What are the parts of Mises that worry people who are prepared to accept Hayek? Blaug did a U turn on the Austrians but he still had grave reservations about Mises.

Is it the epistemology and methodology from the start of Human Action? Maybe that needs to be revised so readers can proceed rapidly to the economics of Human Action without being scared off by the first couple of hundred pages.

Nice retraction Steve! What a joy if everyone would quickly acknowledge mistakes without getting grumpy and defensive or pretending it didn't happen.

That brings to mind the three reasons for welcoming criticism. One is masochistic (you like it); the second is moralistic (you are supposed to) and the third is self interest (you might learn something).

Could anyone please explain the relevance of this discussion?

The important point I see, is simply that there is a difference between ´AE´ and ´AE mixed with other disciplines´. That is true and is a difference we ought to bear in mind. Neither of the 2 things are bad, imo. I I like Mises work and GMU work and I love the discussions between them, when they are actually discussing AE.

Or am I missing something important?

I think Kirzner answered this question well last week. Kirzner said that Von Mises and Hayek really ought to be taken together and that the subtle differences between the two arose from their emphasis on different parts of the market process. Hayek talked more about knowledge and Mises talked more about the role of the entrepreneur (at least it seemed to me). They were arguing to the same conclusion while emphasizing different parts.

But hey, I am not a Hayek/Mises scholar; I am just a geeky student who reads way too much.

Let me add that there are differences, but that some of these differences are superficial in the grander view. Some differences reserve attention, but I think it is wrong to divide the two thinkers as some in my generation wish to do. Hayek was a student of Von Mises.

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