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Here's Leijonhufvud's contribution, "The Varieties of Price Theory: What Microfoundations for Macrotheory" from many years ago:
I find it useful to revisit.

Thank you Bob for providing that link ... that is a very important paper I think. I saw Leijonhufvud give a talk at the HES meetings 20+ years ago where he did something along these lines but focused mainly on the contrast between the Walrasian project and the Mengerian project. If my memory is at all correct, it was one of the most intellectual intriguing talks I have ever heard in that sort of context.

I think Leijonhufvud is horribly underappreciated within our discipline.

If memory serves Pete, that was in Vancouver right? I recall that talk too, and it was great.

To be honest, my book owes a great deal to AL's essays in the collection *Information and Coordination.* I think Yeager is more under-appreciated than AL is, but AL, Yeager, and Hutt are all folks from whom I learned much and who are severely under-valued by mainstream economists.

I think there are some original things in my book, but in the main, it is a work of synthesis. I tried to bring together a variety of work that all seemed to be circling around exactly the point you raise here: what does macro look like if we take the Mengerian conception of micro seriously, particularly when we tack on the comparative institutional work of Mises, Hayek, Buchanan, Tullock et. al...

I'd like to give a solid nod to Rizzo and Whitman for this paper...

...which introduced me to Joel Waldfogel...who deserves the biggest contemporary nod for Scroogenomics...which I just created a Wikipedia entry for...

Everything he says about other people making choices for us..."a terrible way to allocate resources"...and "orgy of wealth destruction" equally applicable to government planners spending our money.

Should taxpayers be allowed to directly allocate their taxes? Yes. Why?

"Normally we buy things for ourselves when the value exceeds the price, and in so doing, this free choice by individuals maximizes society’s benefit. But gift-giving is entirely different because someone else is choosing for you." - Joel Waldfogel

Making the case for taxpayer sovereignty is really the way to go. Well...unless I'm wrong. That would suck...especially if you guys knew all along but never bothered to tell me. Don't you know that sharing is caring?

Let me prove's the very best salad dressing ever...

IMHO, what Simon said regarding Cournot applies to rational expectations: it is a "permanent and ineradicable scandal of [macro]economic theory.” And, indeed, in both cases the problem is expectations, including "I think that you think . . . " Besides the fanciful "rationality" assumed, there is the fact that our "microfoundations" reduce the variety of interpretations down to one representative agent. Modern macroeconomics assumes away the coordination problem. By some magic that happens behind the wizard's curtain the competing interpretations of bulls and bears are always so balanced that the faux expectations of the "representative agent" are "rational" in the strong sense that it never wants to revise its forecasting algorithm. The representative agent never learns because it has nothing to learn. We are not facing the problems of macroeconomic theory; we are assuming them away.

David Glasner is on the mark on this one. I am a Leijonhufvud student and endorse Pete's comments about him.

And, as always, Roger's somments are excellent. Good quote from Simon.

If I may say, this whole topic is one of the most frustrating elements in economics, for an "Austrian."

These "problems" of knowledge, process, adjustment, and expectations; the issue of mathematical formalism (with it's unrealistic assumptions).

They are the same ones that have continued to dominate the "dispute" and "disagreements" about the nature and methods, and conceptual focus of economics since Menger vs. Walras; Hans Mayer vs. "functionalist" theories of price; Mises and Hayek vs. Lange on the quality and characteristics of markets, prices, and competition; Kirzner on entrepreneurship; and the entire topic of macroeconomics vs. microeconomic sequential-temporal processes analysis of the non-neutrality of money of Hayek and Mises vs. Keynes.

It is like a merry-go-round on which the words and structures of part of the arguments get slightly restated or articulated in response to the last round, but the whole thing keeps going in a circle.

The "mainstream" insists that their approach is the only one that is "rigorous" and "scientific." And the "Austrians" emphasize the limits and problems of the mainstream approach in understanding the workings of "real" markets, with hints and suggestions of how a fully process approach might be used instead.

This is now over one hundred and twenty-five years old. Very frustrating, and seemingly unending.

Richard Ebeling

Leijonhufvud very wise on these matters.

Yes, Barkley.

And Happy New Year to you and all.

So long as economics uses equilibrium, it's unscientific. It is precisely because the economy is perceived as being an equilibrium system that such nonsense as "market failure," which governments can "fix" come about. The same with socialist calculation.

Of course, it may be that all the social sciences are fundamentally "unscientific" if we take the natural sciences as being "science."

Likewise, Jerry, and everybody else as well, :-).

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