Question about Hayek

Economics Economics Questions
1

Why is Hayek consider an Austrian economist? I am not discrediting him but you have to admit, he is atleast the least Austrian compared to the other big name in Austrian Econ… even when he explains the Austrian Business Cycle, he adds in neoclassical elements to explain the theory… furthermore, if you read Block’s paper " Milton Friedman on tolerance", Friedman tells of an event at an economic conference where Mises got mad at everyone there and said, “you’re all a bunch of socialists” Hayek was part of that group, the whole story is quoted on the bottom… I havent read alot of Hayek but what i have read seems more like what a neoclassical would say more than an Austrian…

"

I recall a personal episode, at the first meeting of the Mont Pelerin

Society-the founding meeting in 1947 in Mont Pelerin, Switzerland.

Ludwig von Mises was one of the people who was there. I was also.

The group had a series of discussions on different topics. One

afternoon, the discussion was on the distribution of income, taxes,

progressive taxes, and so on. The people in that room included

Friedrich von Hayek, Fritz Machlup, George Stigler, Frank Knight,

Henry Hazlitt, John Jewkes, Lionel Robbins, Leonard Read—hardly

a group whom you would regard as leftists. In the middle of that

discussion von Mises got up and said “You’re all a bunch of

socialists,” and stomped out of the room."

2

And your post shows that Hayek didn’t believe in Austrian economic principles, how?

3

he doesnt explain the business cycle like Mises or Rothbard did because he used neoclassical elements to explain the theory…

Hayek was also a supporter of basic income to all citizens…

4

First of all, I would advise you to research into events before you make claims like Hayek is not “Austrian” enough, though you use the term “Austrian” in an incoherent matter. In fact, in a letter to Michael Polyani following that incident, Hayek explained that Mises was right in the content of his protest, but utterly rude in how he made it. Is that not a reasonable position?

“he doesnt explain the business cycle like Mises or Rothbard did because he used neoclassical elements to explain the theory…”

What “Neoclassical elements” do you speak of?

“Hayek was also a supporter of basic income to all citizens…”

Austrian economics =/= Austro-libertarianism. Learn that immediatly. Austrian economics, at least as promulgated by Ludwig von Mises, was werfrie and therefore completely empty of any such political statements.

5

I DID NOT SAY HE WASNT AN AUSTRIAN… I said he is the least Austrian compared to the other heads of Austrian Econ because some of what he says is neoclassical and not really Austrian…

Hayek explain in much detail on ABC using graphs and equations… Jörg Guido Hülsmann talks about this a bit in his lecture on the business cycle, http://www.youtube.com/watch?v=Bxq_mhdYeBM …

please stop attacking me and just answer my question… why is Hayek considered an austrian

6

"I DID NOT SAY HE WASNT AN AUSTRIAN… "

A tad emotional there, eh?

“Hayek explain in much detail on ABC using graphs and equations… Jörg Guido Hülsmann talks about this a bit in his lecture on the business cycle, http://www.youtube.com/watch?v=Bxq_mhdYeBM …”

Im both Monetary Theory and the Trade Cycle, and Prices and Production, which are clearly Hayek’s two most important expositions of his theory of the business cycle, and he uses equations (very, very rarely - I can only recall one integral in a footnote), and graphs (all Hayekian triangles though if my memory serves me and none of the Neoclassical supply-and-demand analysis species, that I am p) in order to make concepts clearer. In fact, I see a lot more curves in Rothbard’s Man, Economy, and State than I see in either of these books, so does it follow that Rothbard is not an Austrian? According to your logic it does.

“please stop attacking me and just answer my question…”

Oh please, harsh criticism of annoyingly stupid positions does not equal attacking the person who harbors them.

According to the ten criteria provide by Boettke here, Hayek is most definitely to be considered in the tradition of Austrian economics.

7

Rothbard used graphs and equations in MES, but that doesn’t mean he isn’t part of the AE research tradition. If you ask most academic economists what AE is they wouldn’t know what you were talking about, but the large majority of the ones that do recognize the name will only have heard of Hayek (or else would mention Schumpeter).

8

Of course… in one of the Mises institute lectures, they consider Hayek as the most recognizable economist in the Austrian community to the mainstream but I think that is because he was the least radical one… as for the ABC, follow the link posted eailer…

Yet, I still have people attacking me… can anyone answer my question? Please and thank you

9

[quote=“Isaac “Izzy” Marmolejo”]
Yet, I still have people attacking me… can anyone answer my question? Please and thank you
[/quote]

You’re protesting too much my friend.

Lam doesn’t attack people. He usually asks the state to do it for him.

10

The briefest answer I can give the OP is to recognise the influence of Walras on Hayek.

11

I had to point that out because you couldnt catch it the first time, that wasnt me yelling… whether you agree or disagree… I agree with Hülsmann, that Hayek’s approach to the business cycle is a bit neoclassical, Hülsmann uses the term neoclassical to show Hayek’s approach to it BTW… I would also say further that some of what he says is neoclassical based… again whether you disagree or agree…

12

Because he:

  1. employs methodological individualism
  2. is a radical subjectivist
  3. is a pioneer in Austrian capital and business cycle theory
  4. Elucidated the process of spontaneous order
  5. Sided with Mises in the socialist calculation debates and improved on his argument (coordination argument)
  6. Was a student at Vienna (taught by Wieser)
  7. Employed a dynamic approach which incorporated the element of time.

There’s more… Also, libertarianism has nothing to do with Austrian economics. The former is an ideology while the latter is a positive science. Knut Wicksell was an Austrian as well, and he supported the welfare state. “Radicalism” has nothing to do with AE.

13

Technically, Hayek is not an Austrian in the “Rothbard Mises” strand of Austrian economics. He did favor empiricism, mathematical equations, and indifference analysis, ideas that go directly againist major “typical” Austrian tenets. From Bryan Caplan’s “Why I am not an Austrian Economist”

“Contrast Mises and Rothbard’s stringent rejection of mathematical economics with Hayek’s desire to “…avoid giving the impression that I generally reject the mathematical method in economics. I regard it as indeed the great advantage of the mathematical technique that it allows us to describe, by algebraic equations, the general character of a pattern even where we are ignorant of the numerical values determining its particular manifestation. Without this algebraic technique we could scarcely have achieved that comprehensive picture of the mutual interdependencies of the different events in the market.” (F.A. Hayek, “The Pretense of Knowledge,” in F.A. Hayek, Unemployment and Monetary Policy (Washington, D.C.: Cato Institute, 1979), p.28.”

As Caplan correctly noted in his earlier paper regarding Austrian economics, if Mises and Rothbard are correct, neoclassical economics is all wrong; if Hayek is correct, neoclassical economics just needs to adjust its focus.

As for why he is considered an Austrian economist, it probably has to do with the fact that 1)he made important contributions to Austrian capital/ABCT theory (among other areas listed by Esuric) 2)Less stringent Austrians would still consider him a bread and butter Austrian 3)He is easily the most famous Austrian economist, aside from Schumpeter (and he is pushing it to be considered under the “Austrian” aegis).

14

thank you blacknumero, esuric, and nigtahamuk that is what i was looking for

15

“Yet, I still have people attacking me… can anyone answer my question? Please and thank you”

I already did:

“According to the ten criteria provide by Boettke here, Hayek is most definitely to be considered in the tradition of Austrian economics.”

“The briefest answer I can give the OP is to recognise the influence of Walras on Hayek.”

Walras had scant influence of Hayek. Caldwell answers the claim that he did here. As far as where Hayek seems to endorse general equilibrium in his inter-war writings, those need to be interpreted as being in a period where Austrians thought that there were in the mainstream of economic thought. In fact, in the spirit of the time, Mises said in 1932:

“We usually speak of the Austrian and the Anglo-American Schools and the School of Luasanne… [Yet it is a] fact that these schools of thought differ only in their mode of expressing the same fundamental idea and that they are divided more by terminologies and peculiarties of representation than by substance of their teaching.”

16

“Lam doesn’t attack people. He usually asks the state to do it for him.”

Indeed, I hire CIA assassins to type all of my attacks for me.

17

What is known as the “Austrian school of economics” first emerged during the latter part of the 19th century, but did not establish itself as a heterodox and specific school of thought until the socialist calculation debates of the 1920s. Up until this point the Austrians were considered part of the mainstream neoclassical school (as opposed to the Marxian, Neo-Marxian, Institutionalist, and Historical school). In fact, both Hayek and Mises saw no fundamental flaw with the Walrasian system and mathematical economics until the controversy that emerged in the 1920s. They mistakenly believed that the mathematical economists were simply saying what they were saying, but differently.

But by the 1920s it became obvious that the neoclassical school had developed in a certain way, a different way, and held different assumptions, which became increasingly problematic. They took the idea of equilibrium and general equilibrium too seriously, that is, they believed that Walras’ system actually explained real world phenomena, when it was really just an elegant mathematical model which explained the underlying process and employed extremely unrealistic assumptions. Hayek and Mises were on the same side of the debate contra other mainstream neoclassical economists, such as Lange, Lerner, and Schumpeter (this is why Schumpeter is not considered an Austrian economist).

So again, this debate revealed that there were real fundamental differences within the neoclassical school, and the Austrian sect became its own heterodox school of thought (especially after the Keynesian revolution). As far as mathematics is concerned, neither Hayek nor Mises believe that mathematics is inherently flawed as tool which can explain underlying economic phenomena. They just believe that it can’t really explain real world, which is too complicated and volatile for mathematical modeling.

Here’s Hayek:

“That an economist of professor Schumpeter’s standing should thus have fallen into a trap which the ambiguity of the term “datum” sets to the unwary can hardly be explained as a simple error. It suggests rather that there’s something fundamentally wrong with an approach which habitually disregards an essential part of the phenomena with which we have to deal: the unavoidable imperfection of man’s knowledge and the consequent need for a process by which knowledge is constantly communicated and acquired. Any approach, such as that of much of mathematical economics with its simultaneous equations, which in effect starts with the assumption that people’s knowledge corresponds with the objective facts of the situation, systematically leaves out what is our main task to explain. I am far from denying that in our system equilibrium analysis is a useful function to perform. But when it comes to the point where is misleads some of our leading thinkers into believing that the situation which it describes has direct relevance to the solution of practical problems, it is high time that we remember that it does not deal with the social process at all, and that it is no more than a useful preliminary to the study of the main problem (The Use of Knowledge in Society).”

18

OMG, please go read Hayek before you go and diss the man based on some half-baked truths you heard from someone.

19

boinks the ideologico-bolshevix :slight_smile:

20

Umm.. how can you believe that socialist calculation is faulty and yet believe in welfare?