The dystopian von Pepe sends me Karl Smith’s taxonomy of various explanations of the business cycle, which I’ve seen people linking but I hadn’t actually read. The following excerpt took the wind out of my sails:
There are some people, I am thinking Arnold Kling here, who believe in what I might call a neo-Austrian view. I don’t think there are any formal models here and I might be mistaken but I think many in this camp eschew formal models. What there is, is a basic sense that markets work as an evolutionary process.
Within that process transitional pains are to be expected and recessions are just a big version of that. Arnold is currently the most vocal intellectual in this School but if you had to nail down what the Peter Schiffs of the world are thinking, its probably closest to something like Recalculation.
If anyone says that the government caused a bunch of people to buy houses they couldn’t afford and now we are working through the pains of that, they are effectively a Recalculationist.
In summary, for these guys recessions are caused by mistakes which take time to be corrected. There is no treatise as such but you can try:
And then if you click on the link–which yes, in this day and age is an unclothed URL, which simply gives me the willies in its indecency–you go to a google search for Arnold Kling’s various posts at EconLog on “Great Recalculation.”
What’s really so depressing about this, is that this guy Smith is obviously not trying to put down the Austrians. Go read his post; he’s really just trying to honestly answer Ezra Klein’s question about the different models for explaining the business cycle.
Yet Smith either doesn’t know about the various treatises laying out the Austrian theory of the business cycle, OR, he thinks they are so useless that Ezra Klein should just go read Kling’s blog posts.
This isn’t just a failure of Mises.org, it’s also a failure of the GMU guys. I mean, why doesn’t Smith know about Tyler Cowen’s book on Austrian business cycle theory?
I haven’t felt like this since high school.