14 May 2013

Optimal Stopping Time

Daniel Kuehn, Economics 85 Comments

This is a real thing in economics. Applied to “provocative” (not my term) essays, the rule is this: When you read: “the relationship between Nietzsche and the free-market right…is thus one of elective affinity rather than direct influence, at the level of idiom rather than policy,”

…you can safely stop, and turn to something else. Absolutely nothing good will come of it. The writer can insinuate the most absurd things, and yet always claim, “I never said that!” if you object. Just move on with your life.

You still don’t get my point? Okay, as I put it to Daniel Kuehn (who, needless to say, thought the Nietzche/Austrian article was “fascinating”):

I skimmed a lot of the article. I’m not even being snarky; I have no idea what the guy’s point is. It’s like talking about the connection between Ronald Reagan and Star Wars, since they both were popular in the same cultural era, except SDI was actually nicknamed Star Wars, so it makes more sense than this article.

85 Responses to “Optimal Stopping Time”

  1. Joseph Fetz says:

    In all honesty, I stopped at the end of the first page when this first came up. I don’t know if that was “optimal”, but it sufficed for me. Still does. That whole “whether it’s the libertarianism of the GOP or the neoliberalism of the Democrats” thing was the first thing to jump out at me.

  2. Major_Freedom says:

    “The Nobel Prize–winning economist Friedrich Hayek is the leading theoretician of this movement, formulating the most genuinely political theory of capitalism on the right we’ve ever seen. “

    This right away proves this author has little understanding of the subject of capitalism.

    Rothbard reviewed Hayek’s “The Constitution of Liberty”. His opening sentence of that review is this:

    “F.A. Hayek’s Constitution of Liberty is, surprisingly and distressingly, an extremely bad, and, I would even say, evil book.”

    He concluded with this:

    “This then, is the face that F.A. Hayek will present to the world in his Constitution of Liberty. It is a face such that, if I were a young man first getting interested in political questions, and I should read this as the best product of the “extreme Right,” I would become a roaring leftist in no time, and so I believe would almost anyone. That is why I consider this such a dangerous book and why I believe that right-wingers should attack this book with great vigor when it appears, instead of what I am sure they will do: applaud it like so many trained seals. For (1) Hayek attacks laissezfaire and attacks or ignores the true libertarians, thus setting up the “even Hayek admits . . .” line; and (2) his argument is based on a deprecation or dismissal of both reason and justice, so that anyone interested in reason or justice would tend to oppose the whole book. And because of Hayek’s great prominence in the intellectual world, any failure by extreme right-wingers to attack the book with the implacable vigor it deserves will inordinately harm the rightwing cause that we all hold dear.”

    • Daniel Kuehn says:

      “This right away proves this author has little understanding of the subject of capitalism.”

      As soon as I read this sentence I translated it as “MF is whining that he’s not a Rothbardian”.

      Nailed that one.

      • Major_Freedom says:

        He doesn’t have to be a Rothbardian. He could be a Marxist and it wouldn’t matter.

        What does matter is being able to compare and contrast various political theories of capitalism. Those who have read Mises, Hoppe, Reisman, and yes, Rothbard, among others, know that there are much better works out there.

        I seriously cannot comprehend how a writer who classifies initiations or threats of physical violence (e.g. military conscription, taxation, etc) as non-coercive, provided only that the receiver of such force could have reliably expected and adjusted to it (!), to be the right’s “most genuinely political theory of capitalism”, rather than the left’s “most genuinely political theory of socialism.”

      • John B says:

        The writer of this article doesn’t know his subject matter. Mises hated Nietzsche.

        “It is noteworthy that the men who were foremost in extolling the eminence of the savage impulses of our barbarian forefathers were so frail that their bodies would not have been up to the requirements of ‘dangerous living.’ Nietzsche even before his mental breakdown was so sickly that the only climate he could stand was that of the Engadin valley and of some Italian districts. He would not have been in a position to accomplish his work if civilized society had not protected his delicate nerves against the roughness of life” (Mises 171).

        He considered Nietzsche a war-monger (645) and he argues against the “doctrine of evolutionary meliorism” (690).

        Before wasting time reading a few paragraphs I could tell this guy was just spouting non-sense without knowing his subject matter. It made me mad enough to actually track down the quotes and write them down.

        • Gene Callahan says:

          “The writer of this article doesn’t know his subject matter. Mises hated Nietzsche.”

          But that doesn’t prove anything: thinker X could hate thinker Y, despite being deeply influenced by him, perhaps without even knowing it.

          • Bob Murphy says:

            Gene Callahan, stepchild of Major_Freedom.

            • Ken B says:

              Their relationship is more one of elective affinity than direct influence, idiom rather than policy.

        • Daniel Kuehn says:

          I didn’t think the subject of the essay was that Mises liked Nietzsche. Perhaps I should reread?

          Or perhaps you should?

          Mises doesn’t make nearly as much of an appearance as Menger, Hayek, and Schumpeter anyway.

    • Hank says:

      Sure, but Hazlitt gives it much praise,

      “The essential requirements of law have seldom been better described than by F. A. Hayek in The Constitution of Liberty.” – Foundations of Morality, pg 67

      Also on pg. 266, “The fullest and best modern restatement of this view is found in F. A. Hayek’s The Constitution of Liberty. The purpose of law, and the chief function of the state, should be to maximize security and liberty and to minimize coercion.”

      He quotes Hayek’s book extensively in his own book. I am wondering what you think of his opinion.

    • Gene Callahan says:

      “F.A. Hayek’s Constitution of Liberty is, surprisingly and distressingly, an extremely bad, and, I would even say, evil book.”

      Well, Rothbard was a nutjob: what can we say?

      • Major_Freedom says:

        Clearly a nutjob. So nuts in fact that he actually believed individual homesteaders and free traders should not be threatened with violence if they don’t give away their wealth for free.

        The nerve of that guy. Should have been locked up.

        • Ken B says:

          There’s a canard for the ages. Gene’s comment is about Rothbard’s powers of comprehension and judgment. MF twists this into a suggestion about something completely different: punishing people for their opinions. This is how MF and others here hype the nonsense that *they* care about liberty but their critics are all oppressors and villains.

          • Major_Freedom says:

            Clearly Ken is a nutjob according to Ken’s definition of nutjob.

      • Richie says:

        What we can say is that you are even more of a nutjob. Your intellectual capacity does not go beyond the boundaries of calling people mentally retarded.

      • Joseph Fetz says:

        http://networkedblogs.com/LdzOT

        I know, I know. Gene already thinks Hoppe an even bigger “nutcase” than Rothbard.

        If Gene is our final arbiter on all cases nutty, where does that leave us?

    • valueprax says:

      Major_Freedom,

      Wanted to ask you a question privately, if you could reach out to me with the contact form on my website (follow the link in my name) I’d appreciate it.

  3. Major_Freedom says:

    And this:

    “In their war against socialism, the philosophers of capital faced two challenges.”

    Shows the author is a polylogist. We can’t be philosophers. No, we’re philosophers of capitalism, philosophers of socialism, etc.

    ——————

    I read the whole article, and it was like reading as essay from a disinterested student in an early year humanities program who just finished reading the coles notes of the required reading list, and waited until the last week of the course before hastily jumbling in as many disparate references as he could.

    • Bob Roddis says:

      How/why can someone write about Hayek and know absolutely nothing about Austrian Economics? Or any economics? It gets boring saying it after awhile, but….no non-Austrian/progressive/Keynesian ever has the slightest clue regarding Austrian and/or libertarian analysis and/or concepts. EVER. This means we’ve won the debate.

      Robin reminds me of another great scholar. I read the Mike Norman MMT site every day because they always find the best of the best critics of the Austrian School. Like Phillip Pilkington who wrote a multi-part series explaining how Hayek is the father of “neoliberalism” which the DOMINANT philosophy (evil, of course) in the world today:

      http://tinyurl.com/agjrofg

      • Lord Keynes says:

        “no non-Austrian/progressive/Keynesian ever has the slightest clue regarding Austrian and/or libertarian analysis and/or concepts. EVER.”

        So do you think that prices adjusted in a flexible manner by market agents towards their market clearing levels is NOT one fundamental element in Austrian price theory and in Misesian economic coordination??

        Or is it that you are ignorant of basic Austrian concepts?

        • Bob Roddis says:

          “Prices” are not mechanical and are thus not “flexible” or “unflexible”. They are the data that result from human exchanges. People are not machines. Voluntary exchanges create the essential information necessary for informed future action. This process will minimize the manufacture of goods that will not sell at the anticipated profitable price. Keynesian policy distorts this essential pricing process.

          Generally, the more desperate people are and the more informed they are, this will generally induce people to be more flexible and realistic in their attempts at pricing. People who belong to labor unions and are thus Economics Deniers and who live in countries enduring a Keynesian bust will tend to be more irrational, inflexible and unrealistic when it comes to pricing their labor. They need to be taught a lesson. Good and hard.

          I don’t know what else I can say and I don’t plan on repeating this same statement another 28 times today on Bob Murphy’s blog.

          • Lord Keynes says:

            “Generally, the more desperate people are and the more informed they are, this will generally induce people to be more flexible and realistic in their attempts at pricing.”

            So your answer is “yes”?

            If so, all your garbage about your Hayek quote — denying that it is referring to convergence to market clearing prices and wages — has now been exposed as arrant nonsense.

            Congratulations, roddis, you have now confirmed that you don’t understand basic Austrian concepts.

            • Richie says:

              Why do you guys even engage each other? All you guys do is repeat the same shit over and over again. Like petty children.

              • Bob Roddis says:

                I engage LK because he is unique among anti-Austrians. He actually reads Austrian writings and is constantly on the lookout for an unclear explanation or a dispute between various writers. Keynesianism is like Jodi Arias (it’s basically undefendable) and thus requires a rigorous defense. His attacks help me clarify the various Austrian concepts for my own benefit while preparing all of us for the inevitable less rigorous attacks we will face from others.

                But he still does not understand economic calculation because he does not understand that economics is not mechanical and is based upon human action, aka the behavior of knuckleheads.

              • Lord Keynes says:

                “But he still does not understand economic calculation because he does not understand that economics is not mechanical and is based upon human action,”

                Yes, roddis, nobody but the Austrian cult understands that economic phenomena arise from and are causally dependent on human actions.

                Next you’ll be telling us Austrians invented money or the internet, or flying unicorns, or whatever.

              • RPLong says:

                lolz

            • Major_Freedom says:

              “So do you think that prices adjusted in a flexible manner by market agents towards their market clearing levels is NOT one fundamental element in Austrian price theory and in Misesian economic coordination?”

              Prices that adjust to that which tends towards clearing the market, are “flexible” by definition. It’s a tautology.

              Austrian theory does not hold that prices in abtracto behave this way or that way in a mechanistic, quantitative manner, divorced from individual action that seeks to maximize gains and minimize losses.

              Your response of “So your answer is yes?” is passive aggressive and indirect, because you are trying to get Roddis to argue that Austrian theory is what you want it to be, or can only understand it to be, instead of recognizing what it actually is.

              As I have explained to you ad nauseum, Austrian theory is grounded on individual action. EVERY SINGLE ARGUMENT YOU ADDRESS in Austrian theory, ALWAYS ALWAYS ALWAYS has to be understood in terms of individual action categories and concepts.

              So if you want to talk about “price flexibility”, and how that relates to Austrian theory, you have to understand prices, price movements, and price levels, in terms of what individual actors are doing, not what prices are doing in abstracto.

              LK, for some reason there is this gigantic gaping hole of ignorance in every Austrian analysis post you write. Your posts to Roddis are nothing but silly attempts to play gotcha by breaking the very “rules” of Austrian theory and getting anyone who will listen to state Austrian theory in a way that is not representative of Austrian epistemology and ontology.

              You are clearly not trying to understand Austrian theory the only way it can be understood. You are instead trying to explain Austrian theory in terms of abstract, floating conceptualizations of price flexibility, equilibrium, supply and demand, etc, because that is where your semantic definitions and word game can distort and twist the various concepts according to non-Austrian rules.

              For the millionth time, there is no Austrian theoretical argument that attempts to prove, or even accepts as a valid methodological approach, that prices behave in and of themselves in particular ways according to particular rules abstracted from individual action.

              If you want to know how price flexibility relates to Austrianism, ask yourself how individual action is applicable. When you do that, you will trivially see why prices are flexible, why they change, and why there is no absolute single time before which all prices should change in such and such ways.

              The reason why you refuse to do this, is because you know, at whatever unconscious level, that once you recognize human action as the driver of economic phenomena, you will be compelled to reject all of Keynesianism, and accept the conclusions of Austrianism.

              That is why you insist, despite repeated corrections to the contrary, that economic concepts must be, and can only be, interpreted and analyzed in terms of abstract concepts divorced from human action, and manipulated and stacked up using whichever irrational epistemology you feel like using at the moment.

              LK, the only person here who is confirming he doesn’t understand basic Austrian concepts is you.

              • Lord Keynes says:

                “Austrian theory does not hold that prices in abtracto behave this way or that way in a mechanistic, quantitative manner, divorced from individual action that seeks to maximize gains and minimize losses.”

                Nice straw man.

                First, nothing above implies that prices are divorced from human action. Your pathetic comments constitute an attempt to imply that prices move by themselves, or some such nonsense.

                Yes, human actions and interactions create prices. Just as humans in many firms create administered prices.

                Thirdly, the idea that Austrianism has no abstract and prescriptive model of how prices SHOULD be formed by market agents, if Misesian economic coordination is to be achieved is ridiculous.

                Salerno:

                Mises conceives the market process as coordinative, ‘the essence of coordination of all elements of supply and demand.’ This means that the structure of realized (disequilibrium) prices, which continually emerges in the course of the market process and whose elements are employed for monetary calculation, performs the indispensable function of clearing all markets and, in the process, coordinating the productive employments and combinations of all resources with one another and with the anticipated preferences of consumers.” Salerno, Joseph T. 1993. “Mises and Hayek Dehomogenized,” Review of Austrian Economics 6.2: 113–146.at p. 124.

                Rothbard:

                “There is no reason why prices cannot fall low enough, in a free market, to clear the market and sell all the goods available. “
                Rothbard, Murray Newton. 2008. America’s Great Depression (5th edn.). Ludwig von Mises Institute, Auburn, Ala. p 56.

                Next you’ll be telling us that Austrian theory has NEVER said that flexible prices created by human action adjusted towards market clearing levels has been part of Austrian theory, or some such hogwash.

              • Lord Keynes says:

                Nor is it just an abstract prescriptive model either, but supposedly a description of the real world:

                “The characteristic feature of the market price is that it equalizes supply and demand. The size of the demand coincides with the size of supply not only in the imaginary construction of the evenly rotating economy. The notion of the plain state of rest as developed by the elementary theory of prices is a faithful description of what comes to pass in the market at every instant. Any deviation of a market price from the height at which supply and demand are equal is – in the unhampered market – self-liquidating.”
                Mises, L. von. 2008. Human Action: A Treatise on Economics. The Scholar’s Edition. Mises Institute, Auburn, Ala.
                756–757.

                Looks like you forgot to read your Mises, MF.

              • Bob Roddis says:

                I fail to see the discrepancy between what MF and I said and what Salerno and Rothbard said. If you own a house but no food and people will only pay you 1/10 of what you think the house is worth, at some point you will trade the house for food. I guess we can call that “flexible pricing”.

              • Bob Roddis says:

                The fundamental element of Keynesianism is that average people will never ever understand the self evident and simple concept of unsustainable wages and prices induced by a Keynesian boom and when the inevitable crisis hits they must be tricked into accepting more realistic and lower real prices and wages through Keynesian funny money dilution. Right, LK?

              • Lord Keynes says:

                No, it is that aggregate demand drives output and employment.

                The existence of the fixprice markets means demand increases generally increase output and employment.

                The employment of labour is more than just a simple function of labour supply and demand curves.

                Investment decisions are made under fundamental uncertainty, and subjective expectations and uncertainty destroy the equilibrating mechanisms postulated by neoclassical theory.

              • guest says:

                The existence of the fixprice markets …

                Just a quick comment on the fixprice markets issue.

                If the owner is fixing the price, then he’s doing it because it serves his own ends.

                That’s not an example of central planning. He owns the things he’s pricing.

              • K.P. says:

                “Investment decisions are made under fundamental uncertainty, and subjective expectations and uncertainty destroy the equilibrating mechanisms postulated by neoclassical theory.”

                There’s clearly a big overlap, you two should hug already.

              • Major_Freedom says:

                LK:

                “Nice straw man.”

                It isn’t a straw man. That is actually how you have been treating prices, and price changes. It’s littered throughout your writings.

                “First, nothing above implies that prices are divorced from human action.”

                Oh yes it does. Your constant focus on the behavior of prices in the mechanical sense, whether prices “do” this or whether prices “do” that, actually does imply that it is all divorced from human activity.

                “Your pathetic comments constitute an attempt to imply that prices move by themselves, or some such nonsense.”

                This is what you are arguing in your attempt to paint Austrian economics as grounded on “immediate” price changes that clears the market. Everything else follows from this straw man.

                “Yes, human actions and interactions create prices. Just as humans in many firms create administered prices.”

                Administered prices are all prices. Every seller has to agree to a price he accepts. Whether he initiates the ask, or whether he accepts a bid, in all cases, his positive choice to that price, and not another, are all “administered” by his conscious choice.

                The doctrine of administrative pricing is, like I have explained to you already, derived from a misunderstanding of how prices are determined by human action, of a value scale that holds certain prices as more valuable than other prices.

                Instead of understanding how prices are grounded on individual action, your treatment of prices is mathematical, where prices “ought” to be set in accordance with nmarginal revenues equalling marginal costs, and where any deviation from this is some sort of imperfection that requires violence to solve.

                “Administered” prices are nothing but individual sellers refusing to incur losses on their investments. The prices they want are prices that take into account costs plus profit. The costs in turn are either determined on the basis of costs of production, and/or by direct supply and demand (price taker).

                Fixed prices do not in any way imply that the economy depends on, is driven by, or requires sufficient quantity of “aggregate demand.” For whatever expected demand happens to be, sellers can in the present alter their investment activity such that costs eventually change. Aggregate costs are themselves a function of past saving and investment.

                “Thirdly, the idea that Austrianism has no abstract and prescriptive model of how prices SHOULD be formed by market agents, if Misesian economic coordination is to be achieved is ridiculous.”

                The entirety of Austrianism is grounded on individual action. There is no concept that is in abstracto.

                ““Mises conceives the market process as coordinative, ‘the essence of coordination of all elements of supply and demand.’ This means that the structure of realized (disequilibrium) prices, which continually emerges in the course of the market process and whose elements are employed for monetary calculation, performs the indispensable function of clearing all markets and, in the process, coordinating the productive employments and combinations of all resources with one another and with the anticipated preferences of consumers.”

                These passages must be understood in the context of human action.

                “There is no reason why prices cannot fall low enough, in a free market, to clear the market and sell all the goods available. “

                See above. The reason there is no reason why prices cannot fall low enough to clear the market, is because human action is goal seeking behavior, and gains can be made through adjusting prices. There is nothing objectively stopping individuals from seeking gains in a free market.

                “Next you’ll be telling us that Austrian theory has NEVER said that flexible prices created by human action adjusted towards market clearing levels has been part of Austrian theory, or some such hogwash.”

                It’s not central. It’s a side-effect derived from equilibrium theorists trying to understand how chaotic human action can be reconciled with equilibrium theory. These statements by Salerno and Mises are not Austrian economics statements per se. They are responses to the typical straw man complaints about the free market process allegedly being able to instantaneously adjust prices so that depressions never occur.

                “The characteristic feature of the market price is that it equalizes supply and demand. The size of the demand coincides with the size of supply not only in the imaginary construction of the evenly rotating economy. The notion of the plain state of rest as developed by the elementary theory of prices is a faithful description of what comes to pass in the market at every instant. Any deviation of a market price from the height at which supply and demand are equal is – in the unhampered market – self-liquidating.”

                Self-liquidating. Do you know why Mises would say that? Hint: It is not due to some alleged internal property of prices themselves, demands themselves, supplies themselves, or any other quantity in itself.

                The reason Salerno and Mises and Rothbard are talking about prices without explicit mention of human action every single time, is because their praxeological epistemology is taken for granted.

                You have to have much more subtle thinking here. Just because an Austrian uses the same terms and phrases as non-praxeologists/thymologists, it doesn’t mean they are using the same epistemology.

                When Salerno says “Prices tend to adjust to clear the market”, he does not mean the same thing as compared to if a Galbraith or Samuelson said it. He is referring to a manifestation of human action, not prices themselves.

                “Looks like you forgot to read your Mises, MF.”

                Learn the difference between the same sentence, using different epistemologies, and you’ll get it.

                “No, it is that aggregate demand drives output and employment.”

                No, it is not. If consumers of companies stopped buying consumer goods, then sellers will just produce consumer goods for themselves. Individuals don’t actually need external demand in order to produce and consume.

                Yes, a division of labor economy can enable individuals to produce and consume a lot more than before, and in this context, there happens to be a statistical aggregate demand. But this demand isn’t driving the economy. What is driving the economy are people abstaining from their own consumption, and saving and investing in labor and capital goods instead.

                The same aggregate demand can be synonymous with zero employment, or maximum employment. Zero employment if everyone spends money on only final output. Maximum employment if everyone abstains from some consumption and saves and invests the most they can in labor and capital goods instead.

                I will let John Stuart Mill explain this to you, at length, and this is probably the single most important lesson that someone in your position can ever learn about economics:

                “We now pass to a fourth fundamental theorem respecting Capital, which is, perhaps, oftener overlooked or misconceived than even any of the foregoing. What supports and employs productive labour, is the capital expended in setting it to work, and not the demand of purchasers for the produce of the labour when completed. Demand for commodities is not demand for labour. The demand for commodities determines in what particular branch *of production the” labour and capital shall be employed; it determines the direction of the labour; but not the more or less of the labour itself, or of the maintenance or payment of the labour. _These depend_ on the amount of the capital, or other funds directly devoted to the sustenance and remuneration of labour.

                “Suppose, for instance, that there is a demand for velvet; a fund ready to be laid out in buying velvet, but no capital to establish the manufacture. It is of no consequence how great the demand may be; unless capital is attracted into the occupation, there will be no velvet made, and consequently none bought; unless, indeed, the desire of the intending purchaser for it is so strong, that he employs part of the price he would have paid for it, in making advances to work-people, that they may employ themselves in making velvet; that is, unless he converts part of his income into capital, and invests that capital in the manufacture. Let us now reverse the hypothesis, and suppose that there is plenty of capital ready for making velvet, but no demand. Velvet will not be made; but there is no particular preference on the part of capital for making velvet. Manufacturers and their labourers do not produce for the pleasure of their customers, but for the supply of their own wants, and having still the capital and the labour which are the essentials of production, they can either produce something else which is in demand, or if there be no other demand, they themselves have one, and can produce the things which they want for their own consumption. So that the cemployment afforded to labour does not depend on the purchasers, but on the capital. I am, of course, not taking into consideration the effects of a sudden change. If the demand ceases unexpectedly, after the commodity to supply it is already produced, this introduces a different element into the question-: the capital has actually been consumed in producing something which nobody wants or uses, and it has therefore perished, and the employment which it gave to labour is at an end, not because there is no longer a demand, but because there is no longer a capital. This case therefore does not test the principle. The proper test is, to suppose that the change is gradual and foreseen, and is attended with no waste of capital, the manufacture being discontinued by merely not replacing the machinery as it wears out, and not reinvesting the money as it comes in from the sale of the produce. The capital is thus ready for a new employment, in which it will maintain as much labour as before. The manufacturer and his work-people lose the benefit of the skill and knowledge which they had acquired in the particular business, and which can only be partially of use to them in any other; and that is the amount of loss to the community by the change. But the labourers can still work, and the capital which previously employed them will, either in the same hands, or by being lent to others, employ either those labourers or an equivalent number in some other occupation.

                “This theorem, that to purchase produce is not to employ labour; that the demand for labour is constituted by the wages which precede the production, and not by the demand which may exist for the commodities resulting from the production; is a proposition which greatly needs all the illustration it can receive. It is, to common apprehension, a paradox; and even among political economists of reputation, I can hardly point to any, except Mr. Ricardo and M. Say, who have kept it constantly and steadily in view. Almost all others occasionally express themselves as if a person who buys commodities, the produce of labour, was an employer of labour, and created,a demand for it as really, and in the same sense, as if he bought the labour itself directly, by the payment of wages. It is no wonder that political economy advances slowly, when such a question as this still remains open at its very threshold, I apprehend, that if by demand for labour be meant the demand by which wages are raised, or the number of labourers in employment increased, demand for commodities does not constitute demand for labour. I conceive that a person who buys commodities and consumes them himself, does no good to the labouring classes; and that it is only by what he abstains from consuming, and expends in direct payments to labourers in exchange for labour, that he benefits the labouring classes, or adds anything to the amount of their employment.

                “For the better illustration of the principle, let us put the following case. A consumer may expend his income either in buying services, or commodities. He may employ part of it in hiring journeymen bricklayers to build a house, or excavators to dig artificial lakes, or labourers to make plantations and lay out pleasure grounds; or, instead of this, he may expend the same value in buying velvet and lace. The question is, whether the difference between these two modes of expending his income affects the interest of the labouring classes. It is plain that in the first of the two cases he employs labourers, who will be out of employment, or at least out of that employment, in the opposite case. But those from whom I differ say that thig is of no consequence, because in buying velvet and lace he equally employs labourers, namely, those who make the velvet and lace. I
                contend, however, that in this last case he does not employ labourers; but merely decides in what kind of work some other person shall employ them. The consumer does not with his own funds pay to the weavers and lacemakers their day’s wages. He buys the finished commodity, which has been produced by labour and capital, the labour not being paid nor the capital furnished by him, but by the manufacturer. Suppose that he had been in the habit of expendingthis portion of his income in hiring journeymen bricklayers,who laid out the amount of their wages in food and clothing, which were also produced by labour and capital. He, however, determines to prefer velvet, for which he thus creates an extra demand. This demand cannot be satisfied without an extra supply, nor can the supply be produced without an extra capital: where, then, is the capital to come from? There is nothing in the consumer’s change of purpose which makes the capital of the country greater than it otherwise was. It appears, then, that the increased demand for velvet could not for the present be supplied, were it not that the very circumstance which gave rise to it has set at liberty a capital of the exact amount required. The very sum which the consumer now employs in buying velvet, formerly passed into the hands of journeymen bricklayers, who expended it in food and necessaries, which they now either go without, or squeeze by their competition, from the shares of other labourers. The labour and capital, therefore, which formerly produced necessaries for the use of these bricklayers, are deprived of their market, and must look out for other employment; and they find it in making velvet for the new demand. I do not mean that the very same labour and capital which produced the necessaries turn themselves to producing the velvet; but, in some one or other of a hundred modes, they take the place of that which does. There was capital in existence to do one of two things—to make the velvet, or to produce necessaries for the journeymen bricklayers; but not to do both. It was at the option of the consumer which of the two should happen; _and_ if he chooses the velvet, they go without the necessaries.

                “For further illustration, let us suppose the same case reversed. The consumer has been accustomed to buy velvet, but resolves to discontinue that expense, and to employ the same annual sum in hiring bricklayers. If the common opinion be correct, this change in the mode of his expenditure gives no additional employment to labour, but only transfers employment from velvet-makers to bricklayers. On closer inspection, however, it will be seen that there is an increase of the total sum applied to the remuneration of labour. The velvet manufacturer, supposing him aware of the diminished demand for his commodity, diminishes the production, and sets at liberty a corresponding portion of the capital employed in the manufacture. This
                capital, thus withdrawn from the maintenance of velvet-makers, is not the same fund with that which the customer employs in maintaining bricklayers; it is a second fund. There are, therefore, two funds to be employed in the maintenance and remuneration of labour, where before there was only one. There is not a transfer of employment from velvet-makers to bricklayers, there is a new employment created for bricklayers, and a transfer of employment from velvet-makers to some other labourers, most probably those who produce the food and other things which the bricklayers consume.

                “In answer to this it is said, that though money laid out in buying velvet is not ” capital, it replaces a cApital; that though it does not create a new demand for labour, it is the necessary means of enabling the existing demand to be kept up. The funds (it may be said) of the manufacturer, while locked up in velvet, cannot be directly applied to the maintenance of labour; they do not begin to constitute a demand for labour until the velvet is sold, and the capital which made it replaced from the outlay of the purchaser; and thus, it may be said, the velvet-Maker and the velvet-buyer have not two capitals, but only one capital between them, which by the act of purchase the buyer transfers to the manufacturer, and if instead of buying velvet he buys labour, he simply transfers this capital Elsewhere, extinguishing as much demand for labour in one quarter as he creates in another.

                “The premises of this argument are not denied. To set flee a capital which would otherwise be locked up in a form useless for the support of labour, is, no doubt, the same thing to the interests of labourers as the creation of a new capital. It is perfectly true that if I expend 1000L in buying velvet, I enable the manufacturer to employ 1000L in the maintenance of labour, which could not have been so employed while the velvet remained unsold: and if it would have remained unsold for ever unless I bought it, then by changing my purpose, and hiring bricklayers instead, I undoubtedly create no new demand for labour: for while I employ 1000L in hiring labour on the one hand, I annihilate for ever 1000L of the velvet-maker’s capital on the other. But this is confounding the effects arising from the mere suddenness of a change with the effects of the change itself. If when the buyer ceased to purchase, the capital employed in making velvet for his use necessarily perished, then his expending the same mount in hiring bricklayers would be no creation, but merely a transfer, of employment. The increased employment which I contend is given to labour, would not be given unless the capital of the velvet-maker could be liberated, and would not be given until it was liberated. But every one knows that the capital invested in an employment can be withdrawn from it, if sufficient time be allowed. If the velvet-maker had previous notice, by not receiving the usual order, he will have produced 1000L less velvet, and an equivalent portion of his capital will have been already set free. If he had no previous
                notice, and the article consequently remains on his hands, the increase
                of his stock will induce him next year to suspend or diminish his production until the surplus is carried off. When this process is complete, the manufacturer will find himself as rich as before, with undiminished power of employing labour in general, though a portion of his capital will now be employed in maintaining some other kind of it. Until this adjustment has taken place, the demand for labour will be merely changed, not increased:
                but as soon as it has taken place, the demand for labour is increased.
                Where there was formerly only one capital employed in maintaining weavers to make 1000L worth of velvet, there is now that same capital employed in making something else, and 1000L distributed among bricklayers besides. There are now two capitals employed in remunerating two sets of labourers; while before, one of those capitals, that of the customer, only served as a wheel in the machinery by which the other capital, that of the manufacturer, carded on its employment of labour from year to year.

                “The proposition for which I am contending is in reality equivalent to the following, which to some minds will appear a truism, though to others it is a paradox: that a person does good to labourers, not by what he consumes on himself, but solely by what he does not so consume. If instead of laying out 100L in wine or silk, I expend it in wages P, the demand for commodities is precisely equal in both cases: in the one, it is a demand for 100L worth of wine or silk, in the other, for the same value of bread, beer, labourers’ clothing, fuel, and indulgences: but the labourers of the community have in the latter case the value of 100L. more of the produce of the community distributed among them. I have consumed that much less, and made over my consuming power to them. If it were not so, my having consumed less would not leave more to be consumed by others; which is a manifest contradiction. When less is not produced, what one person forbears to consume is necessarily added to the share of those to whom he transfers his power of purchase. In the case supposed I do not necessarily consume less ultimately, since the labourers whom I pay may build a house for me, or make something else for my future consumption. But I have at all events postponed my consumption, and have turned over part of my share of the present produce of the community to the labourers. If after an interval I am indemnified, it is not from the existing produce, but from a subsequent addition made to it. I have therefore left more of the existing produce to be consumed by others; and have put into the possession of labourers the power to consume it.” – J.S. Mill, The Principles of Political Economy, Book I, Ch V.

                ——————————————-

                “The existence of the fixprice markets means demand increases generally increase output and employment.”

                False. Demand for goods can increase without a single additional nickel going to employment.

                An aggregate demand of 1000 units of money does not mean there is employment, and it does not mean there is no employment. There is not enough to establish whether 1000 units of money are primarily the outcome of spending from laborers, or the spending from self-sufficient producers.

                Spending on consumer goods is actually in competition with spending on labor and capital goods. They are not all synonymous.

                If all employers laid off every single one of their employees, and instead of spending money on labor, they spend money on their own consumption, then aggregate spending would be the same, and yet employment would drop to zero.

                Aggregate demand is simply not the driver of the economy. Saving and investment is the driver.

              • Bob Roddis says:

                I tried so hard to stay away…. but….

                “Lord Keynes” says: I do not deny that inflexible prices are an element in the Hayekian ABCT.

                But ABCT is about physically unsustainable production projects. There is a recession because capital is destroyed and labour needs to shift to new production.

                According to the theory, even with flexible prices, capital heterogeneity — the non-malleable nature of capital — means that unemployment is inevitable due to idle capital projects and folding up of unsustainable production projects.

                http://tinyurl.com/abqlro8

              • Lord Keynes says:

                “This is what you are arguing in your attempt to paint Austrian economics as grounded on “immediate” price changes that clears the market.”

                I’ve not claimed that Austrian theory says price must be “immediately” flexible by human action but relatively flexible as they are moved by market agents in exchanges towards their market clearing levels.

                Congrats all around on another laughable straw man.

              • Major_Freedom says:

                LK:

                “Investment decisions are made under fundamental uncertainty, and subjective expectations and uncertainty destroy the equilibrating mechanisms postulated by neoclassical theory.”

                We’ve gone over this umpteen times already. It’s like you’re stuck in a coding loop error.

                Uncertainty and subjective expectations do not “destroy” the fact that humans seek to maximize gains and avoid losses, which manifests itself in prices tending towards that which clears the market.

                The more uncertain people get, and the worse their expectations, the more powerful the corrective forces become.

                For the worse the forecast, the greater the losses, and the greater the rebalancing forces that arise from individuals cooperating in a division of labor and rewarding and punishing each other through spending and abstentions from spending.

                Every individual has a set of expectations. Human action itself contains expectations than can be wrong. The worse their expectations are, the greater their losses, and the greater the corrective forces. The more uncertain an individual is, the more likely they will consume more and invest less, which will raise the rates of profits on capital invested throughout the economy. For the lower are people’s investments, and the more their spending is composed of consumption, the lower costs will be relative to revenues, and thus the greater the profits. The more uncertain people get that is translated into lower investment, the greater the incentive to invest becomes.

                —————-

                Moreover, uncertainty and subjective expectations ground EVERY SINGLE human’s actions. Not just those who refrain from initiating force against homesteaders and free traders (i.e. those not “the state”).

                Politicians, regulators, central bankers, they are all subject to “fundamental uncertainty” and “subjective expectations” as well. So they cannot possibly stand as a “solution” to any so-called problems that result from individuals changing their minds concerning what they want to do with their own bodies and property. So bye bye Keynesian violence.

              • Major_Freedom says:

                LK:

                “I’ve not claimed that Austrian theory says price must be “immediately” flexible by human action but relatively flexible…”

                Relative TO WHAT STANDARD??!?

                See this is your problem LK. You never actually make explicit your standard that the “movements” of prices are to be measured against.

                You always retain it to yourself, so that you can pretend that some rational standard has guided you into condemning free market price changes to not be flexible enough fast enough to satisfy what you have repeatedly conceded is nothing but your personal, subjective, fundamentally uncertain state of mind.

                Even if a person refuses to change their asking price for labor for 99 weeks, while they live off the dole, that does not disprove the fact that human action is a force that manifests in prices tending to clear the market. The tendency is always there, in this case hampered by intervention.

                But even if there was no intervention, and a laborer refused to change their ask price for 99 weeks, and instead lived off their savings, or charity, then this also would not disprove the tendency towards market clearing. Here, it would be voluntary unemployment.

                A laborer who choose to not work for less, and holds out for higher prices, or an employer who refuses to pay less per worker, and so employs fewer workers, all of this does not disprove the tendency either.

                All it does is test your patience in refraining from advocating for violence. You have a limit, and beyond that, it’s open season to other property owners. And while you call for the guns, you make sure to bring the textbooks that “prove” why such coercion is justified.

                If prices don’t adjust fast enough for your liking, then somehow out of the model pops a conclusion that everyone should be taxed of their money.

                Garbage top to bottom in your posts. The same garbage is repeated over and over like some mental patient.

              • Lord Keynes says:

                >“Next you’ll be telling
                > us that Austrian theory
                > has NEVER said that
                > flexible prices created
                > by human action
                > adjusted towards
                > market clearing levels
                > has been part of
                > Austrian theory, or
                > some such hogwash.”

                It’s not central. It’s a side-effect derived from equilibrium theorists trying to understand how chaotic human action can be reconciled with equilibrium theory. These statements by Salerno and Mises are not Austrian economics statements per se.

                Oh wow! So now flexible prices adjusted by human action towards market clearing levels as a way of coordinating supply with demand are not even ” not Austrian economics statements per se.” !!!

                “It’s a side-effect derived from equilibrium theorists trying to understand how chaotic human action can be reconciled with equilibrium theory.”

                If you mean Mises did not invent the idea of a tendency market clearing wage and price vector, you’re right.

                The Walrasian neoclassicals did that.

                But now your attempts to say that the Hayek quote peddled by Roddis is not strongly connected to Walrasian GE theory ideas is exposed as utter garbage.

                Your whole take on that passage has just fallen apart.

                Congratulations yet again.

              • Lord Keynes says:

                ” tried so hard to stay away…. but….

                “Lord Keynes” says: I do not deny that inflexible prices are an element in the Hayekian ABCT.

                Yes, and flexible prices by human action is a fundamental element in Misesian economic coordination.

                So now you admit that that prices adjusted in a flexible manner by human action towards their market clearing levels IS one fundamental element in Austrian price theory and in Misesian economic coordination?

              • Lord Keynes says:

                If prices don’t adjust fast enough for your liking, then somehow out of the model pops a conclusion that everyone should be taxed of their money.

                No, MF as usual you are clueless.

                Flexible wages and prices according to MY MODEL will not work because they induce debt deflation and merely cause bankruptcy and further output collapse.

                Your intelligence and acumen is outstanding, as always!

              • Bob Roddis says:

                Oh dear. I’m still trying to stay away. I really am. However, that Hayek quote peddled by Roddis

                concerned the mental construct of prices that would obtain but for the distortion of prices by the Keynesian funny money machine. Since those prices do not exist, Hayek said they cannot be measured. We’ve also been over that 237 times.

                See page 7:

                http://www.flickr.com/photos/bob_roddis/7534880182/in/set-72157630494776170

              • Lord Keynes says:

                And it is also about a set of market clearing wages and prices, to clear product markets and the labour market.

                Just as described by Salerno:

                Mises conceives the market process as coordinative, ‘the essence of coordination of all elements of supply and demand.’ This means that the structure of realized (disequilibrium) prices, which continually emerges in the course of the market process and whose elements are employed for monetary calculation, performs the indispensable function of clearing all markets and, in the process, coordinating the productive employments and combinations of all resources with one another and with the anticipated preferences of consumers.” Salerno, Joseph T. 1993. “Mises and Hayek Dehomogenized,” Review of Austrian Economics 6.2: 113–146.at p. 124.

              • Major_Freedom says:

                “Oh wow! So now flexible prices adjusted by human action towards market clearing levels as a way of coordinating supply with demand are not even ” not Austrian economics statements per se.”

                Correct. It’s historical analysis. How much did prices change, when did they change, who changed them, what was supply, what was demand, how large was unemployment, how many resources were held for how long before the power switch was turned on. Etc, etc.

                These are all historical, unique events that depend on people’s knowledge and preferences at the time.

                Prices tending towards market clearing levels does not require Austrian theory to know it. It isn’t Austrian econ per se.

                Just because an Austrian economist mentions it in a textbook, it doesn’t mean it is Austrian canon.

                It can be shown as true using Austrian theory no doubt, and yes, it does follow from Austrian principles, but it is not a core component of Austrian theory, which is the study of action, not prices or supply or demand per se.

                “If you mean Mises did not invent the idea of a tendency market clearing wage and price vector, you’re right.”

                Yes, and yet at the same time, human action is the reason why it takes place, and Austrians can show that.

                “But now your attempts to say that the Hayek quote peddled by Roddis is not strongly connected to Walrasian GE theory ideas is exposed as utter garbage.”

                We’ve already gone over this as well.

                Now you’re saying it’s “strongly connected.” Hayek’s theory of spontaneous order, and market clearing price tendencies, do not logically depend on Walras’ theory of equilibrium. Hayek was living during a time when GE was the dominant framework, so he explained his theory by using some of the related concepts to GE.

                Regardless, Hayek is not a Misesian, but praxeology is Misesian.

                “Your whole take on that passage has just fallen apart.”

                “Congratulations yet again.”

                House of cards, built on quicksand, etc. I notice this mental construct of various images of falling are very pronounced in your mind.

              • Lord Keynes says:

                “Now you’re saying it’s “strongly connected.” Hayek’s theory of spontaneous order, and market clearing price tendencies, do not logically depend on Walras’ theory of equilibrium. Hayek was living during a time when GE was the dominant framework, so he explained his theory by using some of the related concepts to GE.

                So now you’re saying that Hayek never thought that flexible prices adjusted by human action towards market clearing values is a fundamental part of economic coordination?

                Presumably he never believed in ABCT either!!

              • Major_Freedom says:

                LK:

                “Flexible wages and prices according to MY MODEL will not work because they induce debt deflation and merely cause bankruptcy and further output collapse.”

                But that isn’t a case of “not working”, unless you have already concluded that bankruptcies are themselves evil and not a part of a healthy, growing economy when they are brought about by voluntary, uncoerced individual behavior.

                The only reason flexible prices and wage rates don’t seem to “work” to you, is not because it leads to bankruptcies, but because you hold bankruptcies to be inherently unnecessary, or destructive, to economic growth.

                But if investment errors have been made, then bankruptcies are not only beneficial, but necessary if growth is to resume using those resources.

                If the capital structure has been distorted and blown up into a debt financed bubble, and the new conditions of individual homesteader and free trader preferences and knowledge would generate falling prices and wage rates which generates debt deflation, then the bankruptcies that result are a good thing, if by good we mean reallocating labor and resources to be in line with actual consumer preferences both cross sectionally, and, very importantly, inter-temporally.

                Yuo have no ground to walk on to justify violence in order to stop consumers voluntarily bankrupting bad investments that do not serve their interests.

                So many assumptions in your model, so little penetrating analysis.

              • Major_Freedom says:

                LK:

                “So now you’re saying that Hayek never thought that flexible prices adjusted by human action towards market clearing values is a fundamental part of economic coordination?”

                I never said that. It is the case that Hayek held that economic coordination contains individuals agreeing to mutually gainful prices, given their preferences and knowledge, which means prices agreed to today may be the same, higher, or lower than yesterday’s prices.

                “Presumably he never believed in ABCT either!!”

                Presumably based on what?

              • Lord Keynes says:

                ““The existence of the fixprice markets means demand increases generally increase output and employment.”

                False. Demand for goods can increase without a single additional nickel going to employment.”

                So now you’re trying to tell us that fixprice market businesses NEVER increase output and employment in response to demand surges? Is that correct?

                Sheer genius.

              • Lord Keynes says:

                ““So now you’re saying that Hayek never thought that flexible prices adjusted by human action towards market clearing values is a fundamental part of economic coordination?”

                I never said that.”

                Ah! So you agree that he did!

                Result: Hayek shared a fundamental idea with neoclassicals.

                He did think convergence towards a market clearing wage and price vector was an important part of economic coordination. You lost.

              • Major_Freedom says:

                “So now you’re trying to tell us that fixprice market businesses NEVER increase output and employment in response to demand surges?”

                If a person spends more on the products of business X, then he must abstain from spending on everything else.

                Yes, at the individual firm level, more demand at that firm attracts labor and capital. But that means less labor and capital available for all other businesses.

                Demand redirects labor and capital from this firm to that firm. It does not drive employment and output in the aggregate.

                In the aggregate, the higher the nominal demand for products of business, the lower the available money to be spent on labor and capital, i.e. the factors of business.

                Again, read the passage by Mill that I copied and pasted above. He explains it all in detail.

              • Major_Freedom says:

                LK:

                “Ah! So you agree that he did!”

                I never said that either.

                “Result: Hayek shared a fundamental idea with neoclassicals.”

                Not really. He used an idea from them to represent how interventions into the market move the market away from market clearing tendencies, which he sloppily represented as GE itself.

                Hayek’s theory was how state intervention distorts the coordinating forces in the market.

                The use of GE is pedagogical, because his contemporaries were almost all GE theorists.

                “He did think convergence towards a market clearing wage and price vector was an important part of economic coordination.”

                That isn’t GE per se.

                “You lost.”

                Don’t see how. You’re playing a game that nobody else is playing here.

              • Lord Keynes says:

                ““He did think convergence towards a market clearing wage and price vector was an important part of economic coordination.”

                That isn’t GE per se.”

                In other words, he did think convergence towards a market clearing wage and price vector was an important part of economic coordination.

                He shared that idea with neoclassicals. But you’re too dishonest to admit even that.

              • Lord Keynes says:

                ““Result: Hayek shared a fundamental idea with neoclassicals.”

                Not really. He used an idea from them to represent how interventions into the market move the market away from market clearing tendencies,”

                Ah, first assert “not p” then effectively “p”.

                Violation of the law of non contradiction.

                You surpass yourself.

                Never underestimate MF’s ability to plump the depths of illogic.

              • Major_Freedom says:

                LK:

                “In other words, he did think convergence towards a market clearing wage and price vector was an important part of economic coordination.”

                Sure, but that isn’t Walrasian GE per se.

                “He shared that idea with neoclassicals. But you’re too dishonest to admit even that.”

                Shared is the wrong word. He used GE to explain his own theory of markets.

                “Result: Hayek shared a fundamental idea with neoclassicals.”

                “Not really. He used an idea from them to represent how interventions into the market move the market away from market clearing tendencies,”

                “Ah, first assert “not p” then effectively “p”.”

                Ah, the good old “effectively” rhetorical strategy.

                Nice.

                You “effectively” beat your wife.

              • Bob Roddis says:

                MF: Sure, but that isn’t Walrasian GE per se.

                It sure wasn’t. Here’s part of that Hayek quote peddled by Roddis:

                These discrepancies of demand and supply in different industries, discrepancies between the distribution of demand and the allocation of the factors of production, are in the last analysis due to some distortion in the price system that has directed resources to false uses. It can be corrected only by making sure, first, that prices achieve what, SOMEWHAT MISLEADINGLY, we call an equilibrium structure, and second, that labor is reallocated according to these new prices.

                See page 7:

                http://www.flickr.com/photos/bob_roddis/7534880182/in/set-72157630494776170

              • Major_Freedom says:

                Roddis:

                Hayek was clearly reluctant to use GE to explain his theory, because it wasn’t a logical component of it, but he likely felt compelled to use it because it was what so many of his contemporaries and opponents were used to using.

              • Lord Keynes says:

                “>in other words, he
                > did think convergence
                > towards a market
                > clearing wage and price
                > vector was an
                > important part of
                > economic coordination.”

                MF:
                Sure .”

                Did you read that roddis?
                Read the writing on the wall.

              • Major_Freedom says:

                LK:

                ”….but that isn’t Walrasian GE per se.”

                You purposefully missed the part that is the core dispute here.

        • Razer says:

          LK, are preferences subjective? Do people omniscient?

          Take on those ideas if you want to demonstrate any knowledge of Austrian concepts.

          Also, how about we talk about a related concept since you don’t even feel comfortable talking about axioms.

          Please answer me this. Is it possible to know how an animal will behave in its natural environment if all you can do is observe in an unnatural one (zoo/cage)? If you can, please tell me how that is possible. If not, tell me why. I promise this will make understanding free markets much easier to understand once you get this.

    • Bob Roddis says:

      Pilkington also did a podcast where he reviews “The Road to Serfdom” thus explaining the nefarious and ubquitous influence of Hayek on the world without actually ever having read “The Road to Serfdom” or knowing anything about Austrian analysis.

      http://fromalpha2omega.podomatic.com/entry/2013-01-26T03_29_12-08_00

    • Bob Roddis says:
    • Bob Roddis says:

      “Lord Keynes” just loved the Pilkington podcast on Hayek.

      When Hayek’s economics essentially failed, he turned to a different program: social and political theorising.

      http://socialdemocracy21stcentury.blogspot.com/2013/02/philip-pilkington-on-hayek-and-origins.html

  4. K.P. says:

    If anyone is harder to understand than Hayek it’s Nietzche. His writings can be tailored to fit practically anything. Although, I think the Austrian School does have some related ideas, it would probably be easier (and more interesting!) to look at the similarities to Stirner.

    Also a shame to see Michael Oakeshott rated viewed to be the worst of Conservative canon, I’ve always thought him as one of the best, at least better than Strauss.

  5. Ken P says:

    I had a lot of problems with this article right off the bat and have not finished it, as it is exceptionally long. It seemed like a whole lot of projection on his part about what Austrians believe.

    Yes, there is a lot of subjectivism in Nietzsche and Hayek’s writing, but that is true about a lot of writers. Attributing nationalism or elitism to those who like Hayek seems very bizarre to me. There are surely more people with the open border mindset among libertarians than Democrats. I often hear Democrats explaining that they know how another person should live their life than the other person does.

    Interestingly, my philosophy professor in college was a huge Nietzsche fan and also a Marxist.

  6. RPLong says:

    Well, I just made it to page six. Some quick thoughts:

    1) I think the fact that Hayek (and especially Mises) were influenced by Nietzsche is hardly controversial. Of course they were; everyone was. And is.

    2) Just because they were influenced by Nietzsche doesn’t mean they were influenced in the particular way the author claims. But that is precisely why he equivocates; if you’re inclined to object, he wants to box you in and force you to defend the claim that “Hayek was not influenced by Nietzsche.” Nietzsche’s influence is a banality; that lone fact does not establish the truth of the rest of the article.

    3) Like many essays of this kind, it comes down to nothing more than telling a story of what might have been true, based on the few surviving facts. Take any set of historical data, and use it to tell a story. At least when Umberto Eco does this, he has the decency to call it fiction.

    • Daniel Kuehn says:

      So defending himself against being told that he said something even you say he’s clearly not saying is him trying to “box you in”?

      You’re quite creative in figuring out a way to criticize Robin here RPLong!

      • RPLong says:

        Huh? Better read me again there, DK. I don’t think I’m saying what you seem to think I’m saying.

        • Bob Murphy says:

          RPLong wasn’t directly saying that, Daniel, it was idiom more than assertion.

  7. John B says:

    Mises has withering critiques of Nietzsche in Human Action. The writer doesn’t know what he is talking about. Typical of those that criticize Austrians.

  8. Bob Roddis says:

    Some thoughts on Nietzsche from “Human Action”:

    Nietzsche even before his mental breakdown was so sickly that the only climate he could stand was that of the Engadin valley and of some Italian districts. He would not have been in a position to accomplish his work if civilized society had not protected his delicate nerves against the roughness of life. The apostles of violence wrote their books under the sheltering roof of “bourgeois security” which they derided and disparaged. They were free to publish their incendiary sermons because the liberalism which they scorned safeguarded freedom of the press. P. 172

    Many authors glorify war and revolution, bloodshed and conquest. Carlyle and Ruskin, Nietzsche, Georges Sorel, and Spengler were harbingers of the ideas which Lenin and Stalin, Hitler and Mussolini put into effect. The course of history, say these philosophies, is not determined by the mean activities of materialistic peddlers and merchants, but by the heroic deeds of warriors and conquerors. The economists err in abstracting from the experience of the short-lived liberal episode a theory to which they ascribe universal validity. This epoch of liberalism, individualism, and capitalism; of democracy, tolerance, and freedom; of the disregard of all “true” and “eternal” values; and of the supremacy of the rabble is now vanishing and will never return. The dawning age of manliness requires a new theory of human action. pp 649-650

    Robin not only has no understanding of Austrian analysis, but is unfamiliar with the essential protections for all persons provided by private property and freedom of contract.

    • Ken P says:

      Great passages, Bob Roddis. It makes no sense to say Austrian economics tends towards warmongering or corporate oppression.

      I think Hayek was well ahead of his contemporaries. His aesthetic seems more akin to network theory than nihilism or modernism.

      Leftists in the art community keep predicting uniformity and commoditization of society. While there are certainly examples of that, I think the stronger trend is towards personalization. Ironically, they also complain about the existence of choice and “consumer fetishism”.

  9. Bob Murphy says:

    You guys are falling into the very trap of which I warned. You’re totally wasting your time. This guy can claim Hayek is controlling John Boehner from the grave, and if you object, Daniel will go nuts on you for misrepresenting the position. Just stop.

    • Robert Fellner says:

      LOL! This is how I feel about you engaging DK in virtually anything at this point, not just this issue.

      • Daniel Kuehn says:

        Oh this is just stupid whining and if you think it characterizes your interaction with me then you’re whining too.

        I think one thing, other people think other things and when we talk about it we’ll each think the other is wrong.

        Horror!!!

        You don’t see me calling the mere fact that Bob disagrees with me on this “a trap”. Why does he think he’s going to get any traction by turning around and doing the same.

      • Daniel Kuehn says:

        Anyway, if you feel that way stop reading me.

    • Daniel Kuehn says:

      Oh noes!!!!

      You say something people think are wrong and people will tell you they think it’s wrong!!!

      Mon Calam… I mean Bob Murphy warned you: It’s a trap!

      http://www.youtube.com/watch?v=piVnArp9ZE0

      • Major_Freedom says:

        I think it’s the specific correction choices you decide to make and which you don’t decide to make, that Murphy was talking about.

        He guessed that you would spend time correcting people about this particular issue, rather than something else.

        I’ll leave it to you figure out what information could have been used to make a correct guess.

  10. Robert Fellner says:

    Best response to this is here:

    “The Nation has just published a piece by BHL’s old friend Corey Robin where Robin tries to draw a significant connection between Austrian economics’ view of economic value and Nietzsche’s far broader value skepticism (also see Robin’s CT post here). The upshot, from what I can tell, is that Austrians are guilty both of a kind of nihilism about objective value (whatever that is) and that they implicitly endorse the sort of elitism that is more explicit in Nietzsche’s writings. The argument fails. After a quick summary of the argument, I’ll outline some major and some more minor errors. The post takes the form of a list because I think the piece is replete with errors and confusions, so weaving them together may not be possible or worthwhile.

    I want to emphasize at the outset that none of my criticisms depend on the truth of libertarianism in any way. Any sufficiently informed reader should be able to appreciate the force of my concerns. Consequently, I hope that replies can stick to Robin’s historical claims and my replies, not on the truth or falsity of libertarianism.”

    http://bleedingheartlibertarians.com/2013/05/on-robins-tenuous-connection-between-nietzsche-and-hayek/

  11. Enopoletus Harding says:

    Another hilarity from the article:
    “That’s how market man increased his utility: by consuming something until he reached the point where consuming one more increment of it gave him so little additional utility that he was better off consuming something else.”

    • Bob Roddis says:

      Mr. Robin obviously just hates reality.

      Back in the 70s, I use to get a big kick out of watching hipster commies engage in typical human action about their hipster record collections, their hipster stereos and their big hipster Rock ‘n’ Roll amps and guitars (these days the same people are rich lawyers in big houses who support Obama’s killing of the orphans so the party appears tough).

  12. Teqzilla says:

    Corey Robin writes for webzine jacobinmag and it’s not a title the site gave itself to be coy or ‘daring’. I remember reading something Robin wrote about Burke, presumably an extract from his book the reactionary mind, which made great play of Burkes opposition to the Jacobins as if it somehow made him look ridiculous. There is not much point dealing with weirdos like him.

  13. Demosthenes says:

    I find it ironic since I’ve determined the optimal stopping time for reading Daniel Kuehn comments is as soon as I read his name at the top of them.

    In fairness to the other commenters, though, I don’t read theirs either.

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