Doug Mackenzie wrote:
>----------------- HES POSTING -----------------
> > I have made my objections to Mises's work clear, and I don't think
> > I have received anything responsive to these points in return.
>
> > I have done extensive reading in Austrian economics ... Nothing I have
> > read persuades me, and much repels me.
>
>This is a rather strong claim. Having come in 
>late on this discussion, I do not know all the 
>details, but it seems that it has centered on 
>the very broad theme of praexeology. I am not 
>clear on what it is, exactly, that JC Medaille 
>finds so repellent and unpersuasive in AE. 
>Perhaps it would help to list the main contributions of Mises (and Hayek).

I thought I made it clear what I found repellent: 
the dual claim "originality" and "obviousness," 
coupled with the condemnation of all 
non-believers as "superstitious." I find 
repellent Mises's claim that praxeology has the 
same epistemological status as does mathematics 
and logic, coupled with a complete misunderstanding of what logic actually is.



>1. The application of marginal utility theory to 
>money (Mises 1912). We can tack on the 
>'regression theorem' and Austrian cycle theory 
>here. Mises did not win over professional 
>opinion with his full theory of money, but even 
>his critics should recognize his work on money 
>and cycles as a sophisticated intellectual construct.

This I will grant tentatively, mainly because I 
am woefully ignorant of monetary theory. I 
distrust the gold bugs and am suspicious of the 
monetarists, and indeed of most that I read on 
the subject. Hence, this doesn't leave me much 
room to run or space to criticize.



>2. expanding the domain of economics to human action.

This is the strangest claim of the Miseans, and 
it is difficult to say what it even means. I 
can't think of an economist who didn't write on 
human action, and only a few who wrote on it as 
Mises did. Mises's theories in this regard are 
completely occult, unconnected with any of the 
higher sciences that deal with human action. I 
don't think he can find much in the way of 
confirmation from the psychologists or the 
sociologists. Doesn't that scientific isolation strike you as suspicious?



>3. Putting equilibrium into perspective. Mises 
>constructed a sound critique of the use of 
>equilibrium models by Neoclssicals. Exclusive 
>focus on competitive or Walrasian equilibrium 
>has led economics down an odd path, and Mises 
>did resist it. Mises and Hayek developed several 
>concepts of equilibrium (final state of rest, 
>plain states of rest, the ERE...) and applied 
>them. Mises and Hayek were able to get past the 
>simplistic notion of competitive equilibrium, 
>and focus on true dynamics- evolution in the 
>sense that Schumpeter wrote about in his 
>Development book. Hayek's 1937 article Economics 
>and KNowledge is a particularly important 
>contribution to understanding equilibrium. Is 
>there something unpersuasive or repellent about 
>the idea that full equilibrium requires an 
>impossible level of knowledge and plan 
>coordination? What is wrong with the idea that 
>the price system works as an imperfect and 
>incomplete (but impressive)communications network? How is this
>  repellent?

The trouble is that it comes down to a claim that 
if equilibrium isn't perfect, then we can't speak 
of equilibrium. Its a great half-truth, but in 
fact we can't speak of anything else in 
economics. A successful economy achieves, 
roughly, equilibrium. When it doesn't have it, we 
have a boom, a bust, or an outright collapse. No 
one invests without some reasonable expectation 
of equilibrium. The ERE is a strawman, and the 
Misean "all-or-nothing" approach is not helpful.

A price system is indeed a very good tool, but 
not a perfect one, since it can do nothing about 
externalities (by definition). To refuse to 
recognize the limitations of any system, no 
matter how good the system is, is to make even good systems ridiculous.



>4. Costs and subjectivity/uncertainty. Aside 
>from the general points about subjectivity and 
>ordinal measurement, we can add in the 
>Calculation Critique of socialism. Mises and 
>Hayek specifically predicted that socialism 
>would lead to bureaucratic rigidity and gross errors in capital investment.

And he was right; socialism does lead to 
bureaucratic rigidity and gross errors in capital 
investment. The problem is that Hayek's ideas 
have been regnant since Reagan in the United 
States and Thatcher in Britain. And they have led 
to bureaucratic rigidity and gross errors in 
capital investment, along with massive and 
unsustainable levels of debt. When Reagan took 
office, the total debt of the United States Gov't 
was $700 million. When Bush Sr. left office, it 
had tripled to $2.1 Trillion. Then it doubled 
again and then doubled again, and now stands at 
$9.4 Trillion, with no end in sight, and no way 
to bring it down. Further, since the "Washington 
Consensus," these ideas have been forced on every 
developing economy within the World Bank's care, 
and the results are all the same: bureaucratic 
rigidity and gross errors in capital investment. 
It is not that we are comparing a successful 
system with an unsuccessful one; that would be 
easy. Rather, we are comparing different 
combinations of success and failure. If we 
compare the more socialist economy of Western 
Europe with the lands were Hayek rules, arguments 
can be made on either side, but great differences 
there are not. Indeed, at least some of the 
differences seem to favor the Europeans, and very 
few the Americans. And when we throw in the mixed 
economies of Japan, China, Taiwan, Korea, 
Singapore, etc., we get even more comparisons, 
and one's not always favorable to our way of doing things.

The ideas of Marx and Hayek have both been 
thoroughly tested--with about the same results. 
Both promised a kind of withering away of the 
state; both saw the state grow to gargantuan 
proportions. The defenders of Hayek will say that 
the politicians never properly implemented 
Hayek's ideas. This is exactly the same defense 
that Marxists put forward. The problem is that 
both are correct; neither's ideas were fully 
implemented because neither set of ideas could be 
implemented. It is not that Marx and Hayek lacked 
politicians who honestly wanted to implement 
their ideals; it was, rather, that it is 
impossible to do so without causing social chaos. 
The politicians pulled back not for a lack of 
conviction, but for a lack of results. Both Marx 
and Hayek ran smack-dab into the law of 
unintended consequences, and systems built on 
both sets of ideas end in more or less the same 
place: a kind of state-directed capitalism. 
However, there is good reason to doubt that these 
systems can sustain themselves for much longer.



>5. Political Economy. JCM claims to find nothing 
>persuasive in The Road to Serfdom. Is the idea 
>that the worst rise to the top really not 
>persuasive? IF not, why? This is not just a 
>matter of Stalin and Hitler rising to the top of 
>centralized states back then. There are recent 
>examples of socialist acting in less than 
>democratic ways- have H Chavez and R Mugabe 
>shown respect for democratic freedoms in 
>Venezuela and Zimbabwe? There is much more to 
>get into here, but this one point will due, at least for now.

Very true, but you need to add at least one more 
name to that list: George W. Bush. I would never 
have thought, even a dozen years ago, that secret 
renditions and torture would be, not an 
aberration, but the standard operating procedure 
for my country. I would not have thought that the 
president could get away with thousands of 
"signing statements" disavowing the laws he was 
sworn to uphold. I never thought that we would 
see such a reach for an imperial presidency 
fighting distant wars for no discernable reason. 
True, Bush is not as far along the road to 
serfdom as is Mugabe, but he has past the toll booth on that same highway.

And Hayek himself had no qualms about working 
with Pinochet. So its a bit questionable to cite 
the socialist tyrants and ignore Hayek's buddy. 
Further, it ignores the facts of Chavez's rise to 
power. Il Modello (the South American term for 
Hayek's model) had been forced down the 
collective South American throat by the World 
Bank and the IMF, and the results were a 
disaster. Politicians like Chavez were a reaction 
to the disasters of the Washington consensus. But 
at least Chavez serves as a warning to others in 
SA, and as long as Venezuela can remain 
democratic, his influence will soon end. That was 
not possible in Chile, because Pinochet made no pretence of being democratic.



>6. Entrepreneurship exists only in dynamic conditions,

Are there "non-dynamic" conditions in human life? 
Or in physical life in general, as far as that 
goes. In any case, it seems to me that the 
Miseans claim originality for what most people take for granted.


>JC Medaille's tone seems to imply that Mises and 
>other Austrians have contributed nothing worthwhile.

I don't know what they have contributed; I don't 
follow Austrian literature that closely. But of 
the things you have cited, with the exception of 
monetary theory which I know nothing about, they 
are all of either questionable value, denied by 
the facts of history, or merely things that 
everybody has always taken for granted.


John C. M?daille