First, I'm not sure if I understand what is so uniquely Austrian about the calculation argument. As I understand it the point is that entrepreneurs maximise profits by putting goods to their most valued uses and the price system is exactly what allows them to do this by means of relative price adjustments and profit and loss accounting (very briefly put). My first point is that this implicitly assumes some sort of harmony of interests, in some cases where this assumption doesn't hold, I don't see how the calculation argument is valid. In the case of asymmetric information, externalities or monopoly power entrepreneurs maximise profits by going against what is in the public interest (yes, Austrians will find this term objectionable). But the other point I'd like to make is that this is a pretty standard point in even principles level micro...
Second, in reality firms costs are highly interdependent and often inextricable from one another. What implications does this have for profit loss accounting? Well, as far as I can tell a lot of big firms don't actually know exactly how to maximise profits so they resort to rules of thumb. My can't government do this? And more importantly, in firms still exist and are efficient, clearly there are some other considerations as to what serves consumers best, why shouldn't they be applied to governments as well?
Third, one of the big arguments against math that I've noticed is that it isn't necessary, something along the lines of "we can express these arguments in verbal logic". I think this is completely besides the point, identifying correct arguments and saying, ex post, that we can say what is in mathematical terms in verbal logic misses the point. The math was useful in fleshing out these arguments in the first place.
Four, I've asked this before, but I want to ask it again: what justifies the large salaries of econ PhD in the private sector? Their model building abilities and econometric skills are often used so what causes firms to be so systematically misguided (that is, according to Austrians).
Five, what is wrong with the concept of willingness to pay?
No we don't have to proceed. Your quote here answers everything.
Student:i am not sure what you are getting at.
Sorry to be vague.
FYI I edited my last post to provide more information. IDK if it will help however.
I couldn't get much more specific. I wanted you to point out the conflict here. This excersize may be annoying, and I know it's pompous of me but it's important. Many of you are debating points giving a facade that you have substantial knowledge of the Austrian School of thought. Hayek is just one teacher, in a collection of many. There are even some written texts of Hayek's which is frequently debated about amongst modern and historical Austrians. You can't only be familiar with Hayek, then claim to be sufficiently familiar with AE. In doing so you ignore all the foundational concepts Austrian Economics builds apon. And the point of this excersize, and pointing out your quote above, shows that.
i am not only familiar with hayek, he is just the austrian economist i enjoy the most. but i didn't even mention hayek in the context of that quote, so I am not sure how that is at all relevant.
so it still isn't clear to me what you are asking. when you ask for an "austrian" follow up, I can think of many. Rothbard would have a different response than Hayek who would have a different response than blah blah.
the only answer i can think of is that there would be no unique "austrian" follow up to that statement. if you think there is one, then please hold forth.
Ambition is a dream with a V8 engine - Elvis Presley
You gusy are fantastic at never defining your terms, and then proceeding to conclusions based on them nonetheless.
Student:in other words, nothing specifics? thanks for the clarification.
No my friend, I am being extremely specific. In fact I am referring to a single specific, and generally dominant, position of the Austrian School. Especially amongst modern Austrian economists(More so than historical). There are a few on this forum who have spent a considerable amount of time and self reflection scrutinizing praxeology and what consequences it's logic implies. I have no doubt folks like LS know exactly what I am referring to based on the quote I pulled from your post. I know it appears unfair for me to be vague to you, but I assure you to someone who sufficiently understands the calculation argument, I am referring to specifics. I'd prefer that you spent time reading texts such as HA, and coming to your own conclusion. Rather then me try and teach it to you.
Lets review again. Here is the quote you provided.
Student:the question then becomes whether moderate government interventions could improve on market outcomes in select cases.
Do you not see why some Austrian's would take issue with this? What argument would they employ?
Your response is
Student:the only answer i can think of is that there would be no unique "austrian" follow up to that statement.
Your not aware of any Austrian argument that would be in conflict with your statement? Lets say it's a fringe argument? Nothing comes to mind? I don't want to give it away. :)
LS:You gusy are fantastic at never defining your terms, and then proceeding to conclusions based on them nonetheless.
I realize it was unfair of me. The point of the excercise was to show Student, and perhaps others, that there is more they can read up on. At any rate Student has been fair and up front. It's me who's been playing coy.
The topic I was referring to was calculation. The only way government intervention could improve the market economy is by accident. My assertion is that this is a generally accepted argument, and a shared view amongst many modern Austrians. That this position implies a lengthy understanding of several key foundational austrian topics.
filc,
i can think of lots of problems some austrians would have with that statement.
roy cordato and others would take issue with the implication that we can define what it means to "improve on a market outcome" (he would argue that efficiency is about individual goal seeking and not some sort of value maximization as my statement might imply).
rothbard would probably take issue with the notion that some markets are special and require government intervention to correct their "failings" (though he would also agree with cordato that it is difficult/impossible to define "market failure" meaningfully).
those are a couple i'm thinking of. i'm sure there are others.
now i am not sure what this strange quiz is supposed to show. that i can guess which austrian critique flic thinks are most relevant for my statement? okay. i guess that proves something, but i'm not sure what.
but before you take upon yourself to grade my performance, let me make me make 2 things clear. first, the statement you quoted was not my assessment of how some modern austrians interpret the conclusion of the calculation debate (i wouldn't attempt to make such a summary). second, I never claimed to be an "expert" on austrian economics. my handle is "student" after all and part of why I hang out here is to learn more about some of the interesting thinkers that call themselves "austrian".
if you think there is something i am missing about the calculation debate, I am all ears. but i really don't appreciate your current attitude.
filc:I realize it was unfair of me. The point of the excercise was to show Student, and perhaps others, that there is more they can read up on. At any rate Student has been fair and up front. It's me who's been playing coy.
I think you may have been trying to be too clever, but I was referring to SL, student and EIT. They constantly have *something* to say about Austrianism, even though it has never been apparent they understand what it is they are criticizing in the first place.
They won't define what Austrianism is, or if they do, it is an unsourced strawman, and then they proceed to critique that caricature.
Thankfully, most here have realized what a pointless endeavor discussing with these sorts are, and have passed beyond it. You are a clever guy, you might be wise to do the same.
flic, this was your big reveal? talk about a let down. yes, i've heard this argument before (in fact this reminds me of a conversation i had with esuric here). but i don't think that notion is excluded by statement AT ALL. nor do I think it is the only way an austrian can interpret can interpret the implications of the calculation debate (as indicated earlier with the hayek example).
let's revisit the question i asked.
the question then becomes whether moderate government interventions could improve on market outcomes in select cases.
i only said that the question then becomes whether the government *could* improve market outcomes. how does what you said contradict this question? you seem to believe that the "austrian" follow up is "yes it is possible, but only by accident so not likely". in no way does my question preclude this potential response.
i just don't believe this is the only or even the *primary* follow up an austrian would have to my question. like I said, i think they would be more upset by the notion that market failure can be meaningfully defined in the first place, let alone that they can be corrected once they are defined.
Student:roy cordato and others would take issue with the implication that we can define what it means to "improve on a market outcome" (he would argue that efficiency is about individual goal seeking and not some sort of value maximization as my statement might imply).
Indeed, and when you intervene universally you undermine that.
Student:rothbard would probably take issue with the notion that some markets are special and require government intervention to correct their "failings" (though he would also agree with cordato that it is difficult/impossible to define "market failure" meaningfully). those are a couple i'm thinking of. i'm sure there are others.
I'm not asking you to go appeal to authority to attempt to discredit the calculation argument. Whether it's right or wrong is besides the point. I'm just point out the fact that your presenting an argument which operates in conflict with a fairly standard Austrian position. Int his case, the calculation problem specifically.
Student:now i am not sure what this strange quiz is supposed to show. that i can guess which austrian critique flic thinks are most relevant for my statement? okay. i guess that proves something, but i'm not sure what.
It was meant to show that you were oblivious to certain positions of the Austrian school. Positions that are fairly standard amongst modern Austrian economists, not that it's not debated but still. That the calculation problem was oblivious to you when considering government intervention as a potential positive method.
Student:second, I never claimed to be an "expert" on austrian economics. my handle is "student" after all and part of why I hang out here is to learn more about some of the interesting thinkers that call themselves "austrian".
I understand that, but when you make comments like the following.
Student:but I find it distressing how narrowly some individuals on this board define "austrian economics".
Your passing judgement which is going to beg for a response.
Student:if you think there is something i am missing about the calculation debate
I can't say, it's not my job to teach you. :)
Student:so, if the buyer is risk neutral, the most he is willing to pay is $1,500 (0.5*2000 + 0.5*1000). but, the seller isn't willing to sell the car for that much so the trade doesn't take place. and if this problem is wide spread enough, the entire market for used cars collapses and the price system cannot do its job.
Why would a seller -- who supposedly knows he's selling a $1,000 lemon -- stubbornly insist on a peach-like price of $2,000 for his car? He's likely to be aware of the risk-adjusted calculation of his (asymmetrically info-challenged) buyers and probably agree to let it go for $1,500. Moreover, if all sellers demanded peach-like $2,000 and all buyers played it safe by assuming lemons and only offered $1,000, then no sale occurs. If the cost of such an outcome is more than $500 for each side, then both sides would gain by trading at $1,500.
Z.
It was meant to show that you were oblivious to certain positions of the Austrian school. Positions that are fairly standard amongst modern Austrian economists, not that it's not debated but still.
flic, your "quiz" in no way demonstrated i was unaware of that argument any more than then fact that you didn't mention the notion that some austrians believe market failure lacks a coherent meaning (or that mainstream welfare economics more generally is deficiant) is evidence that you were ignorant of those arguments.
plus, as i illustrated with the link in my previous posts, i have had similar discussions with other posters. so i am fully aware that some people think that the calculation debate precludes any and all beneficial government action. and the way i phrased my initial statement didn't preclude that possibility.
i think the problem is that you misunderstood my statement, not that i misunderstood austrian economics.
I understand that, but when you make comments like the following. Student:but I find it distressing how narrowly some individuals on this board define "austrian economics". Your passing judgement which is going to beg for a response.
umm if you scroll back, you will see that that quote comes *after* you accused me of not understanding austrian economics and insisted on holding a quiz to demonstrate the fact.maybe if you don't want me to pass judgement on your knowledge of austrian economics, you shouldn't try to pass judgement on mine?
over all, i'm glad with the way things turned out. i passed your quiz and i'm sure everyone on this board will be reasonable and fair minded enough to see that fact. so my day can only keep going up from here, right?
Student:flic, your "quiz" in no way demonstrated i was unaware of that argument any more than then fact that you didn't mean the notion that some austrians believe market failure lacks a coherent meaning (or that mainstream welfare economics more generally is deficiant) is evidence that you were ignorant of those arguments.
Ofcoarse we can't expect you to admit the mistake. :)
Though the sequence of posts above are fairly convincing....
Student:umm if you scroll back, you will see that that quote comes *after* you accused me of not understanding austrian economics and insisted on holding a quiz to demonstrate the fact.
irrelevant. You've made plenty of judgemnetal comments like that in the past. And whether you said it before, or after our dialogue begun is still irrelevant. The fact that you said it at all is pertinent to the point that your quick to pass judgement, before fully understanding the oppositions position, and countering critique's.
Student:personally, i think i have passed your test. so my day can only keep going up from here, right?
Despite the fact you hadn't a clue as to what I was referring to untill after I told you?
At any rate the quiz wasn't for you, it was for others who read the forum. A demonstration is all. Thx
[edit]
It wasn't a quiz, it was a mental exercise.
haha and if you asked me to guess an integer between 1and 10, i doubt i would pick the one you were thinking after 2 guesses.
as i noted, there were a lot of ways different ways austrians could respond to my question and I picked what i felt was the more likely (and maybe more important criticism).
i have indeed heard of the argument (and offered an example of thread with a simiar discussion) and i'm sorry if you don't believe me.
sorry...but not too concerned.
PS*
The fact that you said it at all is pertinent to the point that your quick to pass judgement, before fully understanding the oppositions position, and countering critique's.
said the pot to the kettle. after one sentence you were ready to string up for not knowing what i was talking about. i at least went through an entire post before i called your momma into it.
anyways, if my judgements are "too quick" i apoligize.
Student:as i noted, there were a lot of ways different ways austrians could respond to my question and I picked what i felt were the most likely based on my experience here (in previous threads, nothing gets a convo going like asserting that market failures can be defined at all).
Are you trying to downplay the significance of the calculation argument now? Only so many ways to save face.
I'm sorry this all ended up coming out on you, I hope you don't take offense to all of this. If your not too concerned about it then I won't feel as bad. =D
um, no i'm not? i explicitly pointed out that other people made the argument before you and that I am familiar with it. I just don't agree that it is the only or even best interpretation of the conclusion of the calculation debate.
haha look, if you want to keep pretending like you "proved" something that's fine. I think anyone reading this thread will see my point exactly.
peace out :)