Hayek Contra Pangloss: A Rejoinder

Whitman (1998) claims that Friedrich Hayek's theory of cultural evolution was not Panglossian. Denis's (2002) refutation relies on an overbroad definition of the term Panglossian, a misunderstanding of the implications of group selection theory, and an incomplete understanding of the nested character of evolutionary processes in Hayek's approach.     

Hayek, Keynes, and modern macroeconomics

The Great Recession seems to be creating a change in the trend of macroeconomic thinking. Prior to the financial crisis of 2008, dynamic stochastic general equilibrium (DSGE) models dominated the macroeconomics literature without any apparent challengers on the horizon. Since then, however, we have seen an increasing interest in macroeconomic models that address the state of confidence (??animal spirits??), complexity, cognition, and radical uncertainty. Most of the renewed interest in animal spirits, complexity, cognition, and radical uncertainty has come from a more or less ??Keynesian?? perspective. We discuss the potential to emphasize these elements from a more ??Hayekian?? perspective and argue that Austrian approaches to macroeconomics along these lines are more likely to resonate with mainstream economists than in years past.     

From Keynes to Hayek: The marvel of thriving macroeconomies

Inherent ignorance of and uncertainties about the future may translate into doubts about the overall viability of market mechanisms. However, these doubts are quelled by a broad empirical observation: market economies thrive. Hayek sometimes abstracted from such ignorance and uncertainties in order to identify the market mechanisms that are essential to thriving economies. His often-overlooked “interest-rate brake,” for instance, keeps the rate of implementation of new technologies in line with peoples willingness to save. A careful reading of macroeconomic history suggests that artificial booms often ride piggyback on genuine booms. During a period of technological breakthroughs, the central bank's adherence to the Real Bills Doctrine overrides the interest-rate brake and engenders an unsustainable boom. JEL Code B22, E30, E50     

Keynes, uncertainty and interest rates

Uncertainty plays an important role in The General Theory, particularlyin the theory of interest rates. Keynes did not provide a theoryof uncertainty, but he did make some enlightening remarks aboutthe direction he thought such a theory should take. I arguethat some modern innovations in the theory of probability allowus to build a theory which captures these Keynesian insights.If this is the right theory, however, uncertainty cannot carryits weight in Keynes's arguments. This does not mean that theconclusions of these arguments are necessarily mistaken; intheir best formulation they may succeed with merely an appealto risk.     

Keynes, Lucas and involuntary unemployment: a reply to Hayes

In this response to Mark Hayes's criticism of his article, ‘Lucason involuntary unemployment’, the author insists on theneed to draw a distinction between labour rationing (a marketoutcome) and unemployment (the activity of job seeking). Economictheory is mainly concerned with the former. Yet the issue ofthe voluntarity versus the involuntarity of unemployment pertainsto unemployment as an activity. Failing to make this distinctioncannot but lead to semantic confusion.     

Hayek and Experimental Economics

This paper is an address given to the Austrian legislature in Vienna, Austria on March 3, 2004. The main focus is on the connection between insights from F.A. Hayeks research program and experimental economics.     

On reading Hayek: Choice, consequences and The Road to Serfdom

The basic thesis in The Road to Serfdom is that the lure of socialist ideology has the unintended and undesirable consequence of economic depravation and political tyranny when countries follow its policy agenda. Socialist planning requires economic planners to assume a level of responsibility for economic life in a country which is both cumbersome to the point of impossible, and powerful beyond any reasonable limit that could be safely trusted to any one individual or group of individuals. The papers in this symposium provide a critical reading of the Hayek's thesis on socialism. While many strong points are made in the discussion, the critical reading of Hayek offered must ultimately be judged unsatisfactory. The issues of choice and consequences are not addressed, and as a result the basic argument presented in The Road to Serfdom is never adequately engaged.     

Keynes,Ricardo and the classical theory of interest

Keynes made harsh and repeated attacks on the work of Ricardo, blaming him particulary for what Keynes called the ‘classical theory’ of interest. Garegnani and others argue that Keynes' criticisms of the classical theory of interest apply to later neoclassical writers, but not to Ricardo. This paper re-examines Keynes' criticisms. It argues that Keynes attacked Ricardoapos;s theory of interest despite his awareness that Ricardo did not hold the ‘classical theory’. Moreover, Keynes not only expressed sympathy for Ricardo's understanding of interest, but his criticisms which do apply to Ricardo do not address Ricardo's theory of interest.     

Hodgson on Hayek: a critique

In his book Economics and Evolution, Geoffrey Hodgson offersa detailed critique of F. A. Hayek's writings on cultural evolution.Certain aspects of Hodgson's treatment appear to be inaccurate.This paper criticises Hodgson's critique.     

Hayek and the Great Depression of 1929: Did he really change his mind?

The aim of this research is to establish whether, and if so in what way, Hayek changed his mind about the Great Depression of 1929.The work is divided into two parts. In the first part, I present the ‘early’ Hayek of the 1930s. Hayek was the great rival of Keynes. Both explained the Great Depression, applying opposing business cycle theories. For Keynes, the crisis was caused by an excess of saving over investment; for Hayek, on the contrary, by an excess of investment over saving. In the early 1930s, Röpke attempted a synthesis, positing that a recession due to overinvestment can degenerate, as in 1929, into a depression caused by oversaving. Hayek examined and rejected Röpke's theory. In the second part, I present the ‘later’ Hayek of the 1970s. After years of silence and solitude, Hayek was unexpectedly awarded the Nobel Memorial Prize in Economics, precisely for the contribution he made in the 1930s to the theory of the business cycle. Hayek returned to his pursuit of the ghost of Keynes, debated with his friend and rival Friedman, re-examined Röpke's special case and, according to Haberler, changed his mind. In my conclusion, I attempt to resolve the dilemma.     

The Economic Problem of Happiness: Keynes on Happiness and Economics

By stressing the substantial continuity of vision between John Maynard Keynes’s early unpublished essays and his more mature writings, the paper discusses Keynes’s ethics and focuses on his thoughts about happiness. In particular, we emphasize the anti-utilitarianism of Keynes’s vision and his belief that material wealth is but a precondition to enjoy the possibilities of a good life, and direct attention to problems of incommensurability raised by the multidimensional nature of happiness as considered by Keynes. We then argue that the rediscovery of Keynes’s legacy in this respect may be a precious counterweight to the most controversial aspects of today’s happiness research.     

Foreign investment, reparations and the proposal for an international bank: notes on the lectures of J M Keynes in Geneva, July 1929

Keynes's lectures to the Geneva School of International Studiesprovide substance to the intellectual linkages between the Cambridgedon and economists working in international economic agenciesduring the inter-war period. Keynes was keenly sought afteras a policy adviser; as the notes to these lectures indicate,he provided his audience with theoretical insights into thepressing issues of the day - reparations and the transfer problem,the economic foundations of the Dawes and Young Plans, and proposalsfor an international bank.     

Legal positivism and property rights: a critique of Hayek and Peczenik

Scholars such as Friedrich Hayek and Aleksander Peczenik have criticized legal positivism for undermining constitutionalism and the rule of law, an implication of which is weakened private property rights. This conclusion is far from evident. First, I contend that legal positivism is compatible with a strong support for property rights. Second, the causal relationship between legal positivism and the degree to which property rights are applied and protected is analyzed. The main arguments for a negative relationship—that legal positivism centralizes and politicizes legislation and that it makes the legal culture servile in relation to the political sphere—are considered unconvincing.

Marx's value forms and Hayek's rules: a reinterpretation in the light of the dichotomy between physis and nomos

This paper argues that both Marx and Hayek objected to the dichotomybetween physis and nomos, and offered concepts which integrate,or mediate between, the two. Marx's value forms and Hayek'srules aim to grasp something neither purely natural nor purelyartificial or social, but ‘socially natural’. Valueforms and rules are natural in the sense that they pre-existagents and are taken by agents as given. On the other hand,forms and rules are social in that production relations or spontaneousorder are reproduced as the unintended consequences of agents'using forms or following rules. Thus value forms and rules standas links between agents and production relations or spontaneousorder.     

Vicarelli,Keynes, and the unstable nexus between investment,liquidity, and finance

The goal of this article is to reconstruct Keynes’s vision of the unstable nexus between investment, liquidity and finance, as set out by the Italian economist Fausto Vicarelli (1936–1986). As argued in the article, one of Vicarelli’s main contributions consists of explaining the inherent instability of financially sophisticated capitalist economies in terms of the interaction (and double dissociation) between investment, saving, and stock-holding decisions, within a Keynesian framework characterized by the presence of fundamental uncertainty. While Vicarelli’s interpretation of Keynes is best understood in the context of the post-Keynesian literature, its relevance goes beyond that, as its sheds light on current issues related to the post-2008 financial crisis and its policy implications.     

哈耶克对凯恩斯有关通货膨胀理论的批判及其启示

在全球应对金融海啸初见成效之时,国内外无论政府还是学界都对通货膨胀存在一定预期。本文通过对哈耶克有关文献的梳理,站在哈耶克立场上着重对凯恩斯通货膨胀的性质、形式及后果进行了批判。剖析了人为的、只重视结果的凯恩斯通货膨胀理论在经济和政治层面可能造成的后果,并运用哈耶克理论为中国预防通货膨胀从心理、政治和现实三个方面提供了思想资源。     

Socialism after Hayek and human sociality

Was Hayek a postmodernist? Pointing to the important role that human sociality plays in Hayek’s work, Ted Burzack’s answer is resounding “yes.”     

High pressure and black clouds: Keynes and the frequentist theory of probability

The thesis of this paper is that Keynes wrote A Treatise onProbability in opposition to the frequentist theory of probability,systematised by John Venn, which denied any role for probabilityin decision theory. Keynes was interested in finding an alternativeconception of probability that could be utilised as a guideof life. To analyse this point, the paper considers Keynes'scriticisms of frequentist tradition in the two versions of hisFellowship dissertation, and in the published edition of hisTreatise. Keynes's project is then illustrated with the famousexample of whether or not to go out with one's umbrella in thesituation in which the pressure is high and the clouds are black.