he had very clever ideas—but he was extremely bigoted, he was racist. There is a wonderful interview with him that you can find on You Tube, where he says (imitating Hayek’s accent) “I am not a racist! People accuse me of being a racist. Now it’s true that some of the Indian students at the London School of Economics behave in a very nasty way, typical of Indian people…” and he carries on like this. So that’s one reason he is horrid. A second thing is that if you don’t believe he is horrid, David, I will send you his book The Road to Serfdom, which said that if there is any planning going on in the economy, it will inevitably lead you to a fascist situation. When he produced that book it had a big success, particularly in the United States, and what is more, he authorized a comic book version of it, which is absolutely dreadful. One Nobel Prize winner, [Ronald] Coase, said “you are carrying on so much against central planning, you forget that a large part of our economy is actually governed by centrally planned institutions, i.e., big firms, and these big firms are doing exactly what you say they can’t do.
From a new web site called Evonomics, to which Jason Collins contributes. It seems like an eclectic grab-bag of not-necessarily-original content. Worth a visit. For example, in a different piece, Rory Sutherland writes,
The market mechanism is loosely efficient. But the idea that efficiency is the main virtue of free markets is wrong. Competition itself is highly inefficient. In my home town, I can buy food from about eight different places; I’m sure this system could be much more ‘efficient’ if Waitrose, M&S and Lidl were forcibly merged into one huge ‘Great Grocery Hall of The People No. 1306’. I am equally confident that after a few initial years of success, the shop would be terrible.
The missing metric here is semi-random variation. Truly free markets trade efficiency for a costly process of market-tested innovation heavily reliant on dumb luck. The reason this inefficient process is necessary is that, though we pretend otherwise, no one knows anything about anything: most of the achievements of consumer capitalism were never planned; they are explicable only in retrospect, if at all.
Back to Kirman, I found this interesting:
in France when I arrived here it used to take about a day and a half to make my tax return. Now it takes around about 20 minutes, because some sensible guy realized that you could simplify this whole thing and you could put a lot of stuff already into the form which they have received. They have a lot of information from your employer and so forth. They’ve simplified it to a point where it takes me about 20 minutes a year to do my tax return.
Advantage France, apparently.
Overall, you will find the interview annoying. Lots of use of “neoliberalism” and “laissez-faire” as boo-words. Just once, I would like to see someone on the left walk through the Federal Register’s list of regulations and justify the claim that we are living in a laissez-faire economy. And I would like more people to have Sutherland’s understanding of the virtues of markets rather than the neoclassical understanding.
I think Sutherland is missing the point with respect to efficiency. Competition produces efficient firms, and lack of competition produces the opposite. And his grocery store example is flawed. Multiple stores are, presumably, not located all together in a huge single ‘grocery mall’, but are distributed, providing more efficient access to people living nearby each one. And customer tastes and price sensitivity are not uniform (Aldi shoppers are not Whole Foods shoppers) — no single store could efficiently serve everyone’s needs and desires. And, lastly, efficiency is relative. Creative destruction might appear messy, but is there a known more effective means of producing efficient businesses? Sutherland certainly doesn’t propose one.
The majority of articles in the new Evonomics journal create a simplistic, caricatured view of those disagreeing with them (especially those who are remotely pro-market) so they can then squash the strawmen they have built.
I am not sure if they really believe it, or if they are grandstanding.
Here is one snippet of how Robert Kadar explains one of the central tenets of neoliberalism (which is apparently what they call people like Dr Kling now…
“…government’s sole purpose for existing is to ensure that corporations and ultra-rich individuals aren’t restrained by rules because, if they were, economic growth would cease and wealth wouldn’t trickle down to the rest of society.”
This is in his article on how those believing in free enterprise are infected with a cultural mind virus.
I encourage readers to read some of the initial articles and leave commentary. See if they believe in feedback.
I’m disappointed with that site so far too. But I like Jason Collins, who recommended it. And that Sutherland piece reads as promising. It has a nice Armen Alchian-style theme running through it.
“I would like to see someone on the left walk through the Federal Register’s list of regulations and justify the claim that we are living in a laissez-faire economy.”
Well of course what they mean is neo-liberal or laissez faire COMPARED to their more interventionist ideal. And of course harping on how much your opponent is getting THEIR way, while your side shakes its little fists is simply the way the West’s underdog/victim rhetorical style plays out.
B. R. Shenoy was one of the favorite students of Hayek, he was of course an Indian economist. Actually, quite like Hayek’s situation in the west, B. R . Shenoy was the lone voice of reason during the central planning days of Indian government.
He was the only economist who voiced his opposition to Nehru’s second five year plan. And quite like Hayek, his predictions later proved to be quite prescient. Actually most of his articles reflect a deep understanding of knowledge problem and the importance of structurally unplanned market process.
Shenoy’s conversations with Hayek was published recently and that definitely does not reflect any bigotry whatsoever.
It’s great to see the discussion on the content of Evonomics. Not sure what “eclectic grab-bag of not-necessarily-original content” means, but I can assure you that our objective is to create a deep dialogue on issues held sacred – like support for “markets” and “free-enterprise” and dislike for “planning” and “intervention”. Briefly, these terms don’t say much about down-to-earth matters and generally signal sacred beliefs to a rigid ideological worldview. What we’re trying to do is break free from the rhetoric that often blinds us to why and how market and governments function well. Complexity and evolutionary science provides a whole new framework and narrative about the economy that we’ll make mainstream and move our readers beyond the typical libertarian, liberal, or conservative economic worldviews. And It’s definitely not the simple and unproductive story that “markets” always = freedom, growth, constructive competition, decreasing global poverty and the “State” always = rent-seeking, regulatory capture, lack of innovation, etc. For a technical overview of this point, read Translating New Economic Thinking into Public Policy http://www.ippr.org/files/images/media/files/publication/2012/09/complex-new-world_Aug2012_web_9499.pdf?noredirect=1
Regarding “Neoliberalism”. It isn’t a strawman. The term was created by Hayek and the Mont Pelerin Society. The books Master’s of the Universe by Steadman and The Great Persuasion by Burgin detail this important history.
Lastly, please do comment on the pages. We are currently recruiting ambassadors to respond more quickly to comments. We just started and it’s already difficult to keep up with the amount of traffic and comments on all our platforms, but we’ll do our best!
Robert,
Just to clarify then, you are stating that Hayek’s position was that “…government’s sole purpose for existing is to ensure that corporations and ultra-rich individuals aren’t restrained by rules because, if they were, economic growth would cease and wealth wouldn’t trickle down to the rest of society.”
I find that really hard to believe. Don’t get me wrong, I am sure there are all kinds of things which Hayek did believe we could take exception to. But let’s build on or refute what people really believed, not make caricatures of their beliefs to score points with supposedly receptive audiences.
Come on Robert,
You seem to be playing a role with the editing or collecting of articles for the new journal. You are getting clear feedback that the strawman arguments cheapen and belittle the empirical strength of the new magazine.
I strongly suggest you guys decide whether this is a rhetorical anti market opinion journal playing to people’s biases and politics or something which tries to make an actual contribution to the stock of human knowledge and prosperity.
Seriously man, choose wisely. Make a difference or score cheap political gotchas.
The discussion reminds me of the famous Krugman article where he explained there were two paths to popular writing. The empirical one, and the exciting one full of half truths and political dog whistles. Perversely the same article marked the point where he chose the second path and abandoned the former. Of course it made him a household name and a wealthy man, so perhaps he did choose wisely.
Those are dumb statements. Anybody worked in a firm before? It isn’t the central planning that makes them good. I thought Coast knew that. Never reason from an academic.
The Kirman quote is just hopelessly absurd.
Examples:
“which said that if there is any planning going on in the economy, it will inevitably lead you to a fascist situation.”
Nope, straw man.
“One Nobel Prize winner, [Ronald] Coase, said “you are carrying on so much against central planning, you forget that a large part of our economy is actually governed by centrally planned institutions, i.e., big firms, and these big firms are doing exactly what you say they can’t do.”
If Coase actually said it, he must not have understood anything at all about feedback mechanisms and public choice. Of course, he did understand those things, which likely means Kirman is selectively quoting or he made it up.
On regulation:
I’m not a leftist, but I have done some simple empirical analysis of regulation:
http://www.farmerhayek.com/2015/09/40-years-of-epa-regulation-political.html
http://www.farmerhayek.com/2015/10/basic-textual-analysis-of-epa.html
http://www.farmerhayek.com/2015/02/five-decades-of-usda-regulatory-spending.html
Here’s a paper with some more rigorous analysis
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2565933
“which said that if there is any planning going on in the economy, it will inevitably lead you to a fascist situation.”
It is essentially Hayek’s Road to Serfdom argument, yes. Sorry if truth hurts.
John L,
Pleas provide some quotes from the text to this effect. Include page numbers and the information from your edition so I can confirm.
Here’s the (informed) counterargument:
Hayek was not making a purely scientific prediction about future political reality. If he were, it would likely have been made in a series of scholarly articles or a scholarly book, not a popular one.
The reality is that he was providing a warning: if we don’t restrain the state, it CAN lead to serfdom. That process has occurred many times in the history of Western civilization.
The Alan Kirman quote is really bad, like embarrassingly bad. He is rants about Hayek( a man born in the 19th century) being evil for a few mild lines in an interview about not liking the attitude of the sons of rich Indians at the LSE. Kirman’s paraphrase twists Hayek’s words to be what he wants them to be.
Kirman then gives the Road to Serfdom as another reason for Hayek’s being ‘horrid’. His only reason being his belief that Hayek “said that if there is any planning going on in the economy, it will inevitably lead you to a fascist situation”. Firstly even if this is true it is not a reason for Hayek being ‘horrid’ but just wrong. However Hayek explicitly disavowed this interpretation of his work. In fact for anyone who has read it without preconceived notions it is quite a hard interpretation to maintain. Especially when he states exactly what he means by planning “abolition of private enterprise of private ownership of the means of production and the creation of a system of “planned economy”in which the entrepreneur working for profit is replaced by a central planing body”. Hayek is not attacking the welfare state in the Road to Serfdom.
Kirman’s last point about Hayek not understanding that firms are planned just shows that Kirman has not bothered to read Hayek or try to understand the calculation\knowledge problem which makes up the bulk of Hayek’s case against economic planning. Firms in a market subject to competition and the availability of price signals can not be compared to those without. Or to a planning body doing the planning for everybody. Coase knew that even if Kirman doesn’t.
Not to mention, has anyone looked around the US lately? It is pretty fascist. Nobody said fascist meant poverty. That is communism.