Saturday, October 24, 2015

When Friedman Readily Admitted He Didn't Understand Hayek's 'Prices and Production'

The Milton Friedman Austrian hate series continues. From the interview with Lanny Ebenstein, as reported in Chicagonomics:
I think his [Hayek's] capital theory book is unreadable, I cannot say I've read it. [laughter] It's very unreadable...I never could understand why they were so impressed  [at the London School of Economics] with the lectures that ended up as Prices and Production and I still can't.

From the book blurb:
Hayek was not only a leading champion of liberty in the 20th century. As this massive book reveals, he was also a great economist whose elaboration on monetary theory and the business cycle made him the leading foe of Keynesian theory and policy in the English-speaking world. Here are collected his most important works on these topics: re-typeset, indexed for the first time, and beautifully bound in a 536- page hardbound book for the ages. These works have been tragically out of print for many years. Together they constitute a complete presentation of Hayekian money and business cycle theory. Even more, they work together as an excellent elucidation of Austrian macroeconomic theory, which is why this book has already been adopted in some classrooms. The timing could not be better. The entire world economy is now suffering from the effects of bad monetary policy, and with results that Hayek explains in great detail. With "counter-cyclical" policy again revealed as unworkable, and while the politicians plot to make matters worse, the contents of this book has direct bearing on present and future of monetary policy. Hayek was barely out of his twenties in 1929 when he published the German versions of the first two works in this collection, Monetary Theory and the Trade Cycle and The Paradox of Saving." The latter article was a long essay that was to become the core of his celebrated book and the third work in this volume, Prices and Production, the publication of which two years later made him a world-renowned economist by the age of thirty-two...


  1. I really divide the Austrians into three camps, Rothbardian ancaps, Misesian minarchists, and Hayekian moderates. I've always lumped Friedman in with the Hayekians as moderate interventionists and empiricists. It's interesting to me that there was a wedge even between Friedman and Hayek.

    1. Hayek was much closer to Mises than Friedman in his views. Hayek considered Friedman a lightweight intellectually and a sell out politically.

  2. Thank you R.W. for sharing the material that I find on your sites. I dearly hope that the knowledge base of humanity becomes more accepting of the truth in Austrian economics/critical thinking.

    Lies win now.
    But truth wins always.

    1. Ditto.

      I think Austrian libertarians misjudge the impact that the Internet has had on the future of political thought.

      The last 15+ years of Federal Reserve bullshit, the current slow motion failure of those policies and the explosion of availability of the economically superior Austrian explanation of WHY they have failed (available to anyone with an Internet connection and any curiosity as to why things aren't working the way the government media keeps telling us they will work EVENTUALLY) is slowly reaching a critical mass.

      When the Federal Reserve money printing slows again, and the markets crash again, the number of people who suddenly become Austrian Anarcho-Libertarian-Capitalism proponents will shock even hardcore AnCaps.

      When the tide turns, I believe it will turn swiftly.

    2. Graduating Economics major at a Midwestern university ... I can say Austrian-esque views on macroeconomics and monetary policy are definitely on the rise. Many of my student colleagues are citing Tom Woods and others as inspirations, not Greg Mankiw, Delong, etc. Because of this, I am very optimistic about the future of economic policy in this country. The incoming policy makers are on OUR SIDE.

    3. Oh yeah.So optimistic that you won't even identify your university.

    4. MalcomNYC, I too am a little suspicious of the Bflakaz claim. What reason could there be for withholding that information? It should be something one proudly proclaims. I'm hoping we get a response and confirmation. I'd love to know that it's true.

    5. THE Ohio State University. And yeah, many students are still on the "standard" (meaning what is taught in the courses) side of things, but the vast majority see the Fed as being causal in the boom/bust cycle, even accepting ABCT as plausible. These students were also Bitcoin enthusiasts, though that has died down since it's penny-stock-like supernova, and A LOT of them were Ron Paul fans. They really do cite Mises, Rothbard, and Hayek as inspirations, or economists they admire. Hell, I'm in an industrial organization course right now with a girl who has worn a hoodie with Margaret Thatcher's famous quote about Socialism ironed onto the front.
      Bernie Sanders is not popular with the econ crowd!

      When it comes to praxeology vs empiricism, etc, most prefer empiricism. But you can't blame them, it's hard to unlearn or disassociate with what's been taught to you for four years by PhDs in economics as "the wrong way." It certainly is for me.

      I didn't say where I went to school in the first comment because, I thought, it really should not matter. But I can see now why it would be suspicious. Sorry about that.