Wednesday, February 10, 2016

The History of Economic Thought: the Austrian School and Socialist Planning, Part IV

Richard Ebeling emails:

Dear Bob,

I participated in the February 9, 2016 “Libertarian Angle,” webinar sponsored by the Future of Freedom Foundation, with the Foundation’s president, Jacob G. Hornberger, on the topic: “The History of Economic Thought: the Austrian School and Socialist Planning, Part IV.”

In this segment, the focus is on the Austrian School of Economics – particularly the contributions of Ludwig von Mises and Friedrich A. Hayek in the period of the 1920s, 1930s, and 1940s – in the context of how they came to see the distinct differences in the “Austrian” tradition in terms of the market process from the emerging mainstream microeconomic approach.

The analytical catalyst for this growing awareness, I suggest, was the debate over the viability of a socialist system of economic central planning, which is generally known as the “economic calculation debate.”

Mises and Hayek realized how their conception of acting man under conditions of uncertainty, imperfect and divided knowledge, and the presence of time in all human activity radically differed from the “perfect competition” model becoming widely used as a theoretical benchmark by mainstream economists, including the advocates of “market socialism.”

Due to this, Mises and Hayek refined and deepened their formulations of the nature and role of private property, competitive markets and the role of prices as the essential institution elements to bring about successful rationality and coordination in a complex social system of division of labor.


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