Monday, August 24, 2015

Buchanan: Notes on Hayek

Don Boudreaux writes:

Here’s a hot-off-the press previously unpublished short paper, from February 1979, by my late colleague Jim Buchanan.  Entitled “Notes On Hayek,” this essay is short and excellent from start to finish.

From the paper:
Hayek stood almost alone in opposition to the Keynesian “explanation” of the great depression. Quite apart from the details of analysis, the aggregate-demand explanation, macroeconomics, ruled the day. Hayek alone continued to insist on the microeconomics aspects of inflationary financing, on the discoordination in plans created by the failure of monetary systems to insure stability. His theory of the business cycle fell into disuse, and it remained in the dustbin of economic ideas until the 1970s. But the aggregate-demand simplisms no longer worked at all, no longer explained anything—and, lo and behold, what have we seen? Adusting off and revival of the basic Hayekian notions about discoordination, about inflation as a means through which investment plans get all fouled up. As of now, there is really no alternative theory worthy of much respect, and we can predict that more attention will be paid to the seminal Hayekian ideas during the next decades.


  1. Hayek and Rothbard both diverged from Mises. Rothbard went to Natural Rights anarchism and Hayek rejected Mises's a priori methodology entirely in favor of the empiricism that Mises hated. We are going to need to pull these two factions back to Mises to move forward.

    1. Really? Rothbard actually created the reasonably complete theory of natural law - this goes WAY beyond what Mises did to advance the economic theory. The current re-emergence of classical liberal and libertarian ideas as a mass ideology is mostly due to impressive clarity of Rothbard's work and strength of his argumentation.

      Like it or not, modern libertarianism is a MORAL stance (Non-Aggression Principle), not utilitarian "free market is the best". Free market *and* anarchism are just consequences of NAP.

      The utilitarian approach completely failed to defeat collectivism for the very simple reason: collectivism is also a moral stance, holding that violence is OK as long as it serves the "common good". This moral stance is evil. As in "millions of dead" evil. And no amount of muttering about benefits of free market is going to challenge it, you have to attack it on moral grounds - these guys do not care a tiny bit about material benefits (as long as others are made to suffer).

      And, frankly, Misesian minacrchism is indefensible, on moral grounds. You cannot be just a little bit pregnant. You cannot declare state violence an abomination if you're holding the wishy-washy view that a little bit of it is OK.