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Steve Horwitz
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Steve K might also consider this:
Barkley, would you care to enlighten us as to the idiocy of Mill's Fourth Proposition? I think it demonstrates that Mill knew a fundamental truth about micro rather than revealing his ignorance. Hayek gets it right in the appendix in TPTOC, as do Moss and Vaughn in HOPE in 1986 and Jerry in his 1977 book.
I don't get your point Barkley. Producers respond to what they perceive as consumers' evaluations of course. But consumers can only demand with the proceeds of their prior production, itself dependent on successful anticipation of consumer demands. That economic value ultimately comes from the subjective judgments of individuals in their capacity as consumers doesn't mean that spending is the source of wealth. Wealth creation comes from producers who *correctly anticipate* the valuations of consumers, not from the act of spending itself.
Two more links: 1. A Freeman piece of mine on Say's Law: 2. Chapter 3 of the late Larry Sechrest's book is also excellent on these issues:
Several quick thoughts: 1. The best understanding of "Say's Law" is that "production is the source of demand." That aligns with Steve K's point, and Rothbard's, that "spending" cannot get you out of a recession. Say's Law is the rejection of "demand-side" economics. 2. Say recognized that money mattered. The later versions of "Say's Law" that ignored money and suggested that, esp. in Keynes's caricature, that macroeconomic equilibrium always held in a "free market," simply did not understand the basic idea. I am not even sure those folks really knew Say. 3. I like thinking of the Law of Markets as simply an extension of Smith's insight that the division of labor is limited by the extent of the market. Production is what creats the wealth that defines the extent of the market, which is itself a result of the increased division of labor. The Law of Markets is looking at Smith's insight from a "macro" perspective in some sense. 4. And, as usual, Jerry has it right. Mill's proposition is at the heart of Austrian macro, which is why microfoundations matter so much (hence, my book on that topic). It is money that makes this whole Smith/Say process (and note that word) possible, but it also opens up the possibility of coordination failure if money isn't right. This is at the heart of Hayek (and Mises) and captured by Roger Garrison's "loose joint" terminology. 5. Finally, if we are in a general glut caused by an insufficient money supply, increasing the money supply is the appropriate remedy. That is required to restore the monetary framework necessary for production to be translated into demand. That point is consistent with a money-enhanced version of the Law. It also implies that increasing the money supply beyond the point of monetary equilibrium will NOT generate additional growth/recovery, at least over time. Again, I deal with all of these issues in my Routledge book, both in the MET chapter and chapter 6 which is on Hutt and Say's Law.
I'm not sure if this speaks to Barkley's concerns or not, but here's an Austrian "take" on Say's Law (and there is similar material in my Routledge book). I don't think there's anything distinctly Austrian about Say's Law, but I do think there's an important insight there that is consistent with the Austrian emphasis on microeconomic coordination.'s%20Law-Elgar.pdf
You know, I did not even NOTICE that!
Toggle Commented Aug 1, 2014 on Vons Asinorum at Coordination Problem
A quick Google search indicates there is no reference to him editing such a collection beyond whatever role he had in setting up the online resource at the Hoover Institution, plus some unclear "forthcoming" thing with Palm. Wouldn't there be Google traces if he actually had a contract with a press?
His "scholarship" is the equivalent of what you'd read in the check-out line at the supermarket.
Murray doing his best Jackie Mason. If that was filmed in the Catskills, it would be even better!
In other words, Troy, as Art and I say in the piece: "Note that externality problems are market "failures" only in comparison to the perfectly competitive model's equilibrium. In other words, the "failure" here is not that markets "do not work" in practice, but that they fail to live up to a blackboard ideal. As it turns out, by that criterion, markets "fail" all the time! No actual market is ever in perfectly competitive equilibrium, not even the commodity markets we sometimes point to in introductory courses."
Yeah, I can't for the life of me imagine why you've been banned at multiple places....
Toggle Commented Feb 11, 2013 on My Boudreaux Impersonation at Coordination Problem
Not quite Daniel. At least the Austrian claim is not that recalculation "incited" the downturn, but that the length and depth of the downturn will be related to the degree of recalculation must take place. And as Tyler rightly points out, one can believe that it is both necessary to ensure that "aggregate demand" (I'd rather say MV) is stabilized and best if markets drive the process of recalculation that is required to come out of the slump. I think, as Tyler also said, that was Hayek's view in, say, *Prices and Production* if not later. I'd also say it's the position that Austrians like me, Selgin, White, Garrison, hold to today. Some other Austrians, not so much. The Austrian objection, from my perspective, is not to stabilizing aggregate demand per se, but to the ways in which many policies, especially fiscal ones, designed to increase aggregate demand themselves block the needed recalculation process.
Toggle Commented Apr 3, 2011 on Department of "Huh?!" at
1 reply
Which is why I was very careful to say "Keynesian" and attempt to avoid the issue of whether Keynes himself was a "Keynesian."
Toggle Commented Dec 10, 2010 on Consumerism and Keynesianism at Coordination Problem
Jesus Huerta de Soto's recent book on Austrian economics, which is also designed as an intro/primer, suffers from exactly the same problem: it's as if Austrian economics ended sometime in the early 80s, if not earlier (with Kirzner in the 70s). JHdS's book also has a more Rothbardian take on monetary theory that I think is wrong, but it's certainly part of the Austrian school.
Toggle Commented Aug 19, 2010 on Austrian Economics - A Primer at The Filter^