Thursday, December 8, 2011

Well, Hayek DID win a Nobel Prize

Paul Krugman has announced it: Hayek is not important, and his views have been "discredited," although he did win the Nobel in 1974 for those "discredited" views.

Now, Krugman did not mention Hayek's Nobel, claiming instead that the only reason Hayek was well-known was for The Road to Serfdom which, of course, was nothing more than a right-wing screed, at least according to Krugman. He also says that in the early 1930s, Hayek "made a fool of himself" and that "his ideas vanished from the professional discussion."

Contra Krugman, Keynes did not do anything more than to rewrite Mandeville's "Fable of the Bees," claiming that the less savings that occurs in an economy, the better the economy will perform. (Capital, as we all know, simply appears like magic.) As for the Austrian Theory of the Business Cycle, Krugman constantly refers to it as a "Hangover Theory," which it is not, and then claims Austrians are saying that artificial expansion of credit leads to "overinvestment" when, in truth, Austrians say there is "malinvestment," which is much different.

Let us not forget that Krugman is claiming that this "liquidity trap" which he claims is in play also means that there is no opportunity cost to more government borrowing, and that when governments print money, they actually are creating more wealth. That is the real meaning of Keynesianism.


Dan said...

Well considering the source, does this shock you at all. I mean the entire basis of Krugman's philosophy is that experts can control the economy into perfect health and contain it. Since Hayek's entire is that the decentralized knowledge makes managing an economy impossible, therefore Krugman needs to attack a "nonbeliever" in the power of the almighty state control.

Major_Freedom said...

To be accurate, it's not a Nobel Prize.

It's the Sveriges Riksbank (Sweden's central bank) prize given to economists that they say is "in memory of" Alfred Nobel.

It's not really a Nobel Prize.

At any rate, the award lost any little prestige it had, after Krugman got one.

Since they never gave one to Mises, who is, without a doubt, perhaps the 20th century's greatest economist, it only casts further doubt on its credibility.

I mean, is it any wonder that a central bank would be giving their award out to so many statist technocrats? So many people believe this award means anything other than a "good job" from central bankers. It's like getting an award from Don Corleone.

Bob Roddis said...

Old Kroogie* published my comment pointing out that Hayek's article on knowledge was deemed one of the top 20 economics articles of the past 100 years and how knowledge is central to the ABCT:

Now that he knows that, I'm sure he'll change his mind, don't ya think?

I also set Mr. Warsh straight so I'm also sure he'll be on our side soon too.

*(I'm two years older than he is)

JFF said...

That buffoon DeLong is also a fan of getting ATBC wrong claiming "overinvestment" rather than "malinvestment." Frankly, I don't care what he says because of comments he made about David Gordon.

I made a comment somewhere that I really don't care if Hayek, Mises, Rothbard, et al. are considered significantly contributory to macroeconomics by the "mainstream." The more they regarded them, the easier it would be for them to take the blame when the inevitable end happens.

Wenzel's got a good treatment on Mr. Warsh, too, putting this whole deal into further, typical Krugman relief.

Anonymous said...


Would you be so kind as to provide us with the specific economic theories that we are neglecting? In fact, can you name some "real economic theories" for us to contemplate?

Obviously, we are so primitive and cultish that we cannot fathom of current mainstream theories, so maybe you can enlighten us with regard to the current trends of economic theory. After all, all we've been doing is crying "hyperinflation" for the past century, so a "fresh perspective" might do us some good.... LOL.

Ike said...

Austrians claim there is too much for any one person to know, therefore top-down solutions are doomed to inefficiency.

Keynesians claim those unknowns can all cancel each other out and make the equations tidy.

Keynesians would have you believe that the Brownian motion of these independent actors is unnecessary to understand.

Austrians laugh at Keynesians, who think they can move the brick by telling the atoms which way to vibrate.

Julia Riber Pitt said...

I find it intriguing to know that debates from over 70 years ago (Keynes vs. Hayek) are now back in public discourse; not only that but these types of debates are now all over the media (for example, there was a book on Keynes and Hayek's debates at my local anarchist - not Rothbard "anarchist" but Kropotkin anarchist - bookstore). I guess it's all part of this new clash of ideas.