Friedrich Hayek is generally regarded as the apostle of a brand of economics which holds that the market will assure the optimal allocation of resources â?? as long as the government doesnâ??t interfere. It is a formalized and mathematical theory, whose two main pillars are the efficient market hypothesis and the theory of rational expectations.
This is usually called the Chicago School, and it dominates the teaching of economics in the United States. I call it market fundamentalism.
I have an alternative interpretation â?? diametrically opposed to the efficient market hypothesis and rational expectations. It is built on the twin pillars of fallibility and reflexivity.
I firmly believe these principles are in accordance with Hayekâ??s ideas.
But we canâ??t both be right. If I am right, market fundamentalism is wrong. That means I must be able to show some inconsistency in Hayekâ??s ideas, which is what I propose to do.
Letâ??s start with Hayekâ??s influence on the twin pillars of my interpretation. I was a student at the London School of Economics in the late 1940s and read the great methodological controversy between Karl Popper and Hayek in Economica, the schoolâ??s periodical.
I considered myself a disciple of Popper. But here I was on Hayekâ??s side. He inveighed against what he called â??scientismâ? â?? meaning the slavish imitation of Newtonian physics. Popper took the opposite position. He argued in favor of what he called the doctrine of the unity of science â?? that the same methods and criteria apply to all scientific disciplines.
I was drawn to this controversy by my interest in Popper. I had read his book, â??Open Society and its Enemies,â? in which he argued that the inconvertible truth is beyond the reach of the human intellect, and ideologies that claim to hold this truth are bound to be false. Therefore, he argued, they can be imposed on society only by repressive methods.
This helped me see the similarity between the Nazi and communist regimes. Having lived through both in Hungary, it made a great impression.
This led me to Popperâ??s theory of scientific method. Popper claimed that scientific theories can never be verified â?? they can only be falsified. So their validity is provisional â?? they must forever remain open to falsification by testing. This avoids all the problems of needing to prove scientific theories beyond any doubt and establishes the importance of testing. Only theories that can be falsified qualify as scientific.
While I was admiring the elegance of Popperâ??s theory, I was also studying elementary economics. I was struck by a contradiction between the theory of perfect competition, which postulated perfect knowledge, with Popperâ??s theory, which asserted that perfect knowledge was unattainable. The contradiction could be resolved by recognizing that economic theory cannot meet the standards of Newtonian physics.
That is why I sided with Hayek â?? who warned against the slavish imitation of natural science and took issue with Popper â?? who asserted the doctrine of unity of method.
Hayek argued that economic agents base their decisions on their interpretation of reality, not on reality â?? and the two are never the same.
That is what I call fallibility. Hayek also recognized that decisions based on an imperfect understanding of reality are bound to have unintended consequences. But Hayek and I drew diametrically opposed inferences from this insight.
Hayek used it to extol the virtues of the invisible hand of the marketplace, which was the unintended consequence of economic agents pursuing their self-interest. I used it to demonstrate the inherent instability of financial markets.
Would Karl Popper approve of the founder of SDS heading the "Open Society Institute"?
Would Karl Popper approve of the founder of SDS heading the "Open Society Institute"?
Well, well, well........... look who Politico is now befriending and giving a platform.
The best method of a....... sound .........economy.... is to get GOVERNMENT out of the way.
The politicians are the worst enemy to the economy.
These browbeat America blowhards like Soros, should creep back to Europe where they allow people like Soros...... to take over their lives.
Americans will NEVER allow America to be taken by the likes of Soros.
We are a nation of MANY backgrounds from many nations......not one.
Because of this we are stronger and will remain so.
I will take Milt Friedman OVER Soros any day.........Soros DESTROYS economy's.
"The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 ... Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government. "â?Milton Friedman
If you want to see capitalism in action, go to Hong Kong.
He wrote in 1990 that the Hong Kong economy was perhaps the best example of a free market economy.
A return to a gold standard as neither desirable nor feasible........with the one exception that it might become feasible if the doomsday predictions of hyperinflation under our present system should prove correct.
Well it's here
Of course Soros doesn't agree with the Chicago school of economics. This school of economics doesn't advocate collaboration with Nazis with Soros does.
He makes a very rational argument, yet he is unable to see the destructive consequences of the policies he advocates. His intellect is blinded by his ideology.
Would Karl Popper approve of the founder of SDS heading the "Open Society Institute"?
What right wing babbling point website did you get this nonsense from? SDS didn't have a "founder". It was started by a committee within the League for Industrial Democracy as the LID's youth wing, and was expelled from LID a few years later. I could name a few dozen people who might be considered as original SDS leadership, but it had existed for quite a few years, with quite a few shifts in political philosophy before most people even knew it existed.
I'm pretty certain, though, that Popper would think that the modern crop of right-wingers are intellectually stunted mediocrities.
Human fallibility exists. That principle applies equally to the person making a decision as an economic agent and the person or group in charge of "regulating" the decisions of economic agents to manage "reflexivity". When some economic agents make mistakes, some economic agents pay the price. When some group in charge of "regulating" or "directing" the decisions of all economic agents errs, everyone pays the price. Let's not forget, to have a group "regulating" or "directing", you have to impose taxation, which also has an impact on price- one that has hardly any real economic value.
Mises does a pretty good job logically completing Hayek's free market argument with an interplay of money and credit. With the disintegration of the centrally planned system in our direct path, I hope the austro-libertarian position has a seat at the table.
Another observation - at any point in time we always firmly believe the "standards of political discourse" in our democracy have reached a new low compared to some fictional past time where everybody respected opinions that disagree with our own.
Generally we feel most strongly about this "new low" having been reached when there is a larger, more vocal, opinion against our own deeply held views.
Of course Soros doesn't agree with the Chicago school of economics. This school of economics doesn't advocate collaboration with Nazis with Soros does.
Of course Soros doesn't agree with the Chicago school of economics. This school of economics doesn't advocate collaboration with Nazis with Soros does.
Soros and Politicians plus the media coverup.
Soros Schumer IndyMac
The economic house of cards started tumbling on June 26, 2008, when Senator Chuckie Schumer leaked a memo questioning the solvency of IndyMac bank.
This memo precipitated a run on IndyMac which led to its failure
Warnings of IndyMac's vulnerability resulted in something of a bank run.
In July 2008 ..........Indymac bank worth $32 billion was taken over by the Federal Government.
Jan 2, 2009, a seven-member group of investors agreed to buy the remnants of failed lender IndyMac for $13.9 billion.
They included George Soros, Christopher Flowers, Michael Dell and several other powerplayers purchased the failed IndyMac Bank from the FDIC a $9 billion loss for the Fed.
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