HAYEK AND THE CLASSICAL ECONOMISTS WERE RIGHT

The demand for output is not a demand for labor.

ht Instapundit.

FALKENSTEIN ON MACROECONOMICS & THE GENIUSES AT MIT

Here.

Hayek’s early work on business cycles focused on misalignments in the structure of production. Alas, this was basically impossible to formalize. Keyenes’s model, meanwhile, was adopted into the Hansen-Hicks synthesis that looked a lot like the simple Supply/Demand equations economists were used to, so everything seemed copacetic. A bad idea, in a tractable model, . . . → Read More: FALKENSTEIN ON MACROECONOMICS & THE GENIUSES AT MIT

ARNOLD KLING — HAYEKIAN OF THE DAY

Recalculation thinking vs AS-AD thinking.

Sort of like the difference between adaptation thinking at the margin in Darwinian biology versus Platonic / Aristotelian thinking about biological kinds. Kling misses the fact that one kind of thinking provides a satisfying naturalistic/non-magical causal mechanism, while the other appeals to “And Then A Miracle Occurs” (see the work . . . → Read More: ARNOLD KLING — HAYEKIAN OF THE DAY

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Random Quote

Any attempt to control prices or quantities of particular commodities deprives competition of its power of bringing about an effective co-ordination of individual efforts, because price changes then cease to register all the relevant changes in circumstances and no longer provide a reliable guide for individual’s actions. — F. A. Hayek

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