bust: Hayek, Not Marx

Economist Art Carden explains why he’s reading Hayek, not Marx, in this time of economic crisis:

Marx’s status as an important figure in the history of ideas is unassailable, but the decisive and multi-faceted refutations of his system suggests that we won’t learn much by perusing his work for insight into the roots of the global economic crisis. For real insight we have to look elsewhere. I’m starting with Ludwig von Mises and Friedrich Hayek. Like Marx, both offered complete social systems, internally consistent monetary theories, and explanations of economic crises. The difference is that Mises and Hayek got the economics right ..

The current crisis is not a crisis of capitalism. It is a crisis of interventionism spawned by the hubris of political leaders who, to borrow from F.A. Hayek, were arrogant enough to think that they could design what they could not possibly understand. Governments regulate, which means two things.  First, the regulators are insulated from competition. Removing the determination of standards from the cash nexus of the market process means that they are circumventing the information-generating process that would tell providers of rules and regulations whether they are choosing wisely or choosing poorly. Second, turning market decisions into political decisions means creating political incentives. We should not be surprised that financial market regulations are being bent to the benefit of those who are in the best position to influence policy and to the detriment of everyone else.

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