QUESTIONS ABOUT HAYEK & CLASSICAL LIBERALISM FROM A BRITISH ECONOMIST

James Reade, Lecturer in Economics at the U. of Birmingham, wants to learn more about Hayek and Hayekian political economy.  Here are some of the topics he’d like addressed — if some folks could take the time to give Reade some answers, Army of Davids style, that would be much appreciated:

could [you] do me the service of giving me a synopsis of exactly why I’m wrong in saying markets are not perfect, and tell me where exactly Hayek deals with problems about information – like a few page references at the minimum.

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[As classic liberals you and Hayek] probably deny externalities exist … ?

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.. while I have me scepticism about Hayek and the Austrian school more generally, I think I should understand what they are trying to say. My attempt at bucking the stereotype of someone on the left, at any rate. What arguments against Hayek and markets do you think are good ones, if any?

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My understanding is that in his Constitution on Liberty Chapter 9, Hayek dismisses the provision of public benefits (hence unemployment and health insurance) without any mention of information issues.

But do correct me. How exactly will the market provide insurance for those deemed to have uninsurable risks by the market? Particularly when that has come about because adverse selection has led to premiums being much higher than they would be in the presence of the relevant information?

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What exactly is [the classical liberal] stance on the rampant information problems in markets, particularly insurance and lending markets? Well, I guess what I mean is:  What’s the Hayekian stance?   My understanding is there basically isn’t one – the market will provide the information if it is needed?

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I’m not proposing, nor would I ever propose abandoning markets. Simply I generally point out to my libertarian leaning friends that there are problems with markets, particularly related to externalities and informational difficulties. Doing this is not to propose abandoning markets and bringing in some kind of collectivism. That’s another of my pet peeves with libertarians, they straw-man-isation of anyone who disagrees with them. It isn’t black and white between free markets and a command economy.

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The primacy of markets was around way before Hayek was. I’m inclined to think you overstate his influence   ..

You can read Meade’s blog here.  Meade describes the purpose of his blog thus:

I am an Evangelical Christian and a Lecturer in Economics. I’m highly tired of Christians from a right-wing persuasion trying to convince me that I’m heretical for being on the left of the spectrum and this blog is my attempt to set out why it is Biblically consistent to be left-of-centre (ever so slightly).

I suggested Raymond Plant’s The Neoliberal State and some other books to Reade, but he says he doesn’t have time to read books, so any responses should include references to brief items in the literature or on the web only.

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One Response to QUESTIONS ABOUT HAYEK & CLASSICAL LIBERALISM FROM A BRITISH ECONOMIST

  1. James Reade says:

    Thanks for the comments thus far Greg and Roger – it’s been good to get some more sense of the libertarian/Hayekian/whatever-the-appropriate-term-is position regarding imperfect information…

    Also I should point out: It’s Reade not Meade. James Meade won a Nobel Prize, and if only one could attain greatness by the closeness of one’s name then I’d be doing ok as an economist…

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