You should know better. Hayek was very close to Henry Simons. Are Henry Simons and Frank Knight ideologues? Have you ever read Why I Am Not A Conservative? Did Edmund Burke believe government was evil? Hayek called himself a Burkean Whig. I do too. I think I've provided a number of quotes where Hayek says we need government for the market to work. He did have a misunderstanding of the stability of the welfare state. But he was not a libertarian or anarchist. Friedman had a Pragmatic view and a Utopian view. But the when he said government should take advantage of a crisis, what did Friedman give as an example? Deposit Insurance. FDR was not a fan of Deposit Insurance. John Gray thinks Hayek didn't realize how much capitalism disturbed tradition. Surely you've read John Gray? Socialism is a road to serfdom. The welfare state is not. Keynes claimed he was a Burkean Whig. He detested socialism. There are sensible socialists, but they are, in fact, believers in the Welfare State. So am I . There isn't any other system that works. It's a capitalist system that has a role for government to play. How much government is the real issue. Excuse me if I don't bow down to people who aren't either as smart or as good as they think they are. Central Planning is not inherently ethical or decent. That belief is just laughable.
Are you talking about public sector or private sector Central Planning? Our economy is centrally planned, but most of the planning is done by corporations with monopoly or oligopoly power. Personally, I worry more about private sector Central Planning since it is much harder to fight than public sector Central Planning, and its impact in the US has been much more pernicious.
I agree. All monopoly and concentration of power is to be combatted. I also agree about our being an oligopoly.
Michael Oakeshott "The Political Economy of Freedom" on Henry Simons. The only time Oakeshott gave his own political view.
Wherever a means of production falls under the control of a single power, slavery in some measure follows.
With property we have already begun to consider the economic organisation of society. An institution of property is, in part, a device for organising the productive and distributive activity of the society.For the libertarian of our tradition the main question will be how to regulate the enterprise of making a living in such a way that it does not destroy the freedom he prizes. He will, of course, recognise in our institution of private property a means of organising this enterprise wholly friendly to liberty. All monopolies, or near monopolies, he knows as impediments to that liberty, and the greatest single institution which stands between us and monopoly is private property. Concerning monopolies he will have no illusions; he will not consider them optimistically, hoping that they will not abuse their power. He will
know that no individual, no group, association or union can be entrusted with much power, and that it is mere foolishness to complain when absolute power is abused. It exists to be abused. And consequently he will put his faith only in arrangements which discourage its existence. In other words, he will recognise that the only way of organising the enterprise of getting a living so that it does not curtail the freedom he loves is by the establishment and maintenance of effective competition. He will know that effective competition is not something that springs up of its own accord, that both it and any alternative to it are creatures of law; but since he has observed the creation (often inadvertently) by law of monopolies and other impediments to freedom, he will not think it beyond the capacity of his society to build upon its already substantial tradition of creating and maintaining effective competition by law. But he will recognise that any confusion between the task of making competition effective and the task (to be performed by effective competition itself) of organising the enterprise of getting a living and satisfying wants will at once be fatal to liberty as he knows it. For to replace by political control the integration of activity which competition (the market) provides is at once to create a monopoly and to destroy the diffusion of power inseparable from freedom. No doubt the libertarian, in this matter, will have to listen to the complaint that he has neglected to consider the efficiency with which his economic system produces the goods; how shall we reconcile the conflicting claims of freedom and efficiency?But he will have his answer ready. The only efficiency to be considered is the most economical way of supplying the things men desire to purchase. The formal circumstances in which this may be at its maximum is where enterprise is effectively competitive, for here the entrepreneur is merely the intermediary between consumers of goods and sellers of services. And below this ideal arrangement, the relevant comparison is not between the level of efficiency attainable in an improved (but not perfected) competitive economy and the efficiency of a perfectly planned economy, but between an improved competitive economy and the sort of planned economy (with all its wastefulness, frustration and corruption) which is the only practical alternative. Everything, in short, that is inimical to freedom - monopoly, near monopoly and all great concentrations of power- at the same time impedes the only efficiency worth considering."
My understanding is that this was the view of Aaron Director, and he passed it on. Robert Bork was one of the people he passed it on to. But note this...
“Dismissing long decades of political struggle by workers and antimonopolists, Galbraith posited that countervailing power was an inevitable and automatic process that happened concurrently with industrial concentration. “The long trend toward concentration of industrial enterprise in the hands of a relatively few firms,” he wrote, “has brought into existence not only strong sellers,” but strong buyers. 81 Part of the germination of countervailing power came from Galbraith’s disdain for the fight against A& P. The power of large cereal makers to control prices led to the creation of large chain stores, which then could bargain with cereal makers for better prices, on behalf of the consumer. Echoing A& P’s own PR campaign at the height of the FTC’s antitrust case, Galbraith mocked the government for charging the company with the “crime” of “too vigorous bargaining… on the consumer’s behalf.” The case against the company was a “serious embarrassment to friends of the antitrust laws. No explanation, however elaborate, could quite conceal the fact that the effect of antitrust enforcement, in this case, was to the disadvantage of the public.” 82 Galbraith extended this theme across the entire economy. Countervailing power left no room for agency, but was a story of inevitability. Big buyers generated strong sellers, and big business created big labor as a balance. This process was automatic, and “as a common rule, we can rely on countervailing power to appear as a curb on economic power.” Bigness was modern and progressive, with smart new technology. Smallness was dingy and reactionary. As Galbraith put it, the giant corporation was not an independent merchant writ large, but a new type of institution that could wield increasingly complex capital-intensive technology. A& P was not a corner grocer, but something newer, bigger, a friend of the consumer, a scourge of powerful food suppliers like canning companies. 83 Galbraith would assert the virtues of bigness his whole life. “Half a century ago,” he argued in 1938, “the ambitious workman might reasonably hope to be able in time to set up in business for himself, but today even the white collar man has little prospect of ever becoming an independent enterprise.” 84 He continued this argument into American Capitalism and then The Affluent Society in the late 1950s. The American reality of 1958, with strong unions, a strong and democratic government, and industrial corporations run by patriotic, even somewhat selfless men, was natural, right, and a permanent state of things. At least in terms of productivity, it was according to Galbraith an unchanging utopian end state.”
— Goliath: The 100-Year War Between Monopoly Power and Democracy by Matt Stoller
The difference between Classical "Classical" and later-day Liberals:
The former could not conceive of state power being used to improve the welfare of the less well off. The best we can do is fend off the predatory state. Hayek reigns.
Today's "Classical liberals" conceive of it but think that in practice it is vanishingly unlikely. Buchannan reigns.
DSGE: Should I fee sangfroid? My PhD used what I though was the best possible model to say something macroeconomically consistent about the effects of systematic change in tariffs, quotas and subsidies across multiple sectors with an attempt to estimate the effect of the the changes on relative prices of tradeable and non-tradable goods. And then came DSGE and my intellectual capital was creatively destroyed, not that anyone at the World Bank cared. :)
Still, what kind of model SHOULD the Fed use to decide how to link observations to its policy levers?
"The market should be free to the extent and in the direction that such freedom leads to widely distributed prosperity, and wealth should be pursued not as an end in itself but a means to the political and societal good."
Yes agree subject only to the realization that in this sub-lunar world we will often get it wrong,
"the [Keynesian] economy to would be a very low-interest rate economy.
I just cannot see why a full employment economy would necessarily have low real interest rates. Should we not al least hope that technology would continue dropping tempting morsels in front of us that would make it worthwhile to give up some current consumption to pick up. Not to mention [bringing this down to the early 21th century] for the need to invest boatloads of resources in zero co2 energy, zero CO2 industrial processes, electric grids. Now I guess that all that saving COULD come from massive public sector current account surpluses, but .... that seems like a corner solution to me.
Alex Tabarrok beat you to posting the McDonald/Shalizi paper and I took a look at it last night. I have personal interest in it. As you know, Cosma grew up next door to me though I cannot take any credit for his vast knowledge (that was perhaps more a result of his UC education that likely included one or more of your courses). This is not the only example of a model failing the test of time and there will be many more regardless of the computing power thrown at various economic problems. I love your Ptolemy example at the end of the section!!!
ADDED: I read the Patrick Collinson note to employees and it was quite good. He admitted they over hired against some strong headwinds. Those being terminated are being given a good set of benefits. It would be interesting to know whether those Musk has cashiered are being provided similar ones.
Unrelated question -- would you say you identify as "neoliberal" in any sense of the term? I remember you mentioning before that you did, but I might be misremembering.
You should know better. Hayek was very close to Henry Simons. Are Henry Simons and Frank Knight ideologues? Have you ever read Why I Am Not A Conservative? Did Edmund Burke believe government was evil? Hayek called himself a Burkean Whig. I do too. I think I've provided a number of quotes where Hayek says we need government for the market to work. He did have a misunderstanding of the stability of the welfare state. But he was not a libertarian or anarchist. Friedman had a Pragmatic view and a Utopian view. But the when he said government should take advantage of a crisis, what did Friedman give as an example? Deposit Insurance. FDR was not a fan of Deposit Insurance. John Gray thinks Hayek didn't realize how much capitalism disturbed tradition. Surely you've read John Gray? Socialism is a road to serfdom. The welfare state is not. Keynes claimed he was a Burkean Whig. He detested socialism. There are sensible socialists, but they are, in fact, believers in the Welfare State. So am I . There isn't any other system that works. It's a capitalist system that has a role for government to play. How much government is the real issue. Excuse me if I don't bow down to people who aren't either as smart or as good as they think they are. Central Planning is not inherently ethical or decent. That belief is just laughable.
Are you talking about public sector or private sector Central Planning? Our economy is centrally planned, but most of the planning is done by corporations with monopoly or oligopoly power. Personally, I worry more about private sector Central Planning since it is much harder to fight than public sector Central Planning, and its impact in the US has been much more pernicious.
I agree. All monopoly and concentration of power is to be combatted. I also agree about our being an oligopoly.
Michael Oakeshott "The Political Economy of Freedom" on Henry Simons. The only time Oakeshott gave his own political view.
Wherever a means of production falls under the control of a single power, slavery in some measure follows.
With property we have already begun to consider the economic organisation of society. An institution of property is, in part, a device for organising the productive and distributive activity of the society.For the libertarian of our tradition the main question will be how to regulate the enterprise of making a living in such a way that it does not destroy the freedom he prizes. He will, of course, recognise in our institution of private property a means of organising this enterprise wholly friendly to liberty. All monopolies, or near monopolies, he knows as impediments to that liberty, and the greatest single institution which stands between us and monopoly is private property. Concerning monopolies he will have no illusions; he will not consider them optimistically, hoping that they will not abuse their power. He will
know that no individual, no group, association or union can be entrusted with much power, and that it is mere foolishness to complain when absolute power is abused. It exists to be abused. And consequently he will put his faith only in arrangements which discourage its existence. In other words, he will recognise that the only way of organising the enterprise of getting a living so that it does not curtail the freedom he loves is by the establishment and maintenance of effective competition. He will know that effective competition is not something that springs up of its own accord, that both it and any alternative to it are creatures of law; but since he has observed the creation (often inadvertently) by law of monopolies and other impediments to freedom, he will not think it beyond the capacity of his society to build upon its already substantial tradition of creating and maintaining effective competition by law. But he will recognise that any confusion between the task of making competition effective and the task (to be performed by effective competition itself) of organising the enterprise of getting a living and satisfying wants will at once be fatal to liberty as he knows it. For to replace by political control the integration of activity which competition (the market) provides is at once to create a monopoly and to destroy the diffusion of power inseparable from freedom. No doubt the libertarian, in this matter, will have to listen to the complaint that he has neglected to consider the efficiency with which his economic system produces the goods; how shall we reconcile the conflicting claims of freedom and efficiency?But he will have his answer ready. The only efficiency to be considered is the most economical way of supplying the things men desire to purchase. The formal circumstances in which this may be at its maximum is where enterprise is effectively competitive, for here the entrepreneur is merely the intermediary between consumers of goods and sellers of services. And below this ideal arrangement, the relevant comparison is not between the level of efficiency attainable in an improved (but not perfected) competitive economy and the efficiency of a perfectly planned economy, but between an improved competitive economy and the sort of planned economy (with all its wastefulness, frustration and corruption) which is the only practical alternative. Everything, in short, that is inimical to freedom - monopoly, near monopoly and all great concentrations of power- at the same time impedes the only efficiency worth considering."
The interesting thing to me is how the Stigler-Friedman Chicago became very tolerant of private monopoly...
My understanding is that this was the view of Aaron Director, and he passed it on. Robert Bork was one of the people he passed it on to. But note this...
“Dismissing long decades of political struggle by workers and antimonopolists, Galbraith posited that countervailing power was an inevitable and automatic process that happened concurrently with industrial concentration. “The long trend toward concentration of industrial enterprise in the hands of a relatively few firms,” he wrote, “has brought into existence not only strong sellers,” but strong buyers. 81 Part of the germination of countervailing power came from Galbraith’s disdain for the fight against A& P. The power of large cereal makers to control prices led to the creation of large chain stores, which then could bargain with cereal makers for better prices, on behalf of the consumer. Echoing A& P’s own PR campaign at the height of the FTC’s antitrust case, Galbraith mocked the government for charging the company with the “crime” of “too vigorous bargaining… on the consumer’s behalf.” The case against the company was a “serious embarrassment to friends of the antitrust laws. No explanation, however elaborate, could quite conceal the fact that the effect of antitrust enforcement, in this case, was to the disadvantage of the public.” 82 Galbraith extended this theme across the entire economy. Countervailing power left no room for agency, but was a story of inevitability. Big buyers generated strong sellers, and big business created big labor as a balance. This process was automatic, and “as a common rule, we can rely on countervailing power to appear as a curb on economic power.” Bigness was modern and progressive, with smart new technology. Smallness was dingy and reactionary. As Galbraith put it, the giant corporation was not an independent merchant writ large, but a new type of institution that could wield increasingly complex capital-intensive technology. A& P was not a corner grocer, but something newer, bigger, a friend of the consumer, a scourge of powerful food suppliers like canning companies. 83 Galbraith would assert the virtues of bigness his whole life. “Half a century ago,” he argued in 1938, “the ambitious workman might reasonably hope to be able in time to set up in business for himself, but today even the white collar man has little prospect of ever becoming an independent enterprise.” 84 He continued this argument into American Capitalism and then The Affluent Society in the late 1950s. The American reality of 1958, with strong unions, a strong and democratic government, and industrial corporations run by patriotic, even somewhat selfless men, was natural, right, and a permanent state of things. At least in terms of productivity, it was according to Galbraith an unchanging utopian end state.”
— Goliath: The 100-Year War Between Monopoly Power and Democracy by Matt Stoller
Aaron Director concluding this… based on what?
The next instalment of our story. https://files.hugheshubbard.com/files/Vol35_No1_Fall2020_WITH_COPYRIGHT_Kolasky.pdf
And then....https://files.hugheshubbard.com/files/Vol35_No2_Spring2021_COPYRIGHT_Kolasky.pdf
Thx much..,
The difference between Classical "Classical" and later-day Liberals:
The former could not conceive of state power being used to improve the welfare of the less well off. The best we can do is fend off the predatory state. Hayek reigns.
Today's "Classical liberals" conceive of it but think that in practice it is vanishingly unlikely. Buchannan reigns.
DSGE: Should I fee sangfroid? My PhD used what I though was the best possible model to say something macroeconomically consistent about the effects of systematic change in tariffs, quotas and subsidies across multiple sectors with an attempt to estimate the effect of the the changes on relative prices of tradeable and non-tradable goods. And then came DSGE and my intellectual capital was creatively destroyed, not that anyone at the World Bank cared. :)
Still, what kind of model SHOULD the Fed use to decide how to link observations to its policy levers?
"The market should be free to the extent and in the direction that such freedom leads to widely distributed prosperity, and wealth should be pursued not as an end in itself but a means to the political and societal good."
Yes agree subject only to the realization that in this sub-lunar world we will often get it wrong,
"the [Keynesian] economy to would be a very low-interest rate economy.
I just cannot see why a full employment economy would necessarily have low real interest rates. Should we not al least hope that technology would continue dropping tempting morsels in front of us that would make it worthwhile to give up some current consumption to pick up. Not to mention [bringing this down to the early 21th century] for the need to invest boatloads of resources in zero co2 energy, zero CO2 industrial processes, electric grids. Now I guess that all that saving COULD come from massive public sector current account surpluses, but .... that seems like a corner solution to me.
Alex Tabarrok beat you to posting the McDonald/Shalizi paper and I took a look at it last night. I have personal interest in it. As you know, Cosma grew up next door to me though I cannot take any credit for his vast knowledge (that was perhaps more a result of his UC education that likely included one or more of your courses). This is not the only example of a model failing the test of time and there will be many more regardless of the computing power thrown at various economic problems. I love your Ptolemy example at the end of the section!!!
ADDED: I read the Patrick Collinson note to employees and it was quite good. He admitted they over hired against some strong headwinds. Those being terminated are being given a good set of benefits. It would be interesting to know whether those Musk has cashiered are being provided similar ones.
"Friedman hoped to win a game of intellectual free-card-monte"
All-time great typo.
Unrelated question -- would you say you identify as "neoliberal" in any sense of the term? I remember you mentioning before that you did, but I might be misremembering.