Thursday, August 07, 2008

Hayek and Myrdal Quotations

Hayek had a good argument about the difficulties of central planning. The planners do not have a mechanism for using tacit knowledge distributed among agents. But when it came to describing how contemporary western economies work, Hayek gave up:
"It is important to realize in any investigation of the possibilities of planning that it is a fallacy to suppose capitalism as it exists today is the alternative. We are certainly as far from capitalism in its pure form as we are from any system of central planning. The world of today is just interventionist chaos." -- F. A. Hayek (1948). "Socialist Calculation", in Individualism and Economic Order

On a different topic entirely - I am amused by this Myrdal quote:
"It has been suggested that if one tried to construct a consistent system from Marshall's footnotes and reservations, one would arrive at something very different from the Marshallian system. But it seems to me that if the job were critically, one would not arrive at any system at all." -- Gunar Myrdal, The Political Element in the Development of Economic Theory (Trans. by Paul Streeten) pp. 127-128
One such reservation is Appendix H in the eighth edition of Principles of Economics, titled "Limitations of the use of statical assumptions in regard to increasing returns".


Achim said...

But what shall this description of the world we live in tell us? That we need to make it all more capitalist and less interventionist so that it works fine?

Robert Vienneau said...

I don't think Hayek gives an argument for such a view. I know many read him of this period as giving some sort of slippery slope argument - not surprising given that The Road to Serfdom is the title of his most popular work. But I think such a view is more an emotional reaction. One might read Hayek as giving more a warning.

Anonymous said...

contemporary western economies ... and then you quote Hayek 1948 ... the world Hayek faced in 1948 was very much the non-market mess he was talking about.