Sunday, November 02, 2008

Peter Boettke With Nothing To Say

Peter Boettke goes on and on and on in this post. I'll confine my comments to Boettke's first numbered "point", even though I have views on some others. This point deals with Paul Davidson's review essay on O'Driscoll and Rizzo's The Economics of Time and Ignorance.

I believe Boettke's first point is an inadequate response to Matthew Mueller here and here. Boettke points out a verbal statement from Mises rejecting the claim that money is neutral. It never seems to occur to Boettke that Davidson's point might be that the logic of Mises and Hayek's positions requires them to accept the axioms of ergodicity (logical time), money neutrality, and gross substitution. Boettke cannot rationally challenge that view by citing statements where Mises or Hayek refuse to accept the first two axioms and therefore become inconsistent.

I am of the opinion that Austrian Business Cycle Theory is consistent with money non-neutrality only in the short run. Furthermore, Hayek's notion of intertemporal equilibrium is closely related to J. R. Hick's Capital and Value model of temporary equilibrium and to the Arrow-Debreu model of intertemporal equilibrium. Hicks came to recognize late in his life that his model could not be set in historical time. Hahn has pointed out the difficulties of introducing money in any essential way into the Arrow-Debreu model. I don't know that Austrians have ever grappled with these decades-old developments. I don't see that Boettke engages in arguments.

No comments: