Friday, May 31, 2019

Some Reviews of Quiggin's Economics in Two Lessons

I have been thinking of posting a review of Quiggin's book, but this is not it. I suppose I should mention that I am in the acknowledgements.

Quiggin has a response to a couple of the above. By the way, he had a paper, in 1987, on public choice.

I think any reviewer should note that Quiggin is extremely generous to Hazlitt's Economics in One Lesson. Hazlitt does not mention "opportunity cost". By focusing on this concept, Quiggin makes Hazlitt seem more coherent than he is. I agree with Quiggin that this coherence does not require Hazlitt to think the economy is always in equilibrium. It is consistent with prices providing signals, that, when entrepreneurs act on them, move the economy towards equilibrium. It is not consistent, as Quiggin notes in his book, with the economy persisting for a long time within the production possibility frontier, without any tendency to more towards the frontier.

It is no answer to or review of Quiggin's book to rattle on about Keynesianism or the logically incorrect AustrianBusiness Cycle theory. One has to also address Quiggin's points about externalities, information asymmetries, and the continual redefinition of property rights.

Furthermore, a fair reviewer would note that Quiggin does not recommend a mechanical calculation of, say, taxes and subsidies to correct market failures. Although, I guess, he does not mention "government failure" in his book, his consideration of policies is a lot more nuanced than that.

Furthermore, if one thinks the theory of public choice provides an answer to Quiggin, one should note that Hazlitt does not discuss these matters. Hazlitt was a propagandist and, for decades, should have not been taken seriously.

As far as I know, public choice is an application of neoclassical economics. Gloria-Palermo and Palermo (2005), as I recall this paper, argues that the Hayekian argument about the coordinating function of market prices does not provide a welfare criterion alternative to Pareto efficiency. I think I have such criteria in focusing on conditions for the continued reproduction of society, as opposed to the efficient allocation of given resources. One can also point to the Veblenian dichotomy, between instrumental and ceremonial aspects of institutions, as well as to the pragmatism of John Dewey. If I do review Quiggin's book, I want to point out how it is too accepting of Neoclassicism, as well as where it points beyond.

  • Sandy Gloria-Palermo and Giulio Palermo (2005). Austrian economics and value judgements: A critical comparison with Neoclassical Economics. Review of Political Economy 17(1): 63-78.


Anonymous said...

I must admit admiring your attempts in this, it looks time consuming!

I think it is significant that the "Austrians" rarely mention Kaldor or Saffra when discussing the debates of the 1930s -- I suppose losing that badly will do that, but it does seem intellectually dishonest (I know, I expect too much from people who defend property yet happily stole the name "libertarian" from the left, indeed knowningly).

Still, it is amusing to see people who proudly proclaim their awareness of disequilibrium point to a business cycle theory based on equilibrium and who proudly demand deregulation of everything bar banking, which they would regulate to death by imposing the gold standard as a legal requirement!

An Anarchist FAQ

Robert Vienneau said...

Looking at some of the linked comments has inspired me to look back at Austrian theory. This can be time-consuming.