Good luck to Team Hayek

by Russ Roberts on July 26, 2011

in Hayek

In a few minutes, at the LSE, George Selgin and Jamie Whyte will be representing Hayek’s views contra the Keynesians represented by Duncan Weldon and Robert Skidelsky. You can warm up by watching Fight of the Century. It will air on the BBC tomorrow and if the audio becomes available, we’ll post it here at the Cafe.

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{ 42 comments }

Subhi Andrews July 26, 2011 at 1:23 pm

Good luck to Selgin & White.

BTW, Cafe Hayek doesn’t refresh automatically in the browser anymore – neither Chrome nor IE9. I have to hit the refresh button every time I come back. the site looks as if there has been no new posts or comments since my last visit, when it almost always is not the case.

Subhi Andrews July 27, 2011 at 3:55 pm

BTW, here is a picture from the debate.

http://twitpic.com/5wph94

Henri Hein July 26, 2011 at 2:31 pm

May the best ideas win.

DG Lesvic July 26, 2011 at 5:35 pm

How can they when they won’t be there. Neither Hayek nor Selgin had the best ideas in support of the Austrian Theory of the Business Cycle. Selgin is one of the Keynesian Austrians, subscribing to the Keynesian remedy of fiddling with the money supply. Hayek was against that, and was a pure Austrian, but still committed a serious blunder when he agreed with Keynes that saving, though not the primary cause of the depression, could be a secondary cause.

Lionel from France July 27, 2011 at 7:05 am

“(hayek) but still committed a serious blunder when he agreed with Keynes that saving, though not the primary cause of the depression, could be a secondary cause.”

Hayek was right about saving as John Stuart Mill, for example, before him. The savings can increase dramatically after a crisis and temporarily worsen the economic situation. But it is a consequence (sometimes necessary) and not a cause and it is temporary.

vikingvista July 28, 2011 at 12:55 am

Yes. I don’t think H & K disagreed about the all things that are taking place during a recession. They disagreed about causality, and about whether something better could reasonably be done. Arguably, cutting consumer spending and increasing saving is the BEST reasonable thing for people to do to cut losses and rapidly transition from a major misallocation.

Chucklehead July 26, 2011 at 2:42 pm

The Brits will not stand for some Germanic (Austrian) to come in and prevail over their beloved Lord Keynes. This fight is fixed, just like in the video.

Daniel Kuehn July 26, 2011 at 2:44 pm

LSE stood for just that seven decades ago.

Granted, I’m not well versed about what’s transpired there since then.

Jack Costello July 26, 2011 at 3:12 pm

It is true that the BBC does have a noticeable left-wing bias, but Britain in general certainly doesn’t have an anti-German bias. Remember that the real surname of the beloved Royal Family is the very Germanic Saxe-Coburg-Gotha.

Anyway, I’d bet that George Selgin would be more than a match for Lord Skidelskiy in front of any audience.

Methinks1776 July 26, 2011 at 3:07 pm

Methinks it’s time for “Team Hayek” t-shirts.

Henri Hein July 26, 2011 at 3:34 pm

I would buy one.

W.E. Heasley July 26, 2011 at 5:31 pm

Methinks:

Why not “Team Hayek” on the front of the shirt and “NRO Krugman Truth Squad” with logo!

http://www.cafepress.com/nationalreview/192118

W.E. Heasley July 26, 2011 at 5:32 pm

Ops!

….and“NRO Krugman Truth Squad” with logo on the back of the shirt.

Methinks1776 July 26, 2011 at 5:59 pm

I can’t imagine wearing the image of Krugman on my person for any reason. I see no reason to purposely bring on a bad episode of hives.

W.E. Heasley July 26, 2011 at 9:21 pm

Krug-o-hives!

John Sullivan July 26, 2011 at 3:16 pm

Debates of that nature don’t accomplish anything, as the topic is too broad. It’ll be a waste of time.

An important thing to note about Keynesian economics is that it is a collection of theories regarding the effects of intervention in a political economy. Keynes never added anything to logical economic theory, per se, such as establishing cause and effect relationships based on sound money and a rule of law protecting property, whereas the Austrians did with their theory on subjective-use marginal theory of value (replacing the labor theory of value) and monetary theory of business cycles.

Keynes’s theories were based on intervention, which in every case are forms of theft, because every intervention into an economy shifts resources and property from some groups of individuals to others. Usually, the people hurt by the intervention are so many and so indirect, such as a loss in purchasing power, that its negative effect is hardly seen or understood. On the other hand, each intervention is politically designed to reward a more visible sector of society, so that it can be declared afterwards that the intervention was successful.

A common example is protectionsim, where the politician stands outside a manufacturing plant and celebrates the rehiring of 1000 workers while 100 smaller factories are letting go 2000 workers due to the same protectionist measures.

Daniel Kuehn July 26, 2011 at 3:48 pm

This isn’t true at all. Keynes doesn’t even mention intervention in any great detail until the final chapter of the General Theory. He provides a detailed description of the causes of unemployment without reference to intervention.

Now – early Austrians like Menger made great theoretical contributions of the sort you mention (subjective value theory, monetary economics, etc.). But one of the real weaknesses of the theory of economic downturns of Hayek and Mises is precisely what you accuse Keynes of here – it was highly dependent on state intervention as a causal mechanism.

Hayek himself recognized this weakness and spent a lot of his later life thinking about how the economy itself actually worked, rather than how it responded to state intervention.

Steve_0 July 26, 2011 at 5:15 pm

Keynsians and/or Keynesianism and/or Keynesian school then, if not Keynes.

Daniel Kuehn July 26, 2011 at 5:36 pm

That still seems to be quite wrong to me.

I’m guessing most people on this blog who make pronouncements like that have never read an entire formal article, much less book, that could be called “Keynesian” – to say nothing of their grasp of the scope of the perspective.

Subhi Andrews July 26, 2011 at 8:04 pm

I am actually taking a macroeconomics course from a keynesian professor. Using Robert Gordon. I will agree with Steve_0

Gary July 28, 2011 at 9:26 pm

What formal article(s) do you think best represent your view of Keynesian economics?

vikingvista July 28, 2011 at 12:58 am

keynesiacs

DG Lesvic July 26, 2011 at 5:41 pm

Daniel,

Explain how the market, in the absence of any outside interference with it, could bring about a recession or depression.

Another of my infallible predictions:

The last one, if anyone can recall, amidst all the red herrings, was that no one would furnish an example of mathematical economics.

Now this prediction: Daniel won’t meet this challenge either, but will somehow evade it with some of his famous nuances.

Kirby July 26, 2011 at 8:05 pm

Now you’re spouting stuff I can agree with.

DG Lesvic July 26, 2011 at 9:02 pm

Now I’m worried.

Kirby July 26, 2011 at 10:37 pm

That’s the spirit

Tom D July 26, 2011 at 5:48 pm

“Keynes doesn’t even mention intervention in any great detail until the final chapter of the General Theory. He provides a detailed description of the causes of unemployment without reference to intervention.”

A very curious statement. Do you have any thoughts then why Keynes would write the following in the preface to the German version of his “General Theory”:

Nevertheless the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of the production and distribution of a given output produced under conditions of free competition and a large measure of laissez-faire.

Daniel Kuehn July 26, 2011 at 6:46 pm
Tom D July 26, 2011 at 7:07 pm

On your webpage, “And I see no defense of totalitarianism, what I see is Keynes selling a theory that he thinks is most appropriate for explaining the operation of a totalitarian economy.”

Why would his theory explain the operation of a totalitarian economy if his theory doesn’t mention interventionism until the final chapter? Do you mean to say that totalitarian states don’t intervene in the economy? Certainly you can’t mean that. Then what could you be saying?

John Sullivan July 26, 2011 at 3:26 pm

The other thing is that it’s hard to debate when the premise for each theory is different. The fact is that governments have monopolized the money supply, which is required in order for interventionist theories to work. The Austrians wouldn’t accept fractional reserve banking either. How can such a debate take place?

Mises always said that the Austrian theories work as efficiently as the legal authorities alllow them to, the only difference being that the more the interference, the less efficient will be the allocation of resources. Today, this is manifest in real estate.

muirgeo July 26, 2011 at 3:52 pm

Luck should have no part in such a debate. No one should be protecting their ideas but all should be looking for the best ideas. Keynes was all about ideas.

Dan H July 26, 2011 at 4:15 pm

Yes… they’re just not very good ideas.

Steve_0 July 26, 2011 at 5:16 pm

2 out of 3 great points.

Kirby July 26, 2011 at 8:09 pm

Nobody should be protecting their ideas….
um…. What if *cough* you *cough* somebody decides to voice a stupid attack that is easily defensable?

Steve_0 July 26, 2011 at 5:19 pm

I certainly HOPE anyone with BBC access might have the thought to somehow distribute a recording of this particular time slice of random electronic waves as captured with a digital media device through some sort of web-like data distributing computer system with a creative name something like “the buccaneer lagoon”.

Adam July 26, 2011 at 5:29 pm

Just came back from the LSE. The debate twas rather brill: Prof Selgin accounted for himself very well and Whyte argued Hayek’s corner well. I expected more out of Skidelsky but I have to admit that Duncan, an economist for some international trade union federation, actually was quite impressive (albeit absolutely wrong)

Tom D July 26, 2011 at 6:39 pm

I had to look up brill. The debate was rather European flatfish?

But then I saw an Urban dictionary that said brill was slang for brilliant, equivalent to American “cool”.

Thanks for the report.

vidyohs July 26, 2011 at 5:51 pm

But did the team members get paid for competing, that’s what I want to know? And why was it just four males when smart women are available to compete as well.

I smell a lawsuit.

Kirby July 26, 2011 at 8:11 pm

You’re right, the BBC is going to get sued for sexism. In the country with the toughest slander laws on the planet.

DG Lesvic July 26, 2011 at 10:06 pm

After my criticism of Hayek, above, I want to emphasize that finding fault with his work and that of Mises, as I have done, in no way detracts from it, but, by revealing the same human fallibility as in all of us, only makes it more remarkable.

It is no great accomplishment, from the vantage points of time and their giant shoulders, to see further than they. What was remarkable was their lonely fight to keep freedom’s flickering light alive in those darkest times.

And what would pain them would not be any improvement upon their work, but the frenzied and ferocious resistance to it in their names.

nailheadtom July 27, 2011 at 10:18 am
John from Oceanside July 27, 2011 at 12:32 pm

One thing leads to another: LSE podcasts. I didn’t know about them before this post, thanks! Looking forward to the podcast of the debate, (Aug 6?).

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