[lbo-talk] Hayek, was Re: Stalinism (was Eric Hobsbawm)

andie_nachgeborenen andie_nachgeborenen at yahoo.com
Wed Oct 10 22:27:57 PDT 2012


Hayek beat Lange in the calculation debate. It used to be thought differently, but it is widely recognized, including by many on the left, that Lange and Hayek were talking past each other. Using neoclassical assumptions (red flag), Lange and Taylor showed that by a shadow pricing process of trial and error a totally planned economy can approach neoclassical equilibrium. Why this result is of interest to socialists is mysterious, and the premises are wrong. Moreover the argument depends on the existence if real markets to set real prices to start with.

Hayek's key insight in the calculation debate, discovered independently by Trotsky among others, does not depend on neoclassical assumptions. Hayek is an institutionalist of the sort that his fellow Austrian Schumpeter was. To put his basic insight in bumper sticker firm -- it is really very subtle and intricately articulated -- it is that a central planner would have to know too much, what the quantity of wheat would be produced in the Ukraine next year, hoe much iron and other alloys would have to be produced by what techniques and using how much labor this year to plow those fields, what the opportunity costs of using these resources and these techniques to make this production decision would be. Since almost all the information would be wrong, error amplifies throughout the economy, created incentives to understate capacities and overstate needs, that is lie, further increasing the planner's uncertainty. Bottlenecks and shortages inevitably result. The proof of the pudding is that these were exactly the problems observed by every central planner in the planned economies and every red executive, almost all of whom were businesspeople and officials innocent of Hayek. That is the key Hayekian argument and the reason his name should be listed with Marx's as one of the founders of socialist economics.

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On Oct 10, 2012, at 12:03 PM, "Jim Farmelant" <farmelantj at juno.com> wrote:


>
>
> Well in the case of Poland, Oskar Lange, Michel Kalecki, W&#322;odzimierz Brus and other Polish Marxist economists certainly pushed for economic reforms that would make us of market mechanisms to make the country's socialist economy more efficient. They had held out great hopes that Gomulka might implement such reforms upon his return to power in 1956 after the outbreaks of unrest. But once Gomulka was safely ensconced back into power, he ignored most of the economists' proposals. Later on Poland would experience other outbreaks of unrest and pressures for economic reforms. Eventually, as the country fell more and more into debt to Western lenders pressure for economic reforms would increase, and the Communists were finally forced to step down in 1989, but the kinds of reforms that were implemented were neoliberal reforms that aimed to restore capitalism to Poland, rather the kinds of reforms that people like Lange, Kalecki, Brus, or Kowalik had championed.
>
> Jim Farmelant
> http://independent.academia.edu/JimFarmelant
> http://www.foxymath.com
> Learn or Review Basic Math
>
>
> ---------- Original Message ----------
> From: Wojtek S <wsoko52 at gmail.com>
> To: lbo-talk at lbo-talk.org
> Subject: Re: [lbo-talk] Stalinism (was Eric Hobsbawm)
> Date: Wed, 10 Oct 2012 07:33:05 -0400
>
> I am surprised you mention hayek in this context. The absence of market is
> the dogma of eastern European thatcherites, but it is just a dogma. They
> should have read oskar Lange more carefully to know that planned economy
> can use market mechanism more efficiently than private one. Lange also
> argued that the problems of ee system was sociological not economic. In
> other words too much knout for too long created strong path dependence.
>
> Wojtek
> Sent from my Droid
>
>
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