===== PAGE 1 ===== gy S Volume, Number 1 Autumn, 1977 } | oo With this. mC the future: offers: great oppor- tunities for Austrians. Several insights, long of interest to ~~ Austrians; afe 4 present being discessed by the scenomie Lf focused ont ‘the unique “ole of time’ in economics. Axel Leijonhufvud has incorporated Austrian ideas on the im- = ‘portatice” of relative ‘price ‘changes in his analysis of ik inflation. G.L.S. Shackle’s writings on time, uncertainty ~~ | and knowledge have generated mich work on radical sub- Cd jectivism and. DavR Pose. in addition the work of i James Buchanan on i ve TEC weorkingin Austrian Economics. For a number of years : Sei have been only a few scholars actively writing in the > Austrian tradition. However, there has recently been quite a resurgence of scholarly interest in ‘Austrian economics. Much of this interest has been stimulated. by those who g. atin, von Mises’ advanced" seminar at’ New York SE the participants ware graduate ‘students or recent Ds. REE nthe ot four ees thers avs bon soe ma ~ . Te An Seen) fox the future. third year of monthly meetings at NYU. The expresspur- ~~ SEE Te tia seminat 1s to entourage scholars ter . an “ested. in the Austrian approach to present At a vironment has proved helpful in pe scholafs io $0 integrate their: eptient yo ed aby the on CL : BE . of t present thers are Austrians doing graduate work interest n these acs Vary oF het nul ave bo SE " at drm an inves ning UCLA, | working i in isolation with little xriowledge of the resur- 1 s several ¥ scattered and because: pice present no. formal | . armed ian activities, the ~~ }< cn: Newsletter er shad be of value, Thus ~~ “}: ed in Un goin; gw | ork in Austrian Econo- 1: i A continued on ‘back page SY a. S————— ===== PAGE 2 ===== FL Tua - dade Mibar 4 <8 y Conference Generates oder yi the assumptions (such. as the ceteris paribus conditions). > Interest i in Austrian © have been shown ot to hold. "The lectures of Professors Kirzner, O'Driscoll, Egger, Cn © ‘and Garrison, provided the. application of these ideas te Ce the problems. capital measurement. ‘Further topics Co | : by Richard Fink SR as Ee oaleon versus he maintinanes of apie, «ER The Liberty Fund, in conjunction with the Institute for . equilibrium versus the market process, ang the Misesian Cee Humane ‘Studies, sponsored an instructional seminar in critique of the quantity theory of money. eetly contrasted {© Austrian economics: at Mills College {Oakland, California) Austrian. analysis with that of other schools of thought, 27 from June: 19 through July 2, 1977. As the conference was ~~ Other lectures dealt with entrepreneurship, economic fluc- designed to provide graduate students and young profes- tuations, the development of Keynesian economics, the _ sors with an intensive two-week introduction to Austrian coordination of . ‘e¢onomic activities, “and - Hayek's : economic analysis; thirty-five conferees were chosen who conception of spoiitaneous order. In addition to these q had had little or no previous exposure to Austrian ideas. formal lectures, the afternoons. and evenings provided i. Unger the direction of Charles Baird of California State many opportunities for informal discussions including a ER University at Hayward, the conference featured lecturesby presentation by Derek Jennings of Stanford Univaielly on ~ .lerael Kirzner of New York University, Gerald O'Driscoll = the methodology of the social sciences. : ‘of Iowa State, John Eggér of Goucher College and Roger ~ The Mills College facilien wer excelen and contri - Garrison of the University of Virginia. Participants in- | fer ed “A number of 10 cluded graduate students and professors from India. and “: England, as well as the United States, and represented such : universities as Oxford, Harvard, Chicago, Stanford, New vo York University, Virginia, utgers snd the University. of ature ¢ Eo ET Texas. CL Ea pi other Austrian activities indicate: hat: tania | SS The conference began ‘with ‘an introductory address intrest was genera i Aran ia} | i Hl pl Wataed 3 Sa Lr Br ot he Sunes — — - cLeod’s talk set a tone of ambitious optimism 7 for a conference that would attempt ‘to summarize 100 Austrian Economics Newsletter : . - years of In literature in two weeks. ‘This was the first of four Volume, Number 1 Autumn, 1977 talk of 3 ngufshe & guest lecturer; ‘Nobel Laureate “The Austrian Economics Newsletter is. designed + Friedrich vost Hayek spoke on: constitutionalism and | a5 a research and communications device for work in Be demogracy,;. Axel Leijonhufvud of UCLA developed his | Austrian economics. As such, it is essential that we ideas on, ragged inflation, and Mutray Rothbard of the | ‘have the active support and cooperation of our | HE Pee institute of New York delivered a ‘lecture: on | readers. We need any information which would be of o ri ies tec te forme i we th -. bri nee scomomica sud laced he school ey teh histor- cL i ie td avn oc sn: € Geli 5 an independent project spon- =» be pid the ties prt. ‘Subscriptions are : $e. 5.00 angally from: HR denen and the method § is to ory deductive theories Bl Newto N. Y, 10003. ===== PAGE 3 ===== Austrian Economics Newsletter oo | oo - page3 Loasby Explores Radical Uncertainty : Brian. J. Loasby, Choice, Complexity and Ignorance. Loasby combines concepts developed by Shackle with Cambridge University Press, 1976. 242 pp. $19.9 95 those of Coase and members of the Carnegie School (Herbert Simon, et. al.) in chapters on the firm and organi- zational behavior. He makes the important point that the firm, like money, is essentially a disequilibrium pheno- Brian Loasby, Professor of Management Economicsat menon; in general equilibrium any rationale for the firm ~ Reviewed by Lawrence H. White ~ the! University of Stirling, has written a clear and valuable would be gone. Loasby’s. conception of entrepreneurship critical investigation into the implications of radical and profit is thoroughly Misesian, though without any {(Knightian) uncertainty for economic conduct and eco- reference made to Mises: “Profit depends on imperfection nomic theory. He speaks of “partial ignorance” rather than of knowledge; it results from: the successful exercise of “uncertainty” since deterministic decision theorists have ~~ imagination in seeing a value higher than the conventional bastardized the latter term by using it to refer to what is valuation in some asset or opportunity.” (p. 161) He con- actually “subjectively perfect risk.” (p. 9) Loasby's critical ~~ ceives of the competitive process .in Hayekian terms, but attitude and dry wit are quite evident: “the economist, adds that “the process is one of invention as well as dis- faced with a very awkward, problem [uricertainty], has covery. “ (p. 185) His discussion of innovation is stimulat- succeeded, as so often, not in solving it, but in denying the ing, and he illustrates his points vw with pertinent examples of legitimacy of its existence.” (p. 9) = .. actual firms in Britain. Indeed, throughout. the book In rather praxeological fashion Loasby views uncer- Loasby expresses concern ‘with the practical relevance of tainty as a necessary characteristic of purposive human theory. Loasby also. suggests. an unorthodox defense of action: “The idea of purpose reinforces the logical necessity competition as the proper. means of coping with the uncer- of partial ignorance, for purposive action is intended to tainty of the future. The divergence of plans under disequi- make the future different in some respects from what it librium competition prevents the catastrophes of a false would be without such action.” (pp. 6-7) That the future (i.e. centrally-imposed) convergence of plans. ©“. ¢an be altered, presumably by ‘others, as well as by the Those who have followed the growth: pf knowledge anonymous decision-maker in question, makes it less than literature of Popper, Kuhn, Lakatos, and Latsis should be perfectly predictable. Here, early in the book, is.a state- interested in a chapter entitled “Progress and Paradigms” ment of what Alan Coddington has called the “simultaneity which contrasts general equilibrium theorizing: with problem, " This problem has been given prominent play in Marshallian value theory and behavioral theories of the Shackles Epistemics in Economics as a barrier to the firm. In his final chapter, Loasby again criticizes the realization of final equilibrium and an earlier statement of ~~ general equilibrium models, developed by Arrow. and it can be found in Hayek's “Economics and Knowledge” others for failing to incorporate accurately time; uncer- (Individualism and Economic Order). | tainty and imagination: “He ‘sharply criticizes Hahn's Continuing, Loasby aims a subjectivist critique at a defense of equilibrium theory as a formalization of what number of worthy targets: Hydraulic Keynesian model the world would have to look like were the Invisible Hand ~ building ‘{Leasby, a Fundamentalist Keynesian, calls to operate: = Shackle “Keynes’ solitary follower among leading econo- General equilibrium. theorists have not - mists”), Friedmanian positivism, and especially Arrovian = “formulated a fwo-hundred-year-old tradition,” general equilibrium theory and the ‘associated Paretian as Hahn claims; they have invented a new ques- . welfare economics. In each of these areas Loasby’s criticism tion about the properties of a solution set, already © could have been even sharper had he consciously advanced deemed to have been discovered, in a very special ~. .. the arguments Hayek makes in “Economics and Know- system. The relevance of this invented question + ledge” (in Individualism and Economic Order), “Degrees of they have never attempted to make clear. To. Explanation” and “The Theory of Complex Phenomena” ‘Adam Smith's problem: of how to organize an {both in Studies in Philosophy, Politics and Economics) ~ economy in order to find desizable solutions they and elsewhere. As it is, his arguments have a Hayekian have, formally, nothing to say. (pp. 217-218) flavor, but one filtered through Shackle, While Loasby's critique is excellent, even stirring, his Loasby does not pull his punches: “Bquilibrium . positive suggestions are disappointing. He offers little but models cannot explain because they specify no causal the false choice of Arrow-Hahn versus Shackle-Keynes process,” (p. 26) He refers to general equilibrium theory as (the Keynes of the 1937 article, which he quotes at length), “social science fiction,” His discussion of abstraction and ~~ He adopts a troubling methodological stance similar to experimentation is marred, however, by a failure to recog- that of Shackle and Lachmann, which might be called nize that proper theorizing in the social sciences is compos- “theoretical pluralism, ” that there are “dangers inherent in tive while that in the natural sciences is decompositive (see any single mode of theorizing.” (p. 12) Such a view brings - Hayek's The Counterrevolution of Science). For this one perilously close to institutionalism. Austrians can reason, ‘modeling plays very ‘different roles in these two applaud Loasby's attack on Arrovian general equilibrium types of disciplines. There is more to explanation than ex theory, but they ata that. systematic consis~ post “prediction.” - } tency per se is not a A defect. ===== PAGE 4 ===== yl page 4 : "Austrian Economics Newsletter Scholars Engaged i in Writing & Research 1 We hope to feature this column regularly, but we another outlook, He has also applied this analysis in a long i! ‘depend on our readers for information. Scholars engaged inquiry into theories of decision-making (subjective i in research are encouraged to write us describing their probability vs. Schackle’s theory) and their relevance to. i research interests and progress. It is also hoped that our entrepreneurship, LI readers can provide suggestions of problems which merit White now believes his previous emphasis to have * scholarly attention. | ‘been somewhat lopsided and has endeavored to steer a fi | middle course between Kirzner and Lachmann in a short 3 Richard Ebeling (45-35 44th St., Apt. 1-E, Long Island piece written this summer: “The Austrian School and il City, NY 11104), a graduate student at NYU, during the ~~ Spontaneous Order: Comment on O'Driscoll.” This paper - H last year has written several papers analyzing contem- is intended to help clear up the dispute among Austrians Al porary economists, Two, “Reflections on John Hicks’ The ~~ which was reported by Jerry O'Driscoll in “Spontaneous Hayek Story’” and “Some Reflections on the New’ Mone- ~~ Order and the Coordination of Economic Activities” (Jour- tary Theories of Clower and Leijonhufvud,” were delivered nal of Libertarian Studies, Vol. 1, no. 2). at the Austrian Economic Seminar, For Professor Lach- He and Jack High are organizing a Los Angeles study mann’s seminar at NYU he presented a paper on “Keynes, group which will investigate the Hayekian theory of capital Keynesians and First Principles.” While at the Institute for ~~ as presented in The Pure Theory of Capital and earlier Humane Studies this summer, Ebeling wrote a paper on ~~ works, If time permits, John Hicks’ Capital and Time: A “Alfred Schutz and the Praxeological Method.” He is at ~~ Neo-Austrian Approach will also be covered. present working on an analysis of Milton Friedman's Fh RE TT monetary theory and will be writing a review of the revised edition of F.A. Hayek's Denationalisation of Money. - John Egger (Dept. of Economics, Goucher College, Baltimore, MD 21204) is examining the “rational expecta- tions” literature from both theoretical and history of Roger Garrison (Institute for Humane Studies, 1177 University Drive, Menlo Park, CA 94025) has just com- . pleted his dissertation proposal — “The Neoclassical- Austrian Paradox: A Study of the History of the Wick- ~ sellian Idea” — which contrasts two strains of thought . derived from Wicksell's monetary theory. He is presenting : Bis peoposd] at the October meeting of the Asstrian Economics Seminar. Henry Hazlitt is now working on a new book on | inflation. Whereas his 1965 revision of What You Should Know About Inflation mainly brought statistics up to date, this forthcoming work is to be mostly new with an in-depth treatment of many problems not dealt with in the earlier _ i work. Larry White and John Egger converse at the Mills College El Naomi Moldofski (University of Melbourne, Park- Conference. EE | SI ville, Victoria, Australia, 3052) at present is pursuing Albert Ziabinger (Assistant Professor of Economics, research in comparative economic systems. She sees thisas Valdosta State College, Valdosta, GA 31601) is currently a very fertile area for the application of Austrian insights. translating a number of essays for two volumes to be David Ramsey Steele (30 Chestnut Avenue, Queens published on the theory of market process and on mone- - Road, Hull, Yorkshire HU5 3 JP, England) is putting the tary theory and the business cycle. These essays, origin- final touches on his book, The Impossibility of Com- ally published in the twenties and thirties in German, were munism, which considers Mises’ economic calculation written by Mises, Hayek, Schams, Mayer, Mahr, Rosen- argument in the context of the Marxian idea of socialism. stein-Rodan, Lachmann, Hicks and Strigl. Lawrence H. White (901 Levering Ave., #4, Los A second project involves the papers of Cari Menger, Angeles, CA 90024), a graduate student at UCLA, has which have been inaccessible since 1922 when Hayek, as a | been working on the theory of entrepreneurship and the young student in Vienna, sorted them provisionally after i question of whether there is a tendency toward general Menger's death. Nothing in this collection of Menger's a equilibrium. He presented his “Entrepreneurship, Imagina-* later writings, the product of thirty years of work, has ever 1 tion and the Question of Equilibrium” at the Austrian been published. Much of it, however, was at one time Economics Seminar at NYU in March, 1976. White criti- ready for publication. In his research for the planned three cized what he saw as “a misplaced emphasis on arbitragein additional volumes of the Principles, Menger found it a. Kirmer's Competition and Entrepreneurship” and mar- necessary to study related disciplines. This material should \ shalled arguments of Shackle and Lachmann to provide be very interesting. ===== PAGE 5 ===== wl established Austrian economics ‘program at CH iversity offers an: excellent’ ‘opportunity for. “Co students’ to work toward a Ph.D. if economics. For many... Ont nic. The ears: interest i in Austrian economics centered on. Ludwig. 1977-78 a demic. year ‘there will bi RET 5 {One will begin with a critical study of tan Rothbard gs - ) my and State i es the first-year _ spit theorist IE re the Seni, asa a visiting on : hE sor: ‘additiot of Professor Lachmann. the Of o a e t ellows can attest er tan nity t eof the truly classic 5, The program was" co h ’ Se Mario: Rizzo, a oS make this is challe 4 2 on in the 1980° $3: ream athrife fr Nati al dector, When Hayek any Ce Morgensterh took. over er the CL i frequent participant of the pr ate Mises Seminar, co LL “Professor orgenstern. ‘is best known for : “his co- = it authorship ty of | | . “in: Behavior {1944 ently wi 0 “The Collaboration EE - Between Oskar ‘Morgenstern. and John von Neumann on _the Theory of Game “ Journa of Emi 7 Literate. - | with, the robes of been drwy in ed = Morgenstern. (New York. he published his study On. ervations’ “(Princeton Uni- 63), analyzing. the use se and. ===== PAGE 6 ===== h vi ivi cess do. cron : oie signal, but on kind i: ) ===== PAGE 7 ===== Staatwissenschaften. ‘His translatio is clear and precise” Also in: 1974 Confere ce on’ Austrian ‘Economics LL © and’ the ticle is highly interesting and suggestive. Espe- © was held -at “South” Royalton; Vermont. ‘Lectures. on. i cially. important were insights.on the importance of money ~~. methodology, history of economic’ thought, money, the pricés for economic calculation which i no doubt sowed the market process, capital theory and political economy-were eed for the work of Mises. and. Hayek on. socialism and given by Ludwig M:: Lachmann, Israel M. Ki ter, and. pL “calculation. - a. AN Lo Murray N.-Rothbard. The papers were publishe the” cv The: conferefice ended with” Hayek. discussing “his series as The Foundations of Modern Austrian Economics, = tudent: days in Vienna. Menger had left the university =~ A paper by Gerald P. O'Driscoll and Sudha R. ‘Shenoy. on: efore Hayek arrived, so ‘Hayek heard him speak’ only: “Inflation; Recession and. Seago tion “was g ice; Nevertheless, like. ‘all. ‘the’ ‘economics ‘students. nv clas. i il - Sas ié LY Hayek studied ‘Menger's ‘writings. Interestingly, CP “although impressed with Menger's work, Hayek did not at. ‘the time perceive much difference: between Menger-and oT _: the other marginalists: I¢ was not until much later that he ER began. to. appreciate" Menger's ‘unique “contributions to. “pt "economics, contributions that are now being identified md gu “elaborated: by the; unger economists’ in the Austrian wn = tradition. f x a Studies. Econom Theory Austrlan Economics Newsletter gr y Under the spensciship. of the | Institite: for Humane. ~ “Studies, Sheed Andrews. and McMeel has begun’ a new. ‘tion of hr} “book series entitled’ “Studies in’ Economic’ Theory.” This - Austrian: series, edited by ‘Laurence :S; ‘Moss, consists ‘of original bs n Austri works and feprints of classic volumes in’ the: Austrian CF F traditio Ls a REC a. a sat thins the ni ines the. interventionist Pp olitics : that ro Ferry, NY: die coro Dec. 1077, = 8 Critique of Inter ntionism. New Rochelle, NY: amorg ompeting an ly; eul- tari 3 ence. of purp: ssefu human action, Cola pie ‘of; ADK The E¢onomics of «March, 1977. he eros Murray N. Rothbz ===== PAGE 8 ===== SE This was on cop 20. 0 book. length tinted 3 " : Coby William’ Smart, Ih = several sections devoted to- oe i hin the conte of actions not et. plaitrind a ernative. “possibilities, still influence xplaining the nature rm exports Cn Te op a the. i yek “argued ‘th orice War, 15 analysis wit. e be TES beyond the study of one individual and, instead,’ came: to RE vay: y- completly or cr 6 ===== PAGE 9 ===== he Austrian Economics Newsletter : Bconomics and. Knowledge,” ”: Economica. (Feb; The © book i : introduced wit ane essay y by B Buchanan. a 1937). pp. 33:54, “reprinted in Individualism and * enti rospec co “Economic . Order’ (Univ. of Chicago. Press, 1948). REE These two articles worked as a catalyst for the contri- . butions of G.F. Thirlby. Thirlby explained. that costs he ‘not only subjective but, also, were always ex ante in their nfluence on “human activity. Events . that had’ ‘already drred were no longer open to action. Thus, past choices =. G; nd costs did not directly influence thie actors preferences. ~~~} 2 e actic pe. Costs. ‘influenced. che ice: only. Within: ‘the. Cl C194 ncertanty, “Costs and | Collcvit Economic R ris Economica May. 1 1953). : ===== PAGE 10 ===== SE Austrian Economics Newsletter | x B so Institute Promotes Austrian ERE Co oo E onpmic: 8 in Printing nd Lectures or sr “The recently established Cato. Tnstitute (1700. Mont. ce. ‘gomery Street, -San Francisco, CA. 94111) is. ‘becoming actively involved in. promoting Austrian economics. They « r' intend to expand and improve significantly’ the Studies in... 8. Economic’ ‘Theory series,” ‘republishing. virtually. all out cof t bE print Austrian Works as well as publishin new contribu- Lh i - writings of the ini classical Hits cit Cato Institute ~~ ~' also.plans to’ ‘expand the Austrian lecture series presented ho atthe University of Chicago last year. Under this program = prominent Austrians will present papers to the faculty and. °° k, eC students. at various universities in order to. famil-"/ a ; direc L ..."iatize the economic. profession with Austrian insights o on : Sy eal with such. opics a3 methodoloeal - “eopiigiipoigey, economic probl ms.d Lo ubje ivism, postiviam, oe , of IL i Ea og Rng : E Bh contribute. Our aim in ¥ pros Lo and ‘encourage. work ini Aus Pol ¥ B tions on. nthe an r, we chore to show oC E