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I'm starting to think many of you have never read Hayek in any serious manner, including the author. The mere existence of the Hayekian information problem, whi

I'm starting to think many of you have never read Hayek in any serious manner, including the author. The mere existence of the Hayekian information problem, which is the core tenant of Hayek's ideology, refutes the fairly loose framing of what this post tries to convey.

Apocryphon 8y ago
Probably because Hayek is used here as a stand-in for "capitalist thinker." I suppose the author could have just swapped in Rand or von Mises just the same.
gowld 8y ago
It's fascinating that, to draw crude boundaries, "conservative" thinking is pro-capitalist/free-markets, which is largely justified by the theory of distributed local knowledge, but also strongly in favor of centralized authority on social/moral/scientific/religious/artistic matters.
- rienbdj 8y ago
  interesting point; I'm not sure why you're banned.
- andrenth 8y ago
  There is actually an interesting parallel between the idea of prices in a free market as information (distributed knowledge as you put it) and the conservative notion (originally from Burke I believe) of traditions as information (from one generation to the next). I don’t see conservatism as inherently advocating centralization in the matters you mentioned, just a desire of not throwing away hard-earned good things, due to the realization that they’re much harder to build than to destroy.
dustinthewind 8y ago
Thanks, I've created the account just to say the same: the author never bothered to read Hayek. I imagine Hayek (as many other economists) would object to that by saying that the resource allocation under centralized rule is inferior to that of free market because of failure of central planner to account for individual preferences, which manifest themselves easier in a capitalist market. Now, whether we should optimize for individual preferences as opposed to some other common noble goal - e.g. building communism - is another question. But I think everyone would agree that central planning could lead to some excesses (collectivization, starving Ukrainian peasants to death, Chinese ghost towns come to mind). P.S. The author writes: "I thought ten percent was the normal growth rate of communist economies: why would you care to become communist if you would not grow faster than under capitalism?" Not sure if it's urban legend, but I remember reading how many Western observers were surprised by collapse of Soviet economy since communists always boasted high rates of GDP growth. https://www.nytimes.com/2018/09/14/opinion/columnists/great-recession-economy-gdp.html https://www.nytimes.com/2018/09/14/opinion/columnists/great-... https://utopiayouarestandinginit.com/2015/01/24/paul-samuelsons-repeated-predictions-of-the-soviet-union-economy-catching-up-with-the-usa/ https://utopiayouarestandinginit.com/2015/01/24/paul-samuels...
- partiallypro 8y ago
  Precisely, "communism" even in the "state capitalist" form of China creates massive amounts of asset misallocation and that would immediately draw the ire of Hayek. China has tons of gluts in their economy, every economy has gluts (which are generally fixed during recession), but communist and centrally planned economies have continuous glut problems that erode at the economic foundation over extended periods. There are tons of great examples of that, one of the most recent being Venezuela, which was considered a socialist economical pariah just several years ago.
cuchoi 8y ago
Not sure about why people are upvoting your comment. The article doesn't contradicts Hayek's information problem, nor it refutes the author's point. Can you explain further why do you believe this? Also, my guess is would be that Branko Milanovic has read Hayek in a serious manner.
nabla9 8y ago
Hayek accepted dictatorship as temporary mechanism. China is relevant because they increasingly allow market economy and private ownership without planning. >Well, I would say that, as long-term institutions, I am totally against dictatorships. But a dictatorship may be a necessary system for a transitional period. At times it is necessary for a country to have, for a time, some form or other of dictatorial power. As you will understand, it is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism. My personal impression — and this is valid for South America — is that in Chile, for example, we will witness a transition from a dictatorial government to a liberal government. And during this transition it may be necessary to maintain certain dictatorial powers, not as something permanent, but as a temporary arrangement. -- Friedrich Hayek, El Mercurio, 1981
- partiallypro 8y ago
  There's nothing temporary or liberal about China's government.

Apocryphon 8y ago

Probably because Hayek is used here as a stand-in for "capitalist thinker." I suppose the author could have just swapped in Rand or von Mises just the same.

gowld 8y ago

It's fascinating that, to draw crude boundaries, "conservative" thinking is pro-capitalist/free-markets, which is largely justified by the theory of distributed local knowledge, but also strongly in favor of centralized authority on social/moral/scientific/religious/artistic matters.

rienbdj 8y ago
interesting point; I'm not sure why you're banned.
andrenth 8y ago
There is actually an interesting parallel between the idea of prices in a free market as information (distributed knowledge as you put it) and the conservative notion (originally from Burke I believe) of traditions as information (from one generation to the next). I don’t see conservatism as inherently advocating centralization in the matters you mentioned, just a desire of not throwing away hard-earned good things, due to the realization that they’re much harder to build than to destroy.

dustinthewind 8y ago

Thanks, I've created the account just to say the same: the author never bothered to read Hayek. I imagine Hayek (as many other economists) would object to that by saying that the resource allocation under centralized rule is inferior to that of free market because of failure of central planner to account for individual preferences, which manifest themselves easier in a capitalist market. Now, whether we should optimize for individual preferences as opposed to some other common noble goal - e.g. building communism - is another question. But I think everyone would agree that central planning could lead to some excesses (collectivization, starving Ukrainian peasants to death, Chinese ghost towns come to mind). P.S. The author writes: "I thought ten percent was the normal growth rate of communist economies: why would you care to become communist if you would not grow faster than under capitalism?" Not sure if it's urban legend, but I remember reading how many Western observers were surprised by collapse of Soviet economy since communists always boasted high rates of GDP growth. https://www.nytimes.com/2018/09/14/opinion/columnists/great-recession-economy-gdp.html https://www.nytimes.com/2018/09/14/opinion/columnists/great-... https://utopiayouarestandinginit.com/2015/01/24/paul-samuelsons-repeated-predictions-of-the-soviet-union-economy-catching-up-with-the-usa/ https://utopiayouarestandinginit.com/2015/01/24/paul-samuels...

partiallypro 8y ago
Precisely, "communism" even in the "state capitalist" form of China creates massive amounts of asset misallocation and that would immediately draw the ire of Hayek. China has tons of gluts in their economy, every economy has gluts (which are generally fixed during recession), but communist and centrally planned economies have continuous glut problems that erode at the economic foundation over extended periods. There are tons of great examples of that, one of the most recent being Venezuela, which was considered a socialist economical pariah just several years ago.

cuchoi 8y ago

Not sure about why people are upvoting your comment. The article doesn't contradicts Hayek's information problem, nor it refutes the author's point. Can you explain further why do you believe this? Also, my guess is would be that Branko Milanovic has read Hayek in a serious manner.

nabla9 8y ago

Hayek accepted dictatorship as temporary mechanism. China is relevant because they increasingly allow market economy and private ownership without planning. >Well, I would say that, as long-term institutions, I am totally against dictatorships. But a dictatorship may be a necessary system for a transitional period. At times it is necessary for a country to have, for a time, some form or other of dictatorial power. As you will understand, it is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism. My personal impression — and this is valid for South America — is that in Chile, for example, we will witness a transition from a dictatorial government to a liberal government. And during this transition it may be necessary to maintain certain dictatorial powers, not as something permanent, but as a temporary arrangement. -- Friedrich Hayek, El Mercurio, 1981

partiallypro 8y ago
There's nothing temporary or liberal about China's government.