Posts tagged Austrian Economics
Today's Quote of the Day...

…is from pages 79-80 of the 2016 Mercatus Center re-issue of Don Lavoie’s 1985 book National Economic Planning: What is Left?

[O]ne can argue that just as an articulated statement only carries meaning to other people because of a shared denominational background in unarticulated assumptions about the use of language, so too do articulated prices only carry meaning to those who calculate with them because of a shared background in unarticulated assumptions about the characteristics of the priced goods and services. Just as articulated statements in science constitute an indispensable aid to our advancement of a largely inarticulate understanding of the world, so too do articulated prices provide an indispensable service to our largely inarticulate production activities. But neither articulated statements nor posted prices have any meaning when divorced from their inarticulate foundations.

JMM: In the wake of any disaster, we see a great effort by many people to unmoor prices from their inarticulate foundations via price gouging legislation. But when this is done, the meaning of the price becomes skewed and sends confusing messages to those who have to deal with the price. Its meaning becomes obscure and gibberish, much like how an understanding of sunlight would become gibberish if the word was divorced from the idea of sunlight.

Prices convey information. We may not like what that information is, but pretending it does not exist is not helpful.

From Spontaneous Order to Codification

A while ago, I did a blog post on the “Hayek Memorial Pathway,” one of a series of pathways that have developed on campus though people’s actions. Well, they’re doing a bunch of construction on campus and part of it includes paving the Hayek Memorial Pathway.

Some years from now, people will forget that the pathway was one unpaved and unplanned, that it was only by the constant movement of thousands of students that the path at all formed in the first place. All the “government” (i.e., George Mason University) did was codify what people already did.

Socialists and central planners often point out various institutions and state proudly “look at the good government is doing!” What they fail to see, however, is the spontaneous orders that predated those codifications. For example, they fail to see the development of the law that legislation merely codified. Or the development of money that legislation merely codified. These institutions were not part of government planning, but rather of government codification of already-in-action plans.

Likewise, this is why I disagree with “one-drop” libertarians (ie, those who oppose anything and everything government does, insisting it must inherently be inefficient). Not every institution the government codifies is inherently inefficient. When they merely codify what people are already doing, then that may not change the efficiency at all (indeed, given certain conditions, it may improve efficiency). GMU paving the Hayek Memorial Pathway does not in and of itself imply the pathway is in any way less a spontaneous order or less efficient.