Contrary to propaganda from the likes of Ludwig von Mises, the free market is not some kind of optimal solution to all of our problems. And it certainly does not produce excellent software.
Contrary to propaganda from the likes of Ludwig von Mises, the free market is not some kind of optimal solution to all of our problems. And it certainly does not produce excellent software.
Mises never claimed that the free market produced the most optimal solutions at a given moment. In fact Mises explicitly stated many times that the free market does indeed incur in semi-frequent self-corrections, speculations and manipulations by the agents.
What Mises proposition was - in essence - is that an autonomous market with enough agents participating in it will reach an optimal Nash equilibrium where both offer and demand are balanced. Only an external disruption (interventionism, new technologies, production methods, influx or efflux of agents in the market) can break the Nash equilibrium momentarily and that leads to either the offer or the demand being favored.
> optimal Nash equilibrium where both offer and demand are balanced
This roughly translates to "optimal utopian society which cannot be criticised in any way" right? Right??
It depends on by what metric you define what is optimal.
For the health system or public transport the nash equilibrium of offer and demand is not what feels optimal to most people.
For manufacturing s.th. like screws, nails or hammers; I really can't see what should be wrong with it.
Or, paper clips…
I don't know if you are being sarcastic. But no, it's not an "utopia" by any means and the free market still has many pitfalls and problems that I described. However, is the best system we have to coordinate the production, distribution and purchasing of services and goods on a mass scale.
Somehow the last sentence of your comment caught me as if there's something wrong with it. I don't thing it's wrong, but I think it should be generalised.
Free market is an approach to negotiation, analogous to ad-hoc model in computer science, as opposed to client-server model - which matches command economy. There are tons of nuances of course regarding incentives, optimal group sizes, resource constraints etc.
Free market is also like evolution - it creates thing that work. Not perfect, not best, they just work. Fitting the situation, not much else (there is always a random chance of something else).
Also there's the, often, I suppose, intentional confusion of terms. The free market of the economic theory is not an unregulated market, it's a market of infinitesimal agents with infinitesimal influence of each individual agent upon the whole market, with no out-of-market mechanisms and not even in-market interaction between agents on the same side.
As a side note, I find it sadly amusing that this reasonable discussion is only possible because it's offtopic to the thread's topic. Had the topic been more attractive to more politically and economically agitated folk, the discussion would be more radicalised, I suppose.
> Also there's the, often, I suppose, intentional confusion of terms. The free market of the economic theory is not an unregulated market, it's a market of infinitesimal agents with infinitesimal influence of each individual agent upon the whole market, with no out-of-market mechanisms and not even in-market interaction between agents on the same side.
Just to expand on this really interesting topic. That's where the common pitfall on planned economy begins. Because to some degree a free market can withstand some amount of regulation; after all, external agents trying to manipulate the market are just that, agents in the market. As long as there are other autonomous agents intervening the market will keep functioning as it was. So the bureaucrat has both the incentive and the justification to expand the intervention. In other words, his economical plan didn't work because it was not intervened enough and just if they intervene in this extra thing it will work for sure. That loop continues until the market is 100% intervened, and at that point it requires such a enormous structure of power and control that makes it difficult to fight it (clientelist networks, repressive states, etc).
Many intellectuals have this problem. They make interesting, precise statements under specific assumptions, but they get interpreted in all kinds of directions.
When they push back against certain narratives and extrapolations they usually don’t succeed, because the same mechanism applies here as well.
The only thing they can do about it, is throwing around ashtrays.
What a great visual. I haven't heard that phrase before.
It's a fun image, but I was not my idea. I was playfully referring to this:
https://en.wikipedia.org/wiki/The_Ashtray_(Or_the_Man_Who_De...
Although in this original case the image (that allegedly happened) used to criticize the philopher (Kuhn), so kind of the other side of the coin of what I said above.
So it will reach equilibrium unless literally anything disrupts that equilibrium. Got it.
The free market tends to equilibrium yes. That indeed is a novel realization.
An "autonomous market with enough agents" is carrying a lot of weight there, like "rational actors" and "as sample size goes to infinity'.
It is not carrying a lot of weight. Macroeconomics are different from microeconomics. On a micro scale agents have enough weight on the system where a specific action might break a model. On a macro scale each individual agent's action carries less weight and therefore the system becomes predictable.
On a micro scale it is possible, and sometimes favorable, to intervene. On a macro scale to intervene economically becomes impossible due to the economic calculation problem. It is widely accepted in modern economics that the unit of maximum extent where economical intervention is possible is a business/company/enterprise. Or in sociological terms the maximum unit is the family. Anything broader than that and the compound effect of the economic calculation problem becomes apparent and inefficiencies accumulate. Autonomous decentralized mechanisms (like a free market) are the only solution to it, but not the most optimal.
The problem with this is that "breaking the Nash equilibrium momentarily" is a spherical cow.
"Momentarily" can mean years or even decades, and millions of people can suffer or die as a result.
Markets do not model that especially well. When it comes down to these situations, it's not about the rising price of food motivating producers to enter the market - it's about the people starving. During a war, no amount of money can cause more munitions to appear fast enough. Blast-resistant concrete can take weeks or months to cure, workforces take time to train. These "momentary" disruptions can swamp the whole.
I can't think of a time when I've found an absolutist position useful or intelligent, in any field. Free-market absolutism is as stupid as totalitarianism. The content of economics papers does not need to be evaluated to discard an extreme position, one need merely say "there are more things in earth and heaven than are dreamed of in your philosophies"
Great point, if the only constant is change, then philosophy should follow (or lead).
Propaganda is quite a strong term to describe the works of an economist. If one wants to debate the ideas of von Mises, it'd be useful to consider the Zeitgeist at that time. Von Mises preferred free markets in contrast to the planned economy of the communists. Partly because the latter has difficulties in proper resource allocation and pricing. Note that this was decades before we had working digital computers and digital communication systems, which, at least in theory, change the feasibility of a planned economy.
Also, the last time I checked, the US government produced its goods and services using the free market. The government contractors (private enterprises) are usually tasked with building stuff, compared with the government itself in a non-free, purely planned economy (if you refer to von Mises).
I assume that you originally meant to refer to the idea that without government intervention (funding for deep R&D), the free market itself would probably not have produced things like the internet or the moon landing (or at least not within the observed time span). That is, however,a rather interesting idea.
Governament contracts are very restricted behind layers of certifications and authorizations.
For example, you can't freely produce missiles and have it in wallmart where "the governament" purchase at shelf price.
What a world that would be. Would change the game of 'deer hunting' for sure.
> The government contractors (private enterprises) are usually tasked with building stuff
Ah yes, situation where the government makes a plan and then hands it to the one (1) qualified defense contractor whose facilities are build in swing states to benefit specific congressional campaigns is completely different from central planning.
There are some resemblances, which indicate that you might not have a fully functioning free market. But central planning in the context of von Mises refers to something else. It's about the organization of whole national economies, as in planned economies, a thing you find in communist states or Lenin's "war communism".
You should read up on Yanis Varoufakis' history and just how bad his solution for Greece went. That will explain the extreme amounts of anger on both his side, the side of Greeks and the side of the EU and worldwide financial community (and the EU itself used to be an industry cartel, so you can guess how much every government institution in the EU aligns with the worldwide financial community). This guy will never be allowed to do anything remotely serious in economics ever again, and he knows it very well. His Diem24 project is failing, and he knows that too. He feels the ECB, specifically Mario Draghi, Jeroen Dijsselbloem and Christine Lagarde are responsible for this downfall and talks about them in a way that makes you say "he can't be allowed near them. Seriously. Call the police". But in the constant tragedy of his life: He's probably right they caused his downfall.
He caused a MAJOR issue for Greece that still affects everyone in his country today, after reassuring people for 2+ years it was never going to happen: https://en.wikipedia.org/wiki/Greek_government-debt_crisis
(He'd kill me for saying this but he was lying back then too. He was trying to pull a Thatcher (I could compare him to someone else that did the same a long time ago but ... let's just say if you know you know). He was trying to double Greece's public debt by lying to everyone about what he was doing. He failed, and then started threatening, and when his threats didn't work, he got fired by Greece's prime minister, his oldest friend. It ended the friendship. He lost. And he's not a good enough sport to accept that he lost, frankly he got caught and couldn't talk his way out of it. This, despite the fact that he was finance minister, and so will be paid, very well I might add, for the rest of his life despite what he did, and despite the fact that every Greek today is still paying the price for what he did)
Oh and he's pro-Russia. All Russia wants in Ukraine, according to Yanis, is help the European poor. More detailed he is of the opinion that the current course of action of the EU will lead to a war with Russia, in which a lot of European poor will be forced to fight in an actual war, facing bullets and bombs in trenches. This could be avoided by giving Ukraine and the Baltics to Russia. In the repeating tragedy of Yanis Varoufakis' life, I have to say, yet again: he may be right (I just strongly disagree that offering Ukraine and the Baltics up to Russia is an acceptable solution to this problem, and in any case, this is neither his, nor my choice to make)
He does not live in Greece, his own country, he lives in the UK, making the case for Russia.
https://www.yanisvaroufakis.eu/category/ukraine/
And I get it, his life has become this recurring tragedy. His father was a victim of a rightist dictatorship in Greece, and he was imprisoned and tortured for that, as well as losing his job, living in poverty for a very long time (yes, Greece was an extreme right dictatorship not that long ago, really, go look it up). Yanis Varoufakis himself became the victim of a cabal of laissez-faire very, very rich people who destroyed his career right at the peak of everything he achieved. He has been the victim of one or another form of extreme-right policy (in the sense of laissez-faire parties that capture governments) since he was 4 years old, right up to today. Over 60 years his life was sabotaged in 1000 different ways, some very direct. And, sadly, I agree with his "extreme-right" enemies: he can never be in allowed near any position of power ever again because of this, which isn't even his fault. (extreme-right according to him, I would refer to his enemies as "the status quo", and point out it's working pretty well for everyone)
> He caused a MAJOR issue for Greece that still affects everyone in his country today, after reassuring people for 2+ years it was never going to happen:
care to explain what exactly he caused and how that still affects everyone in his country? in particular how he managed to jump several years backward in the timeline?
All I can say is "keep reading". Because it takes a BIG turn for the worse at one point, and that's where he's involved.
> He caused a MAJOR issue for Greece
That link goes to the Greece financial crisis which, according to the Wikipedia page, started in 2009. Varoufakis was elected minister of finance in early 2015 and resigned only half a year later. From the outside, it seems impossible that his half year miniterial tenure could have caused a crisis half a decade earlier. At the time, Greece had already defaulted twice on their loans and were about to do it a third time.
Economics is propaganda. It’s not an empiracle science, and it’s claims are mostly used to promote ideologies consistent with government policy or the ideology of powerful individuals with the surplus’s wealth available to pay someone to build a quantitative defense of said ideology. What else would you call it?
It's a social science? Economics is much broader and much less unified than you purport it to be. The (social) science of (in this case) Macroeconomics is just that, an observational science, a bunch of theories and observations (controlled experiments are not really feasible). The propaganda is caused by politicians, administrators, and policymakers, not really the scientists. There I agree with you, central bankers are a prime example of such propaganda. Ever wondered why almost everywhere the inflation target is 2%? Not 1%, not 3%, but exactly 2%? There is no real scientific reason behind it, that is just policy, or propaganda if you want to name it like that.
Social scientist carry out experiments / causal analysis on granular data. Macro economics (not micro) I should clarify meets the definition of propaganda because its theories do not have solid backing with experimentation or data. It is primarily used by the state to manufacture consent for economic policies that implement incentive structures that benefit the most wealthy people in society. It’s not that complicated.
Are _you_ making software for the government?