Tuesday, December 20, 2011



David Warsh finally says what someone needed to say: Friedrich Hayek is not an important figure in the history of macroeconomics.

Thus ensued my first visit to economicprincipals.com ("David Warsh, proprietor"). It looks a bit like a newspaper column. Perhaps it induces me to read. Anyway, I do.

Warsh trashes, thrashes, and tongue lashes Hayek for 60 of 64 column inches. Then, something surprising happens: In the last four of those inches, Warsh has something nice to say about Hayek:

That said, it is pleasing to think that Hayek himself may yet turn out to have been a very great economist after all, far more significant than Myrdal or Robinson, when seen against the background of a broader canvas.  The proposition that markets are fundamentally evolutionary mechanisms runs through Hayek’s work. Caldwell, of Duke University, notes that, starting with the Constitution of Liberty, “the twin ideas of evolution and spontaneous order” become prominent, especially the idea of cultural evolution, with its emphasis on rules, norms, and decentralization.

These are today lively concepts in laboratories and universities around the world. “It could have been that Hayek was running a different race, and the fact that he didn’t do well in the Walrasian race was that he wasn’t running in it—he was running in the complexity race,” says David Colander, of Middlebury College. Hayek may yet enter history as a prophet of evolutionary economics, a discipline dreamt of since the days of Thorstein Veblen and Alfred Marshall in the late nineteenth century but not yet forged, whose great days lie ahead.

Markets are evolutionary? I'll have to put that on my list of things to look into. That's a list that just keeps getting longer.

I can't say what Hayek meant by evolutionary markets, not what Warsh and the others mean by evolutionary economics. I can only say what I see:

The economy changes. It changes in response to policy. And it changes in response to internal imbalances and such. Exogenous and endogenous change.

If we lived as long as Struldbrugs we could see the big picture. But we don't. So we can see business cycles, but we can't see the ones that are a human-lifetime long or more, because we never get to see them repeat. And (not) seeing is (not) believing.

And this process of change... Looking at it from afar, it looks like cycles. But looking at it the way we get to look at it, it only looks like "evolution".

That's about it.


Jazzbumpa said...

Thanks to you, I read the post in question. I strongly disagree that Warsh "thrashes, and tongue lashes Hayek for 60 of 64 column inches." and so commented at his site.

I contend that his critique is quite balanced. The Ruiz comparison applies not to Hayek the man, but rather Hayek as he is imagined. To whit: "But the claims conservatives are making about the role he played as an economist are beginning to smack of Ruizismus. That is, they have jumped a caricature out of the bushes late in the day and claim that their guy ran a great race."

Which I think is completely valid.


The Arthurian said...

Sheesh! Focus on my one line of poetry rather than my two or three sentences of conceptual economics.