Interviewed by the FT Ned Phelps has this to say:
Phelps feels that he is at the stage in his career “where I can afford
to be as radical as I want to be. And so I am having a lot of fun
thinking about capitalism and trying to imagine how economics would
have to be re-written to capture the heart of that kind of system.”
Traditional economics, he explains, sees the world as if it were a
plumbing system. “It’s basically rooted in equilibrium – things work
out as people expect them to do.” Capitalist reality, however, “is a
system of disorder. Entrepreneurs have only the murkiest picture of the
future in which they are making their bets, and also there is
ambiguity, they don’t know when they push this lever or that lever that
the outcome is going to be what they think it is going to be – there is
the law of unanticipated consequences. This is not in the economic text
books, and my mission, late in my career, is to get it into the text
books.”
Phelps is clearly getting at many of the ideas emphasized by the Austrians, Hayek, Schumpeter and among the moderns my colleague Peter Boettke.
God bless, but I must say, Phelps mission “to get it in to the textbooks” sounds pretty naive. Rather the epiphanies should lead us to dump the whole idea of textbooks.
Nothing new in Prof.Phelps words.It has been long written in enormous volumes by the Post-Keynesians (see “The Irrelevence of Equilibrium Economics” by Prof.Kaldor).
GW,
Perhaps my chronology is off, but haven’t the Austrians been saying this since there were even Keynesians…let alone POST-Keynesians??
John,
There really wasn’t an Austrian School of Economics until Rothbard and Kirzner.
But, as I stated earlier, I haven’t read anything by either author that struck me as unique or original.
Hayek is probably the exception, but I would argue that his insights have been accepted by the mainstream for some time. And I would also note that both he and Schumpeter are all but ostracized by the Rothbardian Faithful (see Von Mises Institute).
links are switched?
>But maybe I’m wrong. If you can point me in the direction of a few
>Austrian works on the subject that don’t replicate received wisdom
>I would most appreciate it.
Pure Theory of Capital by Friedrich Hayek
Time and Money by Roger Garrison
“The Austrian and the Anglo-American Schools and the School of Lausanne… differ only in their mode of expressing the same fundamental idea and … are divided more by their terminology and by pecularities of presentation than by the substance of their teachings.” — Mises (1933, translated into English 1960, quoted by Kirzner 1987)
Apparently, awareness of Austrian contributions distinct from neoclassical economics more generally came later.
Meanwhile, Hayek’s student Shackle found a non-equilibrium perspective in Keynes.
Student said: “Hayek is probably the exception, but I would argue that his insights have been accepted by the mainstream for some time. And I would also note that both he and Schumpeter are all but ostracized by the Rothbardian Faithful (see Von Mises Institute).”
I just received an invitation to the Mises Institute’s 25th anniversary celebration. Along with Mises, the 11″ x 17″, two-sided invitation has photos of only six other people, one of whom is F.A Hayek. That’s seems to me like a strange way to all but ostracize someone.
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