*Knowledge and Coordination: A Liberal Interpretation*

The author is Daniel Klein and you can buy it here.  My blurb reads:

The best book on Smithian economics, or for that matter Austrian economics, in many years.

Here is a thirty-minute presentation of some themes from the book.  Here is an associated podcast with Dan and Russ Roberts.  Here is the syllabus for Dan’s class on economics and philosophy (pdf); here is the syllabus for his class on Adam Smith (pdf).

Comments

The EconTalk podcast doesn't give much confidence that Klein directly tackles, head-on, the difficulties created by freely giving up everything in neoclassical economics save prices as a resource allocation mechanism. On aesthetic grounds, it seems? So what does one say to pecuniary externalities, or tragedies of the anti-commons, or outright conflicting claims: that is, things which occupy the everyday process of political dispute over economic policy?

It's not as if the EMH literature lacks an extensive study of "gee, what happens when we need to incentivize extracting economic knowledge"... are those too determinate for our tastes? Possibly because they highlight the inherent contradiction between having the knowledge embedded in prices as massively valuable vs. a price mechanism being allocatively efficient, a la Grossman & Stiglitz? As a matter of aesthetic appeal, prices extract knowledge that is backed by effective demand - by consumers who can both desire that information and can afford it. On what basis does one have this implicit invocation of egalitarian opportunity, or should we cheer if we archetypically "export grain in a famine" Because Price Signals Tell Us So? And of course "uncertainty!" cuts both ways here. Asymmetry in its effect needs some actual explanation.

But perhaps I should read the book!

The first chapter is Rinkonomics. A steaming pile of libertarian propaganda that I criticized the last time it was brought up.

"As Steve Sisson has pointed out, Klein ignores the fact that there ARE rules created by central authorities in rinks. And without those rules, the spontaneous order that would form would be quite different. On ice rinks, the hockey players would deter just about everybody else who didn't like collisions, getting hit by sticks and pucks, and the necessity of safety equipment. Roller rinks would hqave similar problems with roller derby players. Rink surfaces would become rapidly degraded by spilled liquids and trash, because nobody would be keeping it off the rink."

"Spontaneous orders are inescapable: even in systems as tightly controlled as crystals, coordinated behavior for wave transmission and oscillation is possible. The big question is whether the spontaneous order is a desirable one. That can only be decided by mechanisms outside the pathetic scope of individualist libertarian ideology. If not desirable, then it takes social coordination to change the conditions so that another spontaneous order forms. Considering that spontaneous orders form under socially created conditions, it's rather an oxymoronic term."

"And once again, we have a libertarian propaganda ploy that proves far too much: the businesses of the world all rely upon central control just as government does. But we don't expect GMU propagandists to note such problems with their arguments."

"If you want to see the academic reception of "Rinkonomics" in the 4 years since its publication, search for "Rinkonomics" with Google Books or Google Scholar."

"A resounding silence: one English footnote by 2011. It would be difficult to do worse academically. I'm an amateur entomologist, and my scientific publications get much more academic citation. It's like creationism: public relations for their theories first, establish academic validity at some unspecified time in the future."

"The big fault of the notion of spontaneous order is the individualist viewpoint it endorses. The term focuses our attention away from the existence of institutions whose influences may actually be driving the ordering. Institutions such as skating culture, parental authority, private property (many outdoor ponds are private but opened to the locals) and other systems of social dominance in this case."

I don't understand the conflict between spontaneous order and skating culture or parental authority (or private property, for that matter). Those are things that arise without central planning, right?

If you can accept the notion of a private authority exercising planning within the constraints of its private property, you immediately plunge headfirst into the "market socialist" attack of positing one very large "private" authority exercising planning within the constraints of its "private property" that merely happens to include all the land you need to live on and all the capital stock you rent to earn a living, which is at most leased out on a temporary basis. And then 'the market' stops being an alternative regime and is instead merely one of many possible mechanisms by which this private entity efficiently manages its resources in such areas where it is appropriate. Thus central planning.

But that's private authority. Even private rulesmaking authority alone contradicts bottom-up spontaneous order.

I can't say that I find anything in Mike's post to disagree with except to say that central planning is every bit as much propaganda. And that goes for both corporate and government planning.

However, I wouldn't gauge the truth of an article by its popularity for obvious reasons.

Mike Huben is the intellectual equivalent of a Cleveland steamer:

http://www.urbandictionary.com/define.php?term=cleveland+steamer

http://world.std.com/~mhuben/
he seems like a pretty interesting guy, to me.

Seems like a guy with a serious ax to grind. Plus, the frequency with which he uses the word "propaganda" is a clear signal that he is not really concerned with arguments at all.

I would beg to differ. I just heard about the guy but spent the last 2.5 hours reading through his site. It's almost entirely substantive and engaging - evening includes back and forths with other libertarians.

An ax to grind, maybe, but looking at his resume he's clocked far more hours in many other things.

No, he's a piss-poor ideological hack. The fact that he seems obsessed with Tyler, a libertarian court jester, tells you all you need to know about him. (To spell it out, if he believes Tyler epitomizes principled libertarian thought such that he has to patrol this blog, he's either confused, or more likely, given his heritage, dishonest.)

Here's a whopper from his anti-libertarian FAQ on extortion:

"And the US government owns rights to govern its territory. "

That sentence seems true by definition to me.

Then you're as big an idiot as Huybensz.

Substantive engagement as usual, libertarians. Stay classy.

Actually ass-hat, I'm not a liberal (classical or otherwise), but a liberal conservative. Not that I'd expect you to have half a fucking clue as to the difference. Keep tilting at windmills, shithead.

FUCK YEAH

I love the standard 'no true scotsman' libertarian defence there.

Also, Huben thinks Tyler is dangerous because he's likeable and appears to approach issues from a neutral(ist) perspective. But in reality he often dredges up some very poor argument and links to crappy RW article all the time. Combine that with his bi-monthly criticisms of IS/LM and Fannie/Freddie posts and you get a very influential court jester as far as libertarianism is concerned.

"Balsac" clearly has "Mises.org" and "LewRockwell.com" in his browser history.

And I've got my ball-sack bouncing off your old lady's chin.

CO2 only 0.4% yeah... but I elxpain in my posting why we can hardly afford any.dig it. If we colonize other worlds, our plants will kick butt. They make do with less CO2 than probably any other living world.

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