The Failed Political Economy of Socialism

1
The Failed Political Economy of Socialism

• Peter Boettke
• Econ 828/Fall 2004
• 20 September

2
On Reading Hayek

• Who is his audience?
• The intellectual elite in the democratic west
• What does he treat as given?
• The essential correctness of
• Smiths invisible hand theory of cooperation and
  coordination within markets
• The scientific contribution of methodological
  individualism --- marginalism and subjectivism
• The Misesian argument on the impossibility of
  rational economic calculation under socialism
• What does he argue?
• The intellectual left had misleadingly believed
  that they had discredited Smith by highlighting
  the problems with monopoly and business cycles,
  and ignoring the modifications to classical
  doctrine that were made by marginalism and
  subjectivism in theoretical economics. Because
  they ignored these modifications to the doctrine
  they failed to understand Misess damaging
  critique of the socialist project. Socialism
  wouldnt be abandoned therefore, but instead
  would be pursued with a vigor even in those
  countries which valued political freedom, such as
  the democratic west. The unintended consequence
  of this pursuit would be economic depravation and
  political tyranny.
• False interpretation of capitalist development
• False application of war planning to peacetime
• How successful was he in communicating his
  message?
• Ideological icon
• Analytically ignored

3
Hayeks Contribution to Public Choice

• Since Hayek assumes benevolent intentions does
  that preclude him from making a contribution to
  public choice theorizing?
• Choice and Consequences within the political
  process
• Interest groups and the concentration of benefits
  and dispersed costs
• Hayek and Arrow on the limits of agreement
• Hayek and the logic of comparative advantage in
  discretionary power

4
Hayeks Contribution to Economics

• Market economy as an information processing
  system as opposed to strictly an incentive system
  for allocating resources efficiently
• Use of existing knowledge and the discovery of
  new knowledge
• Cognition and Epistemic direction in economic
  research
• Subjectivism, context (time and place) and
  learning
• Methods and methodology
• Abuse of Reason project
• Science and Ideology
• Fatal Conceit versus Humility

5
Conclusion

• Socialism is incompatible with
• Economic progress
• Political Freedom
• Democratic decision making
• Rule of law
• Liberalism requires a reinvigorated defense after
  socialism
• Beyond wooden conceptions of laissez faire
• International Federalism
• Competition as a discovery procedure in the
  market, politics and life