Liveblogging World War II: August 8, 2014: Operation Totalize
Over at Equitable Growth: Magic Asterisks in the Budget: Robert Waldmann Continues the "Civility" Discussion: Friday Focus for August 8, 2014

Lunchtime Must-Read: Robert Solow (2012): Hayek, Friedman, and the Illusions of Conservative Economics

Just as I finish writing up my office-hour thoughts on a framework for organizing one's thoughts on Friedrich A. von Hayek and twentieth century political economy, along comes the esteemed Lars P. Syll with a link to an excellent piece--one I had never read--on the same thing by Equitable Growth's Fearless Leader Bob Solow...

Robert Solow (2012): Hayek, Friedman, and the Illusions of Conservative Economics: "There was a Good Hayek and a Bad Hayek...

...a serious scholar who was particularly interested in the role of knowledge in the economy... [the] system of competitive markets is a remarkably efficient way to aggregate all that knowledge while preserving decentralization. But the Good Hayek also knew that unrestricted laissez-faire is unworkable... monopoly power... better-informed actors can exploit the relatively ignorant... distribution of income... grossly unequal and... unfair... unemployment and underutilized capacity... environmental damage.... Half of Angus Burgin’s book is about the Good Hayek’s attempts to formulate and to propagate a modified version of laissez-faire that would work better and meet his standards for a liberal society.... The Bad Hayek emerged when he aimed to convert a wider public... overreach[ed].... The Road to Serfdom was a popular success but was not a good book.... Sixty-five years later, Hayek’s implicit prediction is a failure, rather like Marx’s forecast of the coming 'immiserization of the working class'....

The source of their alarm was not the danger from Soviet communism or Nazi Germany, but rather the rash of interventionist economic policies everywhere, the New Deal here and the Labor Party there, designed to ameliorate and to reverse the ravages of falling incomes and rising unemployment.... Lionel Robbins... Friedrich von Hayek... Frank Knight... Jacob Viner... Henry Simons... [all] wanted both to propagate ideas and to change the world. (It is worth mentioning that both Knight and Viner were later privately critical of The Road to Serfdom.) What seems off-key (at least now, at least to me) is that they all felt themselves to be in a struggle between free markets and collectivism (or socialism) with no possible intermediate stopping point. That is the meaning of 'the road to serfdom'.... This apocalyptic tone survived into the period dominated by Milton Friedman, who is the subject of the second half of Burgin’s book. It is the language of the Tea Party Hayekians...

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