Economics and Mechanisms » Political Economy

Fukuyama on Hayek

Dimitrios Diamantaras — Sun, 08 May 2011 02:22:13 +0000

Francis Fukuyama has a review of Hayek's The Constitution of Liberty in the New York Times. He concludes with this insightful observation:

In the end, there is a deep contradiction in Hayek’s thought. His great insight is that individual human beings muddle along, making progress by planning, experimenting, trying, failing and trying again. They never have as much clarity about the future as they think they do. But Hayek somehow knows with great certainty that when governments, as opposed to individuals, engage in a similar process of innovation and discovery, they will fail. He insists that the dividing line between state and society must be drawn according to a strict abstract principle rather than through empirical adaptation. In so doing, he proves himself to be far more of a hubristic Cartesian than a true Hayekian.

UPDATE (2011-05-09): Although the commenter to this post did not respond to my request to show me who has contradicted Fukuyama online, I did find a whole lot of comments via Easterly's blog. This one, from beyond the grave, is most entertaining. Do read the comments on Easterly's blog, too. At the end of the day, Fukuyama's review, at least the part I quote above, is certainly true about people like Beck and may not be true for Hayek. I stand by my observation in the comment below that Hayek should have looked for the mathematical tools needed to formalize his seminal ideas. (I have almost the same complaint about Keynes's General Theory, although Keynes was reasonably capable in mathematical modeling. Why did he not try it?)

How history created the perverse incentives that hold back the Greek economy

Dimitrios Diamantaras — Tue, 28 Sep 2010 00:59:00 +0000

In a recent post in opendemocracy.net, Aristos Doxiadis presents a thoughtful and detailed look at the historical and structural features of the Greek economy that make Greek society so ineffective and, at least to people like me, one to be far, far away from. His article deserves thoughtful commentary, which I hope to have time for soon. Meanwhile, as a person who was born in Greece and spent the first 25 years of his life there, I can say with confidence that his observations on the Greek society and economy are on-target. I am really surprised that Doxiadis has chosen to continue living in Greece, given the clarity of his vision about the rottenness that pervades that society. I suppose it is admirable that he is trying to reform it for the better. I am more than a little pessimistic about the prospects of success of any such fundamental reform of a society so diseased.

The degradation of US democracy

Dimitrios Diamantaras — Thu, 04 Mar 2010 00:47:39 +0000

Read this post by Daniel Little and weep. If you care about democracy and the public good, that is. This kind of thing is a main reason that standard economics has done a serious disservice to humanity by emphasizing the private motivations of individuals and not studying public mindedness and the "public good" in general very much. We can still hope to make strides to reverse this inattention to publicness in economics and also in the political sphere. At least, I sincerely hope so.