José’s Reviews > Karl Marx and the Close of His System > Status Update

The description of the book at the Mises website clearly explains that it includes attempts of defense from BB's critique.

Pedro wrote: "The description of the book at the Mises website clearly explains that it includes attempts of defense from BB's critique."

you're right, didn't noticed this at the time.

I found Hilferding's retort more valuable than BB's criticism, at least BB's criticism is a lot easier to make evident from a subjective interpretation. In other words I think Hilferding engages more with BB's perspective than BB does with Marx's. Either way BB's is a valid criticism, even though it assumes a certain and probably erroneous interpretation of Marx.

I think the most valuable bit of this book is really its demonstration of the clear incompatibilities between the LTV and subjectivism. The paper at the end of it by Bortkiewicz feels a bit tame when compared with the rest of the volume

Fair enough.
Why did you type M*ses?

Pedro wrote: "Fair enough.
Why did you type M*ses?"

mostly a gag from twitter, if you don't like someone you type their name in a way that's unrecognisable for these systems of trend detection

lol ok. You don't like Mises? Or just the Institute?

Pedro wrote: "lol ok. You don't like Mises? Or just the Institute?"

The institute, they rarely engage in the theories they want to criticise, they just blanketly reject them which I find a bit of a hegemonic practice (which worked great for them tbf) that prevents further discussions and makes them generically act in bad faith.

As for Mises himself - I only know of his work on the grandiose field of economics best described as "why socialism is bad" and I find these essays really hard to take seriously; mostly Mises and Hayek devote their criticism to 1) describing socialism as an absolute monopoly where no perfect competition can happen and 2) assume that perfect competition or individual praxeology are essential to create perfect competition. It is, as far as I can tell, more of a self-fulfilling prophecy than an essay

Well, Oskar Lange, a famous socialist economist, said that Mises deserved a statue in the Soviet Union for having called attention to the problem of economic calculation in a socialist economy, so he was certainly taken seriously by both sides.
I suggest you read the essays contained in the following book: Collectivist Economic Planning: Critical Studies

By the way, both Mises and Hayek are very critical of the concept of perfect competition, so I'm not sure which were your sources (Or it may just be your way of expressing the idea, which is fair enough for someone not much into the details of their theories. But I suggest you become more engaged with their theories in the volume above, and also on Hayek's Individualism and Economic Order. Both of them are freely available at the Institute).

For more recent discussions on the topic, I would recommend Rivalry And Central Planning: The Socialist Calculation Debate Reconsidered or Socialism, Economic Calculation and Entrepreneurship

Pedro wrote: "Well, Oskar Lange, a famous socialist economist, said that Mises deserved a statue in the Soviet Union for having called attention to the problem of economic calculation in a socialist economy, so ..."

Well. I wouldn't call Lange a socialist economist exactly... but I see your point. By no means do I wish to praise what was done in terms of "economy" in the USSR, just that by defining "socialism" as close as possible to the system of the USSR one makes "socialism" a very easy target.

Yes, I wouldn't take most of the terminology I use on this very seriously to be fair, I have no formal training in economics and I see I was too confident in my words. By perfect competition I meant some form of competition with a complete absence of interventionism but I now see that "perfect competition" aludes to something wildly different. I also realised I was a bit redundant in my comment, I meant in 2) that they "assume that perfect competition (absence of interventionism) ... are essential to create a functioning economy". I will have to read further to make a point about this, but I would be curious how Hayek and Mises's theories hold up when one can consider a real-time measurement of economic performance.

I will keep these references in my reading list, thank you for the recommendations. Just one more thing - I generally know that the Austrians are not as fond of the rational individual as the neoliberals, but not a lot more apart from this; are there good references on this? What I know about the Austrian school places it closer to the classical liberal school than neoliberals, but this is a divide I have become interested in recently and I haven't been able to address it - how do the Austrians advocate for the free market without assuming the rational individual? Maybe this is contained in Hayek's writings on individualism, I will have to read them eventually.

José wrote: "Pedro wrote: "Well, Oskar Lange, a famous socialist economist, said that Mises deserved a statue in the Soviet Union for having called attention to the problem of economic calculation in a socialis..."

What would suggest as an example of an harder socialist target, then? By the way, still regarding the socialist economy, I would recommend The Socialist System: The Political Economy of Communism by Janos Kornai, a former socialist.

Regarding individualism and rationality, that is indeed a wide topic. First of all, one must - or at least should - separate the economic postulates from the political ones. I'm not sure I like your comparison of "Austrians" with "neoliberals" and "classical liberals". Austrian economics is a tradition of economics which is easily understood as a "free-market" doctrine, but one still needs to make some distinction. For example, one of the old deans of the Viennese school, Friedrich von Wieser, had some interventionist and collectivist leanings, and his closest pupils were very upset when people talked of the Austrian School as implying a political set of postulates. In any case, I understand what you are saying, and that is indeed a fair view of the Austrian Economics movement nowadays.
The rationality postulates are most visible in the Chicago School tradition, which you may call "neoliberal", but it should be noted that the term "neoliberalism" would be equally well suited for the German ordoliberal school of Eucken, Roepke, Erhard, Rustow, Bohm, and those certainly did not assume individual rationality - indeed, the ordoliberals stress the need for a strong state that oversees competition and the market, and are very fond of noting that "economics is not everything".
Just to finish this conceptual clarification, in the following article by Fritz Machlup, a pupil of Mises from the Vienna years, you will find some reminiscences of Mises and, most importantly, a short excursion on what defines the Austrian School in terms of scientific postulates:
https://mises.org/library/ludwig-von-...
It is important to note that Machlup lived through many of the mutations and developments the School went through, so he is a good guide.

So, in the end, your question turns into: how do both the Austrian and the Chicago schools manage to typically defend the prominence and superiority of the free market while not coinciding in their scientific assumptions. (the Chicago School has also gone through many shifts over time, and I am not sure if after Gary Becker and Robert Lucas they are as market oriented as in their time. Economics has turned ever more mathematical and abstract, and so the ivory tower is ever more distant from political disputes).

This is a very wide epistemological topic, but the typical Chicago School argument is positivistic in character, following Milton Friedman's influential methodological work (Essays in Positive Economics). He famously argued that the verisimilitude of the assumptions is not as important as their predictive power. So, in that sense, the rationality postulate simply happens to work. It does not matter if it is bullet proof - it is simply the case that models of rational agents are useful in explaining and predicting market phenomena. But, of course, this is open to many kinds of caricatures and hence the usual bad reputation of this kind of analysis in modern discourse outside economics. The average person knows that people are stupid, and so sees the rationality postulate as an easy target for their contempt of current economic problems. Also, the rationality postulate is a bit "amoral", and tends to invade other fields of social inquiry (the imperialism of economics), and to question the true motivations of supposedly benevolent agents (public choice theory), and so it was easy for it to gain many enemies.

The Austrian School comes from a very different background. Most of its original scholars were initially Law doctorates from Vienna (political economy was part of the Law degree), as opposed to the more engineering/mathematical training of other schools. The point was always to stay close to reality, to describe the individual as an economic agent in the midst of uncertainty. This tradition was pushed to the extreme in Mises's Human Action: A Treatise on Economics, where he builds all economic theory on the basis of the action axiom (people always act with a purpose, according to what they deem best for themselves or for what they care about), which many people find tautological and unscientific. So, while Chicago *assume* rationality as a good working hypothesis for further empirically testable theories, Austrians usually try to build more solid foundations and then deductively start from there. To Austrians, rationality is not an assumption but is instead built into the very logical structure of our mind and action. It is not for others to make a value judgement about whether someone else is acting "irrationally". If he has an end in mind and is using means to achieve that end, then he is being rational and economics has something to say about the consequences of his actions.
The point that Austrians make is that, if you take peoples preferences as given, even if you find them stupid, then the free interaction of the agents (the market) will tend to freely make those preferences reveal themselves in exchange. If you try to intervene and hamper the market, that will not change people's preferences: it will only make them find other ways to express them, or else waste opportunities for mutual benefit. Moreover, Austrians since Mises view the market as a *process* (this is also somewhat implied in Schumpeter's chapter on Creative Destruction - see Capitalism, Socialism and Democracy). It is through profit and loss, and through competition, rivalry and through freedom to make choices and to take responsibility, that the market not only allocates resources and satisfies preferences, but even serves as a mechanism of discovery whereby those preferences are formed and new ways of production are invented and tested. So Austrians don't really care about the model of "perfect competition" in order to establish that the market is functioning "efficiently" - that is because in "perfect competition" all competition has already ceased. Austrians stress movement and disequilibrium and the creativity fostered by the market. Sometimes a temporary monopoly obtained through competition may simply be the right incentive for the market to move forward.
Another very important aspect of Austrian thought, introduced by Hayek, and which may help explain why the Austrians value the market well beyond rationality assumptions, is that relevant knowledge is disperse in society and sometimes is not even possible of formalization - it is tacit. Hayek explains that, even if the market is not perfect, it is our best means of making use of all available knowledge and of taking account of every individual's preferences - and so, even if people are not rational, the fact is that a central planner would never be able to replicate the market process and so we should not compare the market with a supposed nirvana of perfection, but with the alternative means of achieving our ends - and the market, Austrians believe, is the best means for doing so. (see Hayek's famous essay "the use of knowledge in society", included in the individualism compilation)

There is much more to say about this topic, but I hope I have provided a useful introduction.