Hayek lecture
Date: Thursday 28 October 2010
Time: 6.30-8pm
Venue: Sheikh Zayed Theatre, New Academic Building
Speaker: Professor Jesús Huerta de Soto
The current financial and economic situation of the world should be analysed from the point of view of the Austrian Business Cycle Theory as developed by Mises and Hayek. Professor Huerta De Soto will present innovative solutions to the banking crisis and credit crunch working within the tradition of the Austrian School masters, Mises and Hayek. He will also unveil his proposal for similar legislative change that the "Peel Act" or Bank Charter Act of 1844 achieved with regards to the over issue of promissory notes to gold, but with respect to the over issue of credit. The consequences of doing this should create a climate of financial stability and an opportunity to totally restructure the national debt (potentially pay it off).
Should you wish to get an advanced feel for the subject of the lecture, you can look at Chapter 9 of this book by Huerta De Soto, which can be downloaded from The Cobden Centre, the pdf is called "Huerta de Soto, Jesus: Money, Bank Credit and Economic Cycles. This chapter gives the theoretical outline of part of the lecture.
Jesús Huerta de Soto is professor of political economy at King Juan Carlos University.
This event is free and open to all with no ticket required. Entry is on a first come, first served basis. For any queries email events@lse.ac.uk| or call 020 7955 6043.
[Source]
Just to be clear, yes that's on tomorrow.
9 comments:
"The current financial and economic situation of the world should be analysed from the point of view of the Austrian Business Cycle Theory"
No it shouldn't. Hayek on a social level and some economic points is a legend, but BCT is simply wrong.
Interesting that you lot never give two shits about Freidman, the great libertarian economist whose ideas actually work and who don't consider to be a libertarian despite being named as such by the Cato Institute (who I presume you also don't think are libertarian).
For the life of me I can't fathom why you always go Austrian and not Chicago....
Kevin: I posted as an individual member. The words are cited clearly as the LSE's promotional copy. I have heard of both Schools, there is a talk at the LSE about one of them.
Rather than compaining about how impenetribable the collective LPUK consciousness is on Hayek vs Freidman, you would explain to this LPUK member what the hell you are on about?
Kavin who said Friedman wasn't a Libertarian? I certainly consider him to be one and he has certainly described himself as being part of this school of economic and political thought.
In regards to Austrian vs Chicago school. I am not 100% clear on ALL the differences, but I am certainly studying them as much as possible in my spare time (currently University student studying economics)...
The problem that I find with Friedman's assesment is that with regards to the great depression he himself states that one of the major contributing factors was the fact that the Fed withheld gold flowing in from europe from circulating and injecting a credit boost to the US economy...
however from my understanding he concludes that this would not have been enough and even more credit would have been required...
I don't quite understand why.
Monetarism was tried to a degree in the 80s... and was dropped after 2 years.
But I am curious, why do your think the Austrian BCT is wrong?
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The orevious hiarachy of the party have repeatedly disputed the fact about poor old Milton. And he was rarely cited if at all.
More to the point, abct.
The ABCT is fundamentally scientifically flawed and is therefore wrong as an economic model. It is based on presumptions drawn from political belief that do not hold real world water, and the theory has been systimatically taken to pieces over the last few decades. It's major proponant is....Rothbard (from what I have always understood, the LPUK hero).
However, Rothbard's solution involves free banking.
Most libs online stop there, failing to grasp the consequence of this, because they see the BoE as a state monoploy, when in effect it is there to calm and balance the money supply.
Free banking led to the abject chaos of most of the pre-great war period and huie meltdowns that were on a par with the 30s. Which is why the central banks were given the monoploy.
Rothbard's solution to that is....massive regulation.
So what is the libertarian/ancho-capitalist (Rothbard is an ancap) solution to the monoploy of the central bank? Massive regulation.
The main benefit of Chicago Max is that there is a reality to it, ie the state can be used to increase economic and social freedoms - economic by lightly controlling and balancing the economy.
Milton sees the Gold Standard as a fault, whereas Austrians seem to like it - again, massive state regulation of currency, not free market forces - but he saw the Fed as the solution, although its inaction at the start was the problem.
ABCT has its lovers in the current period, because it appears to fit. But it doesn't. For instance, yes there was a huge credit boom with cheap rates, but there was also huge, vast criminal accoutning practices taht causes that credit boom: balance sheets were fixed to be great when they weren't allowing them to palm off products with AAA ratings and market trust. In reality the balance sheets were toxic.
Monetary policy was tried in the 80s, you are correct. However Hayek distanced himself from Thatcher because she did the bits of his theories she liked (as he saw it) etc.
I love Hayek on a po,itical level, Serfdom is one of the greatest things I've read. But ABCT is, quite simply, wrong and fundamentally flawed.
So it is wrong, because it is epistemologically wrong? What epistemology do you subscribe to?
For me, it appears to be an abstraction of concrete observed/observable actions and phenomona. It has been used to predict a real event. I suspect, Popper and Rand would both like it, at least epistemologically.
Systematically taken to pieces by who? More detail please.
On the criticisms of Rothbardian solutions. Irrelevant. Tim Carpenter, LPUK Head of Policy has not followed Rothbard, he proposed massive deregulation retaining a simple disclosure requirement under which market forces would push banks toward a desirable outcome.
Simon. FFS.
"For me, it appears to be an abstraction of concrete observed/observable actions". No, it isn't. It simply isn't.
It presumes that low interest rates will lead to unsustainable credit creation and then a bust. End of. No other factors are taken into account.
Taken apart by who? Everyone mate; Krugman, Keynes and Friedman for starters - all the time, consistantly for decades. No half decent economist even uses it anymore and it was taken aprt as soon as it came out, in fact Hayek had to re-do it because it was pointed out that it was so flawed.
"because it is epistemologically wrong", no, sorry, didn't say that. It is scientifcally flawed Simon. Economics is a science, the premise of the ABCT is fundamentally wrong - it makes presumptions about money and market drivers that are far too simplistic without any scienfitic basis; in fact it takes presumptions as evidence and creates the theory. There is no scientific evidence at work which is why it is ignored as a theory.
"massive deregulation retaining a simple disclosure requirement ".
Then you clearly have not a clue about economic history. You perceive central banks as the problem because of a perception of control and regulation is entirely misplaced and without any foundation in evidence. In fact it is very clearly shouwn that since the creation of the central banks monopoly the number of busts have been fewer, less frequent and less severe. That is simple fact.
When banks had the processes you support, collapses of the current scale happened all the time, every decade or so. Fact.
Even Rothbard, the founding AnCap would replace central bank regulation with massive individual bank regulation to stop history repeating.
Kevin thanks for the reply.
In regards to Rothbards call for massive regulation of free banking. I don't think that regulations is automatically an evil... regulation to prevent fraud is desireable and my understanding is that it is this Rothbard looks to target to allow a system of free banking to opperate smoothly (smoother?).
In regards to the Austrians vs Keynesians/Monetarists... I can't help but bring up the pre 1971 debate between them..
The latter two stating that if Nixon were to break the link with gold, gold would be worthless and fall far bellow $35/ounce.
Of course history shows us in hindsight that it did no such thing and the Austrians were spectacularly correct, but what is the significance?
I think if we take Hayeks idea of competing currencies (something that is themed in the LPUK manifesto), removing legal tender laws will surely be beneficial in keeping any government monetary tinkering, however light, fully accountable.
For me the fact stands that economic "scientific" models are great over simplifications and I actually prefere the austrian method of rational deduction.
Example: Last year in Macroeconomics lectures we were taught that because individuals have a marginal propensity to save (thus not spending all their income), government spending is a far supperior way to stimulate the economy than tax cuts...
If you look at the full keynesian formula for GDP... this seems true.
But logical deduction tells us that REAL economic prosperity will depend on what that money is spent on (cue Bastiats Broken Window fallacy).
With regards to ABCT (I know I am dragging on here abit, appologies)... this is essentially the point but taken into a greater, big picture context.
Short term the government may move interest rates around for a possitive boost... but the key is the big picture and the "capital structure". If interest rates are artificially too low for too long, the "Real Value of Money" for 30 years down the line is massively distorted...
This is what businesses and financiers study and look at, they get the "all clear" to invest in long term projects that would not have otherwise been profitable (usually housing, automobiles etc).
The problem for me with ABCT is timing... this theory looks to explain economic miscalculation over very very long periods of time, and when it comes to shorter term economic policies... it is pretty useless as things cannot be undone in a year or two.
But as Hazlitt said, we are living in the Long Run of 10, 20, 30 years ago. "In the long run we are all dead" simply does not apply.
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