14

Breaking Out of the Walrasian Box: Schumpeter and Hansen

Since World War II, mainstream neoclassical economics has followed the general equilibrium paradigm of Swiss economist Léon Walras (1834–1910).1 Economic analysis now consists of the exegesis and elaboration of the Walrasian concept of general equilibrium, in which the economy pursues an endless and unchanging round of activity—what the Walrasian Joseph Schumpeter aptly referred to as “the circular flow.” Since the equilibrium economy is by definition a changeless and unending round of robotic b

15

Professor Rolph on the Discounted Marginal Productivity Theory

Of current schools of economic thought, the most fashionable have been the econometric, the Keynesian, the institutionalise and the neo-classic. “Neo-classic” refers to the pattern set by the major economists of the late nineteenth century. The dominant neoclassical strain at present is to be found in the system of Professor Frank Knight, of which the most characteristic feature is an attack on the whole concept of time preference.

16

Professor Kirzner on Entrepreneurship

Since I admittedly know more about Austrian economic theory than about Richard Cantillon, I would like to focus my comments on the Austrian aspects of Professor Hébert’s paper, in particular his discussion of entrepreneurship. Hébert is correct in his discussion of the differences between Mises’s and Kirzner’s concept of the entrepreneur and in his critique of the Kirzner approach.

17

Toward a Reconstruction of Utility and Welfare Economics

Individual valuation is the keystone of economic theory. For, fundamentally, economics does not deal with things or material objects. Economics analyzes the logical attributes and consequences of the existence of individual valuations. “Things” enter into the picture, of course, since there can be no valuation without things to be valued. But the essence and the driving force of human action, and therefore of the human market economy, are the valuations of individuals.

Section Three

Property and the Public Sector

18

The Politics of Political Economists

In the course of his interesting discussion of “The Politics of Political Economists,” Professor Stigler challenges the alleged view of Professor Mises that “economic statistics, or more generally quantitative—economics, generates a radical political viewpoint.”1 Stigler asserts that the empirical student acquires a “real feeling” for the functioning of an economic system, and “has had the complexities of the economy burned into his soul.” Without going into the question of Mises’s precise viewpoint on this issue,

19

Justice and Property Rights

THE FAILURE OF UTILITARIANISM

Until very recently, free-market economists paid little attention to the entities actually being exchanged on the very market they have advocated so strongly. Wrapped up in the workings and advantages of freedom of trade, enterprise, investment, and the price system, economists tended to lose sight of the things being exchanged on that market.

20

Law, Property Rights, and Air Pollution

LAW AS A NORMATIVE DISCIPLINE

Law is a set of commands; the principles of tort or criminal law, which we shall be dealing with, are negative commands or prohibitions, on the order of “thou shalt not” do actions, X, Y, or Z.1 In short, certain actions are considered wrong to such a degree that it is considered appropriate to use the sanctions of violence (since law is the social embodiment of violence) to combat, defend against, and punish the transgressors.

21

The Fallacy of the “Public Sector”

We have heard a great deal in recent years of the “public sector,” and solemn discussions abound through the land on whether or not the public sector should be increased vis-à-vis the “private sector.” The very terminology is redolent of pure science, and indeed it emerges from the supposedly scientific, if rather grubby, world of “national income statistics.” But the concept is hardly wertfrei; in fact, it is fraught with grave, and questionable, implications.

22

Statistics: Achilles’s Heel of Government

Ours is truly an Age of Statistics. In a country and an era that worships statistical data as super-“scientific,” as offering us the keys to all knowledge, a vast supply of data of all shapes and sizes pours forth upon us. Mostly, it pours forth from government. While private agencies and trade associations do gather and issue some statistics, they are limited to specific wants of specific industries. The vast bulk of statistics is gathered and disseminated by government.