Re: BOS political compass scatterplot
Perfect Knowledge - this is not at all the case, in fact, the reason markets are a good solution is because they do well at dealing with the fact that we have imperfect information. Hayek wrote about this sort of thing in "The Fatal Conceit".
Rationality - "rationality" as an assumption in lots of the non-austrian economics/finance literature is very different to the sort of rationality that austrian economics refers to. 'Rationality' within Austrian economics literature means purposive behaviour, whether the means chosen to attain the purpose are appropriate or not. Austrian economics is constructed based on the axiom that "Humans Act", not that "Humans always economise perfectly" or whatever.
Uncertainty - Austrian economics generally teaches that the uncertainty of the future is the reason humans have to make decisions and act upon them, so the existence of uncertainty doesn't discredit austrian economics because it is already included in the framework.
Path Dependency - True cases of path dependency are few and far between, and tbh this type of criticism of markets tends to fall prey to the Nirvana fallacy. So the criticism here is that "The market doesn't always choose the best technology/path" - but you have to also prove that the government bureaucrat would make a better selector. The problem is that doing this ignores the economic calculation problem, so the government bureaucrat has even less information to make the decision with and not a great deal of incentive to choose carefully.
Generally there is some feature that the consumers value about the product they end up choosing. for eg. QWERTY may have been chosen just for compatibility's sake, VHS might have won out over Betamax because it had a longer tape length.
Just felt like clearing these up for anyone who might be reading the thread and thinking the conditions mentioned actually work against the idea of having free markets.
Just FYI, most of these assumptions are applied in other streams of economic thought, but they generally aren't applied within the austrian position.
Perfect Knowledge - this is not at all the case, in fact, the reason markets are a good solution is because they do well at dealing with the fact that we have imperfect information. Hayek wrote about this sort of thing in "The Fatal Conceit".
Rationality - "rationality" as an assumption in lots of the non-austrian economics/finance literature is very different to the sort of rationality that austrian economics refers to. 'Rationality' within Austrian economics literature means purposive behaviour, whether the means chosen to attain the purpose are appropriate or not. Austrian economics is constructed based on the axiom that "Humans Act", not that "Humans always economise perfectly" or whatever.
Uncertainty - Austrian economics generally teaches that the uncertainty of the future is the reason humans have to make decisions and act upon them, so the existence of uncertainty doesn't discredit austrian economics because it is already included in the framework.
Path Dependency - True cases of path dependency are few and far between, and tbh this type of criticism of markets tends to fall prey to the Nirvana fallacy. So the criticism here is that "The market doesn't always choose the best technology/path" - but you have to also prove that the government bureaucrat would make a better selector. The problem is that doing this ignores the economic calculation problem, so the government bureaucrat has even less information to make the decision with and not a great deal of incentive to choose carefully.
Generally there is some feature that the consumers value about the product they end up choosing. for eg. QWERTY may have been chosen just for compatibility's sake, VHS might have won out over Betamax because it had a longer tape length.
Just felt like clearing these up for anyone who might be reading the thread and thinking the conditions mentioned actually work against the idea of having free markets.
