Was Hayek Right? | IEA Discussion

Friedrich Hayek is rightly considered to be one of the intellectual forefathers of classical liberalism and his famed work, 'The Road to Serfdom', is thought of by many to be the ideology's clearest codification.

However, with the book's 80th anniversary looming, we thought it would be a good idea to revisit this seminal work and ask the question, was Hayek right?

On the panel was:

Dr James Forder (Chair) - IEA Academic and Research Director

Dr Kristian Niemietz - IEA Head of Political Economy

Professor Mark Pennington - Professor of Political Economy and Public Policy at King's College London

Sherelle Jacobs - Daily Telegraph columnist

#economics #freedom #liberalism

[AegonCallery-tyvy]

The book is still, or should i say increasingly relevant. Because it is finetuned and does not fall into an ideological trap. It actually examines the pitfalls and does not offer simple solutions to complex issues. However, it does highlight all the issues concerning a planned economy and the threats to individual freedom.
It is compulsary reading, especially for left leaning but not yet completely captured individuals. No book is perfect but this one is close to perfection given the time it was written in..

[rainerlippert]

Thank you for this video!

From my point of view, the statements made by Hayek and the supporters of the Austrian School of Economics in general about the market and central planning only cover partial aspects of the economy.

* A “free market”?
What is a “free market” supposed to be?
A market that is not regulated?
There can be no such thing! The market has no facilities to recognize anything, to make decisions, etc.
The market is the place of value formation and economic exchange, according to the Austrian School the place of market price formation and economic exchange.

Everything that is put on the market, how, in what quantity and at what price is decided by people, as is everything that is bought there.
In today's world, algorithms support the decision making of sales and purchases. But these algorithms are programmed for clients, and if programmed correctly, they work in the interests of the clients, not for the market. Thus, the market must always be regulated - it cannot control itself.

* There have always been regulations for the market
How products can be brought onto the market has practically always been regulated. At different times, however, there were different requirements for this: Certain weapons were rarely or never freely available for sale, as were certain clothes (including uniforms).
Nowadays there are specifications for the producers, e.g. which components can be contained in canned food and children's toys, with which pollutant emissions cars can be produced, how by-products of production have to be disposed of, what has to be filtered out of the exhaust gases in the chimneys, how waste water is to be treated, which occupational health and safety regulations must be observed, etc.
All this is not determined by the market, but the effects of such decisions on the prices of products can be felt on the market.
For the buyers, in turn, it is determined how they are allowed to use the products, e.g. they have to use mufflers and catalytic converters in cars, certain electrical products may only be installed with appropriate training, etc. This is not determined by the market either

* The value creation function of the market is important for the economy
The market is also not restricted by such requirements. It shows what is important in the economic sense for people under the given social (i.e. also political) conditions. This happens via its value formation function.

* The Austrian School of Economics and value
Note: According to the Austrian School of Economics, there is a swap due to different evaluations. But that's not correct from my point of view: If a buyer sees an espresso machine in a department store, it is valued at 400 euros, but it is offered for 300 euros, then he will not necessarily buy it, even if his rating is favorable for a purchase. If he then sees a TV set that he values at 2, 000 euros, but it is only being offered for 1, 600 euros, then he will not necessarily buy it either. Then he sees a washing machine, which he rates at 3, 000 euros, but it is being offered for 3, 800 euros. He buys these, not because of his evaluation, but because he develops a weighted need for this. She seems very important to him, maybe because it's a top-loader he wants while the others are front-loaders. He pushes the economic value (which he has to assign when buying) into the background.

The common value, which is reflected in the sale or purchase price, will be written on the purchase contract.
It is the same for both bartering partners, the retail chain and the buyer - the sales contract/invoice cannot contain a sales price and a different purchase price.
The money transfer takes place objectively in this amount from the buyer to the seller, the goods are given as being of equal value for this amount of money (money as a right to a percentage of all goods subject to economic exchange) - nothing has to be added to the washing machine or to the money.

* For central planning
With central planning, the values can be formed in exactly the same way as with decentralized planning. There is no question that the economy as a whole is not as effective as with decentralized planning: the value creation processes contain subjective elements in addition to the value that is objective for both exchange partners and for society. These lead, among other things, to exchange and thus to value creation. These cannot be sensibly determined for society from a central point.

* Ineffectiveness and inefficiency in Socialism
A problem in Socialism was the scarcity economy. This was caused by issuing money based on expected values (which are made visible as offer prices). Since not all products produced could be sold, and prices and production volumes were kept constant over long periods of time, there was an ever-increasing surplus of money.
But the main problem was that with the fixed prices (and thus, in connection with the scarcity economy, sometimes even processes of value formation based on chance) competing access to resources (raw materials, supplier products, transport, machines, buildings, human workers, gas, electricity, fuels) could not be represented adequately in relation to their real importance. The economy became increasingly ineffective until it collapsed.

[samuelmatz]

Thomas Sowell. Books of his offer insight into large and important issues with detailed facts.

[sinamirmahmoud]

dude her eyes are really interesting 👀

[MarcDufresneosorusrex]

the book was a call for more free association; the opposite of that is fascist corporatism. Driven by lobbyists primarly. That's why people go to school then work for a corporation, then they leave the corporation and become a lobbyist for the business they were supposed to regulate. Then people wonder why there is a slowly creeping fascism in the media, healthcare, insurance. Of course opportunistic lobbyists are gonna associate with politicians; they have nothing to offer society except a suit a smile and a new pair of shoes made in an overseas sweatshop. They don't care what the corporation brings because they aren't held responsible for the actions of the corporation.

[TheOrphicLyre]

Why have we economically stagnated? Because we outsourced production to a mercantilist nation in the far east, justifying the move with misplaced claims of economic liberalism.

[torquemaddertorquemadder]

So, Hayekian liberalism was, like fascism tout-court, yet another (all-be-it very different) aspect of the Ruling Class defence against Popular Ethical Self-Organization?

[samueljtroy]

Hayek argued for decisions to be made at the most individual/local level. So not in principal against national interventions. But the principal is there and was overlooked by the first main speaker on right of the screen, and is an important restriction.

The journalist in the middle needs to cut the waffle and learn to make a clear point and to not make idiotic faces while others are speaking.

1979 there was a degree of serfdom. Similar to Mark, Hayek was talking about underlying principals, not big structural forces. Kristian is good, we do have a task to do.

[AegonCallery-tyvy]

The Green deal/ NetZero= the road to serfdom. There is no denying that..

[samueljtroy]

Serfdom... the placing of the individual at the service of others, where government takes on its own agency and is no longer a neutral umpire.

[Adrian-yifl]

The fact that Hayek did not specifically single out the welfare state portion of the centrally planned economy does not mean that he was not against the welfare state.

[vaiyaktikasolarbeam]

23:20 lol as close as blasphemy but i understand

[albionicamerican]

Ironically John Maynard Keynes was a successful investor. He built up multiple fortunes, not only for himself, but also for his bohemian friends, the insurance company he worked for and his alma mater.

Meanwhile, Friedrich von Hayek was dirt poor throughout his life. So who really showed on a practical level how capitalism works?