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Economic discourse and the market

from Maria Alejandra Madi and the WEA Pedagogy Blog

In the last decades, the emergence and diffusion of the neoliberal agenda reflected the intellectual victory of Hayek’s ideas about the supremacy of the competitive economic order and the rejection of interventionism to promote economic growth and social justice. Considering the relevant economic outcomes of this intellectual victory, the main question that arises in the context of economics education is: What is at stake in  the economic discourse that privileges the economic competitive order?

The economic competitive order, as a necessary one, is the pillar of Hayek’s theoretical construction. The competitive market is a necessary order in which men make choices and the fundamental economic problem is that of coordinating the plans of many independent individuals. The main advantage of the competitive economic order, in Hayek’s view, is that rational agents respond to price signals, which convey the relevant information available in the markets, for the purpose of economic calculus. In his view, competition, through the price market system, leads to such an efficient coordination. Individuals, acting in their own self-interest, respond to prices which, in turn, reflect the information available in society for the purpose of economic calculus. Indeed, prices are signals that support an extensive social division of labour in a context of individual freedom.  In Hayek’s approach, the domain of liberty (the market) presupposes the legitimate domain of government intervention.

Taking into account the economics education, it is relevant to highlight that what is really at stake in economic discourse is the sociopolitical function of the scientific and academic work, and hence interests and ideologies.  read more

  1. March 18, 2016 at 5:38 am

    Or to put the conclusions (all those big words frighten me) in colloquial language — Hayek believed in Oz (and the wizard therein) and wanted us all to follow him there. Hayek is an interesting writer. But he’s a philosopher, not an historian or scientist. So many of his basic assertions about how the world works, that he labels natural are supported by no or very little information. Certainly not enough “data” upon which to base a total planned society. And that is precisely what Hayek proposes. He wants to build the world in the image of his philosophical principles. Even William James, a philosopher smarter and more insightful than Hayek never made such a foolish proposal. Two problems then occurred. First, the followers of Hayek were even less intelligent and insightful than him. And thus went off madly selling a product that could never work, with a no warranty and no-returns policy. Second, the dumbest and least morally aware people often make the best sales persons. They’re not bothered by moral or ethical dilemmas and aren’t smart enough to see the longer term consequences of their selling. Add to this that the newly empowered business class used Hayek and Adam Smith also as convenient tools to push their agendas. Democracy challenged Hayek and associates for a time, particularly when it was activist. But that era is now over in the US and may soon be over in Europe. Democracy is now just one more commercial enterprise, with decisions based on the same logic as any other business activity. But it’s still Oz and the wizard behind the curtain is still a fake. Question is, how do we pull back the curtain to reveal the cheap magician behind the curtain?

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