Privilege has a lot of resources in its hands, and can enlist many "economists" to serve it, because they are also human beings and have profitability. They dominate the main means of communication, and their economics thus becomes "mainstream economics." That is, mainstream economics did not become mainstream because it was correct, but became mainstream because of politics.
Written by Zhang Hong
Former U.S. President Ronald Reagan and former British Prime Minister Margaret Thatcher were both followers of Hayek. (Source: Visual China)
As Professor Foss of Copenhagen Business School puts it, it has traditionally been thought that Austrian school economics originated in the writings of The Viennese professor Karl Menger in the 1870s and 1880s. In fact, many of the core ideas of the Austrian School can be found in the writings of Cantillon, the French Physiocrats, and even earlier Spanish Jesuits. Menger's students Wiesel and Pombavik expanded Menger's ideas from different directions, and the third generation of Austrian economists Mises and Hayek gave the school a flourishing trend in the first half of the 20th century. But after the end of World War II, the school remained silent. It was not until the 1970s that the Austrian school was revitalized in the United States. Since then, the Austrian School has expanded globally. It has a large following in Europe, Latin America and Russia.
In the 1980s, the writings of Hayek (winner of the 1974 Nobel Prize in Economics), a representative of the Austrian School, had a profound impact on US President Ronald Reagan and British Prime Minister Margaret Thatcher. According to Hayek's biography (by Alain Abbott, translated by Autumn Wind), Margaret Thatcher, as Prime Minister, said in the House of Commons: "I am an ardent admirer of Professor Hayek. Some of our distinguished members here should read his book. Hayek's books such as The Road to Slavery, Principles of Liberal Order, and Law, Legislation, and Liberty had a great influence on her. Reagan also mentioned that he had read one of Hayek's books and invited Hayek to the White House to interview him. After Reagan was elected president, more than twenty Austrian scholars became his think tanks. Israeli President Simón Peres once made an empirical observation: "In general, in this world, countries that put freedom above equality are compared to those that put equality above freedom, and the former does better in equality than the latter in freedom." And that is exactly the view that the Austrian school calls for and supports.
In recent years, the influence of the Austrian School in China has grown. Hayek's major works have been translated into Chinese, Mises's The Behavior of Man has several translations, and Rothbard and others have been introduced and published. However, the Austrian school is not the mainstream. Zhu Hai, a professor at the School of Economics at Zhejiang Gongshang University, is one of the representatives of the Austrian school, and not long ago, his "Real Market" was released. On the views and methods of the Austrian school, similarities and differences with other economic schools, Yanjing Book Review interviewed Zhu Haiyun. The first one will be published today, and the second will be published tomorrow.
Zhu Haiyan, born in 1973 in Qingtian, Zhejiang, graduated from Zhejiang University in 2002 with a doctorate degree in economics, and is now a professor at the School of Economics of Zhejiang Gongshang University. He is the author of "The Nature of the Market", "The Great Reform: The Theory and Practical Orientation of China's Market-oriented Reform", "Cooperation and Order of the Market", etc.
<h1 class="pgc-h-arrow-right" data-track="8" > the mathematicalization of economic papers is directly related to the nationalization of scholarship</h1>
Yenching Book Review: It is generally believed that the Austrian school of research continues economic thought since the 15th century, including David Hume, Adam Smith, David Ricardo, Frederick Bassia and so on. The Austrian School believes that only economic theories that logically derive from the principles of human behavior are true. The formal name of this theory is praxeology, and the Austrian school has long advocated a way of interpretation derived from this theory. The methods of human behavior allow economists to explore economic laws that apply to all human beings, while the Austrian school of interpretation can be used to study specific historical periods. Ludwig von Mises and Friedrich Hayek, among others, insisted on methodological individualism in their research methods. You repeatedly emphasize in your book: 1. The Austrian School is based on human action, and human behavior is purposeful; 2. Human preferences, human expectations, and the undetermined and unpredictable inherent in human knowledge (p. 53). I feel that this seems to be a philosophical question, and this difference in starting point has led to the difference between The Austrian school and neoclassical economics and other economic schools, so why does the Austrian school insist on starting from these two points to carry out economic analysis?
Zhu Haiyi: Human behavior (praxeology), which we now often call "action science", I think it is not only Austrian economics, but also the fundamental characteristic of economics as a whole that has become a unique discipline. Economics as a discipline, its unique difference from other disciplines, is not that it uses quantitative, empirical, and mathematical models, because these are all technical, let alone the study of so-called "economic problems", but that it is a logical system based on human action. The science of action was established by Mises on Menger's theory and developed during the great debates of socialist economic calculations in the 1920s and 1930s.
Menger wrote a very important book, Principles of National Economics, in which he emphasized the subjectivity of value, arguing that value is the judgment of the importance of man to the satisfaction of his needs, such a person who can make judgments is not available in classical economics, and that this person who can make judgments of importance is real, not fictional. Mises further developed this subjectivist idea of Menger, establishing the edifice of theoretical systems from the purposeful nature of human action. In contrast, the "economic man" or "rational man" hypothesis of neoclassical economics is untrue, which has to do with their purpose of illustrating equilibrium. Economic theory must be able to explain reality and correspond to reality, otherwise it has no meaning, so how can it have such reality? It's about starting from real people. Opai insisted on this, making his theory realistic, and Opai's method was therefore called logical realism.
Why is activism important? We think that there are two methods of social science, namely theory and history. The method of history is "understanding", that is, according to the interpretation of the interpreter himself, such an explanation has no theoretical basis and is arbitrary. The theoretical approach holds that history needs to be explained by exact theories, and that when theories cannot be explained, the methods of understanding can be used. This "theory" is "activism." Austrian believes that theory precedes history, that all history is the history of theory, that we always observe history with theory, and that history is also created by people with certain theories or opinions, and to understand history is to understand the theories or views they have. The science of action is a set of theoretical systems established from the axiom of the purposefulness of human action, revealing that human society also has the same laws as natural science, which are a priori, and when we understand this law, we can judge the consequences of our own actions and certain systems, otherwise we are likely to fall into blindness and recklessness, that is, it enables us to avoid "man's victory over heaven".
Activism is the science of society, the science of letting us know what society is, and this knowledge of society is the knowledge that the Chinese people have hitherto been extremely poor. Historically, we have understood that the tools of society, such as Confucianism, Interpretation, Taoism, etc., are not about the science of society, and the mainstream Western ideas introduced in the past hundred years or so have great limitations in this regard. Austrian economics is the wisdom of all mankind and has special significance for China, but it has not yet attracted attention.
The Real Market. Zhu Hai, Shanghai Sanlian Bookstore, May 2021 edition
Yanjing Book Review: Mainstream economics, a large and extensive use of mathematics. In mainstream economic journals, it is impossible to publish papers without the use of mathematics, and Austrian economists believe that this shows that mainstream economics has gone astray. In your book, you cite mises and Menger's arguments against the study of economics in mathematics. But mathematics is the foundation and important tool of the natural sciences, so why does the Austrian School reject the use of mathematics?
Zhu Haiyi: This question is often asked. More than a hundred years ago, Menger addressed this issue when he wrote to Walras, saying that the nature of concepts cannot be expressed mathematically, that the essence of values, profits, and rents cannot be expressed mathematically, such as the inability to explain in mathematical terms what value is, and that the understanding of these concepts forms the basis of economics. The mathematical method excludes real people, i.e., human ends, judgments, and discoveries, because these cannot be expressed in mathematical symbols. Therefore, although mathematics has logic, for economics, it is unrealistic and cannot show reality.
The use of mathematics to examine human activity is to turn the human world into a world of things. Neoclassical economics assumes that man's ends or means are given, and that man is faced with the maximization of solutions under a given condition, which can be used mathematically, but this assumption is untrue. There are no immutable relationships in the human world, and man does not live in a static equilibrium world of given information, rather than reacting mechanically to external signals. Positivism always makes use of data that has already been produced and that can be collected; and those subjectively perceived by individuals, such as feelings of happiness and pain, are ignored because there is no data, but these are fundamental. Data carries theory, and people choose data according to his position. Social phenomena are not a mechanical world, any data is a total or average, and it is difficult to say that a certain data is the result of a certain action. What matters is not the data, but the knowledge and understanding of the data. This knowledge and understanding contains judgments of importance and cannot be expressed in terms of data. Therefore, it is a kind of planned economy thinking to think that problems can be solved with data.
I myself learned a lot of mathematics during my college years, and the mathematics textbook used is the upper and lower volumes of "Higher Mathematics" compiled by Mr. Huang Zhengzhong, which I still keep, and its content includes unitary space, quadratic type, etc., and its difficulty should be much more difficult than the mathematics textbook used by the university economics department now. My math grades at that time were also quite good, of course, I don't use much of it now when I study Austrian economics. Nowadays, the economic articles that use mathematics in large quantities rarely give people any inspiration, and it can be said that there is basically no value, but the "publication" of these articles makes many people get practical benefits, such as becoming the basis for the conclusion of the project, so that you can get the project funding, enter a talent plan, evaluate the title and promotion, and so on. Economics papers are basically produced for this purpose, in the service of these interests, and they have little value in themselves. The mathematicalization of economic papers is directly related to the nationalization of scholarship, because this kind of ineffective production can only be supported by the state, the market cannot support it, the relevant personnel are the beneficiaries of this invalid production, they constitute a monopoly circle of interests, the emergence of this phenomenon is sad, it completely deviates from the spirit of scholarship, I can only hope that they can wake up.
Hayek (right) and Mises at the celebration of the fiftieth anniversary of Mises' ph.D. from the University of Vienna. Image from The Great Biography of Mises.
<h1 class="pgc-h-arrow-right" data-track="20" > real market versus real market</h1>
Yanjing Book Review: Coase proposed the concept of the "real market", and you proposed the concept of the "real market" in the book, which you explained as "the kind of market that contributes to the continuous improvement of individual happiness". In my opinion, happiness is a very subjective concept, and you repeatedly emphasize in the book that Opai has always implemented subjectivism, what is the connection between the two?
Zhu Haiyan: The title of this book is "Real Market", and I must have an explanation of "what is the real market". Earlier in this book, I made a very general statement, namely" the "kind of market that contributes to the continuous improvement of individual happiness." Later in the book, I'll explain further.
When explaining the "real market", I naturally think of "the continuous improvement of individual happiness", because I do think that individual happiness is the most fundamental, and the market economy must ultimately be implemented in the continuous improvement of individual happiness, which is the purpose of the "real market". This understanding is indeed related to the methodology of the Austrian school. Austrian emphasized methodological individualism and subjectivism, arguing that the goal of achieving wholeness is not equal to the improvement of individual happiness, because only the individual himself knows his needs, his possessions, and therefore should let the individual make his own choices. Moreover, only when individuals are allowed to make independent choices on top of general rules is the most conducive to the continuous improvement of individual happiness, such a state can be called a real market.
Yanjing Book Review: You emphasize in the book that there is no distinction between the entrepreneur function and the capitalist function in classical economics, and the entrepreneur in neoclassical economics is only a manager (pp. 109-111), and Schumpeter emphasizes the importance of the entrepreneur, but there is no entrepreneur at the methodological level. Opal believes that entrepreneurship (innovation, discovery, imagination, p. 203), knowledge, and the market process are the three most important concepts. So, how should the three big concepts of entrepreneurship, knowledge, and market processes be understood?
Zhu Haiwei: The concept of the entrepreneur is a full embodiment of the Subjectivist method of the Austrian School, and since Candiron introduced this concept into economics, it has been an important part of the Austrian School that distinguishes it from other schools of economics. It is associated with uncertainty, in order to cope with uncertainty, people must make judgments, discoveries and imaginations, etc., and the entrepreneur refers to such a function, and has nothing to do with the profession. Mises said that beggars have to judge where to get more money, so in a broad sense everyone is an entrepreneur, or that human action must be "entrepreneurial", and the narrow sense of the entrepreneur refers to a person who is particularly alert, which Mises calls a "facilitator".
Among the Austrian economists, Hayek placed special emphasis on knowledge, believing that knowledge is decentralized, subjective, implicit, and practical, and that we can say that important knowledge is knowledge that exists in the mind of the entrepreneur, that is, knowledge about judgment, discovery, and imagination, which cannot be clarified and cannot be known to others. The use of this knowledge by entrepreneurs drives the use of other knowledge and creates wealth. The market is the process by which entrepreneurs exert their talents, and it is also the process by which entrepreneurs use knowledge.
Mises's masterpiece "Human Behavior", Shanghai Academy of Social Sciences Press, September 2015.
<h1 class="pgc-h-arrow-right" data-track="28" > mainstream economics: not by being right, but by politics</h1>
Yanjing Book Review: Mises said, "Economics is unpopular because of its analysis of the consequences of privilege." It is impossible to refute the economist's argument that all privileges are to the detriment of all others, or at least of a large part of them, and that those victims will tolerate their existence only if they are also granted privileges. Then, when everyone is privileged, no one benefits, and everyone suffers, because the productivity of labor must generally decline. Yet greedy those who fully understand that they cannot win in competitive markets without the help of privilege ignore the admonitions of economists. They are convinced that they will receive more and more valuable privileges than other groups, or that they will be able to prevent other groups from receiving compensatory privileges for at least a period of time. In their eyes, economists are nothing more than troublemakers who intend to sabotage their plans. "So, is this also an important reason why the Austrian school cannot become mainstream?
Zhu Haiyan: Mises's words are wonderful. Privilege is the opposite of the market, and privilege protects the interests of some people, but harms the interests of all others. And the revelation of the dangers of privilege in economics is so profound that it is naturally not welcomed by those who have privileges, who are afraid of losing their privileged interests as a result. The economics we speak of here refers to real economics, not to economics that serve privilege, which is pseudoeconomics.
Privilege requires pseudoeconomics to serve it and blind the masses so that they can sit back and relax. Privilege has a lot of resources in its hands, and can enlist many "economists" to serve it, because they are also human beings and have profitability. Because these pseudo-economists are supported by a large number of resources, they become the party of the multitude, they occupy the main means of communication, and their economics thus becomes "mainstream economics". That is, mainstream economics did not become mainstream because it was correct, but became mainstream because of politics. On the contrary, the more correct economics is not only not supported, but is suppressed by privilege, unable to enter the channels of communication controlled by privilege, and thus marginalized. Mises himself was marginalized, he did not even get a formal teaching position at the university, but he did not bow to privilege, and he made it his motto that "not bow to evil, but fight it bravely".
Yanjing Book Review: The Real Market refutes the fallacies of neoclassical economics and other schools of economics, and it seems that only the Austrian school of economics is correct. This view will surely lead to criticism from economists of other schools. I have read "Transforming China" co-authored by Coase and Wang Ning before, and I feel that Coase's theory of institutional economics is basically consistent with the Austrian views you show in this book in some places, so where are the similarities and differences between the two?
Zhu Haiyi: One of the characteristics of the discipline of economics is that it has many different schools, and different schools have their own methods, theories and policy propositions, but this does not mean that all schools are correct. There is only one kind of correct economics, and relatively speaking, Austrian is closer to "correct economics". Correctness here refers to "methodology", and other schools of economics also have correct places in some aspects, and have insights on some specific issues, such as the Chicago School in policy proposals and the Olympic School have many similarities, such as opposing inflation, but there are differences in methodology. And I think methodology is fundamental, the key to measuring right or wrong. Keynes's mistakes, as Hayek said, were primarily methodological errors.
If the methodology is wrong, the specific elaboration is not important. Neoclassical economics is not a step forward on the basis of a marginal revolution, but to some extent returns to classical economics, which is Hayek's evaluation of Marshall, and The Austrians have truly established modern economics through the promotion of subjectivism. But I am not completely denying mainstream economics, as Professor Zhang Weiying pointed out, mainstream economics is not a good "market theory", that is, it is indeed insufficient in market theory, because the market is a multi-person world, a coordination problem; while the mainstream is a maximization theory, which is about the economics of one or two people's world; my book is about the market problem, and my criticism of the mainstream refers to its limitations in this regard.
It is undeniable that the interpretation of specific problems in mainstream economics is still very strong, because specific problems are largely related to constraints, but relatively speaking, Olympics pay less attention to specific problems and more concerned with general problems, and I think That Olympics will also take a mainstream similar approach to explain specific problems. That is, the interpretation of specific problems can be included in the Austrian Pai, which is relatively a more general framework, while the mainstream is a special case, such as a given information or equilibrium special case. I don't think there is a unique Olympic economics, but I think economics should be like this. In this regard, I agree with Friedman that there is no Distinction between Austrian and Non-Austrian economics, only good and bad.
Mises.
<h1 class="pgc-h-arrow-right" data-track="37" > Government, Markets, and Entrepreneurs: The government plays the role of a referee for the protection of private property rights</h1>
Yanjing Book Review: You put forward the "action-rules" framework on the basis of "actors", emphasizing coordination, and coordination needs rules. The system is mainly to coordinate the actions of the people, so that the plans of different individuals are compatible (p. 8). So, what role do you think governments should play in this?
Zhu Haiyi: This is a very good question. "Coordination" is a core concept of my book and the theme of the third book. The idea of coordination can be traced back to Smith, who emphasized the division of labor at the beginning of The Wealth of Nations, which he saw as the cause of wealth growth, and the division of labor was a problem of "coordination". Ricardo's important contribution, the "Theory of Comparative Advantage", shows that between different countries, even in the absence of absolute superiority, as long as there is a relative advantage, then mutual benefit can be achieved through trade, which is also a theory related to "coordination", which I see as the development of Smith's division of labor. Mises further generalized Ricardo's theory of comparative advantage, showing that human action itself involves coordination.
The entrepreneur uses resources through economic calculations, judgments, discovery and imagination of profit opportunities, and uses resources in areas that better meet consumer needs; in the process, he harmonizes the behavior of different subjects, such as employees, factor suppliers, and consumers, that is, to meet their respective needs, which means the growth of wealth. If the entrepreneur loses money, it means that he has not achieved coordination, and the market forces him to cede the function of coordination to other entrepreneurs.
Governments play an important role in coordination. We say that coordination requires the aid of prices, which in turn depend on private property rights, because without property rights there is no possibility of exchange and exploitation of assets by entrepreneurs, and thus no price. Therefore, the role of the government is to protect private property rights and play the role of a good referee, and it is not appropriate to directly participate in the allocation of resources.
The key to coordination is the "general rule". When the actions of individuals follow general rules, there will be sufficient coordination, which of course is a process, because general rules and their importance need to be recognized, and general rules themselves evolve. General rules also provide a measure of government action. Such a government is "ideal" when it follows general rules entirely; conversely, such a government is the worst when it completely deviates from general rules. The real government is somewhere in between, with the governments of different countries in different positions of the "line segments" that the two constitute.
The Biography of Mises, by Jorge Guido Hulsmann, Shanghai Academy of Social Sciences Press, August 2016.
Yanjing Book Review: Hayek has sharp criticism of the planned economy in works such as "The Road to Slavery", but the emergence of big data has made entrepreneurs like Ma Yun and professors like He Daan believe that a new planned economy can be generated. In chapter 14, you refuted Ho's view that big data will have an impact on industrial development, but the implementation of the planned economy in this way is unlikely to be successful.
Zhu Haiyi: Big data is just a means, it has no institutional implications, and what purpose is important for people to use big data to achieve. This is an institutional issue, not a technical one. Individuals, entrepreneurs, and governments can use big data, but they are bound by rules, that is, they cannot infringe on the property rights of individuals in the process of using big data. Indeed, government power is relatively large, and if it is not subject to supervision, it is more likely to infringe on the property rights of individuals. Therefore, the relevant property rights of big data need to be clarified, relevant regulations should be established, and the government uses big data under the law.
There is now a view that big data should be nationalized and become public property, such as big data enterprises should be owned by the state, which I do not agree with. Data assets are the result of the actions of investors, entrepreneurs and individuals, property rights should belong to them, and entrepreneurs' use of big data under the law is the best way to serve the public interest. The role of the government is to provide protection for entrepreneurs' use of data assets and to prevent illegal use.
<h1 class="pgc-h-arrow-right" data-track="47" > spontaneous order does not arise automatically, provided that the government loosens its grip on the private sector</h1>
Yanjing Book Review: The Austrian School adheres to the market principle of free competition, emphasizing that the best order is spontaneous order, as you say in the book, Hayek's theory of spontaneous order shows that the rules formed by human long-term choice are reliable, and the continuation of human beings cannot deviate from tradition and cannot deviate from the rules formed over a long period of time (301). The book "Chinese Economic History" by the economic historian Mr. Hou Jiaju shows that in Chinese history, imperial power has interrupted the bud of Chinese capitalism at least three times. Some scholars believe that in imperial China (Qin Dynasty to Qing Dynasty), capitalism could not be produced. This seems to indicate that spontaneous order cannot grow in the case of the family world. What do you think?
Zhu Haiyi: The generation of spontaneous order is not automatic, but conditional, that is, the government relaxes its control over the private sector, and private property rights, including personal safety, are protected. In the case of the family world, this condition is not available, so the spontaneous order cannot grow and will always be interrupted by it. The family world and the spontaneous order are incompatible, because the family world is to maintain monopoly interests, and the spontaneous order will threaten this monopoly interest, so the power will inevitably intervene to limit the expansion of the market order, it will only allow the market to expand to the extent that it believes is most beneficial to it.
Hayek.
The conclusion drawn by Mr. Hou's empirical research is consistent with that of Aopai, that is, when the government deregulates and the degree of civil freedom is relatively high, the economic development will be better. The key question here is, why does the imperial power suppress spontaneous order again and again? One fundamental reason is that the free market has not yet triumphed conceptually over the idea of imperial despotism, which is a cognitive error with an unbreakable basis of ideas.
For example, in Chinese history, people have advocated "learning and excellence", "all things are inferior, but reading is high", the purpose of reading is not to seek wisdom, but to become an official, the glory of the ancestors. Officials are highly respected, while entrepreneurs and businessmen have a low status, as can be seen from the ranking of "scholars, farmers, industrialists and merchants". The entrepreneur has no status, no dignity, and when the entrepreneur's property rights are deprived, no one defends him, so how can the market economy develop? A society promotes officials or power, maintaining the existing power order, but it is not conducive to the expansion of the market. Promoting power is actually a collective "irrationality", because power does not create wealth, but more to take away the wealth in you, and it is indeed incredibly absurd that a society should promote it.
Only by promoting creation (entrepreneurial) can your wealth increase, which is rational. I think this irrationality is related to the poverty of economic knowledge. The lack of economic knowledge has led the public to believe that businessmen are exploitative, so when the government suppresses businessmen, they also applaud and regard the government's actions as a just act. The long-term existence of imperial power is ultimately a matter of perception. Ignorance of economics, especially of intellectuals, led to the perpetuation of imperial power. This is why Austrian economics, a science of well-ordered societies, a science that helps people to correctly understand their own interests, is so important to China.
It should be added that "learning and excellence" is also a kind of "rationality", because after all, it is easy to make money as an official, and others will send money, but this rationality is only the rationality that is maximized under the limitations, not the rationality placed in the social context. Not seeing, such as restraining the mighty, will also promote their own interests. They maintain such an "easy" system, and ultimately they harm their own interests. But this kind of rationality is foreign to people. Economics tells people what the right rationality, that is, the rationality that benefits them, "should be," but it does not guarantee that people will be able to have such a rationality.
Olympic economics is a "theory" of an open society or an extended order, which has been very poor in Chinese history. As mentioned earlier, neither Confucianism, Buddhism, Taoism, nor Law provide such a theory of the market or extended order, nor do the mainstream theories introduced in the West over the past hundred years, such as not pointing out the importance of private property rights. When the masses do not know what an open society or expansion is all about, the development of society or the expansion of order may naturally advance.
Keynes, Lasky, hayek: Three Economists Who Changed the World, by Kenneth R. Hoover, Shanghai Academy of Social Sciences Press, June 2013
<h1 class="pgc-h-arrow-right" data-track="57" > zhang wu commonly used error methods to draw incorrect conclusions</h1>
Yanjing Book Review: You define property rights as "the creation of entrepreneurs who have the ability to exert their entrepreneurial talents", and the core of the property rights problem is "whether you can exert entrepreneurial talents", and those systems that are consciously practiced by people are usually "spontaneously" born in the written system, before the written system (374 pages). The Real Market devotes a long time to criticism of Zhang Wuchang's explanation of China's reform and opening up. You argue that local governments are in competition, but they are also competing, and the two are in conflict with each other (399). In addition, local governments are not qualified resource allocation entities. Most people know that the government's participation in the allocation of resources is equivalent to both being an athlete and a referee, which usually distorts the economic system, so Zhang Wuchang interprets the worst system as the "best system", is this epistemology or methodology?
Zhu Haiyi: Indeed, my interpretation of China's reform and opening up is different from Zhang Wuchang's. Zhang Wuchang attributed China's economic success to human-made institutional arrangements, one that enables local governments to allocate resources, such as the state ownership of land. From the perspective of the market, I understand that reform and opening up enables individuals to have their own creations that exert their entrepreneurial talents, that is, to recognize the property rights of individuals, so as to incentivize individuals to create, so that market prices can appear; and the emergence of prices enables local governments to calculate economically, "rationally" allocate resources, and enable local governments to play a role similar to entrepreneurs. At this time, although state-owned land was "legally" state-owned, due to the integration of division of labor and cooperation, it had the nature of "economically" similar to the allocation of private property by entrepreneurs. Therefore, the emergence of the market is the premise for local governments to be able to act "rationally", and Professor Zhang Wuchang did not see this key point. We see that in the era of the Great Leap Forward, local governments also "competed", but the result was destructive, because at that time there was no market, no market price signals, and the actions of local governments were blind.
Professor Zhang Wuchang came to this conclusion because of his methodology. The positivist approach concludes from empirical observations, that is, it is not from the point of view of definite, a priori laws, which is one of them. The second is related to the maximization method under limited conditions, Professor Zhang Wuchang uses maximization to explain economic phenomena, but this method is not suitable for the multi-person world, that is, the market, because the market is a multi-person coordination problem, not a maximization problem. The explanation of local government maximization cannot be equated with an explanation of economic growth; for the former is a problem of maximization of individuals, and the latter is a problem of coordination of a multi-person world. The maximization of individual subjects is not equal to the maximization of the whole.
Keynes was Hayek's enemy. (Source: Visual China)
Yanjing Book Review: Rothbard advocated anarchic capitalism based on natural rights; another kind of anarchic capitalism based on "coordination" regarded the use of entrepreneurial talents as a condition for achieving coordination. You paint an exciting picture: nations do not border regions and nationalities, but transfer specific people, are spatially and ethnically intertwined, and governments located in specific regions can serve residents around the world. This evolution of government in the direction of "market-oriented organizations" represents a more advanced form of civilization (p. 271). I feel that this can be deduced from the academic point of view of Opai, but, as you say in the book, land has always been an element of economics, is this step too big an academic leap?
Zhu Haiyan: In the eleventh chapter of The Real Market, I put forward the concept of "no government from a coordinated perspective", which is also an important point of the book, which modifies Rothbard's view and provides an ideal picture of the future society, but it is not a utopia, because it is logically feasible. As far as I know, some places abroad have been experimenting with "private cities", that is, the de-publicization of government services, which is close to the "no government from the perspective of coordination" that I propose in the book. Classical liberals, such as Smith, advocated small government, with the government acting as a night watchman; most Austrian economists, such as Mises and Hayek, were also supporters of small government, but the biggest problem with small government was the recognition of the legitimacy of government's monopoly, and when the government had a monopoly position, government expansion was difficult to avoid.
In this regard, the Spanish Austrian economist De Soto believes that classical liberalism has in fact failed, as evidenced by the catastrophe of the twentieth century. To avoid the expansion of the government, first of all, the monopoly position of the government should not be recognized in theory, but the government should be placed under general rules, so that it has the same status as other subjects, that is, the government as a function, which is open and can be provided by other organizations, so that the government becomes part of the competitive coordination system.
In this way, the restrictions of the nation-state and the geographical state have also been broken, and free trade, free movement of capital and free movement have been truly realized. This is an academic conception, and whether it can be turned into reality depends on man's ideas and actions, because any socio-political form is ultimately the product of man's ideas and actions, not "predestined" to be what it should be.
As Hayek put it, economists should not consider whether it is politically feasible, and "the first task of an economic theorist or political philosopher should be to influence public opinion and make politically possible what seems politically impossible today."
Under the concept of "no government from a coordinated perspective", the problem of land or jurisdiction no longer exists, because the government as a function does not earn income by collecting taxes on residents living in fixed areas, but through services. At this time, people are mobile, the government is also mobile, of course, can not be mobile, residents and government do not belong to a fixed area, no longer have a country in the geographical sense, but a privately managed community or city.