Friday, February 22, 2019

761: Friedrich von Hayek...

"The Road to Serfdom" byFriedrich von Hayek was published in 1944. The book has been translated into about 20 languages and is dedicated to "The Socialists of all Parties". 
"The Road to Serfdom" is one of the most influential and popular expressions of classical liberalism, libertarianism and a forerunner of neoliberalism.
It has made an important contribution to the political ideologies of Margaret Thatcher and Ronald Reagan and the concepts of "Reagonomics" and "Thatcherism". 
It also led to the revival of the neoclassical economy in the West and a decline in Keynesian influence.

The Keynesian school is a movement in economic science, based on the ideas of the English economist John Maynard Keynes (1883-1946). 
The Keynesian economy proclaims a largely structuralist view, in which the place of man in his (macro-) economic environment is a major cause of individual economic behavior.
Macro-economics is the part of the economic science that deals with the economic behavior of people or companies on a national or international scale.
It is way too complex and off trail to go into detail, but Keynesian economists generally advocate a market economy partly managed by the government , 
a predominantly private sector, but with an active role for government intervention during recessions and depressions.
In the period 1973 - 1975 there was "stagflation". In economics, stagflation is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.
Keynesian measures to fight the crisis didn't work in those days, which is of course very inconvenient for the ruling political parties in the government.
This was the moment that Margret Thatcher (UK) and Ronald Reagan (US) dropped a lot of government control over banks and the economy. Keynes was out, Hayek was in.
Hayek's central thesis is that all forms of collectivism lead logically and inevitably to tyranny. 
He uses the Soviet Union and Nazi Germany -  don't forget this is from 1944 - as examples of countries that had "gone the way to slavery" and had achieved tyranny. 
Hayek argued that in a centrally planned economy, the distribution and allocation of all resources and goods 
is performed by a small group that would not be able to take all relevant information into account.
Disagreement over the practical implementation of an economic plan combined with the inadequacy of the central management of resources would always make coercion necessary to achieve something. 
Hayek further argued that the failure of central planning by the public is seen as a lack of state power to implement a further good idea. 
This perception would cause the public to vote for more power for the state and thus assist in the emergence of a "strong man" 
who is deemed capable of "getting the job done". After these developments, a country would inevitably end up in totalitarianism. 
According to Hayek, "the road to slavery" is inevitably used with central planning and the dismantling of the free market, 
ending in the total destruction of individual economic and personal freedom.
To be continued next Tuesday.....

Thank you again for your attention...

The Discussion

[13:20] herman Bergson: I can't help hearing "Making America great again" here
[13:21] herman Bergson: The floor is yours....
[13:21] herman Bergson: This about the question:Who controls the economic processes....the government or the free market
[13:22] Particle Physicist Bejiita (bejiita.imako): and Hayek is thus the free market version if I get it right
[13:22] herman Bergson: Keynes put a lot of responsibility on the government
[13:22] herman Bergson: yes Bejiita....
[13:22] CB Axel: I can vote on the government. I have little to no control over the free market.
[13:23] herman Bergson: any form of, education, production leads to tyranny
[13:23] Particle Physicist Bejiita (bejiita.imako): is this the same as this privatizing craze of railway, schools ect we see everywhere?
[13:23] Particle Physicist Bejiita (bejiita.imako): railways
[13:23] herman Bergson: Yes
[13:23] Alarice Beaumont: for me this is today a little too much
[13:23] Particle Physicist Bejiita (bejiita.imako): we hand them to the free market
[13:23] herman Bergson: Don't worry Alarice
[13:24] herman Bergson: The debate in the 20th century was...who orders what..?
[13:24] herman Bergson: Does the government set limits to food prices for instance....
[13:24] Particle Physicist Bejiita (bejiita.imako): but as i get it its centralized (government) vs non centralized (free market)
[13:24] Particle Physicist Bejiita (bejiita.imako): something like that
[13:25] herman Bergson: or is the price subject to supply and demand on a free market
[13:25] CB Axel: Or private vs public
[13:25] Particle Physicist Bejiita (bejiita.imako): aaa that too
[13:25] herman Bergson: yes CB
[13:25] Alarice Beaumont: well... it seems that one needs regulation
[13:25] CB Axel: I feel that some things are too important to be subject to the whims of the marketplace.
[13:25] herman Bergson: yes Bejiita....and this is the core issue of politics
[13:25] Particle Physicist Bejiita (bejiita.imako): the problem is when everyone just screams MORE MONEY and prices shoot up and up and up until noone can afford anything
[13:26] Particle Physicist Bejiita (bejiita.imako): and everything stalls
[13:26] CB Axel: Or to the greed of the marketers
[13:26] herman Bergson: I did a whole  project on that observation, CB :-)
[13:26] herman Bergson: For that you should read Michael Sandel....check him out....
[13:27] Particle Physicist Bejiita (bejiita.imako): a few sucks out all they can from the rest, so some form of control is necessary i think
[13:27] Particle Physicist Bejiita (bejiita.imako): its about balance
[13:27] Particle Physicist Bejiita (bejiita.imako): but how to achieve the optimal balance?
[13:28] herman Bergson: yes is the belief that eventually prices, supply and demand will end up is some balance....
[13:28] Particle Physicist Bejiita (bejiita.imako): wih it doesnt
[13:28] herman Bergson: Ahh THAT is the main article of belief, Bejiita
[13:28] Particle Physicist Bejiita (bejiita.imako): look at house prices, stock market results ect
[13:28] Particle Physicist Bejiita (bejiita.imako): everyone just want MORE and MOOORE!
[13:28] herman Bergson: Adam Smith believed in the Invisible Hand...
[13:29] Particle Physicist Bejiita (bejiita.imako): no stop to it
[13:29] herman Bergson: Hayek believes in the Free Market
[13:29] Particle Physicist Bejiita (bejiita.imako): noone ever gets satisfied, they want more all time
[13:29] Particle Physicist Bejiita (bejiita.imako): never gets happy with what they have already
[13:29] Particle Physicist Bejiita (bejiita.imako): thats the problem
[13:30] herman Bergson: That is why I refered to the resemblance with religion in the previous lecture
[13:30] Particle Physicist Bejiita (bejiita.imako): aaa
[13:30] Particle Physicist Bejiita (bejiita.imako): well indeed same thing there
[13:30] Alarice Beaumont: we are used that growth is more important then keep the state we are in
[13:30] herman Bergson: The basic assumptions of economics are just beliefs about human behavior
[13:31] Particle Physicist Bejiita (bejiita.imako): true alarice
[13:31] herman Bergson: Yes Alarice....
[13:31] herman Bergson: and there is proof, that a self sustaining economy very well possible
[13:31] Alarice Beaumont: yes.. that's what I think... power and money is not the most important
[13:32] Alarice Beaumont: but people see it differently
[13:32] herman Bergson: Produce just as much as you need for consumption....
[13:32] Particle Physicist Bejiita (bejiita.imako): i have for es seen many cases that although a company goes well the VD says "NO WE WANT MORE" closes the place, sacks everyone and move to a low salary country where they treat the workers as slaves
[13:32] Particle Physicist Bejiita (bejiita.imako): and quality plummets
[13:33] herman Bergson: the idea of necessary economic growth is just a belief...
[13:33] Particle Physicist Bejiita (bejiita.imako): indeed
[13:33] Alarice Beaumont: yes.. I really wonder if we need it
[13:33] Alarice Beaumont: but all the arguments go around this one subject
[13:33] Particle Physicist Bejiita (bejiita.imako): if something goes well just be happy with what u have and keep it that way, good for everyone
[13:33] Alarice Beaumont: I mean Hayek said there were waves because of that
[13:34] herman Bergson: well ...just the log will this growth last? Is it meant to be endless?
[13:34] Particle Physicist Bejiita (bejiita.imako): it seems thats what they think
[13:34] Particle Physicist Bejiita (bejiita.imako): = impossible
[13:35] herman Bergson: Because we are no economists this is a pretty hard subject....
[13:35] herman Bergson: but it was created in the 20th century by Thacher and Reagan.....the neoliberal situation we are in now
[13:35] Particle Physicist Bejiita (bejiita.imako): in Sweden we have a saiyng "Den som gapar efter mycket mister ofta hela stycket" = The one who gapes after too much often loose the entire piece
[13:36] Particle Physicist Bejiita (bejiita.imako): but that does not seem to happen so they just continue to gape after more and more
[13:36] CB Axel: Here's a fun quote, "If we laid all economists end to end they still wouldn't reach a conclusion."
[13:36] CB Axel: I can't remember who said it.
[13:36] herman Bergson: You did CB ...just now :-)
[13:36] Particle Physicist Bejiita (bejiita.imako):
[13:36] CB Axel: lol
[13:36] Particle Physicist Bejiita (bejiita.imako): and its so true
[13:37] Anuska (anuska.loon) is offline.
[13:37] herman Bergson: and yes...that is the situation
[13:37] Alarice Beaumont: probably true :)
[13:38] herman Bergson: Till the early 70s the belief was that in situations of unemployment and slowing economic growth the government should start projects to give people jobs...
[13:38] herman Bergson: That was Keynes.....
[13:38] Particle Physicist Bejiita (bejiita.imako): ah
[13:38] herman Bergson: But it didn't work anymore in 1973-1975....
[13:39] herman Bergson: that was the moment they set the banks free.....
[13:39] herman Bergson: and started the privatization of postal services, railways, transportation, healthcare and so on
[13:40] Particle Physicist Bejiita (bejiita.imako): just as we see here in Sweden and all over the world
[13:40] herman Bergson: The new free market belief was that competition would fire up the engine again
[13:40] Alarice Beaumont: well.. that is not totally wrong
[13:40] herman Bergson: and now we see that this doesn't work
[13:40] Particle Physicist Bejiita (bejiita.imako): in the end only the ones who can afford it gets a good education for their children, only the rich get healtchare and so on
[13:41] herman Bergson: Indeed Alarice
[13:41] herman Bergson: But it isnt a universal law of nature
[13:41] herman Bergson: And that is how it is treated by the believers in the free market policy
[13:41] Particle Physicist Bejiita (bejiita.imako): cause the service is not in proority, the proority is for the owners of the schools hospitals ect to make money
[13:42] CB Axel: priority?
[13:42] herman Bergson: It was Swedish CB :-)
[13:43] CB Axel: I just want to make sure I'm understanding.
[13:43] CB Axel: No matter what the language. :-)
[13:43] Particle Physicist Bejiita (bejiita.imako): a Swedish artist made a tune about how a hospital director lived in luxury in a tax paradise while the patients were sleeping in their owh shit
[13:43] Particle Physicist Bejiita (bejiita.imako): and thats what we see here
[13:43] Particle Physicist Bejiita (bejiita.imako): in many cases
[13:43] Particle Physicist Bejiita (bejiita.imako): really sad development
[13:44] herman Bergson: Here we had one driving a Ferrari, Bejiita
[13:44] Particle Physicist Bejiita (bejiita.imako): well i bet they have a few
[13:44] CB Axel: I was curious about privatization a while back and looked for instances where it has worked. There are some.
[13:44] herman Bergson: Well, unless you still have an important question, let's get into Hayeks ideas next Tuesday...:-)
[13:44] Particle Physicist Bejiita (bejiita.imako): its wrong to live on making others live a misery
[13:45] Particle Physicist Bejiita (bejiita.imako): life
[13:45] Particle Physicist Bejiita (bejiita.imako): but they feel no shame
[13:45] herman Bergson: Yes works in the supermarket....but not in the hospital for instance
[13:45] Particle Physicist Bejiita (bejiita.imako): true
[13:45] CB Axel: I worked in Chicago for garbage pickup.
[13:45] herman Bergson: But as you see in current politics....
[13:46] CB Axel: But, yes, healthcare should not be a business.
[13:46] herman Bergson: people are is either this or compromise....
[13:46] Particle Physicist Bejiita (bejiita.imako): true cb
[13:46] Particle Physicist Bejiita (bejiita.imako): and not education either
[13:46] herman Bergson: We were in shock recently...
[13:46] CB Axel: right, Bejiita.
[13:47] Particle Physicist Bejiita (bejiita.imako): cause its about peoples future and lives
[13:47] herman Bergson: A hospital had to close because it was bankrupt..>!
[13:47] Particle Physicist Bejiita (bejiita.imako): not products
[13:47] herman Bergson: Nobody understoood, but it was a fact
[13:47] Particle Physicist Bejiita (bejiita.imako): crazy :(
[13:47] herman Bergson: yes
[13:47] CB Axel: That happens occasionally here, too.
[13:48] Alarice Beaumont: yes.. the society should do some things for free.. but astoundingly...ppl don't work good if they aren't guided and have rules and are looked after if efficiently
[13:48] Alarice Beaumont: (oh sorry... so much spelling.. think one wine too much :( )
[13:48] herman Bergson smile....
[13:48] herman Bergson: send me the bottle Alarice :-)
[13:48] Particle Physicist Bejiita (bejiita.imako):
[13:48] herman Bergson: send
[13:49] theo Velde is online.
[13:49] CB Axel: Yes. I'll just take that wine away from you and put it someplace safe. :-)
[13:49] Particle Physicist Bejiita (bejiita.imako): ill fix that (grabs alarices bottle=
[13:49] Particle Physicist Bejiita (bejiita.imako): GLUNK GLUNK!
[13:49] Particle Physicist Bejiita (bejiita.imako) whispers: mmmm that was some ttuff!
[13:49] Particle Physicist Bejiita (bejiita.imako): YAY! (yay!)
[13:49] Particle Physicist Bejiita (bejiita.imako): YEEEEEHAAA!
[13:49] herman Bergson: I better dismiss class now....!
[13:49] Particle Physicist Bejiita (bejiita.imako): lol
[13:49] herman Bergson: ^_^
[13:49] Particle Physicist Bejiita (bejiita.imako): this was nice
[13:50] herman Bergson: Thank you all again for participating :-))
[13:50] Particle Physicist Bejiita (bejiita.imako): interesting and important
[13:50] bergfrau Apfelbaum: Thank you Herman and class!
[13:50] Alarice Beaumont: lol
[13:50] Alarice Beaumont: it's white wine btw ;)
[13:50] Particle Physicist Bejiita (bejiita.imako): aaa thats tasty
[13:50] herman Bergson: ohh I like that Alarice :-)
[13:50] Particle Physicist Bejiita (bejiita.imako): mild and smooth
[13:50] CB Axel: Thank you, Herman. This is all very interesting.
[13:50] Particle Physicist Bejiita (bejiita.imako): mostly
[13:50] Alarice Beaumont: but I think a wine would be a good companion on such discussions :)

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