Lovin' Mises to pieces
X-posted to heidicmorris
[After I wrote this post, I could tell it was nearly as much about philosophy of language as it was about Austrian economics, so I decided to x-post it here.]
Wow. In reading a photocopied section of [Ludwig] von Mises' Human Action (Chapter XV), I just came across a very simple description that I've always wanted to express, but never quite found the words for: "The market is a process."
Of course! I always tell my intellectual opponents that they can't refer to 'the market' or 'the economy' as a collective entity, like some complex giant robot just playing around on its own until the little man in the booth moves the controls. But I haven't been able to express in such simple terms just what the market is. I've always described it as, say, "All the individuals engaging in transactions in a given area," or something like that. Which is true enough as it goes, of course, but it doesn't really lay it out there clearly for the instigator to see. Mises clarifies the concept.
Here's the whole quote: "The market is a process, actuated by the interplay of the actions of the various individuals cooperating under the division of labor. The forces determining the - continually changing - state of the market are the value judgments of these individuals and their actions as directed by these value judgments" (HA 257-58).
That's about as clear and concise a logos of the market as anyone could hope for.
To play Devil's Advocate, though, further down the page he points to the impossibility of a mixed economy, a combination of socialism and capitalism in the same system. Indeed, he says that such a setup isn't even thinkable. "Production is directed by the market or by the decrees of a production tsar or a committee of production tsars." Doesn't this impose an unrealistically stringent dichotomy on our thinking about economic systems?
I understand his point that "publicly owned and operated enterprises are subject to the sovereignty of the market." But every system, even completely nationalized 'socialist' nations like the USSR, are subject to the workings of trade, both internationally and internally. Is he reiterating his argument against the possibility of socialism here? And if so, isn't he rigging the game by defining 'socialism' in such a way that it a priori can't exist? What point would a system have to reach before we called it socialist? If it really is impossible to even conceive, why are we talking about it, and why do we say that politicians who impose rent controls and government land grabs and eminent domain are enacting socialist (or socialist-like) policies?
So, yes, I agree that centrally-planned economies must still invoke market processes, to find a method of calculation in order to allocate resources, if nothing else. If we apply a less rigid, more common-usage form of the word 'socialism', though, how is that not a mixed economy?
Just bein' nasty. Mises is still Glog's only son. ;-)