Pileus readers may be interested in George Soros’ new short essay on F.A. Hayek and Karl Popper. Soros lauds Hayek’s “fallibilism” but attacks him for inconsistency in endorsing “market fundamentalism.” According to Soros, Hayek is an “apostle of a brand of economics which… is a formalized and mathematical theory, whose two main pillars are the efficient market hypothesis and the theory of rational expectations.” So Soros fundamentally misunderstands Hayek.
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That’s quite a charge. Care to elaborate a little? I took away that Soros fundamentally accepts what Hayek preaches, just that it’s not the whole story.
Read some Hayek, most Austrians oppose the historical, empirical and mathematical strains of economics.
Austrians aren’t necessarily anti-math, and Hayek isn’t necessarily a doctrinaire Austrian either, but certainly the entire thrust of Hayek’s intellectual enterprise is opposed to the rational expectations school that sees markets as immediately incorporating new macroeconomic information into microeconomic decisions. For Hayek, markets are a discovery process, and it’s improper to assess their efficiency by looking at static time slices. Instead, we have to assess the alternatives of the market and the regulator according to how likely each institution is to correct errors and distribute useful information over the long run.
Maybe he forgot to read Hayek before he wrote the essay.
[...] words: "generally regarded". As Jason Sorens noted, "So Soros fundamentally misunderstands Hayek." Arnold Kling flushes out the [...]