Facultad de Ciencias Económicas | fce.ufm.edu | 4 Lecciones

Austrian Economics: Political Economy, Public Policy and Monetary Economics (Session 4)

Aletse López  | 17 de julio de 2018  | Vistas: 64

Austrian School Of Economics Economy Free Market Government Intervention

Dr. Richard Ebeling shares in this video the Public Choice Theory to understanding the political process. As well as the Austrian economists’ view on the free market and why any type of interventionism, eventually leads to a centrally planned economy.

Man can associate by the contractual or the command, which is a voluntary society based upon voluntary exchanges and transactions, like the Free Market (Laissez Faire) or a Regulated Market (Interventionism). Or, they could also associate by compulsion or force. This is basically a centrally planned economy, like socialism, communism and fascism/nazism.

In the Free Market economy, the government may exist but its functions are limited and narrow. Almost all market outcomes are based upon the voluntary transactions, relationships and associations among the social participants itself. Private property in the means of production and two—sided competition in bids and offers permits the formation of market prices for inputs and outputs upon which market actors have the capacity for economic calculation.

In a Regulated Market (Interventionism), which is a mix economy, the role of this type of economy is not to abolish the market, but the government will regulate and intervene the market to influence the outcomes, the supposedly desired outcomes.

Is either the market or a centrally planned society.”

Even though, economic theory and history often have suggested that various forms of government control, intervention, and regulation can be self-defeating or counter-productive in terms of the general welfare of the society as whole, moving economic and public policies in a more competitive and free-market direction is often resisted by the “special interest” groups who gain from this interventions at the expense of other in society.

Private property is not just for economic reasons, is the institution that preserves our freedom."

Special interest groups want politicians and bureaucrats to give them “others people’s money”, through market regulations, prices controls, production restrictions and taxes. These individuals are often rational informed votes, their benefit (political favors and privileges) is greater than their cost. The rest of the public, are rational uninformed voters, their cost, as an individual, is greater than the benefit.

How do we stop this?, asks Ebeling. No one has an answer yet to stop this vicious cycle of power. Manser Olson, in his book The Rise and Decline of Nation, said that is during great society catastrophe, like WWII, that we can reform and transform the economy of a nation. But even if there is no catastrophe, as a prerequisite to move the society in the correct decision, there must be the right amount of us, to have the good ideas, so when the time comes, we will have the arguments and the policies proposals to that open door and thereby, we can have the chance to reform with the value of these freedom ideas.


Author, economist, professor and honorary doctor of UFM