I like the idea of a free market for money, through experimentation, iteration, and competition we might see the emergence of a monetary system that is more sustainable, anti fragile, and less volatile. Through decentralization we can potentially ensure that what gets selected for and up regulated is what benefits humanity as a whole, not just institutions. How might we transition to such a global economic experiment and is it even possible that those with the most power/money/and control who benefit from things the way they are could ever be incentivized to change? Do we need to wait until collapse? Is there a movement that needs to be started?
A concern I have about decentralization and experimentation is without checks and balances on money and the economy, how do we hedge the risk of new systems, and if a countries system fails whose going to bail them out? Would there be a global organization that agrees to help eachother out through the growing pains?
Good question. First, IMHO, we'd want to get rid of monetary monopolies completely, which means making open competition among open-source currencies. Exit is the only true check on power. Otherwise, if you invite power into the door to be a "check," the powerful will collude with monied as it always has. So I think anyone would be wise to invert your concern, that is, instead of a concern about "decentralization and experimentation ... without checks and balances on money and the economy, how do we hedge the risk of new systems, and if a [country's] system fails, [who is] going to bail them out?" This is a fatal error. The very idea that an authority can be trusted to wear THE RING so it can bail out countries or mitigate risks is WHAT CREATES MORE RISK, aka moral hazard. Bailing out countries with hyperinflation only encourages the powerful in those countries to double down. An authority powerful enough to "protect" people from the risk of their own choices is an authority that will eventually become a predator as GovCorp is (US Treasury/Fed). Nic Carter has done good work showing how corrupt and awful the IMF has been on aid to developing countries, for example.
“Power tends to corrupt, absolute power corrupts absolutely”. I wonder if it’ll ever be possible for powerful institutions to be checked and bound. Game theory, multipolar traps, arms races, and short term narrow goal oriented self interest make it very very difficult, but I lean towards believing it’s not impossible with proper transparency, and good faith agreement and enforcement structures. A kind of decentralized anarcho- libertarian approach seems to be the only other option. Perhaps both should be tried in the ecology of experimentation :)
The thing about "anarcho-libertarian" approaches is that they would create the ecology of experimentation. Or so I argue... https://underthrow.substack.com/p/introducing-metapolitics (I hate to sling this one your way, but it captures my position pretty well.)
Excellent essay. Some mandarins of Mission Control might see a contradiction in the fact that Hayek, et al. did attempt to explain how economies work on a basic level and offer reform ideas based on this understanding.
I agree it’s not necessarily a contradiction given that Hayek’s view was that planners were faced with a severe knowledge problem--but he still had to present a model of how the economy worked (“spontaneous order, the price system, etc.) to explain why the knowledge problem existed in the first place. It was this somewhat predictive model that guided his reform efforts re: inflation, etc.
I see what you mean. I don't know if we can call spontaneous order a model per se, but it's at least arguable that we can refer to Austrian Business Cycle Theory (ABCT) and the Structure of Production as a model of sorts. No doubt ABCT and the SoP connect to spontaneous order in Hayek's mind. There is a contrast between Austrian-style/new institutional economics and Keynesian models of aggregate demand.
The Keynesian view of the economy does seem more “machine” like than Hayek’s; but Hayek’s model would still have to explain how the “parts” (individuals, businesses, etc.) mesh with the whole in order to make a case for a laissez-faire(ish) model (e.g., free banking, etc.). In this regard, you might find Jeffrey Friedman’s (RIP) last book, _Power Without Knowledge_, to be challenging. He agreed with Hayek that knowledge problems plague all attempts at social engineering in terms of a technocrat’s ability to predict negative or positive consequences--but he also questioned the assumptions of neo-classical economics underpinning the claims of free market economists.
I'll check it out. // Does Friedman apply a critique of neo-classical economics to Hayek? That seems strange, given how critical the Austrians were of neo-classical economics, especially Hayek.
As I recall he criticizes Buchanan re: the minimum wage. He thinks the claims of free market economists are oversold in that they face the same knowledge problems that pro-government technocrats do in terms of predicting the positive/negative consequences of their policy recommendations. But appreciates the “exit” option that markets allow.
I second the motion.
http://dispatchesfromheck.blogspot.com/2022/10/economics.html
Great work 👏🏼
Thank you, sir!
I like the idea of a free market for money, through experimentation, iteration, and competition we might see the emergence of a monetary system that is more sustainable, anti fragile, and less volatile. Through decentralization we can potentially ensure that what gets selected for and up regulated is what benefits humanity as a whole, not just institutions. How might we transition to such a global economic experiment and is it even possible that those with the most power/money/and control who benefit from things the way they are could ever be incentivized to change? Do we need to wait until collapse? Is there a movement that needs to be started?
A concern I have about decentralization and experimentation is without checks and balances on money and the economy, how do we hedge the risk of new systems, and if a countries system fails whose going to bail them out? Would there be a global organization that agrees to help eachother out through the growing pains?
Good question. First, IMHO, we'd want to get rid of monetary monopolies completely, which means making open competition among open-source currencies. Exit is the only true check on power. Otherwise, if you invite power into the door to be a "check," the powerful will collude with monied as it always has. So I think anyone would be wise to invert your concern, that is, instead of a concern about "decentralization and experimentation ... without checks and balances on money and the economy, how do we hedge the risk of new systems, and if a [country's] system fails, [who is] going to bail them out?" This is a fatal error. The very idea that an authority can be trusted to wear THE RING so it can bail out countries or mitigate risks is WHAT CREATES MORE RISK, aka moral hazard. Bailing out countries with hyperinflation only encourages the powerful in those countries to double down. An authority powerful enough to "protect" people from the risk of their own choices is an authority that will eventually become a predator as GovCorp is (US Treasury/Fed). Nic Carter has done good work showing how corrupt and awful the IMF has been on aid to developing countries, for example.
“Power tends to corrupt, absolute power corrupts absolutely”. I wonder if it’ll ever be possible for powerful institutions to be checked and bound. Game theory, multipolar traps, arms races, and short term narrow goal oriented self interest make it very very difficult, but I lean towards believing it’s not impossible with proper transparency, and good faith agreement and enforcement structures. A kind of decentralized anarcho- libertarian approach seems to be the only other option. Perhaps both should be tried in the ecology of experimentation :)
The thing about "anarcho-libertarian" approaches is that they would create the ecology of experimentation. Or so I argue... https://underthrow.substack.com/p/introducing-metapolitics (I hate to sling this one your way, but it captures my position pretty well.)
Excellent essay. Some mandarins of Mission Control might see a contradiction in the fact that Hayek, et al. did attempt to explain how economies work on a basic level and offer reform ideas based on this understanding.
Thanks, Spencer. To those mandarins, I'd say perhaps, but probably not. Then I'd refer them to his Nobel Prize lecture, which is more relevant today than when he gave it: https://www.nobelprize.org/prizes/economic-sciences/1974/hayek/lecture/
I agree it’s not necessarily a contradiction given that Hayek’s view was that planners were faced with a severe knowledge problem--but he still had to present a model of how the economy worked (“spontaneous order, the price system, etc.) to explain why the knowledge problem existed in the first place. It was this somewhat predictive model that guided his reform efforts re: inflation, etc.
I see what you mean. I don't know if we can call spontaneous order a model per se, but it's at least arguable that we can refer to Austrian Business Cycle Theory (ABCT) and the Structure of Production as a model of sorts. No doubt ABCT and the SoP connect to spontaneous order in Hayek's mind. There is a contrast between Austrian-style/new institutional economics and Keynesian models of aggregate demand.
The Keynesian view of the economy does seem more “machine” like than Hayek’s; but Hayek’s model would still have to explain how the “parts” (individuals, businesses, etc.) mesh with the whole in order to make a case for a laissez-faire(ish) model (e.g., free banking, etc.). In this regard, you might find Jeffrey Friedman’s (RIP) last book, _Power Without Knowledge_, to be challenging. He agreed with Hayek that knowledge problems plague all attempts at social engineering in terms of a technocrat’s ability to predict negative or positive consequences--but he also questioned the assumptions of neo-classical economics underpinning the claims of free market economists.
I'll check it out. // Does Friedman apply a critique of neo-classical economics to Hayek? That seems strange, given how critical the Austrians were of neo-classical economics, especially Hayek.
As I recall he criticizes Buchanan re: the minimum wage. He thinks the claims of free market economists are oversold in that they face the same knowledge problems that pro-government technocrats do in terms of predicting the positive/negative consequences of their policy recommendations. But appreciates the “exit” option that markets allow.