Tape 165 - The noble laureates
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- | Welcome once again as MIT Professor Paul Samuelson | 0:02 |
discusses the current economic scene. | 0:05 | |
This series is produced by | 0:07 | |
Instructional Dynamics Incorporated. | 0:09 | |
This program was recorded October 25. | 0:11 | |
- | Today I'd like to talk about the new Alfred Nobel awards | 0:16 |
for economic science, | 0:21 | |
which were announced a little bit earlier this month. | 0:23 | |
Gunnar Myrdal of Sweden and Friedrich von Hayek, | 0:27 | |
originally of Austria, | 0:32 | |
later of the London School of Economics | 0:33 | |
and the University of Chicago | 0:35 | |
and now I believe back in Salzburg, | 0:36 | |
were the joint persons awarded the 1974 prize. | 0:40 | |
The Nobel award, it's not really a proper Nobel prize, | 0:49 | |
in economics is new. | 0:56 | |
It was awarded for the first time in 1969. | 0:58 | |
It was not part of the original will of Alfred Nobel, | 1:02 | |
the winner of, the inventor of dynamite. | 1:05 | |
But to celebrate I believe it was its 300th anniversary, | 1:09 | |
the Bank of Sweden decided that it would | 1:14 | |
fund a prize equal in cash value | 1:17 | |
to the original prizes which are in physics, | 1:21 | |
in chemistry, in physiology, | 1:25 | |
and literature. | 1:32 | |
Those four prizes are awarded | 1:33 | |
by Swedes and are awarded in ceremonies in Stockholm | 1:37 | |
on Alfred Nobel's birthday, December 10, | 1:45 | |
and in addition of course there's the Peace Prize, | 1:50 | |
which Alfred Nobel arranged to have given | 1:51 | |
by Norwegians and awarded on the same day in Norway. | 1:56 | |
At the time that Nobel died, | 2:01 | |
which was in the 1890s, | 2:04 | |
Sweden and Norway of course were | 2:06 | |
under a joint crown, | 2:10 | |
that is, they had the same king and queen, | 2:12 | |
although there was a certain measure of independence | 2:15 | |
of the junior partner which was Norway. | 2:18 | |
I believe it was in 1905 | 2:22 | |
that the Norwegians became restive | 2:24 | |
and I guess they were given a different German | 2:25 | |
royal family. | 2:31 | |
And since then, of course, they've been part of Scandinavia | 2:33 | |
but completely separate countries. | 2:36 | |
Well, the prizes always involve a certain amount of drama. | 2:39 | |
They are awarded on successive days. | 2:45 | |
The person who receives the prize | 2:54 | |
usually learns about it at six o'clock in the morning | 2:57 | |
from some member of the press | 3:00 | |
asking him how he's going to spend the money | 3:01 | |
or how he feels about winning the prize. | 3:03 | |
And apparently this year, The New York Times was alerted | 3:06 | |
that the prize would come out on a Wednesday | 3:10 | |
morning and on Monday they asked me if I would stand ready | 3:17 | |
to write an article as I had done in the past | 3:24 | |
for them on the new recipients. | 3:27 | |
I said I would be glad to, provided that I knew them, | 3:31 | |
and I rather thought that I probably would know them | 3:36 | |
because economics is, after all, one small happy family. | 3:40 | |
It's interesting that I just caught in my hotel room | 3:45 | |
at the Waldorf the last part of the announcement | 3:50 | |
saying that an Austrian had received it | 3:55 | |
for his contributions to monetary analysis, | 3:58 | |
but I didn't get the name. | 4:01 | |
That opened up some interesting guessing games for me. | 4:03 | |
I thought, well, if Ludwig von Mises were alive, | 4:07 | |
it could well have been given to him, | 4:11 | |
but he died in his 90s not very long ago, | 4:14 | |
still with his boots on, so to speak, | 4:19 | |
preaching the virtues of laissez-faire | 4:21 | |
as an extension professor at New York University. | 4:25 | |
You can't give the prize to a dead man. | 4:29 | |
A man is permitted to die between the time | 4:32 | |
that the prize is announced | 4:34 | |
and when it would have been awarded to him, | 4:37 | |
the difference between October and December, | 4:40 | |
but if you're dead, you're dead, dead, dead | 4:43 | |
and it's too late. | 4:46 | |
So Ludwig von Mises couldn't be it. | 4:49 | |
My old professor, Gottfried von Haberler, | 4:52 | |
Gottfried Haberler as we've come to call him | 4:58 | |
these last almost 40 years that he's lived in America, | 5:01 | |
was of course a possibility, | 5:05 | |
but I couldn't think why they were | 5:07 | |
identifying him with Austria. | 5:08 | |
I know American chauvinism and jingoism, | 5:11 | |
and it tends to take anybody who | 5:15 | |
is current in America and allocate the prize to an American | 5:21 | |
even though he may have been born elsewhere | 5:25 | |
and even though he may have done his best work elsewhere. | 5:27 | |
So I thought that that was unlikely. | 5:31 | |
But I didn't really know whether Hayek would be the one. | 5:33 | |
Myrdal was not so surprising. | 5:40 | |
In fact, just a few days before the awarding of the prize, | 5:42 | |
I was discussing with one of the previous Nobel winners | 5:48 | |
who it might be, | 5:53 | |
and he said, well, what about Gunnar Myrdal? | 5:55 | |
Myrdal is a very eminent person, | 6:01 | |
and it was to be expected that | 6:04 | |
he might someday receive the prize | 6:10 | |
although the Swedes, | 6:11 | |
particularly in the Royal Academy of Sciences, | 6:13 | |
where the economics prize is given | 6:15 | |
are a little bit reluctant | 6:17 | |
to give an early prize I would suppose | 6:19 | |
to one of their own members, | 6:23 | |
lest it be thought to be a case of favoritism. | 6:24 | |
And actually, as some of you will remember, | 6:27 | |
the prize for literature was given to two Swedes | 6:30 | |
not very well-known outside Scandinavia. | 6:32 | |
Indeed, their works haven't been translated | 6:36 | |
until now into English, | 6:39 | |
and you can be sure they'll be very quickly | 6:42 | |
now translated but that was considered to be kind of | 6:44 | |
an unfair thing. | 6:48 | |
The peace prize is always difficult. | 6:50 | |
What are the standards to be used? | 6:52 | |
And the literature prize is, I'm afraid, not much better. | 6:55 | |
In particular, there were some outstanding | 7:01 | |
people who were overlooked in the early years. | 7:04 | |
Tolstoy, for example, was alive | 7:07 | |
and could have been given the 1901 prize. | 7:10 | |
He died, I think, around 1911. | 7:13 | |
He was never given a prize because it is said | 7:17 | |
that the head of the Swedish Academy, | 7:20 | |
it is the Academy that gives the literature prize, | 7:24 | |
was against him. | 7:28 | |
One can wonder whether these prizes do more good than harm. | 7:33 | |
I don't want to go into that discussion, | 7:36 | |
but it's always seemed a pity to me | 7:39 | |
that there isn't a Nobel prize for mathematics. | 7:41 | |
It is a natural subject it seems to me for such a prize. | 7:45 | |
But I've learned that Alfred Nobel did not care for | 7:51 | |
one of the great Swedish mathematicians of the day, | 7:57 | |
Mittag-Leffler, and he was pretty sure, | 7:59 | |
and I think he's right, that Mittag-Leffler | 8:03 | |
would have gotten one of the early prizes. | 8:05 | |
And rather than contemplate from the grave that happening, | 8:06 | |
he didn't award a prize. | 8:10 | |
Besides, Alfred Nobel originally had the notion | 8:12 | |
that these prizes were to be given | 8:16 | |
for the good of mankind, | 8:18 | |
for people who had made contributions | 8:20 | |
for the good of mankind, | 8:22 | |
more exactly for people who were still going to make | 8:24 | |
contributions for the good of mankind. | 8:28 | |
And he rather thought that it would be given to somebody | 8:30 | |
for very recent work, a young person, | 8:32 | |
and that the amount of money would be large enough | 8:36 | |
to support him the rest of his life | 8:39 | |
so that he could give himself to pure science. | 8:40 | |
Well, it shows how even the very wealthy | 8:43 | |
can't take it with them | 8:48 | |
and they can't leave it in such a way as to realize | 8:49 | |
their fondest dreams because although | 8:52 | |
the Nobel foundation in Sweden I must say | 8:55 | |
has done very well in investing, | 9:00 | |
you can unitize how well they have done by | 9:02 | |
looking at the size of the prize. | 9:05 | |
To have had an increase in the prize | 9:08 | |
from $100,000 of a year ago or whatever it was | 9:10 | |
to $120,000 this last year | 9:13 | |
suggests that they're practically geniuses | 9:16 | |
in their ability to do better than a random dart | 9:19 | |
in selecting securities. | 9:23 | |
Well, that's a good round sum, | 9:27 | |
particularly if it goes to a single person. | 9:31 | |
But it's not enough to support a prime scientist | 9:35 | |
in the prime of life for the rest of his life. | 9:39 | |
I thought that Simon Kuznets, | 9:43 | |
who received the award in 1971, | 9:46 | |
gave the best answer to the reporter who | 9:49 | |
asked the inevitable question, | 9:53 | |
what are you going to do with the money, | 9:54 | |
and he said, I'm going to use it | 9:56 | |
to brighten up my retirement years. | 9:58 | |
That's about what the | 10:00 | |
function of that sum of money these days, | 10:03 | |
of inflation and increasing real income around the globe | 10:06 | |
can actually do. | 10:09 | |
Well, I did | 10:12 | |
scribble down some remarks for The New York Times, | 10:17 | |
and let me mention what their content was | 10:22 | |
and also elaborate and comment on the matter. | 10:26 | |
I said economists all over the world | 10:33 | |
will think it a happy choice | 10:36 | |
of the Swedish Royal Academy of Science | 10:38 | |
to have selected Gunnar Myrdal and Friedrich Hayek | 10:40 | |
for this year's Nobel Memorial Prize in Economic Science. | 10:43 | |
Although both men were said to have been selected primarily | 10:48 | |
for their stellar contributions to monetary analysis, | 10:51 | |
macroeconomics as we now tend to call it, | 10:55 | |
each has in fact made outstanding contributions | 11:00 | |
in the wider realms of policy and the social sciences. | 11:03 | |
But of course in no sense has their work been joint. | 11:08 | |
Indeed, their policy conclusions, if followed literally, | 11:11 | |
would be at loggerheads and self-canceling. | 11:15 | |
Hayek's most famous work, | 11:20 | |
his 1931 four lectures on business cycles called | 11:24 | |
Prices and Production, | 11:28 | |
arrived at the conclusion | 11:31 | |
that excess | 11:33 | |
credit expansion and deficit spending | 11:37 | |
by governments plus the central bank | 11:41 | |
created too much money | 11:46 | |
and this was the root of all business cycle evil. | 11:48 | |
In fact, the root of all evil. | 11:52 | |
The best cure for the depression then, he thought, | 11:55 | |
was to sweat it out. | 11:57 | |
And the worst thing that Dr. Hayek | 11:59 | |
and his Austrian school counterparts believed | 12:02 | |
was for the government to provide unemployment compensation | 12:05 | |
and other supplements to consumers' incomes, | 12:08 | |
for that would merely put off the bitter day of reckoning | 12:11 | |
and only worsen the under-saving, | 12:14 | |
you have to put that in quotation marks, | 12:18 | |
that he thought was the villainous cause | 12:20 | |
of every depression. | 12:24 | |
It's a very odd and mechanical theory of the business cycle. | 12:26 | |
I can assure you it had a tremendous vogue | 12:30 | |
for a few years about 1931, | 12:32 | |
but you pay for that kind of vogue | 12:34 | |
and it's been at a very deep discount. | 12:37 | |
To show how seriously it was taken, | 12:40 | |
I suggest any of you go to | 12:41 | |
a good library and read a book by Lionel Robbins, | 12:44 | |
now Lord Robbins, whom you might call the | 12:48 | |
greatest Austrian of them all, | 12:50 | |
on the Great Depression. | 12:52 | |
And it's a book which, | 12:56 | |
by the way, Robbins is now repudiated, | 12:57 | |
I guess he thinks that he was bewitched when he wrote it, | 13:00 | |
but in that, he's saying don't give any income relief, | 13:03 | |
don't make consumer credit available | 13:10 | |
because what has caused the depression, | 13:13 | |
and this by the way was never properly | 13:18 | |
and cogently deduced, | 13:21 | |
what caused the depression was the fact that | 13:25 | |
the structure of production, | 13:28 | |
the roundabout-ness of production, | 13:31 | |
was artificially elongated by excessive credit creation | 13:34 | |
by the banks. | 13:40 | |
And you can't keep up that artificial elongation | 13:41 | |
unlike the genuine elongation that comes from | 13:46 | |
genuine permanent saving. | 13:50 | |
Therefore, sooner or later, | 13:52 | |
the trombone which has been pulled out, | 13:55 | |
has been elongated is going to try like a rubber band | 13:59 | |
to snap back to a shorter form, | 14:02 | |
and if you try to put off that necessary correction, | 14:04 | |
by giving money to the consumers, | 14:09 | |
that will only make the snap back faster. | 14:12 | |
Now of course, the Great Depression of the 1930s, | 14:16 | |
which involved poverty in the midst of plenty, | 14:19 | |
is very hard to recognize in this mechanical scenario | 14:23 | |
of an elongated trombone pulled back by a spring | 14:30 | |
or a rubber band, | 14:34 | |
but that sort of thing was taken seriously at that time. | 14:37 | |
Now by contrast, Myrdal was one of the Stockholm School, | 14:41 | |
who anticipated much of Keynes' general theory. | 14:45 | |
Other members of that School, | 14:50 | |
and by the way except for their age, | 14:51 | |
they would be certainly | 14:53 | |
deserving of | 14:56 | |
contemplation at least of a Nobel award, | 14:59 | |
would be Bertil Ohlin for a long time | 15:02 | |
the head of the free enterprise party, | 15:05 | |
liberal party so called in Sweden, | 15:11 | |
the late Dag Hammarskjold also made | 15:15 | |
pre-Keynesian contributions, | 15:18 | |
Erik Lindahl, | 15:20 | |
now dead, and Erik Lindberg, | 15:24 | |
now very much alive and actually | 15:27 | |
the president of the Royal Academy of Science in Sweden. | 15:30 | |
I don't think that Lindberg anymore | 15:36 | |
is on the committee of that Royal Academy | 15:38 | |
that awards the prize. | 15:41 | |
I believe Assar Lindbeck is the chairman of that committee. | 15:43 | |
Well, Myrdal wrote many books. | 15:47 | |
He was a brilliant young man. | 15:50 | |
He actually was trained as a lawyer, | 15:52 | |
as so many economists on the continent were in those days. | 15:53 | |
I think he even practiced law as Schumpeter did | 15:56 | |
for a very short period of time. | 15:58 | |
He's a very | 16:01 | |
valuable, non-Scandinavian type of fellow. | 16:06 | |
Well, his monetary equilibrium emphasized | 16:13 | |
the need for expansionary fiscal and monetary policy | 16:19 | |
in a depression. | 16:22 | |
And Myrdal has been anything but | 16:24 | |
a believer in laissez-faire. | 16:27 | |
In fact, he's been an important architect | 16:29 | |
of the Swedish labor party's welfare state. | 16:33 | |
By contrast, Hayek regards himself | 16:37 | |
as not belonging to any of the current parties. | 16:41 | |
I think he once described himself as most at home | 16:44 | |
in the early 19th century Whig era of limited government | 16:47 | |
paints him about the same color as Macaulay. | 16:55 | |
Well, the world of course has not gone Hayek's way, | 17:00 | |
but Myrdal has seen his heart's desire realized. | 17:04 | |
And as Oscar Wilde said, | 17:09 | |
the only thing worse than getting your heart's, | 17:11 | |
not getting your heart's desire is to get it. | 17:13 | |
I think that Myrdal actually became a little bit bored | 17:16 | |
with the successes of the Swedish welfare state, | 17:21 | |
and he thought that there must be something | 17:25 | |
more important in life for him to devote his older, | 17:27 | |
later years to than settling the petty | 17:31 | |
squabbles of tenants in the housing developments | 17:36 | |
of the middleway of Sweden. | 17:41 | |
And so, he turned to southeast Asia, to India, Pakistan, | 17:44 | |
now Bangladesh, and has done a vast study there. | 17:51 | |
Actually, both men have been more than economists. | 17:57 | |
Hayek is not only a learned scholar | 18:01 | |
in that he can tell you when the doctrine of four savings | 18:04 | |
first began | 18:07 | |
or he edited beautifully the important and interesting | 18:09 | |
letters of John Stuart Mill and Harriet Taylor, | 18:15 | |
who was his, I guess we'd have to call, | 18:19 | |
we'd have to say his girlfriend | 18:23 | |
even though she was married to John Taylor, | 18:24 | |
but she did later become John Stuart Mill's wife after | 18:27 | |
John Taylor, shall we say blissfully, | 18:32 | |
passed away from the scene. | 18:38 | |
Hayek has even written on psychology. | 18:43 | |
He is a man of very, very broad learning. | 18:47 | |
Well, Myrdal perhaps was getting a little bit bored by | 18:52 | |
mainstream Keynesian economics in the 1930s. | 18:58 | |
He and his wife, who is a scholar in her own right | 19:03 | |
and perhaps an even more important political figure | 19:08 | |
in the labor party in Sweden than Gunnar, | 19:12 | |
I'm referring to Alva Myrdal, who has been | 19:17 | |
an ambassador to India and who has been a cabinet officer | 19:20 | |
and has had many other important functions | 19:23 | |
and who I believe is by profession a psychologist. | 19:28 | |
Well, they wrote in the 1930s | 19:30 | |
a very famous book on the declining | 19:32 | |
population prospect for Sweden. | 19:36 | |
It received a great deal of attention. | 19:39 | |
To Myrdal even became a slang word I think to procreate, | 19:42 | |
and it was said I suppose in jest | 19:48 | |
that the Myrdals had three children | 19:51 | |
because they had to live up to their own recommendations. | 19:52 | |
By the way, one of those children is Sissela Myrdal, | 19:56 | |
the wife of Derek Bok, | 20:02 | |
president of Harvard. | 20:05 | |
Another one, Jan Myrdal, is an anthropologist of some fame | 20:07 | |
in writing up China and something of a left winger. | 20:13 | |
And I'm not sure about the third child. | 20:18 | |
Well, that would have been enough to have | 20:22 | |
constituted an important scholarly career for one man, | 20:28 | |
but perhaps history will record | 20:33 | |
that the great life work of Gunnar Myrdal | 20:36 | |
was the study of the American Negro, | 20:40 | |
called An American Dilemma which he did at the request of | 20:43 | |
the Carnegie Foundation just before World War II. | 20:47 | |
He says that he was picked for the job | 20:51 | |
because he knew nothing about the problem | 20:54 | |
and it was thought that a dumb Swede | 20:56 | |
would have the innocence to be objective. | 20:58 | |
In any case, he came to this country, | 21:02 | |
he acquired a huge staff | 21:05 | |
and made Baltimore his headquarters. | 21:07 | |
He thought that was a good compromise | 21:13 | |
between New York and Washington, | 21:15 | |
and he turned out the great work, | 21:17 | |
An American Dilemma, which still | 21:22 | |
sells very well and which pointed out to Americans | 21:25 | |
what they should have known but which we didn't know, | 21:30 | |
namely that we were not in equilibrium | 21:33 | |
in our black-white relationships. | 21:36 | |
But on the contrary, there was a glaring discrepancy | 21:38 | |
which could not stand between the American creed, | 21:42 | |
which is something that we take seriously, | 21:46 | |
it isn't just something that we trot out | 21:48 | |
on the Fourth of July and on Sundays, | 21:51 | |
it's something that bothers our consciences | 21:53 | |
in a way that many South Africans | 21:55 | |
are not bothered by their racial problem, | 21:58 | |
and he pointed out that all is not well | 22:03 | |
and this is documented in a scholarly fashion. | 22:07 | |
Still, that wasn't enough for Myrdal. | 22:14 | |
He went on to become head of United Nations for Europe. | 22:16 | |
And at that time, in the late 1940s and in the 1950s, | 22:21 | |
he provided a very important bridge | 22:26 | |
between the western European countries | 22:31 | |
and the eastern European socialist countries. | 22:35 | |
Those were the days of the Cold War, | 22:40 | |
those were the days of the Marshall Plan, | 22:41 | |
and it was good to have one place in Geneva | 22:43 | |
where problems in common were threshed out | 22:46 | |
and discussed and negotiated. | 22:51 | |
Moreover, he had quite a brilliant staff there | 22:54 | |
so that the people looked forward to their reports. | 22:59 | |
I'm referring to Nicholas Kaldor of Cambridge University, | 23:01 | |
Professor Kaldor, now Lord Kaldor, | 23:06 | |
Walt Rostow and still others were on that staff. | 23:10 | |
I had to write that throughout his life, | 23:17 | |
Gunnar Myrdal has been carrying on a lover's quarrel | 23:19 | |
with the United States. | 23:22 | |
He's always talking to us like a Dutch uncle, | 23:23 | |
scolding us for not doing what he thinks ought to be done | 23:26 | |
and which he thinks our own credo requires to be done. | 23:31 | |
Well, let me conclude by | 23:38 | |
saying what I think to be the most important | 23:42 | |
lasting work in economics by Friedrich Hayek. | 23:45 | |
I don't think it's Prices and Production. | 23:51 | |
I don't even think that it's the pure theory of capital, | 23:53 | |
although he has made some nice | 23:56 | |
contributions to that subject. | 23:59 | |
Indeed, if you want to see the best refutation | 24:01 | |
against Major Douglas or the notion of underconsumption | 24:05 | |
as a matter of the anatomy of the system, | 24:09 | |
there's always a hole in the loop of purchasing power, | 24:12 | |
you might look at his, I believe it's about 1929 or 1930, | 24:16 | |
The Paradox of Saving, in which he shows | 24:22 | |
that there might be a saving investment problem | 24:24 | |
but there certainly need not be one | 24:27 | |
merely for accounting reasons. | 24:29 | |
No, I think that his most important work | 24:33 | |
is in connection with the effectiveness and the philosophy | 24:38 | |
of the free market system. | 24:42 | |
Let me review an important controversy | 24:46 | |
in the field of economics. | 24:50 | |
Ludwig von Mises, about | 24:52 | |
the year 1920, wrote a famous study in which he said | 24:57 | |
that planning under socialism is by definition impossible. | 25:02 | |
He said the only rationality that is possible | 25:07 | |
is the rationality of a market pricing system. | 25:10 | |
This gave rise to a spirited debate in the 1930s. | 25:15 | |
And finally we had the late Oskar Lange, then I think | 25:19 | |
a traveling scholar in the United States from Poland | 25:27 | |
and later to be the vice president of Poland | 25:30 | |
and an important post-war official in the Polish government, | 25:33 | |
and A. P. Lerner, Abba P. Lerner, | 25:38 | |
who was trained at the London School | 25:42 | |
but came to the United States | 25:44 | |
shortly after the period I'm talking about, | 25:46 | |
those two men took the viewpoint | 25:48 | |
that you could use under socialism a kind of planning | 25:51 | |
which was planning not to plan, | 25:54 | |
which was to use the advantages of a pricing system | 25:57 | |
but you're playing the game of competition | 26:02 | |
and you're ruling out monopoly. | 26:04 | |
I don't want to go into details, | 26:07 | |
but each bureaucrat, the wheat bureaucrats | 26:08 | |
were to take the price of wheat as given | 26:11 | |
and then they were to respond in a non-monopolistic way, | 26:13 | |
other bureaucrats were to act as auctioneers | 26:18 | |
so as to clear the market. | 26:21 | |
And they proved that contrary to what von Mises had said, | 26:22 | |
it was possible to define rationally | 26:27 | |
a good society without the market | 26:30 | |
and it was possible to prove | 26:34 | |
as you might say a logical theorem | 26:35 | |
that under planning not to plan socialism, | 26:38 | |
playing the game of a perfect competition, | 26:43 | |
you could realize that definable optimum. | 26:46 | |
And so, they said in effect, Ludwig von Mises is wrong, | 26:51 | |
but as Oskar Lange said, | 26:55 | |
the socialist state of the future will put up statues | 26:57 | |
in the town square to Ludwig von Mises | 27:00 | |
for having brought up an important question. | 27:03 | |
Actually, the results of Lerner and Lange | 27:06 | |
were recapitulating what had been done by | 27:12 | |
Pareto and Wahlroos at the turn of the century, | 27:14 | |
if not by von Wiesser in his natural value | 27:17 | |
with his parable of a communist state even earlier. | 27:20 | |
Well, you might say the debate's over | 27:24 | |
and the pro-socialists have won, | 27:26 | |
but Hayek in an article | 27:29 | |
written about 1945 in the American Economic Review | 27:32 | |
pointed the very great importance of information | 27:37 | |
in real life situations, not in the textbook situations | 27:41 | |
of the textbooks. | 27:46 | |
And so, he provided, I think, a very important rebuttal | 27:48 | |
emphasizing that we live in a world of uncertainty, | 27:53 | |
and he said that decentralized enterprise | 27:57 | |
is an efficient way of having each individual | 27:59 | |
bring his little quantum of information | 28:02 | |
into useful play. | 28:04 | |
Well, anyone who overhears the current discussions | 28:06 | |
in the law schools of America | 28:09 | |
on the relationship of information to contracts, to torts | 28:11 | |
and public regulation | 28:15 | |
will appreciate, I think, that the Hayekian contribution | 28:17 | |
still lives on. | 28:20 | |
Well, I concluded my New York Times article | 28:23 | |
by saying the 1974 joint Nobel award | 28:25 | |
underscores the need in political economy | 28:29 | |
for tolerance and eclecticism. | 28:32 | |
I think I'm ready to stand by what I wrote, | 28:35 | |
but after I wrote it, I've been receiving reactions | 28:39 | |
from various friends in the economic area, | 28:43 | |
and I might mention their contrasting reaction. | 28:49 | |
My wife, who knows economists pretty well, | 28:55 | |
said my god, is Hayek still alive? | 28:57 | |
Well, of course he is very much alive. | 28:59 | |
He left the University of Chicago before the retirement age, | 29:01 | |
I suppose to go back to the land of his native tongue, | 29:05 | |
but also because by acquiring a chair on the continent, | 29:10 | |
in Germany for example, that's really a lifetime job. | 29:15 | |
You don't take a cut in pay after you retire. | 29:19 | |
You take a cut in pay as far as that part of the pay | 29:22 | |
which comes from the fees of students, | 29:25 | |
so that may have been a consideration. | 29:27 | |
So he's very much alive and he's in the British Academy | 29:30 | |
and I've received reprints from him. | 29:33 | |
My younger colleagues thought Hayek a very odd choice. | 29:38 | |
They didn't realize, of course, | 29:44 | |
what his lifetime integral of accomplishment was, | 29:46 | |
nor do they know much about his work | 29:50 | |
in connection with the Mont Pelerin Society, | 29:53 | |
which is a society meeting about once a year, | 29:56 | |
usually somewhere in Switzerland, | 29:59 | |
to push the cause, | 30:01 | |
for a long time unpopular in these states these days, | 30:04 | |
of liberalism in the old sense of laissez-faire, | 30:07 | |
of libertarianism in modern life. | 30:12 | |
Well, I think that the Royal Academy of Sciences can | 30:16 | |
congratulate itself this year | 30:21 | |
on a job well done. | 30:24 |
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