Posts filed under ‘People’
Foss at Missouri
| Peter Klein |
O&M co-founder Nicolai Foss will give the 2012 Sherlock Hibbs Distinguished Lecture in Business and Economics Tuesday, 6 March 2012, 10:00-11:30am, in 205 Cornell Hall on the University of Missouri campus. The title is “Open Entrepreneurship: The Role of External Knowledge Sources for the Entrepreneurial Value Chain.” The lecture is sponsored by the Hibbs Professors of the University of Missouri’s Trulaske College of Business and the University of Missouri’s McQuinn Center for Entrepreneurial Leadership (which I direct).
The full announcement (with Nicolai’s impressive bio) is below the fold. The lecture is free and open to the public, so all are welcome! (more…)
Birger Wernerfelt to Become Honorary Doctor at CBS
| Nicolai Foss |
Over the last few years, CBS has bestowed honorary doctoral degrees on the likes of Jay Barney, Oliver Williamson, Oliver Hart, Michael Brennan, and other luminaries in strategy, the theory of the firm, and finance (in addition to a number of reps of pomo in management research that are of small interest to O&M readers). At a ceremony on 19 April a CBS honorary doctorate will be bestowed upon Birger Wernerfelt.
Wernerfelt is the JC Penney Professor of Management of the MIT Sloan School of Management. A Danish citizen, Wernerfelt holds degrees from the University of Copenhagen and Harvard. Wernerfelt’s best known work is no doubt “A Resource-based View of the Firm.” With more than 12,000 cites (google scholar) this paper is also one of the most cited social science research articles ever, and, of course, one of the founding papers of strategy’s (still) dominant view, the resource-based approach. The paper develops a conception of firms as bundles of heterogeneous and partly firm-specific resources, and links this conception to sustainable performance differences between firms as well as to growth strategies through resource-based diversification. These ideas opened up several paths of research in strategic management in the following decades, including Wernerfelt’s own influential empirical work (with Cynthia Montgomery) on diversification and its link to performance (e.g., here).
More recently, Wernerfelt has been working on other truly fundamental aspects of the theory of the firm, namely the reason why firms exist and what explains their boundaries and internal organization. Thus, in a series of papers, Wernerfelt has developed an argument that the employment relationship exists because it allows the parties to the contract to exploit economies of scale in bargaining costs (e.g., here) — a stream that may be seen as much more true to the original message in Coase’s (1937) “The Nature of the Firm” than the asset-specificity branch of the theory of the firm. Wernerfelt has extended the argument to the understanding of asset ownership, communication within and between firms, and the strength of incentives in firms versus markets. In addition to these contributions to strategic management and the theory of the firm, Wernerfelt has contributed to the economics of search and numerous important contribution to marketing theory.
What Did Keynes Mean by “Animal Spirits”?
| Peter Klein |
Keynes’s idea that investors are motivated by “animal spirits” has come back into vogue with the recent Keynesian revival, but the term is often misunderstood. Keynes referred not to psychological factors that make investors reluctant to invest, but those that make them invest at all — in the face of deep uncertainty, he thought, only a manic, driven, strong-willed person would put capital at risk. When animal spirits are strong, investment is sufficient to maintain aggregate demand; when they lag, aggregate demand falls, and the economy lapses into depression. (Lord Skidelsky approvingly calls this the “mood swings theory” of business cycles — an idea just crazy enough to spawn a recent NBER paper.)
The new issue of Capitalism and Society features a piece on What Keynes Really Meant on this issue, and it’s a good read:
Alexander Dow, Glasgow Caledonian University
Sheila C. Dow, University of StirlingThe term ‘animal spirits’ has returned to academic and public discourse in a way which departs significantly from the original use of the term by Keynes. The new behavioural economics literature uses the term to refer to a range of behaviour which falls outside what is normally understood as rational. This treatment follows from the mainstream dichotomisation between rationality and irrationality. However, Keynes explained that, given fundamental uncertainty, rationality alone was insufficient to justify action. Animal spirits was the name he gave to the (psychological) urge to action which explained decisions being taken in spite of uncertainty; animal spirits for him were neither rational nor irrational. Nor are they beyond analysis. We explore how the nature and role of animal spirits can vary according to context (as between different sectors, types of firm and within firms). This analysis indicates ways in which policy can promote structural change to strengthen animal spirits in the long term as well as offset short-term weakening in animal spirits.
Too Freaky
| Peter Klein |
We’ve been somewhat critical on this blog of the Freakonomics approach, but not as critical as Andrew Gelman. Here’s his latest (with Kaiser Fung) in the American Scientist:
On the heels of Freakonomics, the pop-economics or pop-statistics genre has attracted a surge of interest, with more authors adopting an anecdotal, narrative style.
As the authors of statistics-themed books for general audiences, we can attest that Levitt and Dubner’s success is not easily attained. And as teachers of statistics, we recognize the challenge of creating interest in the subject without resorting to clichéd examples such as baseball averages, movie grosses and political polls. The other side of this challenge, though, is presenting ideas in interesting ways without oversimplifying them or misleading readers. We and others have noted a discouraging tendency in the Freakonomics body of work to present speculative or even erroneous claims with an air of certainty. Considering such problems yields useful lessons for those who wish to popularize statistical ideas.
Here’s some additional commentary from Andrew.
My unease with Freakonomics is not its anecdotal, narrative style, but the emphasis on clever puzzles rather than substantive problems, over-reliance on weird instrumental variables, and belief that one can tackle almost any phenomenon with only the barest knowledge of its history and prior literature. Economic theory is indeed quite general and powerful, but not to be thrown around willy-nilly. After all, with great power comes great responsibility.
Rafe Champion at Missouri
| Peter Klein |
It’s been fun hosting Australian writer (and frequent O&M commenter) Rafe Champion at Missouri the last couple of days. Rafe spoke to the economists about the philosophy of science (handout here), and to the graduate philosophy seminar of my colleague André Ariew on current research topics in the philosophy of biology. We’ve had many talks about Hayek, Mises, Popper, Parsons, and our mutual friend Bill Bartley, among others. Rafe blogs at Catallaxy Files and the Critical Rationalist blog, and his website The Rathouse contains a treasure-trove of writings by, and commentary on, the most important twentieth-century philosophers of science.
Anita McGahan at Missouri
| Peter Klein |
Friend of O&M and leading management scholar Anita McGahan will present the University of Missouri’s Monroe-Paine Distinguished Lecture in Public Affairs, “The Health of Humanity 2050,” Thursday, 27 October 2011. She’ll also do a faculty-student seminar, “Changing the World,” that morning. Besides her important contributions to industry and competitor analysis Anita has become a leading expert in public health, poverty, and economic growth. Local O&Mers, make plans to attend!
Monroe-Paine Distinguished Lecture in Public Affairs
You’re invited to attend
Dr. Anita McGahan
Associate Dean-Research, Director of the PhD Programs, Professor of Strategic Management and
Rotman Chair in Management, Rotman School of Management,
Munk School of Global Affairs, University of Torontowill present
“The Health of Humanity 2050”
October 27, 2011 — 1:30 pm
2501 Missouri Student Center, Chambers Auditorium
RSVP to McGahan Lecture
For more information on Dr. McGahan, please visit the Truman School website.
Of Categories and Killers
| Peter Lewin |
A recent issue of the Review of Austrian Economics (edited by Virgil Storr) honors the contributions of Don Lavoie who died at a very young age in 2001. It contains contributions by Storr, Boettke and Prychitko, Klamer, Chamlee-Wright, Horwitz, Lewis, and High. In addition, published for the first time is a seminal article by Lavoie on the interpretive turn in economics.
Lavoie was an audacious pioneer. Like many such pioneers he was ahead of his time. The newly re-emergent Austrian school was not ready for him — did not understand what he was about. Most of them either ignored Lavoie’s products (and those of his collaborators at the Program on Social and Organizational Learning — a center he co-founded with Jack High), or else marginalized him. To the latter his preoccupation with late Continental Philosophy and hermeneutics was seen as a real threat to doing social science. His young, loyal and creative collaborators were caught in the crossfire. After his death the furor simply died down.
With the publication of this issue it is possible to gain a fresh perspective (something Lavoie’s hermeneutics might have predicted). For me it is a case of “distance lends enchantment to the view.” I confess I was in the group who neglected his work for lack of sufficient understanding of its significance.
For management and industrial organization types Lavoie’s work is highly relevant. There is a growing appreciation of the connection between language, communication, meaning, action, purpose and organization — about which Lavoie’s approach has much to say, not to mention his prescient contributions on culture, modularity, and computer science. For those wishing to benefit from his work, unless you have an interest in the epistemology of Continental philosophers, I would suggest concentrating on the contributions that have to do with information, knowledge, computing, and organization. (more…)
The Institutional Revolution
| Peter Klein |
I’m very excited about Doug Allen’s forthcoming book The Institutional Revolution (University of Chicago Press). Trained by Yoram Barzel (and hence part of the Tree of Zvi), Doug is a leading contemporary scholar on property rights, transaction costs, contracting, and economic history. His work on agricultural contracting with Dean Lueck, including their 2002 book The Nature of the Farm, is a classic contribution to the economics literature on economic organization. He also has a very good introductory textbook. More information is at Doug’s informative (and amusing) website.
Here’s the cover blurb for the new book:
Few events in the history of humanity rival the Industrial Revolution. Following its onset in eighteenth-century Britain, sweeping changes in agriculture, manufacturing, transportation, and technology began to gain unstoppable momentum throughout Europe, North America, and eventually much of the world—with profound effects on socioeconomic and cultural conditions.
In The Institutional Revolution, Douglas W. Allen offers a thought-provoking account of another, quieter revolution that took place at the end of the eighteenth century and allowed for the full exploitation of the many new technological innovations. Fundamental to this shift were dramatic changes in institutions, or the rules that govern society, which reflected significant improvements in the ability to measure performance—whether of government officials, laborers, or naval officers—thereby reducing the role of nature and the hazards of variance in daily affairs. Along the way, Allen provides readers with a fascinating explanation of the critical roles played by seemingly bizarre institutions, from dueling to the purchase of one’s rank in the British Army.
Engagingly written, The Institutional Revolution traces the dramatic shift from premodern institutions based on patronage, purchase, and personal ties toward modern institutions based on standardization, merit, and wage labor—a shift which was crucial to the explosive economic growth of the Industrial Revolution.
Bonus: Here’s the syllabus from Doug’s course on the economics of property rights.
Peter Lewin Interview
| Peter Klein |
Adrián Ravier has put together a nice collection of Spanish-language interviews with economists of the Austrian school (volume 1, volume 2). The leading modern figures are all included: Mises, Hayek, Machlup, Lachmann, Rothbard, Kirzner, fellow travelers such as Buchanan and Shackle, and contemporary Austrians such as Garrison, Block, Hoppe, Higgs, Ebeling, Salerno, Boettke, and more.
Guest blogger Peter Lewin’s interview is coming out in a third volume, to be published later this year, and Adrián has given me permission to post the English version here. You’ll find Peter’s intellectual odyssey very interesting!
(I am also featured in the collection, via translation of an old interview from 1995. Those were the days!)
Warning to My Future Biographers
| Peter Klein |
Daniele Besomi, writing at the SHOE list (and shared with permission):
[N]ot only memory is treacherous and selective, but even archival sources are not always fully reliable. In my work on the papers of Roy Harrod I have found examples of self-selection of documents to be preserved for posterity. Already aged 30 he annotated some documents as witnessing his position on some university matters; at 32 he preserved his own side of the correspondence he entertained with some politicians apparently because he deemed it important to keep a trace of it (he normally never kept copies of his outgoing correspondence, almost all handwritten); at 45 he started going through his own archives, annotating some correspondence for the benefit of “future historians of thought.”
At some (probably later) point in life he organized his own archives for the benefit of future readers, and he is likely to have manipulated some contents (besides rearranging the correspondence: annoyingly, the archivists undid some of Harrod’s work and moved some papers to different folders …).
It is in fact very strange that one who preserved tailor’s bills and bus tickets had kept no documents relating to his activities with the New Fabian Research Bureau in the early 1930s: he didn’t keep any of the memoranda he wrote (two at least survive in the NFRB’s archives) nor the correspondence he received about it (but the outgoing letters are in the recipients’ archives), except for a letter from James Meade dealing with theoretical matters and mentioning the NFRB in a postscript — perhaps (I am speculating here) Sir Roy turned conservative was embarrassed of the left-wing tendencies of his younger self.
Look below the fold for some annotations and sources (via Daniele). (more…)
A Krugmanian Slasher Flick
| Peter Klein |
Paul Krugman is furious about the deficit-reduction plan reportedly agreed to yesterday, which Krugman says will “slash government spending,” introducing “big spending cuts” that “will depress the economy even further.” And yet, the deal apparently does not cut one penny of government expenditures, but simply increases them at a slower pace (over ten years) than originally projected by the CBO. Remember, in Washington-speak, “cut” means “reduction in the planned rate of increase.”
Imagine a scene from a Krugman-style slasher flick: the villain approaches the victim, and gives him a smaller hug than the victim was expecting! The audience gasps as the victim screams in terror and flees from the vicious attack.
The Menger Sponge
| Lasse Lien |
Earlier the investigative arm of O&M (with only limited hacking of phones and bribing of police officers) discovered the sensational news that Peter is named after a bottle with no inside and no outside, the endlessly fascinating Klein bottle. Apparently this sort of thing is quite common in Austrian circles. We can now reveal that Menger is named after a sponge, the Menger sponge, which is described in greater detail here.
(Actually the Menger Sponge is named after Karl the mathematician, son of Carl.)
2011 Spengler Prize
| Peter Klein |
Congratulations to Robert Leonard for winning the 2011 Joseph J. Spengler Prize for the best book in the history of economics for Von Neumann, Morgenstern and the Creation of Game Theory: From Chess to Social Science 1900-1960 (Cambridge University Press, 2010). I’ve only skimmed the book but it looks exceptionally well done. Required reading for O&Mers interested in intellectual history, methodology, Austrian economics, strategy, and/or game theory. . . . (That’s pretty much all of you.)
Against (Karl) Polanyi
| Peter Klein |
I mentioned Karl Polanyi (not to be confused with Michael) in yesterday’s post on anonymity. Gavin Kennedy points us today to Mark Pennington, who writes that Polanyi’s claims “are either historically inaccurate or based on a crude misrepresentation of classical liberalism.” Specifically,
classical liberalism has never claimed that narrowly selfish behaviour is all that is required to sustain the social fabric. Of course markets are always “embedded” in a broader nexus of institutions, but the question we need to ask is precisely what sort of institutional and social norms are required to facilitate social cooperation on the widest possible scale. Polanyi and his followers prefer to rely on hackneyed accounts of the Wealth of Nations rather than recognise that Smith’s support for markets and “self interest” constituted part of a broader ethical system set out in the Theory of Moral Sentiments. Specifically, Smith was concerned to elucidate the balance between the social norms appropriate to contexts of commercial exchange and those appropriate in more intimate environments. From Smith’s point of view feelings of sympathy which include love, friendship and reciprocity are reserved for people of whom we have detailed personal knowledge. The morals expected in commercial relations which are often between relative strangers, however, tend to be more impersonal, focussed on principles such as the observance of contracts and are oriented more towards the “self interest” of the parties involved rather than the direct benefit of “others.” The great mistake is to suppose that the type of ethos that pervades family life or that in tight knit communities can operate on a much wider scale. The development of inclusive markets requires a more impersonal ethos which enables people to engage with diverse actors who may not share the same moral outlook. If people deal only with those who share the same moral outlook or trade only with “locals” rather than engage in transactions with “foreigners” then the sphere of potentially cooperative relationships will be reduced. The alternative to self-interest is not solidarity, but suspicion if not outright conflict.
Anti-Williamson
| Peter Klein |
Thanks to Per for reminding me of this 2004 paper by Daniel Ankarloo and Giulio Palermo, “Anti-Williamson: A Marxian Critique of New Institutional Economics” (Cambridge Journal of Economics 28, no. 3). It’s one thing to question Williamson’s behavioral assumptions and to complain about their implications for education and business practice. But apparently “Williamson’s categories, his method and conception are themselves products of bourgeois ideology.” Who knew?
Bonus: Here’s Doug North getting the same treatment. And if anyone thinks I don’t take Marx seriously, let me say that I once mitigated a contractual hazard in my pajamas — how it got in my pajamas I’ll never know.
Competitive Advantage, Network Advantage, and Vienna
| Peter Klein |
At last week’s ACAC Joel Baum gave a very interesting presentation (ppt) on the institutional and intellectual histories of two important strands in management thought, the literature on competitive advantage and the literature on network advantage. These two strands developed largely in isolation but, as it turns out, can both trace important parts of their development to the University of Vienna and the Austrian school of economics. Check out the genealogies below, captured from Joel’s slides. First, two diagrams on the origins of the competitive advantage approach (click to enlarge):
Now, two on the origins of network advantage theory: (more…)
Mitch on Hoselitz
| Peter Klein |
The following is a guest post from David Mitch, Professor of Economics at the University of Maryland, Baltimore County and an expert on Bert Hoselitz.
The reasonably recent postings on this blog on Bert Hoselitz prompt me to post a correction to my biographical piece on him for the Elgar Companion to the Chicago School of Economics (2010) edited by Ross Emmett and also to make some further comments regarding Hoselitz’ “Austrian” origins. Both the correction and futher observations stem from Yvan Kelly’s very interesting article “Mises, Morgenstern, Hoselitz, and Nash: The Austrian Connection to Early Game Theory” published in the Quarterly Journal of Austrian Economics 12, no. 3 (2009).
The correction to my piece is as follows. On p. 274 of my piece, I state that “Prominent leaders of the Austrian School of Economics such as Ludwig Mises and F. A. Hayek had departed Vienna by the time Hoselitz began his university studies.” Yvan Kelly indicates on p. 38 of his article that Hoselitz attended two of Mises’ seminars in 1933 and 1934 based on correspondence that Hoselitz sent to Mises in 1941. I have not yet seen copies of this correspondence. However, I was clearly in error in stating that Mises had departed Vienna by the time Hoselitz began his university studies. Klaus Herdzina’s (1999) biographical essay on Hoselitz cited in my piece indicates that Hoselitz studied at the University of Vienna between 1932 and 1937. I do not know from what sources Herdzina obtained this information; but I based the statement in my own piece that Hoselitz studied at the University of Vienna between 1932 and 1937 on Herdzina’s essay. Hulsmann’s 2007 biography of Mises (p. 678) indicates that Mises stopped his private seminar and left Vienna in 1934. Thus, it would appear that Hoselitz’ studies at the University of Vienna did overlap with the period that Mises was in Vienna and leading his private seminar. And this would thus be consistent with the possibility that Hoselitz attended some of Mises’ seminars. So again, the statement in my piece for the Elgar Companion that Mises had departed Vienna by the time Hoselitz started his studies at the University of Vienna would definitely seem to be in error assuming the Herdzina is correct in his dating of when Hoselitz studied at the University of Vienna. (more…)
Contributions from Mature Scholars
| Peter Klein |
Following up my earlier post on Austrian longevity: Rafe Champion notes that Max Weber died suddenly of pneumonia, in 1920, at age 56. What important further contributions might he have made if he had lived longer?
This prompts the thought, what would have been lost if some long-lived Austrians [and fellow travelers] had died at 56? For Mises, that was 1937, before his masterwork was completed (later translated as Human Action) and before he was a living presence in the US.
For Hayek, that was 1954. No Constitution of Liberty and later works, no Nobel Prize.
For Popper, 1958, before The Logic of Scientific Discovery appeared in English and a dozen other books apart from The Open Society and The Poverty of Historicism.
Coase turned 56 in 1966, with several important contributions still to come: the 1970 paper on durable-goods monopoly, the 1974 paper on the lighthouse, and his recent papers on Fisher Body, not to mention the Nobel Prize and his crowning achievement, the 2002 CORI Lecture. What other examples come to mind?
Mahoney Invested as Caterpillar Chair
| Peter Klein |
Congratulations to O&M friend and former guest blogger Joe Mahoney for his investiture as the Caterpillar Chair in Business at the University of Illinois at Urbana-Champaign. Here is the official announcement, which includes the following summary of Joe’s many accomplishments:
Joseph T. Mahoney is a professor of business administration at the University of Illinois who specializes in corporate governance and organizational economics. He is an editor for several top management journals, a prolific author, frequent advisor to Ph.D. candidates, and a professional consultant. For more than 20 years Mahoney has been an award winning teacher to undergraduates, MBAs and other graduate students. He holds a B.A. in Economics from the University of Pennsylvania, and M.S. and Ph.D. degrees in Business Economics from the Wharton School of Business.
Joseph Mahoney has published more than 50 scholarly articles in respected journals like the Academy of Management Review, Journal of Management, Journal of Management Studies, and Strategic Management Journal. His publications have been cited over 5,600 times by scholars in 65 countries. His book, Economic Foundations of Strategy has been adopted by over 30 top doctoral programs. Mahoney is an editor for the International Journal of Strategic Change Management and the Strategic Management Journal, and he contributes to 21 additional journals. Mahoney’s passionate teaching has garnered him many outstanding teacher awards since coming to Illinois in 1988. In that time he also served on 47 completed doctoral dissertation committees and currently serves on 8 others that are in progress.
You may recall that Joe is also this year’s recipient of the Academy of Management’s Irwin Award. Way to go, Joe!
Veblen at Missouri
| Peter Klein |
Thorstein Veblen was a professor at the University of Missouri from 1911 to 1918, following stints at Chicago and Stanford and before moving to New York to co-found the New School for Social Research with Charles Beard and John Dewey. Little has been written about Veblen’s time at Missouri, or his relationship with Herbert J. Davenport, who recruited Veblen to Missouri and provided his lodgings. (Veblen is mostly forgotten, locally, but Davenport, who founded the College of Business, is fondly remembered.)
The most detailed account of Veblen’s Missouri years (to my knowledge) appears in Russell H. Hartley and Sylvia Erickson Hartley, “In the Company of T. B. Veblen: A Narrative of Biographical Recovery” (International Journal of Politics, Culture, and Society 13, no. 2: 273-331 — the entire issue is devoted to Veblen). One snippet:
The notion that Veblen’s years in Missouri were a kind of Siberian exile which he spent as an embittered recluse seems more the fancy of academic urbanites than a reflection of actual fact. Dorfman’s puzzling assertion that Columbia “was the first country town where Veblen had stayed for any length of time” contradicts both the facts of Veblen’s life and Dorfman’s own account of those facts. By the time he settled into the Davenports’ at the end of 1910, Thors had lived thirty of his fifty-three years in rural and small-town settings. Columbia was a veritable metropolis compared with Nerstrand or Stacyville and was more than twice the size of Northfield, where he had spent six years attending Carleton.
Veblen’s reported description of Columbia as “a woodpecker hole of a town in a rotten stump called Missouri,” cited by Dorfman as evidence of his “abhorrence” of the place, reflects his wit and mordant sense of humor rather than emotional distress over his physical location. It was an offhand commentary on the local Chamber of Commerce’s campaign to elicit a promotional slogan for the Boone County seat — a remark perfectly in tune with Veblen’s views of business and the commonweal, comprehensible only in light of his analysis of American country towns generally.
Social Science Is For the Asocial?
| Lasse Lien |
I went to a physics seminar the other day. The presenter, an eminent astronomer, made the following remark as he was trying to convey what it was like to work in the natural sciences:
If you hate people and would prefer to do most of your work alone in your office, you should join the social sciences. If you love people and would like to work closely with many others in large research teams, you should join the natural sciences.
The paradox is just beautiful. You self-select to the social sciences because you hate people and want as little as possible to do with them.
More Hoselitz
| Peter Klein |
Since we first inquired about Bert Hoselitz, new information has come to light. First, we hosted a copy of Hoselitz’s hard-to-find 1951 essay “The Early History of Entrepreneurial Theory,” still the best source on the origins of economic thinking on the entrepreneur. Randy has also located Hoselitz’s rare 1963 paper “The Entrepreneurial Element of Economic Development,” which we hope to share soon.
Also, Yvan Kelly published an interesting paper in 2009, “Mises, Morgenstern, Hoselitz, and Nash: The Austrian Connection to Early Game Theory” (Quarterly Journal of Austrian Economics 12, no. 3), which provides more information. Hoselitz attended Mises’s Vienna seminar in 1933 and 1934 and, after Hoselitz emigrated to the US, Mises helped him get a position at Chicago. In 1947 Hoselitz taught a class on international economics at Carnegie Tech, where one of his students was John Nash — the only economics course Nash ever took. Notes Kelly, “there exists the distinct possibility that Nash’s thought process in formulating the [Nash] equilibrium was influenced by Austrian thought.” Kelly goes on to quote Nash’s Nobel lecture: “By coincidence the person who taught the course was someonethat came from Austria. . . . Austrian economics is like a different school than typical American or British. So by coincidence I was influenced by an Austrian economist which may have been a very good influence.” (This article by a famous blogger also deals with the Austrian connection to game theory.)
Coasian or Coasean?
| Peter Klein |
For years I described things relating to Ronald Coase as “Coasian.” Walter Block continually needled me about this, insisting the proper spelling was “Coasean,” but I resisted. Now I see more people using the latter spelling, and I’ve started using it myself. But which is correct? I beats e, but not by much, in a Googlefight. But I think a more targeted crowdsourcing arrangement is warranted. So, dear O&M readers, which do you prefer? Vote below.
Addendum: Thanks to Scott for pointing out that this was debated before at Volokh, where many of the critical issues — and the most obvious snarks — were already presented. To me, the fact that Coase himself, and people at Chicago Law, use “Coasian” seems a pretty strong argument in favor of the non-standard spelling. But one can make a good case for either.
Creative Destruction in Popular Culture
| Peter Klein |
Thanks to Thomas B. for forwarding links to US Sen. Rand Paul’s Monday-night appearance on the Daily Show (part 1, part 2, part 3). At the start of part 3, while discussing government bailouts, Paul uses the words “creative destruction,” and Jon Stewart bursts out laughing, apparently hearing the term for the first time. I guess Schumpeter is not as culturally relevant as I thought!
The show had some interesting moments, but I found the discussions (in the parts I watched) pretty shallow. Stewart was grilling Paul on his “free-market” views, focusing on health, safety, and environmental regulation. Both Paul and Stewart took the milquetoast position that sure, some of this type of regulation is needed, but it shouldn’t be “too much.” They didn’t get into a serious discussion of theory or evidence, however, or explore specific trade-offs. There are huge political economy and public-choice literatures on the FDA, EPA, OSHA, etc., showing that these organizations are easily captured, tend to retard innovation, fail to weigh marginal benefits and costs, and so on. The Journal of Law and Economics under Coase’s leadership made its bones on these kinds of studies in the 1970s. The FDA has been a particular target. The Stewart view also ignores comparative institutional analysis — e.g., the role of private ordering (third-party certification, reputation, etc. ) in the protection of health and safety.
At least Paul didn’t say he intended to become the best Senator, horseman, and lover in all Washington!
Kuhn’s Ashtray
| Peter Klein |
You know about Wittgenstein’s Poker. But have you heard of Kuhn’s ashtray?
We began arguing. Kuhn had attacked my Whiggish use of the term “displacement current.” I had failed, in his view, to put myself in the mindset of Maxwell’s first attempts at creating a theory of electricity and magnetism. I felt that Kuhn had misinterpreted my paper, and that he — not me — had provided a Whiggish interpretation of Maxwell. I said, “You refuse to look through my telescope.” And he said, “It’s not a telescope, Errol. It’s a kaleidoscope.” (In this respect, he was probably right.)
The conversation took a turn for the ugly. Were my problems with him, or were they with his philosophy?
I asked him, “If paradigms are really incommensurable, how is history of science possible? Wouldn’t we be merely interpreting the past in the light of the present? Wouldn’t the past be inaccessible to us? Wouldn’t it be ‘incommensurable?’ ”
He started moaning. He put his head in his hands and was muttering, “He’s trying to kill me. He’s trying to kill me.”
And then I added, “…except for someone who imagines himself to be God.”
It was at this point that Kuhn threw the ashtray at me.
The account comes from filmmaker Errol Morris, then Thomas Kuhn’s graduate student at Princeton, who adds that “I had imagined graduate school as a shining city on a hill, but it turned out to be more like an extended visit with a bear in a cave.” (HT: Pete Boettke). I have not used Kuhn’s particular technique with my own students, though I admit it has a certain visceral appeal. Nor have I been on the receiving end of such behavior, though a conference participant once opened his presentation by saying, “My paper is basically devoted to refuting everything in Klein’s paper.” (Fortunately, I was the moderator, and responded immediately, “Thank you, your time is up.”)
Back to students: I do keep this decorative item by the entrance to my office, placed for all to see:
Joe Mahoney Wins Irwin Award
| Peter Klein |
Congratulations to O&M friend Joe Mahoney for winning the Irwin Outstanding Educator Award for 2011. The Irwin Award is issued each year by the Business Policy and Strategy Division of the Academy of Management to someone who “(1) has demonstrated outstanding teaching capabilities in business strategy over an extended period of time and the ability to enable future strategy scholars to contribute original research as well as teaching effectively; (2) has had an important impact on strategy pedagogy through demonstrated expertise; and (3) cares deeply about the subject of Strategic Management and the development of his or her students.”
Joe has been my friend and colleague for several years and it’s great to see him join such luminaries as Michael Porter, Mike Hitt, Don Hambrick, Jay Barney, Kathy Eisenhardt, Pankaj Ghemawat, Will Mitchell, and Anita McGahan on the list of Irwin winners.
Anita McGahan at TEDx
| Peter Klein |
Here is my good friend and colleague Anita McGahan, Professor and Rotman Chair in Management and Associate Dean for Research at the University of Toronto’s Rotman School, speaking at a recent TEDx event on the role business schools can play in making the world a better place. Anita is not only a gifted speaker and teacher, and a highly accomplished researcher, but also one of the most thoughtful people in the profession, emphasizing Big Problems as well as the more narrow, technical issues favored by the strategic management literature. Check her out!
New Coase Interview
| Peter Klein |
In conjunction with Ronald Coase’s new book on China, he’s given a new interview to his co-author Ning Wang. (HT: Paul Walker via Mike Giberson.) Excerpt:
WN: You mentioned many times that you do not like the term, “Coasean economics,” and prefer to call it simply the “right economics” or “good economics.” What separates the good from bad, the right from wrong?
RC: The bad or wrong economics is what I called the “blackboard economics.” It does not study the real world economy. Instead, its efforts are on an imaginary world that exists only in the mind of economists, for example, the zero-transaction cost world.
Ideas and imaginations are terribly important in economic research or any pursuit of science. But the subject of study has to be real.
I’m sympathetic to this, but with some methodological reservations, expressed at the end of this post. Anyway, the interview focuses on China, its future economic prospects and likely influence, and the newly formed Coase China Society. Coase is bullish on China: “In the past, economics was once mainly a British subject. Now it is a subject dominated by the Americans. It will be a Chinese subject if the Chinese economists adopt the right attitude.” (more…)
CFP: Hayek and Behavioral Economics
| Peter Klein |
Forwarded on behalf of Roger Frantz:
CALLL FOR PAPERS
“Hayek and Behavioural Economics” (2011). Palgrave Macmillan. Vol 4 of Archival Insights into the Evolution of Economics. Robert Leeson Series Editor. Vol 4 editors, Roger Frantz and Robert Leeson.
Papers on all aspects of Hayek’s work as it relates to behavioral economics defined broadly which includes but not limited to economics and psychology, neuroeconomics, and topics in the history of economic thought.
Papers will be due by the summer of 2011. Send inquiries and an abstract to Roger Frantz (rfrantz@mail.sdsu.edu) or Robert Leeson (rleeson@stanford.edu).
The Economist on Coase at 100
| Peter Klein |
The new Economist celebrates Ronald Coase’s 100th birthday (this coming Wednesday) with a short piece on “The Nature of the Firm” (1937), the founding document of modern organizational economics (16,379 Google Scholar cites). (Thanks to Avi for the pointer.) It’s nice to see the theory of the firm get its props, and the first few paragraphs do a good job summarizing the paper. But the (anonymous) author has misread the modern literature, first in setting up an artificial conflict between Coase’s transaction-cost approach and the resource-based approach to the firm and, second, by missing the depth and nuance of Coase’s own research program.
On the first point: Much recent work tries to reconcile transaction cost economics (TCE) and the resource-based view (RBV) (e.g., Silverman, 1999; Foss and Langlois, 1999; Tsang, 2000; Madhok, 2002; Foss and Foss, 2005), pointing out that the two theories are, in important ways, complementary. Put simply: TCE and RBV start with different explananda. The RBV asks which resources will be combined in which ways to produce which outputs, while TCE asks how this activity will be organized (market, hierarchy, or hybrid). RBV offers a theory of competitive advantage, while TCE focuses on boundaries and governance. Second, the Economist writer confuses Coase with the (Coase-inspired) transaction cost approach of Williamson (1971, 1975, 1979) and Klein, Crawford, and Alchian (1978): (more…)
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