NationStates Jolt Archive

I thought perhaps a more thorough investigation of different schools of Libertarianism was in order.

Sorry about the length of this, but before we can start bashing each other I guess everyone needs to get the same grounding...if you already know about the Austrians, save yourself the time :p .

Now I guess we're all familiar with Milton Friedman (http://en.wikipedia.org/wiki/Milton_Friedman), the CSE (http://en.wikipedia.org/wiki/Neoclassical_economics) and the type of libertarianism they stand for. These people are very technical, they use standard economic theory (in fact much of it was created by them) to assert that Government intervention, while done with good intentions, usually fails to do what it's supposed to.

Their (or at least Milton's) reason for that is strictly pragmatic. While they do have some sort of vision, and they interpret information according to it, they primarily believe in libertarianism because they think it works best, rather than for any romantic affiliation with it.

Problem is of course: Economic Theory can be used for everything, including to kill the CSE's arguments. When people use simply "Labour Supply & Labour Demand" Diagrams to illustrate why a minimum wage hurts the workers, then that works only if the diagram is valid. To see why it isn't, read up on Thurow (http://www.lthurow.com/).

Add to that a healthy mix of moral relativism and not only do you get people that for the sake of their theories help Pinochet build a dictatorship, but that (at least according to my lecturer's (http://www.uq.edu.au/economics/index.html?page=15857) thoughts) build up an ideology (or lack thereof) that may very well end up killing the US off.
Afterall, if everything is merely a question of supply vs demand, then why exactly is democracy better than dictatorship? Answer: There is no reason.

And then there is the type of people (Marxists and their offspring) that reject mainstream economics as a whole. They have very good points (http://en.wikipedia.org/wiki/Marxist_economics), and indeed a dogmatic theoretical system abotu something enormously complex is easily attacked, and let's face it: That's what Economics is.

And to counter that come in the Austrians. Open Curtains:
The central message of the Austrian School (as is my interpretation) is that the economy, nay society, is not a machine, but an evolving, almost biological entity. "The Market" (read: society) is smarter than experts, smarter than philosophers and economists. Trying to play around with it will pretty much never lead to what you really want.
They say that the Soviet Union (and any other planned economy) failed because of this. No planning commission can ever really grasp the entirety of the task required of it. Millions of people have different demands for everything, and while in a market we would go out, search for information and eventually come close to an optimal level of utility, in a planned world someone else would have to decide for us - an impossible task.

The important point of course here is this: The individual always knows what's best for itself better than anyone else.
Perhaps this is one point where they can be challenged, and I'm sure someone will. (My best guess is Hirsch's Theory of Positional Goods...)

Thus the Austrians not only reject any form of planning in the economy, they also reject all our accepted policy "levers" (note the mechanistic view again) in macroeconomics.
Take for example interest rates. Today we looove playing with interest rates. While Friedman says: "Look, just move them around to keep inflation steady, not to counteract the business cycle", the Austrians say this:
"You cannot possibly do anything better than the individual. Investment is not simply the component "I" in Aggregate Demand. Investment is a variety of things done by individuals. Moving down the interest rate only causes people to buy their blast furnaces now rather than later. So in a few years we won't need a new one because we bought a whole lot earlier. Are we better off? No!!!"

And so the Austrians side with the Marxists in their rejection of economics as a science, yet come to a completely different conclusion.
For them, the entrepreneur is the hero. Particularly Schumpeter has a very romantic view of the entrepreneur. To him it is quite normal that people lose their jobs, that entire industries are wiped out because one guy had a good idea. The keyword is "Progress". The Horse & Buggy Industry was killed. Thousands of workers lost their jobs there. So what? We are all better off because of it.
If such "gales of destruction" didn't happen, there'd be stagnation and death.
Note: That means of course that every monopoly deserves its position. In 5 or 10 or 50 years it will be destroyed by a new invention, and killing monopolies ourselves makes it less attractive for others to become entrepreneurs.

Which, curiously, is exactly what Schumpeter predicted. Large Corporations, R&D Departments, Marketers and Accountants would start to replace the entrepreneur. What follows is stagnation and death. Schumpeter didn't like his conclusion, but he saw no alternative.
Perhaps this is the straw people can cling to yet?

And so my final point is: Apart from the Austrian's deep conservativism (rooted in a sense of "It's here after 1000 years. You don't understand it, don't tinker with it!"), I don't really see where these guys are so fundamentally wrong.
So while I think one can create an Austrian type of society with a certain amount of "starting capital" for everyone in order to create fairness of opportunity (they argue that everyone has the same chance of being born rich, and if you aren't: tough luck), I would almost think that this is the single form of libertarian thinking/vision that has ever come close to making me blink.

What do you think? (Other than that everyone of every persuasion needs to read "The Road to Serfdom" by Hayek...)

:headbang:
This took me like 20 minutes to write. Talk about a waste of time...

My knowledge of Austrian economics comes only in passing. Their economics coincides with my own moral and political viewpoints.

Which, curiously, is exactly what Schumpeter predicted. Large Corporations, R&D Departments, Marketers and Accountants would start to replace the entrepreneur. What follows is stagnation and death. Schumpeter didn't like his conclusion, but he saw no alternative.
Perhaps this is the straw people can cling to yet?

The entrepreneurs start up because of stagnation amongst the corporations. The corporations replace the entrepreneur by always progressing and not getting stagnant. Free market pressures eliminate the stagnation, either through the massive R&D by corporations, or the innovation of small entrepreneurs.

So while I think one can create an Austrian type of society with a certain amount of "starting capital" for everyone in order to create fairness of opportunity (they argue that everyone has the same chance of being born rich, and if you aren't: tough luck), I would almost think that this is the single form of libertarian thinking/vision that has ever come close to making me blink.

I am morally opposed to the elimination of allodial rights, but it is nice to see that you are crossing the divide, so to speak.

What I would like to know is, what are the differences you see in the Austrian school of economics and other forms of libertarianism that perks your interest?

Naw, these things are never a waste of time even if nobody ever reads them because they serve to organize your thoughts for a time when somebody does. ^_~

That said, I'm only going to do 1 or 2 "hit and run" comments now and come back to this later when I'm more awake. *^_^*


Afterall, if everything is merely a question of supply vs demand, then why exactly is democracy better than dictatorship? Answer: There is no reason.


There isn't? O.O

In which alternative universe is *that* one true? o_O How many people do you know of who confide soulfully, "Gee, I really hate being free! I wish someone would come around and take control of me!" Never seen it happen outside a BDSM story and I doubt I ever will. Yeah, there are people who say "Democracy sucks" in some form or another but that's generally because they're either part of a power elite in a tyranny or nasty oligarchy or else because they envision themselves as being a part of such a power elite should a democracy be overthrown. By and large the elements of democracy and civil liberty come to the fore because that's what the majority of people prefer. Which is about what you would expect in a supply/demand "rational actor" view of things. :)

The entrepreneurs start up because of stagnation amongst the corporations. The corporations replace the entrepreneur by always progressing and not getting stagnant. Free market pressures eliminate the stagnation, either through the massive R&D by corporations, or the innovation of small entrepreneurs.
Indeed we are witnessing the growth of new industries (biotechnology?) still, and Schumpeter wrote around the end of WWII. Perhaps this was simply him looking out the window and finding that the real world didn't fit his romantic view of the hero entrepreneur.
But to know exactly I'll first have to read his books, and apparently they are notoriously difficult to get your head around...we'll see.

Nonetheless, I think there still are some problems around the corner. I don't know what will happen to the masses once we reach the point where robots can do most types of labour. The profit motive would dictate that we'd all lose our jobs, and I while the Austrians never really tackle that issue, I just don't see us all acting in our best interest once it happens.
If one entrepreneur uses machines rather than workers he'll have a huge advantage over others, provided that the others still pay their workers/consumers. Which they won't.
Of course that assumes that we can't all live in some sort of utopian society where money disappears and we let machines do all the work.... ;)

What I would like to know is, what are the differences you see in the Austrian school of economics and other forms of libertarianism that perks your interest?
Probably mainly that other forms are so heavily based on standard economic theory, which is rather a long way removed from reality. The Austrians recognise that and therefore replace it with a different set of rules. Which makes it enormously more difficult to refute them...

There isn't?
Well my lecturer is something of a philosopher sometimes, but it is true that Adam Smith was a teacher of Moral Philosophy first and foremost.
People like Gary Becker and Richard (?) Posner reject all forms of morality (even if perhaps they don't think so themselves).

Or as one MCQ in my test said:
"According to Becker, we don't have to accept Becker's arguments because he merely provides what is being demanded."
True/False

I'm only generally familiar with the overtones of the Austrian school, and specifically knowledgeable about one aspect of von Mises failed technical refutation of socialism (not much help here).

There are a few problems I have just be skimming over your review here.

1) As had been mentioned before on this forum, but also thorougly studied most prominantly by Stiglitz, Spence, and Akerlof, there is a basic information problem. While the individual may know, generally, what is best, he/she does not have the information to make a proper decision especially given the complex society we have today.

2) For this let me quote you:

"You cannot possibly do anything better than the individual. Investment is not simply the component "I" in Aggregate Demand. Investment is a variety of things done by individuals. Moving down the interest rate only causes people to buy their blast furnaces now rather than later. So in a few years we won't need a new one because we bought a whole lot earlier. Are we better off? No!!!"

That is just plain wrong. It matters when people invest and not just that they invest. If you encourage capital development now then down the line there will still be the demand for more capital, in fact even more so than if you had not because the economy would be much larger than it would otherwise. People might say "Well I want a furnace in the next 5 years" at one point in there lives so that there is no effect in encouraging investment, but they may also say later on "Wow, business is booming, I will need a second furnace now".

Basically, the problem with the arguement is that there is a limit on the potential growth of wealth. Now I would agree, as a matter of theory, there is some upper-bound of growth that we just cannot exceed unless we move out of the planet and find new resources to exploit. However, this upper-bound is so astronomically high, considering that we are still in a resource rich enviroment, that the adjustment of interest rates will not get us there.

3) Finally, you seemed to imply at one point in your post that the Austrian school argues if it ain't broke don't fix it and it hasn't been broke in 1000s of years. Does the Austrian school consider market economies to be a timeless feature of human civilization?

As had been mentioned before on this forum, but also thorougly studied most prominantly by Stiglitz, Spence, and Akerlof, there is a basic information problem. While the individual may know, generally, what is best, he/she does not have the information to make a proper decision especially given the complex society we have today.
Indeed this is the one thing where I would think you could most easily attack the Austrians. It would be interesting to see what modern Austrians say in response...
And about Mises, he called Milton Friedman "a rotten socialist". :D

That is just plain wrong. It matters when people invest and not just that they invest. If you encourage capital development now then down the line there will still be the demand for more capital, in fact even more so than if you had not because the economy would be much larger than it would otherwise. People might say "Well I want a furnace in the next 5 years" at one point in there lives so that there is no effect in encouraging investment, but they may also say later on "Wow, business is booming, I will need a second furnace now".
The Austrians are probably not the most short-term of thinkers. I could imagine that they dismiss this with a simple picture of the aggregate, ie

We buy a furnace every 20 years. But today interest rates were set lower, so we can buy two. Interest Rates only influence large, long-term investments though - buying a new tool, or a new PC with a note payable over a year doesn't depend much on i. So there is a distortion in the investment pattern.

Maybe, I'm not sure, they might even agree that a second furnace today would just be in the way and not produce as much as it would have in 20 years - which it might in any case if you assume that a furnace from the future would've been a better machine anyways.
So they say that you only pull investment forward, you don't increase the aggregate.

So, in which timeframe I'm not completely certain, they reject interest rates as a macroeconomic tool. Their answer is of course to privatise the money supply, and if your money inflates too much no one will want it.

Finally, you seemed to imply at one point in your post that the Austrian school argues if it ain't broke don't fix it and it hasn't been broke in 1000s of years. Does the Austrian school consider market economies to be a timeless feature of human civilization?
I would think they'd take an almost philosophical point of view and make free market capitalism simply the modern incarnation of human nature, which perhaps it is. If you want something you go and get it by trading something you have.
So I would say "yes, they do think that."

The problem I have with the Austrian School is they are not as pragmatic as the Chicago School. They tend to view economics as sort of philosophical thought rather than a social science. Economics, in their view, also is usually more values-based than a positive science. However, I do agree with them on philosophical issues, such as von Mises's Liberty and Property. They change the defitions put forth by the CSE and others and make them more philosophical, for example the purpose of the market is seen as a way to distribute knoweledge if you will rather than to distribute resources. I disagree with their subjective idea of value. Rather than supply and demand it is based on how much person X would pay for this item or another. I myself subscribe to the Chicago School of Economics. [/rant]

Holy crap, that was a serious post! :eek:

Indeed this is the one thing where I would think you could most easily attack the Austrians. It would be interesting to see what modern Austrians say in response...
And about Mises, he called Milton Friedman "a rotten socialist".

Heh... I didn't know that and that's actually pretty funny.

So, in which timeframe I'm not completely certain, they reject interest rates as a macroeconomic tool. Their answer is of course to privatise the money supply, and if your money inflates too much no one will want it.

I can see them rejecting macroeconomics tools on principle, but not on functionality.

They work (well... to the extent that you screw with something and then something else happens in responce), but it is a valid question to ask if we should use them.

I would think they'd take an almost philosophical point of view and make free market capitalism simply the modern incarnation of human nature, which perhaps it is. If you want something you go and get it by trading something you have.

Human nature I won't comment on, but if they entertain the idea that free-exchange and private property has been the constant state of the world then they have the weight of history on their back.

I disagree with their subjective idea of value. Rather than supply and demand it is based on how much person X would pay for this item or another.

Hmmm... but price is not value. They are generally equivalent but not synonymous.

Besides, I'm not sure that Neo-classicals have developed a totally objective theory of value. They still use indifferance curves and the demand curve is slanted (usually) after all.

Heh... I didn't know that and that's actually pretty funny.
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/int_miltonfriedman.html
Commanding Heights (If you haven't seen it you need to. And Quickly!) has got a big website with info about all kinds of stuff.
Which is excellent because I think that one's "ideology", one's vision comes primarily from one's character and experience. So perhaps one can't really understand Hayek's idea if you don't know about the man first...

Hmmm... but price is not value. They are generally equivalent but not synonymous.

Besides, I'm not sure that Neo-classicals have developed a totally objective theory of value. They still use indifferance curves and the demand curve is slanted (usually) after all.
I'm sorry about my statement, I was thinking of their price theory, oops.

Are you you're not thinking of the SRAS? I didn't know the demand curve slanted, then again I've not taken economics.

Are you you're not thinking of the SRAS? I didn't know the demand curve slanted, then again I've not taken economics.
SRAS is something I'm not even sure Chicago would be all that comfortable with....it's a rather Keynesian idea.

SRAS is something I'm not even sure Chicago would be all that comfortable with....it's a rather Keynesian idea.
As a friend of mine said, "The Chicago School is a critique of Keynesianism."

As a friend of mine said, "The Chicago School is a critique of Keynesianism."
Meh, for the time being both the Classicals and the Keynesians have introduced useful stuff to macroeconomics, and it seems to work (until the next stagflation-type impossibility comes along...).

What would interest me (and perhaps if I was to do Postgrad stuff...) would be consumer confidence, policies and results.
Germany is doing everything right according to economic theory (apart from its education budget, but that's a long-term thing), and yet consumer confidence keeps it in deadlock.
A solution needs to be incorporated right there.

Commanding Heights (If you haven't seen it you need to. And Quickly!) has got a big website with info about all kinds of stuff.

I know I have seen it. Bah... I always miss the good stuff. Which chapter/episode is it in?

Which is excellent because I think that one's "ideology", one's vision comes primarily from one's character and experience. So perhaps one can't really understand Hayek's idea if you don't know about the man first...

That is certainly true, and something I have been mentioning in casual conversations for awhile. We have reason, and that's all well and good, but sometimes things just come down to instinct.

I'm sorry about my statement, I was thinking of their price theory, oops... I didn't know the demand curve slanted, then again I've not taken economics.

No need to apologize, I was mostly just asking for clarification and pointing out why I didn't understand your arguement. I think you do have a point though, it is clear that the Neo-classicals are trying to find a way to relate individual decision with objective standards, and so to reconcile economics with the rational actor model. I just think that they have a rather long road ahead of them.

And yeah it slants from, imagine a graph, upper-left to lower right. Among a number of things, it suggests that there are individuals who would pay a much higher price than the market price for a good or service. This is so because they highly value that good or service.

Of course, their position on the demand curve is determined by the intersection of their budget constraint and their indifferance curve. Basically, what they can afford with the proportion of the goods they want. And so that is how subjectivity enters into CSE, through the basic utility curves in microeconomics.

As a friend of mine said, "The Chicago School is a critique of Keynesianism."

Yep, that is an excellent observation.

I know I have seen it. Bah... I always miss the good stuff. Which chapter/episode is it in?
No Idea...I got if from the website, the interview with Friedman. I'm not sure whether it ever made it into the program.

No need to apologize, I was mostly just asking for clarification and pointing out why I didn't understand your arguement. I think you do have a point though, it is clear that the Neo-classicals are trying to find a way to relate individual decision with objective standards, and so to reconcile economics with the rational actor model. I just think that they have a rather long road ahead of them.
I agree with your statement, I disagree with the Austrians on price because it does not attempt to formulate some objective standard.

And yeah it slants from, imagine a graph, upper-left to lower right. Among a number of things, it suggests that there are individuals who would pay a much higher price than the market price for a good or service. This is so because they highly value that good or service.
Again I'm sorry about my muddle statement. My thoughts are scattered tonight. I misunderstood your post. *slaps himself* Basic econ. *slaps*

Well my lecturer is something of a philosopher sometimes, but it is true that Adam Smith was a teacher of Moral Philosophy first and foremost.
People like Gary Becker and Richard (?) Posner reject all forms of morality (even if perhaps they don't think so themselves).

Or as one MCQ in my test said:
"According to Becker, we don't have to accept Becker's arguments because he merely provides what is being demanded."
True/False


That hardly disqualifies Smith. I myself would argue that morality is the sine non qua of democracy in any event. It's when people try getting "clever" and amoral that democracies collapse. Never heard of Becker or Posner so what they reject or don't reject means very little to me. (Just for the record I kinda doubt you can really get anything from Rousseau or Nietcsche that you couldn't get through random rants on an Internet message board these days. Rightly or wrongly it seems to me that rants and bombast was about all either man was good for! ^_^; ).

For what such things are worth I suspect the "masses" would actually do pretty well in a "robots do most jobs" scenario. Nothing in the Social Sciences or the Arts actually require much in the way of talent or education. Sad but true. ^_^;;; That said, I also doubt we will ever reach a point where robots do most jobs. New technology tends to create more jobs than it eliminates as a rule.

That hardly disqualifies Smith. I myself would argue that morality is the sine non qua of democracy in any event. It's when people try getting "clever" and amoral that democracies collapse. Never heard of Becker or Posner so what they reject or don't reject means very little to me.
Well if you want to know more, check this (http://www.becker-posner-blog.com/).
Becker is a Nobel Prize Winner for Econ, and a pioneer in introducing Economics into things other than the economy. It's enormously interesting, but ultimately the message is that other values/morals etc are of no consequence, and that all that counts are demand and supply curves.
Posner is on the highest level of the US Appeals Court, and if Clinton hadn't been Prez, he'd probably sit on the Supreme Court by now. His work is about Economics and Law, and basically a complete redefinition of "justice". There's plenty of interesting anecdotes about what he said to rape victims etc in court...
I guess you would fit Coase in here too, whose theorem, while great academically, again completely gets rid of "justice" and replaces it more or less with who's got the most money.
These three guys are probably the top of what CSE's got. Friedman is a conservative, and while neither ever actually speaks about it, he and Becker disagree on these things fundamentally. But Friedman is 90, and he'll be dead soon.
And you can expect a few Posner-type people to end up on the Supreme Court in our lifetime. There's a whole bunch of those guys moving up the ranks.

Point being that the CSE has become very influential indeed with Conservative Governments, and if its absolute moral relativism catches on, who knows what will happen?

New technology tends to create more jobs than it eliminates as a rule.
You don't think that artificial intelligence and robots can one day replace not only human menial labour, but intellectual labour too?

Thanks for the link. I remember them now from the days when I was subscribing to the Futurist. Neither they nor Thurow nor Erhlich nor the Club of Rome ever impressed me much. One of the things that stuck in my mind from that silly Malthusian magazine was the prediction that Western Civilization would collapse in the year 1980. 1980 came and went and good old Western Civ still looks to be in good shape today. :)

As for any of those guys ever making it to the Supreme Court I sincerely doubt it. :D One should never say "never" but I expect them all to go the way of Richard Lamm. The influence of people like Julian Simon, Herman Kahn, Jane Jacobs, Jerry Pournelle and G. Harry Stine is more likely to stand the test of time.

Onto the more burning issue. I do indeed doubt that Robby the Robot will replace human intellectual labor. In truth I doubt that he will replace human manual labor entirely either. Robots are like any other machine. They require and will require human maintanance and human supervision. Even with machines to repair and supervise machines you are still going to have to repair and supervise *them*. So the manual labor isn't replaced, it's merely given a different form. One that requires a different set of skills but that is also true of the auto mechanic who stands in replacement of the village blacksmith. And because things we had to scramble to do can be taken for granted what often happens, and will continue to happen, is that things we couldn't do yesterday now become today's necessity. That goes on to create new jobs as well.

Most overdone thread. Ever.

You don't think that artificial intelligence and robots can one day replace not only human menial labour, but intellectual labour too?

It doesn't even replace menial labor these days, not with the third world/immigration in play.

One of the things that stuck in my mind from that silly Malthusian magazine was the prediction that Western Civilization would collapse in the year 1980. 1980 came and went and good old Western Civ still looks to be in good shape today. :)
See I wasn't even alive back then...maybe I'm lucky :D .

As for any of those guys ever making it to the Supreme Court I sincerely doubt it.
We'll see, but CSE's rather libertarian, rather right-wing message seemed appealing to various Republicans and other Conservatives over the years. Reagan and Thatcher come to mind.

Onto the more burning issue...
Hmmm, of course they'd need watching, but do you think that could provide enough jobs for the 8 or 10 billion people that'll live by then?

But I don't think we can find an answer to any of these questions here and now.

Most overdone thread. Ever.
Thank you very much indeed. :p

It doesn't even replace menial labor these days, not with the third world/immigration in play.
Obviously not today, but in 100 or 200 years it might.

In which alternative universe is *that* one true? o_O How many people do you know of who confide soulfully, "Gee, I really hate being free! I wish someone would come around and take control of me!" Never seen it happen outside a BDSM story and I doubt I ever will. Yeah, there are people who say "Democracy sucks" in some form or another but that's generally because they're either part of a power elite in a tyranny or nasty oligarchy or else because they envision themselves as being a part of such a power elite should a democracy be overthrown. By and large the elements of democracy and civil liberty come to the fore because that's what the majority of people prefer. Which is about what you would expect in a supply/demand "rational actor" view of things. :)

There are also some people (among them several Austrian economists) who say that democracy sucks, because it means growing power to the elected government and power is the opposite of freedom.

One example from an NS signature: "Democracy is when two wolves and a sheep vote on what to have for dinner. Freedom is when the well armed sheep challenges the election result."
Benjamin Franklin

Thank you very much indeed. :p


Obviously not today, but in 100 or 200 years it might.

No I agree - barring something cataclysmic - eventually the pool of unskilled labor will dry up. But not in my lifetime. Just look at the halt in farming mechanization in the US caused by the governments decision to allow temporary "guest" workers from Mexico to take agricultural jobs.

As a larger point, if robbie the robert could do everything for us, I would imagine our entire notion of economics as we know it would have to be rethought. I imagine we would all have to become politicians, artists or atheletes if we were still going to compete for the positional goods or something.

As a larger point, if robbie the robert could do everything for us, I would imagine our entire notion of economics as we know it would have to be rethought. I imagine we would all have to become politicians, artists or atheletes if we were still going to compete for the positional goods or something.
So we'd no longer have a product of our own labour, we no longer could exchange it with someone else's, and Capitalism no longer exists...a rather philosophical point perhaps, but probably true nonetheless.

Nonetheless, I think there still are some problems around the corner. I don't know what will happen to the masses once we reach the point where robots can do most types of labour. The profit motive would dictate that we'd all lose our jobs, and I while the Austrians never really tackle that issue, I just don't see us all acting in our best interest once it happens.
If one entrepreneur uses machines rather than workers he'll have a huge advantage over others, provided that the others still pay their workers/consumers. Which they won't.
Of course that assumes that we can't all live in some sort of utopian society where money disappears and we let machines do all the work.... ;)

Two retorts:
1) Mises adresses this in Human Action (What does he not talk about?;].) Basically when something can be produced at no cost it is a free good and not an economic good, so it is irrelevant to the theory. Economic theory will still apply to things (services) that robots can't do. If everything is free then that is the end of economy and no one really knows what will happen. The state that would follow is not natural and impossible to imagine, since we are evolved to handle situations of scarcity.

2) You forget that capital is not free. Replaceing all workers with robots is a huge investment, which means using capital, which is a cost during the whole life of the factory. New kinds of robots might decrease the wages in some industry (if the cost of capital is less than the original wages). But they will at the same time increase the total wealth of the society, so that more things are produced and more things are demanded until all the workers get jobs elsewere and are at least as well off in real terms (though not in monetary terms or compared to capitalists).

People like Gary Becker and Richard (?) Posner reject all forms of morality (even if perhaps they don't think so themselves).

Utilitarianism (Potential Pareto efficiency über alles) is a moral philosphy, and is what that kind of "amoralness" amounts to.

Mises adresses this in Human Action (What does he not talk about?;].) .....The state that would follow is not natural and impossible to imagine, since we are evolved to handle situations of scarcity.
And it wouldn't be capitalist. Which is all that I'm saying.

You forget that capital is not free.
How could I? I just generally assume that as time and living standards progress, and the Marginal Productivity of Capital increases there'll be more and more of a shift away from workers to machines.
Depreciation may be an issue, but the same goes for labour turn-over. And once we have robots that can repair robots, or robots that repair themselves (Nano-Technology?) it'll go away completely.
Of course, if people would not keep raising their wages, they'd be more competitive relative to robots, but then they couldn't buy all the extra stuff anymore either.
Ford knew that it is a good idea to have your workers actually able to buy stuff, and it is generally accepted. But when we reach a certain point it becomes a matter of game theory. If only one guy does the wrong thing and replaces his workers with machines, he'll make a killing, but only as long as no one else does the same thing....

But they will at the same time increase the total wealth of the society, so that more things are produced and more things are demanded until all the workers get jobs elsewere and are at least as well off in real terms (though not in monetary terms or compared to capitalists).
In total terms though, if workers are replaced by robots, all the wealth will go to the (former) employers, and I don't think they can possibly buy as much as they produces. Or if they do then the utility they get out of that is bound to be hugely less than it could be.
For the time being menial workers can move into intellectually challenging jobs, but only until some sort of artificial intelligence can be developed (which may be a matter of philosophy too...)

That is just plain wrong. It matters when people invest and not just that they invest. If you encourage capital development now then down the line there will still be the demand for more capital, in fact even more so than if you had not because the economy would be much larger than it would otherwise.
Yes. But in order to invest you must abstain from consumption now, so you need to hit a balance between consumeing now and getting richer later. The correct balance is determined by people's preferrences and is the one you get with no regulations or "encouragement" neither to invest or to consume.

Basically, the problem with the arguement is that there is a limit on the potential growth of wealth. Now I would agree, as a matter of theory, there is some upper-bound of growth that we just cannot exceed unless we move out of the planet and find new resources to exploit. However, this upper-bound is so astronomically high, considering that we are still in a resource rich enviroment, that the adjustment of interest rates will not get us there.
Were do you see that limit? There are infinitely many things that people want to do, and there is no limit to how many things we can do. What is the problem?
3) Finally, you seemed to imply at one point in your post that the Austrian school argues if it ain't broke don't fix it and it hasn't been broke in 1000s of years. Does the Austrian school consider market economies to be a timeless feature of human civilization?
Market economies is a consequence of human nature. If no one destroys them they work.

But a lot of Austrians want a lot of change, and an Austrian economists who say we have capitalism without problems now is a fraud.

And it wouldn't be capitalist. Which is all that I'm saying.
And why does that matter, considering it is nothing that will ever concern any of those living now, and probably no one ever.

How could I? I just generally assume that as time and living standards progress, and the Marginal Productivity of Capital increases there'll be more and more of a shift away from workers to machines.
Relatively speaking it does. But the new technology can only be implemented at a finite rate, so there will always be a front were work is needed. The number of machines will increase, but they don't replace workers in the sense of decreasing the number of hours worked. They just allow the workers to produce ever more without working more. In other words they increase the productivity of labour, or in other words increase wages...

Ford knew that it is a good idea to have your workers actually able to buy stuff, and it is generally accepted. But when we reach a certain point it becomes a matter of game theory. If only one guy does the wrong thing and replaces his workers with machines, he'll make a killing, but only as long as no one else does the same thing....
Ford was all wrong when he said this. Yes, he sold more and increased wages. But he sold more because he decreased prices and raised wages because he needed to hire more people. No game theory here.

If the increase in sales would have been due to the increase in wages, wouldn't most of the increase in sales be cars sold to Ford's workers? But the number of workers was very small compared to the number of cars sold, so if that was the case the sales would have started to decrease within a month. They didn't.

In total terms though, if workers are replaced by robots, all the wealth will go to the (former) employers, and I don't think they can possibly buy as much as they produces. Or if they do then the utility they get out of that is bound to be hugely less than it could be.

No. If all workers would be replaced by robots we'd be in post scarcity. I can't imagine what would happen and I don't think that you can either.

But in reality the robots only allow the workers to be more productive. When the productivity of the work increases the employer can increase his profits by getting more workers. But to get that (to draw them from other employers) he has to offer them more wages. So in the end (a part of, assuming no cost for materials and economic equilibrium all of) the increased revenue of the employer goes to the workers.

Yes. But in order to invest you must abstain from consumption now, so you need to hit a balance between consumeing now and getting richer later. The correct balance is determined by people's preferrences and is the one you get with no regulations or "encouragement" neither to invest or to consume.

Well, yes I agree but I didn't say anything to the contrary (I say that too much around here :p )

Now, it's fine if the Austrian school wishes to assert that the proper balance is to be determined by the people without artificial encouragement. And it is quite another to assert that the artificial encouragement has no effect. I read the school to be asserting the later, and so I responded with the statement you quoted.

Were do you see that limit? There are infinitely many things that people want to do, and there is no limit to how many things we can do. What is the problem?

Like I said, the limit to the potential growth of wealth is quite extreme. There is no limit to what we want to do, but there is a limit with what we have to work with (the scarcity problem that popularly defines the science of economics).

The limit comes in when we no longer have any resources to work with and no economical source of energy to recycle old resources. It's extreme, in fact almost fanciful, and that is why I didn't suggest it as a likelyhood but a possiblity.

As I stated in my comment I agree that there is a theoretical limit, but in all seriousness there is no reasonable limit, at the present time, to the growth of wealth.

Market economies is a consequence of human nature. If no one destroys them they work.

Well... that may have to be a discussion for another time. :D

And why does that matter, considering it is nothing that will ever concern any of those living now, and probably no one ever.
Indeed. But at any rate, humans may live longer than Capitalism does. Of no practical importance, but good to keep in mind nonetheless.
Capitalism is not necessarily the be-all and end-all of existence.

Relatively speaking it does. But the new technology can only be implemented at a finite rate, so there will always be a front were work is needed.
Can't you imagine proper robots, that can do everything people can do?

Ford was all wrong when he said this. Yes, he sold more and increased wages. But he sold more because he decreased prices and raised wages because he needed to hire more people. No game theory here.
Bad example, my bad. Point is, if one guy fired all his workers and had a fully automatised factory, that could produce...cars just as well as a factory with people in it, chances are that guy will have a better profit margin. Once the investment is made off (which would also be made employing new and inexperienced workers) and paid off the MPK is likely to be higher than the MPL.
Which forces his competitors to do the same thing. And if you now take this picture and impose it on the entire economy, the consumer base is bound to dry up.
True, some different jobs will be created, and those jobs will probably pay quite well, but I don't see there being 10 billion of them. So Capitalism for those with a job and anarchy for those without?

I agree that with current technology robots cannot replace workers, but only complement them. But I think it is likely that we will be able to build machines that do not require any sort of human intervention in the production process. And once these can also act (or imitate) being intelligent, it's no longer only production jobs that are replaced.