Price theory as prophylactic against popular fallacies

Boettke, Peter J.; Candela, Rosolino A.

doi:10.1017/s1744137416000515

Cited by 45 publications

(12 citation statements)

References 24 publications

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“…Second, entrepreneurship transmits information about historical exchange relationships in successive waves through the market process. Market prices communicate entrepreneurial knowledge about the relative scarcity of goods and services subjectively valued by suppliers and demanders, participating in the market or refraining from doing so [33]. They are used to carry out a rational economic calculation: the estimation in monetary units of the possible results of the different action plans [34].…”

Section: Theoretical Framework and Methodologymentioning

confidence: 99%

The Political Economy of Rent-Seeking: Evidence from Spain’s Support Policies for Renewable Energy

2021

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This paper provides a theoretical framework to explore how the support policies for renewable energies can promote rent-seeking incentives in private firms. We develop a political economy of rent-seeking that considers the link between the regulatory decisions of political agents and the potential scope of socially wasteful pursuits. We argue that systematic public support schemes bring rent-seeking as a perception shared by entrepreneurs that influencing political allocations of resources is an essential and potentially preferable source of private profit than other for-profit economic avenues. As evidence of our claims, the framework is applied to the case of Spain to illustrate the economic effects of support policies on the production and distribution of renewable energy. We find rent-seeking behavior in Spain’s renewable energy industry, and precisely that: (i) political regulations have induced market concentration and rent-seeking in renewable energy firms, (ii) these firms have required increasing regulations and premiums to survive, and (iii) energy consumers are forced to pay rent-seeking through increasingly expensive electricity bills. The analysis reveals some challenges and opportunities to drive efficient market-based policies to strengthen entrepreneurial competition and curb rent-seeking behavior. These insights have relevant proposals for the Spanish energy industry in complying with the EU Green Deal through a sustainable transition and comprehensive growth.

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Section: Theoretical Framework and Methodologymentioning

confidence: 99%

The Political Economy of Rent-Seeking: Evidence from Spain’s Support Policies for Renewable Energy

2021

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“…All people tend to coordinate as suppliers and demanders of solutions to human problems based on price signals. The coordinating effect does not refer to the "equilibrium" of the supply and demand curves; it refers to entrepreneurial profits and losses through economic calculation [40]. Entrepreneurial competition is a process of rivalry through which the possibilities of offering people better products at lower prices are exploited and tested.…”

Section: Dynamic Efficiency and Entrepreneurshipmentioning

confidence: 99%

Principles of Sustainable Economic Growth and Development: A Call to Action in a Post-COVID-19 World

2021

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The analysis of sustainable economic growth and development often focuses on how to control the market process through coercive state intervention. While state interventionism may play a significant role in countries’ progress, entrepreneurship is the driving force behind sustainable growth and development. Entrepreneurship is the people’s judgment on ideas, plans, and projects, which promises profit in uncertain times. Its effects are the creation and transmission of information and social coordination as a dynamic process of identifying and solving human problems. Sustainable development is the widening range of entrepreneurial alternatives open to people, and sustainable growth is a phase of sustainable development that depends on genuine savings to finance increasingly capital-intensive production structures. The degree to which people are entrepreneurs and the direction genuine savings take depend on institutional arrangements. Some institutions are more conducive to sustainable growth and development than others. After reviewing principles of growth and development sustainability, how coercive state intervention influences economic performance is discussed, proposing novel policy conclusions and research avenues to cultivate entrepreneurship and genuine savings in a post-COVID-19 world.

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“…The law of price of productive factors explains the inconsistency of the Marxist theory of labor exploitation (Boettke and Candela 2017). First, there is no exploitation in a private property-based society because individual relationships are contractual.…”

Section: Fundingmentioning

confidence: 99%

Private Property Rights, Dynamic Efficiency and Economic Development: An Austrian Reply to Neo-Marxist Scholars Nieto and Mateo on Cyber-Communism and Market Process

2021

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The Austrian school economics and neo-Marxist theories both have been reviving in recent years. However, the current academic discussion lacks a debate between two schools of economics with diametrically opposed views. This paper is the first and an initial Austrian challenge to Neo-Marxist scholars Nieto and Mateo’s argumentation that cyber-communism and the Austrian theory of dynamic efficiency are consistent to enhance economic development. Their argument focuses on two issues: (a) the existence of circular reasoning in the Austrian theory of dynamic efficiency, and (b) dynamic efficiency and full economic development could be strongly promoted in a socialist system through new information and communication technologies (ICT) and the democratization of all economic life. While cyber-communism refers to cyber-planning without private property rights through ICT, dynamic efficiency refers to the entrepreneurs’ creative and coordinative natures. In this paper, first, we argue that the hypothesis that dynamic efficiency and cyber-communism is not compatible. Contrary to the above cyber-communist criteria, the Austrian theory of dynamic efficiency argues that to impede private property rights is to remove the most powerful entrepreneurial incentive to create and coordinate profit opportunities. Second, we argue that the cyber-communism system is inconsistent with economic development. In this regard, we explain how the institutional environment can cultivate or stifle dynamic efficiency and economic development. Having briefly outlined the central argument of Nieto and Mateo, we examine the institutional arrangement supporting cyber-communism. After that, we evaluate the implications of cyber-communism in the dynamic efficiency process. It becomes manifest that Nieto and Mateo’s accounts are too general to recognize the complexity of how economic development works.

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Price theory as prophylactic against popular fallacies

Cited by 45 publications

References 24 publications

The Political Economy of Rent-Seeking: Evidence from Spain’s Support Policies for Renewable Energy

The Political Economy of Rent-Seeking: Evidence from Spain’s Support Policies for Renewable Energy

Principles of Sustainable Economic Growth and Development: A Call to Action in a Post-COVID-19 World

Private Property Rights, Dynamic Efficiency and Economic Development: An Austrian Reply to Neo-Marxist Scholars Nieto and Mateo on Cyber-Communism and Market Process

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