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

Abstract

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.

A Free-Market Environmentalist Enquiry on Spain’s Energy Transition along with Its Recent Increasing Electricity Prices

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“…According to Kirzner (2000, p. 92), dynamic efficiency, compared with static or ‘allocative’ efficiency, involves the expansion of “the domain of what is known, continually shifting the location of profitable opportunities and thus continually inspiring yet further discoveries expanding the domain of what is known”. To Huerta de Soto (2009), dynamic efficiency is not only resource optimisation according to a set of given means and ends, but mainly the discovery and creation of new means and ends 4 (Wang et al, 2021). In contrast to the static definition of efficiency, the dynamic definition does not assume that resources, means, and ends are given but regards them as variable and resulting from a discovery and creative process.…”

“…Indeed, Mises (1998) considered the entrepreneur the driving force of the market process. In an economic sense, entrepreneurship means judging the difference between a current price and an expected future price, under inevitable conditions of uncertainty (Foss & Klein, 2012;Wang et al, 2021). But the entrepreneur also parallels an "acting man exclusively seen from the aspect of the uncertainty inherent in every action" (Mises, 1998, p. 254), meaning that every human action involves the exercise of entrepreneurship.…”

“…Researchers approaching development from dynamic efficiency theory (Espinosa, 2020(Espinosa, , 2021Espinosa et al, 2020;Espinosa & Carreiro, 2021;Wang et al, 2021) can find in complexity a way of deepening and enriching their knowledge and understanding of development. Instead of relating the level of development to, let us say, capital accumulation, they can associate development with economic complexity.…”