Market process(es) and (un)knowledge

Market process(es) and (un)knowledge By extending an underdeveloped idea of Lachmann, I show that the Austrian theory of the market process à la Kirzner is unable to explain the diversity of market processes because it neglects the imperfect inter-market mobility of factors of production. I show that by taking into account the imperfect mobility of capital equipment and the associated reshuffling costs, it is possible to formulate a set of empirically testable implications about the unfolding of the market process. Furthermore, I show that reshuffling costs shape the context in which the learning process takes place and that the epistemic assumption of structural opacity on which the Austrian theory of the market process relies is not incompatible with the epistemics assumption of structural transparency of neoclassical economics. These epistemic assumptions can be seen as the two poles of a “knowledge spectrum”, from potential omniscience to sheer ignorance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Austrian Economics Springer Journals

Market process(es) and (un)knowledge

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Publisher
Springer US
Copyright
Copyright © 2016 by Springer Science+Business Media New York
Subject
Economics; Public Finance; Political Science; History of Economic Thought/Methodology
ISSN
0889-3047
eISSN
1573-7128
D.O.I.
10.1007/s11138-016-0346-z
Publisher site
See Article on Publisher Site

Abstract

By extending an underdeveloped idea of Lachmann, I show that the Austrian theory of the market process à la Kirzner is unable to explain the diversity of market processes because it neglects the imperfect inter-market mobility of factors of production. I show that by taking into account the imperfect mobility of capital equipment and the associated reshuffling costs, it is possible to formulate a set of empirically testable implications about the unfolding of the market process. Furthermore, I show that reshuffling costs shape the context in which the learning process takes place and that the epistemic assumption of structural opacity on which the Austrian theory of the market process relies is not incompatible with the epistemics assumption of structural transparency of neoclassical economics. These epistemic assumptions can be seen as the two poles of a “knowledge spectrum”, from potential omniscience to sheer ignorance.

Journal

The Review of Austrian EconomicsSpringer Journals

Published: Jun 25, 2016

References

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