Knowing and Making

I’ve spent some time over Christmas reading a comprehensive review by Mario Rizzo of recent work in Austrian economic theory. Regular readers might have noticed that, though this is a school I broadly disagree with, I have given it a lot of attention. It does seem to hold a fascination for me. I think the reason for this is that the founding thinkers of the Austrian school picked some really important issues to think about, and I instinctively agree with their choice of territory. Here is the list of topics Rizzo identifies: “(1) the subjective, yet socially embedded, quality of human decision making; (2) the individual’s perception of the passage of time (‘real time’); (3) the radical uncertainty of expectations; (4) the decentralization of explicit and tacit knowledge in society; (5) the dynamic market processes generated by individual action, especially entrepreneurship; (6) the function of the price system in transmitting knowledge; (7) the supplementary role of cultural norms ...

From Mario Rizzo in ThinkMarkets , objecting to Samuelson's mathematical formalisation of economics: I believe that the profession has, because of the formalistic direction in which it has traveled, more than its share of idiot savants. Perhaps that's so. I guess Rizzo would prefer to adopt the model of some other social sciences, which are quite satisfied with ordinary idiots.