Richard Wagner

Quotes From

“Boom and Bust: The Political Economy of Economic Disorder” (1980)

• The way that [national income] accounts are constructed, resources devoted to the correction of error are valued equivalently with resources devoted to other production.#Quoted in Steven Horwitz, Microfoundations and Macroeconomics (2000)
• By virtue of the law of conservation, all engines are necessarily 100 percent efficient. To say that an engine is less than perfectly efficient requires a normative judgment that separates the output into useful or desired output and waste. A pump that moves water uphill to a house can be said to be less than 100 percent efficient only as a result of someone’s having judged that such things as the water lost in transit and the heat dissipated in the pump house are unwanted and hence represent waste. It is the same with society. . . . The efficiency of an economy cannot be judged without placing some valuation upon different uses of time, any more than the efficiency of an engine can be judged without placing some valuation upon different transformations of energy.#
• So long as the interests of politicians are promoted more effectively through actions and policies that are negative-sum than through actions that are positive-sum, we should expect such negative-sum action and policies to dominate the political process.#

Mind, Society, and Human Action (2010)

• When economic theory is constructed within an analytical window that uses closed concepts to portray economic phenomena as reflections of static equilibriums, it is hard to see how U-max could be displaced because it is a construction that is perfectly suited for characterizing static relationships among variables: the value of any variable is what it is and not something else because that is where the opposing forces in play neutralize one another; the only question at issue is how to identify and account for these other forces.#
• Any choice involves embracing one option and rejecting some alternative. To the option chosen we normally ascribe the term value or utility, while to the option rejected we normally ascribe the term cost.#
• Private property exists to the extent that third parties forbear from disputing an owner’s use of property.#
• The incentive to settle varies inversely with the divergence of belief held by the disputants about the likely outcome of a trial.#
• Plans require some degree of inflexibility in pricing, as well as in other attributes of a plan. Information must be accumulated and processed before it can be acted upon. Accumulation and processing are activities that require the passing of time. During any such interval, prices will be inflexible for that entity. . . . The very idea of plans and an ecology of plans means that some degree of inflexibility is part of a well-working catallaxy.#
• If you work with equilibrium, you cannot allow structure to be anything other than a sideshow. If you want structure to matter, you cannot work with equilibrium.#
• A restriction on alienability for one service will tend to induce a bundling of services to secure economic calculation in the absence of alienability for the controlled service.#
• What is called “vision” becomes more significant for nonprofit enterprises of all forms [including states] because vision is a vector of characteristics that is not reduced to a scalar through transferrable ownership.#
• It is just as metaphorical to assert that the state does something as it is to assert that the market does something. What we denote as state activity, just as market activity, emerges out of complex patterns of interaction.#
• The core of economic theory explains how complex patterns of economic organization emerge through interactions among people whose individual actions are governed by adherence to the disjunction between mine and thine that we characterize as private property.#
• The neo-Walrasian program provides a view of society as an equilibrated structure of relationships that is characterized by a set of prices that is consistent with market-clearing in light of consumer demands. You cannot get any more orderly than this. Much work in economic theory involves claims of market failure, which brings in claims that the observed degree of orderliness is not as complete as it could be. This claim of market failure, however, cannot be rendered intelligible without an ontological effort that would account for plausibility regarding the actual degree of orderliness within a society. The neo-Walrasian program makes no effort to develop such an account of plausibility.#
• As a tool of thought, the neo-Walrasian metaphysics of general equilibrium is surely indispensable for economic theory because it conveys the general interdependence among economic relationships in a society. As a description of reality, the situation is not so clear. It is possible to set forth necessary conditions for the existence of a general competitive equilibrium. What comes out of these formulations is mostly a sense that reality does not match these conditions.#

“Austrian Cycle Theory: Saving the Wheat while Discarding the Chaff” (1999)

• If there is any merit in Austrian cycle theory, it resides not in an explanation of booms and busts but rather in an explanation of structural shifts in the pattern of economic activity without aggregate implications.#
• It does not follow that nonsustainable price signals must show up as variations in aggregate series through time. It is conceivable that miscoordination could increase without any impact on aggregate time series. Miscoordination induces revisions in plans. Labor is shifted from the execution of plans to the revision of plans. It is conceivable that this shift of labor can be accommodated within an unchanged aggregate volume of employment.#
• An increase in the volume of miscoordination in a society will shift the pattern of activity in a society, but it need not alter the total volume of activity,and would represent a meaningful notion of waste instead.#
• Observed variability in aggregate data might be a sign of avoidable and correctable miscoordination, but it can also be a sign of progress in an interdependent world with capital complementarity.#
• The standard variables of macroeconomics, rates of growth, levels of employment, and rates of inflation, are not objects of choice for anyone, but rather are emergent outcomes of complex economic processes. Governments may do things that might influence the subsequent measures that are assigned to those variables, but this is a very different thing from choosing values for those variables.#
• Walras’ Law does not deny the possibility of miscoordination, but only notes that miscoordination will always have a kind of symmetrical character.#
• A cycle theory that depends on the inability of people to distinguish, in the aggregate, between an increase in personal saving and an increase in central bank holdings of government debt must rightfully be dismissed on the grounds that it fails to incorporate any reasonable requirement of individual rationality in economic action.#
• The specific Austrian story of a shift in the structure of prices due to an expansion of credit is simply one particular way of recognizing that the central focus of macro theory should be on coordination, because macro variables are not objects of choice but only emergent outcomes.#