Austrian Economics Re-examined: The Economics of Time and Ignorance

By Gerald P. O'Driscoll and Mario J. Rizzo

Book Overview

Austrian Economics Re-examined: The Economics of Time and Ignorance is an expanded version of the 1996 edition of The Economics of Time and Ignorance. This work is a classic statement of the role of subjectivism, radical uncertainty and change through real time in Austrian economics specifically, and in modern economics more generally.

• Format: Hardcover
• Language: English
• ISBN: 1138023000
• ISBN13: 9781138023000
• Release Date: December 2014
• Publisher: Routledge
• Length: 314 Pages
• Weight: 1.25 lbs.
• Dimensions: 1.0" x 6.2" x 9.2"

Customer Reviews

Take some Time to Dispel Your Ignorance

This book does much to advance the marginalist-subjectivist paradigm in economics. Most economists treat time trivially in their analysis. Some, like Gary Becker, correctly recognize the need to examine how people allocate the only non-renewable resource- time. The Becker approach uses static equilibrium models to address this issue. This represents an advance over the rest of mainstream analysis, but holds the data that people acquire through time constant. This makes convergence on equilibrium conditions possible, if not certain.Following the work of Mises and Hayek, the authors of this book examine the implications of how knowledge develops through time. As people interact, they learn and change data relevant to their economic plans. We learn and create knowledge simultaneously, and do this differently depending upon the choices we make. Consequently, convergence on equilibrium conditions in markets is not inevitable, and may not even be possible. This makes the concepts of 'real time' and 'ignorance' that the authors discuss relevant to all economics analysis. This allows us to consider information problems other than second best rational ignorance. We not only know that we do not know some things. We face gaps in our data concerning what we consider finding out about.This does not mean that equilibrating forces do not exist. It means only that we must consider open ended processes in markets. This is not a new proposition. Adam Smith, the founder of economics as a distinct discipline, thought in evolutionary and process orientated terms.If there is anything wrong with this book, it is that the authors might be a little too dismissive of conventional economics. Conventional notions of supply, demand, and equilibrium help us to understand economics more than the authors will admit. This approach simplifies many real world complexities. The static approach is not entirely unreal, and does contain enough reality to play an important role in economic analysis. Mainstream economists should, however, be mindful of the extent to which static optimization models fail to explain real world phenomena.