Sunday, 4 December 2016

Impossibility of Hayekian Wealth

In Economics, Income is what you can spend without diminishing your Wealth and Wealth is stuff which generates Income.

Notice that, if Knightian Uncertainty obtains, neither Income nor Wealth have any objective measurable value, or indeed, existence. Rather they arise in the course of economic transactions, not as their raison d' etre or by any essential or substantive process but merely adjectivally and under the rubric of chrematistics- not 'choice under scarcity'.

Hayek's insight was to see Markets as information aggregation mechanisms and to stand up for the notion that a stupid drunken nigger like me is better able to judge what is good for me, or what is in my interest, than some super-smart Oxbridge or Ivy League patrician. Why? Well, it's coz I spend a lot of time thinking about myself and how to satisfy my ignoble cravings and, what's more, face no 'preference revelation' problem because I have a window of Momus into my own squalid soul.

Unfortunately, Hayek as an unctuous refugee anxious-too-anxious to please, wrote a foolish book in which he committed the vulgar error of ascribing to 'the Rule of Law' an adjectival Chrematistic function.
Yet, the Law is either 'artificial reason'- i.e. a protocol bound dialethia with a different domain and range from Chrematistics- or it is nothing. If Knightian Uncertainty obtains; if Darwin, not Dueteronomy, has salience for ordoliberalism; it cannot be the case that Judicial ratios will magically accord with whatever is necessary for Wealth's golden path burgeoning unless, in truth, there is no 'Rule of Law' at all but only 'Mechanism Design' got up in a horsehair wig and fishnet stockings or whatever it is that Judges wear under their ermine.

The truth is, under ordoliberalism, Wealth is adjectival to the Law in a manner which only highlights the latter's reactively coercive power thus negating the one appealing aspect of Hayek's polemics.
What I mean is this. If you have Wealth, you would be wise to keep at least a portion of it safe from any given Legal Jurisdiction because the Rule of Law can burgeon upon any resources it can subsume procedurally.
No doubt, if you have already 'hedged' your position, you can use your 'hidden' resources to get a better deal for yourself by gaming the 'artificial reason' of any given jurisdiction. But, what is actually being made sport off, at the margin, is the unwieldy Punch & Judy show of what Bentham called 'Dog's Law'.

Hayek published his 'Constitution of Liberty' at a time when the Rule of Law permitted the expropriation of the wealth, through inflation, of a tenth of the population. It also stood silently by as thuggish Trade Unionists used highly coercive means to raise Labor's share of National Income by about 10 percent.

Margaret Thatcher, more by luck than design, reversed the inequity of the Law by Executive action- or bungling- but Hayekian Wealth, as something conserved by the Rule of Law, remains, for us 'Thatcher's children', a mocking mirage.

When I was 14, it was possible for me to believe that Friedman type indexation would restore the Rule of Law to a Hayekian Chrematistic function. But, Friedman himself made no such claim. He very well knew that 'the Rule of Law' had permitted contracts stipulating for payment in gold to be rendered a nullity.
Hayek, as a displaced person, was too polite to point this out.  In any case, a fucking Austrian lecturing us about Liberty was a delicious enough irony to keep him in business.

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