Hayek vs Myrdal

In 1974, the Nobel Prize for Economics was awarded to two men- Gunnar Myrdal & Friedrich Hayek. Two women, Indira Gandhi & Margaret Thatcher caused a dramatic change in the reputation of both men. Myrdal's status fell when Indira Gandhi proved India was a 'hard', not a 'soft' state, while Thatcher openly said 'there is no such thing as Society'- thus demolishing the premise of Myrdal's Institutionalism- and that Hayek was right- only markets could efficiently aggregate information.

In his Nobel lecture, Myrdal said-

Our knowledge, as well as our ignorance, at any time and on every issue, tends to be opportunistically conditioned,

i.e. they are determined by incentives 

and thus brought to deviate from full truth.

Which is why the Market approach is better than the Institutionalist approach. Open Markets are almost instantaneously updated and hence 'error accumulation' is lower. 

In every epoch and every problem, this opportunistic tendency operates also in our scientific work, if not critically scrutinized.

Even if scrutinized. If you say to an Economist 'you only focus on the Stock Market because there's a lot of money there. There's no money to be made in studying the market for second hand farts which is why you avoid my own specialty' he will happily agree that he gets paid quite well precisely because he focuses on the Stock Market rather than at what price my farts are resold. (I bet it is very high. That's why it is so generous of me to give them away for free.)

This view dawned upon me more than forty years ago, when I analyzed the political element in the development of economic theory.

When you leave University, you realize there is a market for Economic theories of various types. Sadly, the price for your own specialization may be negative.  

I have then over the years found this hypothesis confirmed by my studies in many different fields and, of course, during my ten years as Executive Secretary of the United Nations Economic Commission for Europe, responsible for operational work in relations with governments, as well as for research.

He who pays the piper calls the tune. But if the tune is horrible people run away and the guy paying the piper finds he is regarded as a pariah. Nobody buys stuff from him. He goes bankrupt. 

This is why 'Conventional Wisdom', in Econ, isn't 'Institutional'. It is Market driven. As markets were liberated from the Bretton Woods strait-jacket, Hayek's star rose while Myrdal's fell.  

When I am now working on a study of the broad social and economic dynamics of race relations in the United States

nobody was interested in what this elderly Swede or Turnip had to say. Back in the Thirties, he had a little salience coz he was as White as Fuck. Also, his policy recommendations back in Sweden were proto-Keynesian. Thus, in New Deal America, this sedulous student of American Institutionalists like John R Commons, was encouraged to write a book about 'Negros'.

since the time, more than thirty years ago, when I wrote An American Dilemma

the Carnegie Corporation spent a quarter of a million dollars on this. Myrdal was brought in because hee had studied in America and was a Swedish statesman of some repute. Ralph Bunche, who received the Nobel Peace prize in 1950, did much of the research for the book.  

it has struck me how different the whole outlook on the world could be during the late Roosevelt era, compared with now. In most respects the world issues seemed to be, and in a sense were then, simpler, much less complex.

Get the police to beat up and incarcerate Commie nutters. Don't rely on black-shirts or brown-shirts to do it. Them guys be kray kray.  

Leaving all other differences aside, what then was referred to by the static term the “backward regions” were held at rest, within the colonial power structure.

Nonsense! Many industrialized countries had 'backward regions' where squirrel hunting and sister fucking were the two main occupations. They were welcome to supply cheap labour to filthy Mill towns.  

Their continued economic stagnation in great poverty was taken for granted,

Rubbish! People could see that factories were coming up in Bombay and Shanghai and so forth. There was already an anti 'Sweated Labour' lobby in England in the Twenties. But, even prior to that there had been 'Yellow Peril' legislation against the influx of coolie labour in the US. 

without exerting much interest on the part of the public in the rich countries, nor among their economic scientists.

No. Missionaries were always gassing on about how to raise productivity amongst those you converted in 'backward areas'. The 'rice bag' Christian must be trained to earn more and more money otherwise the proselytization of his country will fail for lack of endogenously generated resources. Interestingly, one text the Missionaries translated and circulated had to do with the manner in which Ninomiya had raised productivity in rural, bakufu, Japan. Perhaps, they believed Ninomiya belonged to Japan's 'underground' Christian tradition. 

Perhaps the most important effect of World War II was the rapid dissolution of that power structure – although not having been part of the war aims of any belligerent country

the USSR always supported de-colonization. 

and not expected anywhere.

by a stupid Swede or Turnip. The fact is America had decided to pull out of the Philippines in the Thirties while the Tory 1935 Government of India Act permitted de facto Dominion Status if the Indians managed to agree to form a Federal Government at the Centre.  

Beginning with the quasivoluntary decolonization of the British dependencies on the Indian subcontinent and the rest of South Asia,

France and Holland tried to keep their colonies in South East Asia. But the game was not worth the candle. The Portuguese too tried to hang on to their colonies thus falling behind even Franco's Spain.  

it swept over the globe like a hurricane, reaching also regions where there had been virtually no indigenous liberation movement foreboding and, in some measure, preparing for the change. The result was the coming into existence in a rapid sequence of a great number of new, politically independent countries, which all were very poor and mostly stagnant, economically and socially, but where the educated elite, who thought and acted on their behalf, now raised the demand for development.

From whom? If you have become 'independent' you can't demand that your former master return and 'develop' you. I suppose what Myrdal means is that under Bretton Woods, because capital flows were regulated by Governments, some multi-lateral mechanism was required to take the place of Free Market f.d.i. & technology transfer. Some hapless bureaucrat, like Myrdal, would have to meet darkies who demanded 'Development'- i.e. turnkey projects- and do some virtue signalling as part of his job. 

In turn, as a subsequent effect of that political change the general public in the Western countries were suddenly forced to become aware of the huge income gap as between the poor majority of mankind and the rich minority,

They were already well aware of it- which is why 'Yellow Peril' arguments worked. The UK put up immigration barriers against Russian Jews precisely because they were poor and their arrival might drive down wages. In America, the White working man had been told for many decades that the thrifty 'Asiatic' was habituated to getting by on one tenth of the average wage. Clearly, if there was unrestricted immigration of Asiatics, wages would be driven down.  In France during the Great War and in the inter-war years, there were in fact Chinese 'guest-workers'. My point is, there was an acute awareness of the poverty of Asia & Africa. Indeed, after the Great War, one motivation for setting up an International Labour Organization was to prevent 'low wage' competition from such countries. Incidentally, Japan was as poor as fuck when it first entered global manufacturing markets. 

as well as the further fact that this income gap is continually widening, as indeed it had been doing for more than a century. An isolating wall of inattention, and an ignorance made possible by that opportunistic bent of mind, had been broken through.

Rubbish! The Churches which sent out Missionaries made a point of indoctrinating little kiddies back home that they should hand over a portion of their pocket money not just to save the souls of little brown babies but also to keep them alive with a little gruel. It must be said, back then doing 'Development' in Africa/Asia meant moving there and sharing the discomforts of the local people. This was fine if there was a Heavenly reward but it did not enthuse bureaucrats with PhDs in Econ. They wanted a way to virtue signal without having to stray very far from home comforts or such luxuries as 5 star hotels in Third World countries could provide.  

The poverty of what now came to be known as “underdeveloped countries”,

like Russia. Stalin was admired because he had turned a backward, agricultural, nation troubled by famine in the 1890s, into a Super-Power with nukes and Sputniks. 

a dynamic term, became recognized to be a problem. This represented a momentous redirection of public interest.

Not really. Working people may have looked askance at 'Overseas Aid' but their leaders explained to them that the thing was a con. If you had a shitty industry, you got the taxpayer to pay for it so as to preserve jobs, and then gave the shit away to darkies who didn't know it was shit. 

Within this movement there went also an equally radical redirection of economic research, for the first time giving importance to these countries’ abject poverty and also to the policy methods, which could initiate progress there by planning for development.

There was a Cold War aspect to Aid. If you were helping a smart country- Japan, South Korea, Taiwan etc- then their industrial rise meant you gained a bigger arsenal for a cheaper price. If you were pretending to help a stupid country- you could send them Myrdal or some such virtue signalling cretin.  

This new awareness of the poverty in underdeveloped countries was bound to be morally disturbing in the Western world, where, particularly since Enlightenment, the ideal of greater equality has had an honored place in social philosophy.

Political equality- maybe. Economic equality would have meant nobody could afford University fees and there would be no elite of any type. Also, Churches would be suppressed. Enlightened people don't believe in God or Heaven or Hell.  

In economic science it had even been “proven” and placed at the basis of economic theory.

Perhaps Myrdal means that the 'diminishing marginal utility of money' implied consent to progressive taxation. Sadly, you can only tax factors in inelastic supply- i.e. rents can be redistributed though the process of redistribution itself yields rents and rent contestation. Anne Kreuger who began to visit India towards the end of the Sixties saw nothing but rent-seeking there. Myrdal hadn't seen it at all. Why? Anne talked to Indian businessmen. Myrdal talked to Nehru and repeated his silly ideas in a speech to the Lok Sabha. Perhaps, that was part of his job. But it was a shitty job.  

The influence on practical policy of that recognized ideal had been minor, however, until towards the end of the last century economic conditions and power relations in one Western country after another began to make possible gradually to turn them into “welfare states.”

because they also needed to be 'warfare states'. The proletariat serves the State only by reproducing itself. The moment warfare can't be left to a professional warrior caste and conscription and 'careers open to talent' in the military become absolutely vital to national security, the industrial proletariat must be vested with rents so as to have an incentive to protect the regime. (The agricultural worker can be bought off with a bit of 'land reform'. Peasant proprietors have a stake in Society.) 

This process also implied greater awareness of existing inequalities.

i.e. having eyes in your head.  

From the beginning we find also that among the new policy proposals of economists aimed at instigating development in the underdeveloped countries, besides the prescriptions for economic planning, there was included a demand for economic assistance from the developed countries.

Because of the Bretton Woods strait-jacket. Most countries had Exchange Controls. Sweden only got rid of its foreign currency controls in 1989.  

In fact, much of the writings of economists in that early stage of the postwar era, as in many cases even later, became focused upon urging the politicians and the general public in the developed countries to be prepared to come forward with technical assistance, capital aid, and commercial concessions.

Otherwise, more and more countries would accept 'Socialist division of labour' and trade with the Soviet bloc. Vital raw materials might be denied to NATO. 

The real 'demand' of the 'Global South' was for fairer terms of trade. They could secure this only through cartelization as OPEC showed. But that meant curtains for Bretton Woods. It also meant curtains for the Soviet Union. Rooskis woke up to the fact that they could get rich trading on open markets rather than swopping oil for Cuban sugar so as to keep Castro comfortable 

This was a new element in Western thinking. Until then, the colonial power system had served as a protective shield for consciences in Western developed countries.

No. Colonial power had meant direct control of raw materials. That shield was gone. Some transfers were necessary to prevent countries signing up with the Kremlin. But the bigger threat was cartelization by primary producers. Consider Iran. It had suffered two famines during two world wars because Britain needed its oil. This was also the reason Mossadegh was toppled. But what was the upshot? The Shah became a prime mover in the creation of OPEC. The tables were turned.  Suddenly India- which had supplied Britain with the soldiers they had used in Iran during both World Wars- was tying up with Iran to develop Kudremukh. Bilateral Development projects didn't need to pretend to be about equality or democracy or being nice to darkies. 

There anyhow existed no political basis for sensing any degree of collective international responsibility for what happened in the colonial dependiencies of some West European countries, for instance no surge for a discussion in the League of Nations about how to help them to develop.

The League was useless. But there was developmental thinking in UK by the late Thirties. This increased during the War. Why? Resources were needed to defeat Hitler & Tojo and, after the War, resources would be needed to maintain threat points during the Cold War. British soldiers helped Malaysia rid itself of Commies. The Malaysian five year plans were perfectly sensible. Their current one focuses on AI.  

And the otherwise highly idealistic charter of the United Nations, drawn up before the end of World War II, had little to say about the right to political independence for the peoples in the “backward regions.” The Charter was still less outspoken about how to spur and aid development in the underdeveloped countries that would come to emerge.

Fuck the UN. It was always useless. Way too many Scandinavian shitheads ended up in its bureaucracy.  

But almost from the beginning, the United Nations and its specialized agencies became now the sounding boards for demands, raised by the representatives of the underdeveloped countries, for aid from, and commercial considerations of the developed countries.

Against the backdrop of the Cold War. Consider Pakistan. Its PM got invited to the US after Stalin invited him to Moscow. Talk of 'Development' was just cover for buying support in the newly independent nations. You never knew when their territory or resources might become strategically important. Pakistan got a lot of aid because it provided bases for American U2 flights over the Soviet Union. America needed to know how successful the Soviet nuclear program was. But the Soviets wanted the Americans to know the truth and what's more wanted the Americans to know the Soviets knew they American knew. The World had become game-theoretic. Myrdal was a walking dinosaur.  

During the three decades of its existence, the effectiveness of the United Nations has, on the whole, tended to decrease, particularly in the field of peace and security and, more generally, all issues in which the developed countries feel they have important stakes. But this whole system of intergovernmental organizations has more and more become agencies for discussing, analyzing, and promoting development in underdeveloped countries.

Is the UNDP any good? No. Still, it provides jobs to some nice people. It is important to remember that all countries have some useless diplomats and other bureaucrats who can't be sacked. But they can be shunted off to the UN. Also small countries need some place safe to store their useless ex-leaders. Again, International Organizations come in handy.  The alternative is Tony Blair or BoJo jetting around the place making money off shady Dictators. 

Their secretariats produce statistics and studies aimed at ascertaining, analyzing, demonstrating, and publicizing the pertinent elements of their poverty and the possible means of lifting them out of it. This is part of the process through which a compelling awareness of their plight has been engendered in the postwar period and forced itself upon every alert person.

Hilarious! Alert peeps know Statistics be shite. Still, it is true that Joe Lunchpail spends a lot time examining Econometric evidence that starving peeps in shithole countries aren't doing well economically. 

Myrdal says he wasn't always stupid- 

in the middle of the Fifties, I delivered a series of lectures in Cairo focused on the same topic as my present lecture (later published in a volume, Economic Theory and Underdeveloped Regions), and in spite of my already then having attempted to redirect my thinking in an institutional direction, I could assert:

“What is needed is not primarily a redistribution of wealth and incomes. Indeed, aid can only be a very small part of a rational international equalization program… None of the schemes which have been propounded for capital aid for development of underdeveloped countries has ever amounted to taking away more than a tiny fraction of the yearly increase of national income per head in the richer countries, which implied that no real sacrifice has ever been envisaged… A wholesale income equalization by redistribution between nations is both impossible and, I am inclined to believe, an unimportant objective.”

Nobody had any such objective anymore than it was their stated aim that billionaires submit to buggery by beggars.  

My theory is that the selfish national interests, particularly as they so often turn out to have been spurious and misconceived, do not appeal to ordinary people, who in our type of countries determine the course of public policy over the years, while a motivation in moral terms carries weight.

The Abolitionists were moral and did carry weight. People did subscribe to Charities which were known to help starving people in distant places. Herbert Hoover had done much in this field. He became POTUS. A guy helping lepers in darkest Africa was considered a saint. Money flowed to Charities of this sort. It was only when the State (because of the War, or post-War reconstruction) took over more of the economy that what had previously been done by privately had to be done publicly. But there was no good reason why the Public Sector should not be pruned back so that 'consumer sovereignty' could be restored. Indeed, Myrdal's own Sweden would regret not having taken this course earlier.

A few of the underdeveloped countries, those having oil for export, have succeeded to form an effective cartel, the Organization of the Petroleum Exporting Countries, raising the price of oil four and a half to six and a half times the earlier price, depending upon what base year is chosen for comparison. They have suddenly become immensely rich. Except a few of them, like Nigeria and Indonesia, they were among the richer of the underdeveloped countries already before, or at least not so poor.

Some OPEC countries would import labour and remittances would loosen the foreign currency constraint for the countries where they came from. Also remittances were often used by families to improve health, educational and housing outcomes. This boosted the service sector and had a multiplier effect leading to higher 'Human Development' indices and positive 'mimetic' effects.  

 the other commodity exporting underdeveloped countries will probably not succeed to follow the same pattern to any considerable extent.

But they can try to add value at home and then export- e.g. Kerala exporting sea-food and other 'ready meals' to migrants in the Gulf and elsewhere. Labour mobility by itself creates some Capital, Enterprise and Technology mobility.  Intriguingly, the networks thus created may be broader and more agile than that of established elites. 

Myrdal shows awareness of the food deficit in India & Bangladesh. It is estimated that there may have been half a million to a million and a half famine deaths in Bangladesh in that year. Sheikh Mujib's Socialist policies certainly worsened the effect of the food availability deficit. Since then Bangladesh has quadrupled food output and greatly raised the participation rate for women in manufacturing. In the early Eighties they even did a bit of 'privatisation'. Myint & Bauer, not Myrdal, were on the right side of this debate. 

Myrdal expresses distaste for 

 the concept “triage” (from the French “trier”: to soft), following out an analogy from the practice in the allied medical tents during the trench warfare slaughters of World War I. With resources limited, a distinction had been made between those likely to die no matter what was done to them, those who would probably recover even if untreated, and those who would survive if cared for. The third group alone received attention. The others were left to live, or to die, on their own.

What was the alternative? France was fighting for its life. Only those soldiers who could return to the battlefield were helped- unless they would recover anyway in which case they were left to get on with it.  

Based on such an analogy, India is in this literature commonly counted as belonging to the first group,

It was obvious that it was in the third group. Pretending an agricultural country can't feed itself is silly. Still, the ruling party didn't want dominant peasant castes to start rising in prosperity through the use of hybrid seeds, fertilizers, tractors etc. Why? They would vote for their own people not dudes who went to Cambridge.  

which should be left unaided, but also many other very poor countries. Not giving them food aid is more “ethical” so the argument runs, because those who would be saved will breed, and in the end still more millions will ultimately be starving and dying. In the longer run, aid creates more misery than it alleviates.

Also Aid can work like a 'resource curse'. It can have a substantial 'crowding out' effect.  On the other hand, aid to people suffering the effects of war or natural disaster is simply a case of 'risk pooling'. Also, it makes sense to over-supply essential items so 'buffer stocks' are available. Run them down from time to time. This is a simple case of 'regret minimization'. As I have explained elsewhere, if the people of Sodom & Gomorrah had been rational, they would have had a rule to help- not refuse to help- the needy. You can only be sure there is an effective buffer stock, if it is drawn upon to feed 'outsiders'. True, if there is a deficit, those outsiders will starve. But you will be fed. Entitlements are always defeasible. But so are norms. Under exigent circumstances, benefits are rationed with 'insiders' getting everything and 'outsiders' getting nothing. 

The triage theory is not advocating less aid from the rich countries, only that it be distributed more wisely by cutting out from consideration those that are helpless.

No harm in dumping buffer stocks on the hopeless. This enables the stock to be replenished. In this case Aid is not a curse since there was no possibility that its recipients could have grown their own food. Only when we face a supply shock will we laugh heartily while they starve to death. They have served our purpose and are now welcome to perish.  

It has often been wrongly assumed that farming in underdeveloped countries is labor intensive, as an inference from the very large portion of the total labor force sustained in agriculture – in India, which is not selfsupporting in food, about 70 per cent.

Thanks to Borlaug & Swaminathan it did become so by about 1977.  

In fact their farming is extensive. Too few work at all, those who work do it for too short periods during the day, week, month and year, and they work too inefficiently.

Unless their labour is better remunerated. The Green Revolution made manual labour in agriculture better paid. This meant the transfer of earnings of manual workers went up. This then meant alternative employment had to have higher marginal product- i.e. productivity there had to rise- with the result that real wages for all physical labour tended to rise. There were plenty of comments about how 'uppity' rural workers were becoming back then. But they were also more productive. If you actually do something useful in return for higher pay, you can go elsewhere and do that work for almost the same pay without having to say 'Ji Huzoor' to the boss. Moreover, to retain labour you had to pay a premium even to the chap who looks you in the eye and thinks you are no better than he is. But, because your profits have increased, you no longer care about being 'Ji Huzoored'. You are now focussed on 'keeping up with the Joneses'. 

In the 1950s, Albert Mayer's Etawah project succeeded because it introduced a new higher yielding crop strain. Sadly, this was not obvious to some economists. They thought the key was 'community organization' or some such shibboleth. The truth is, A.O Hume (later the founder of the Indian National Congress) had been the Collector of Etawah. He had started many schools, a couple of newspapers, and encouraged new agricultural techniques. The support of the Administration did make a difference to outcomes. But when a less intelligent or hard working Collector was posted, Etawah sank back. Hulme understood that Indian notables in the District should provide the continuity to ensure incremental progress. His pal Mayo and then Ripon agreed. In the 1880s there was a scheme for local government boards with educated Indians taking on more and more tasks. Again in 1920, there was a 'devolution' scheme. The problem was the ruling Party. If it could win without doing 'development', why bother with it? The moment local politics becomes a matter of deciding whether to build a school or spend the money on irrigation, talk of 'Ahimsa' or 'Shoshialism' becomes otiose. Furthermore, your caste/communal vote-bank politics might be challenged by cadre-based parties which recruit smart people who want the value of their property in the district to go up. To be clear, that is FASCISM! It is very evil. If trains run on time, Mussolini has won! If a municipality does smart things and property values rise, incomes rise, the place stinks a little less- then FASCISM has triumphed! Furthermore, in a Hindu area, it will be noticeable that those who have benefited most are well-off Hindus! This shows that Muslims have been secretly slaughtered. 

There were good Chief Ministers who, because of their own social background, helped improve matters. Prakash Singh Kairon got an MA in Poli Sci from US. It was USeless. But the manual work he did on farms there paid off. He helped turn East Punjab from a food deficit shithole to a granary with mushrooming light industry. Maybe he was corrupt, nepotistic etc (he was killed because he was believed to have pressurised a Judge to send a man to jail) but there was no reason why the good things he did should not have been emulated. I recall asking a Sikh economist, back in the Nineties, whether there was any monograph on Kairon's contribution I could read. He didn't know. But he told me a story of the late British economist, Ajith Singh, having been denied the Student President post because some nephew of Kairon wanted it. This caused the young Ajith to quit the country and go off to America. This was a pity. Sikh economists have served India well. Swedes or Turnips haven't. 

Already without any other technology than what is already known and applied by some of the farmers in a district, yields could be increased substantially by raising the labor input and its efficiency.

Because you don't have to pay labour. You can just tell it to input more of itself and it will be happy to oblige.  

A large part of that labor input should rationally be directed upon cooperative public work, improving the land, building more and better roads,

launching Spacecraft so as to benefit research in Astrophysics 

constructing wells, irrigation ditches and storage facilities, and generally ameliorating the environment for life and work in the villages.

Why stop there? Why not raise the input of labour in an Indian village to a level where the inhabitants of distant planets are provided with stylish flying saucers?  

Jan Myrdal, Gunnar's son, has thrown a harsh light on his parents personalities and activities. I think he himself linked this to the early Swedish 'National Socialist' and 'geopolitical' theories of Rudolph Kjellen. This is the substructure to Gunnar's systematic stupidity which was disguised by his thorough self-education in Economics (his original qualification was in law) and what appeared to be a 'positivist' eagerness to do field-work, compile statistics, and so forth. His later 'development' work could be dismissed as a case of 'the White Man's burden'. But such was not the case. As his Nobel lecture makes clear he actually had shit for brains. 

Instead of a summary of his contribution to Economics- i.e. a succinct statement of axioms, theorems, policy recommendations & Statistical evidence- we have hysterical drivel about 'the Equality issue in World Development' as if poor countries were demanding a World Government which would redistribute income. The truth is inequality is a driver for mimetics which is how 'low hanging fruit' are plucked by the poorer who grow more quickly in consequence. Their relative Income rises but real income in the rich countries rises because more stuff is being produced more cheaply. There may also be a wealth effect in the rich country which invests in the poor country. There may be convergence or even over-taking. In other words, the same thing happens globally as happens within a country or, indeed, a district. 

Myrdal concludes thus-

As an institutional economist, compelled to conceive of development as a movement of a whole political, social and economic system

Myrdal should have followed Commons by looking at the legal basis of Indian society. This meant looking at property title, contract enforcement, legal penalties for malfeasance in financial and other markets, speed of criminal proceedings etc. The Indian judiciary was already in decline but 'institutional' fixes could have been suggested. Indian industry faced a problem of Mundhra type speculators and shady deals enabling 'capital flight' and asset stripping or fraudulent conversion in firms which were taken over in an illegal manner. The Congress party was itself an institution which could have reformed itself from below rather than by the 'Kamraj plan' which was disastrous. In this way the political incentive to back the Green Revolution and then to back industrialization and urbanization would have been created. Development means you can have a much bigger 'rent' while the excess burden of the restriction or regulation which creates the rent is small. Moreover, welfare schemes based on 'risk pooling' reduce uncertainty and boost economic activity. Institutions for this- themselves creating clerical jobs- could more than 'pay for themselves'. In other words instead of wasting money on virtue signalling, institutions could have set in motion 'virtuous circles'. 

Sadly, Myrdal's Manichaean morality forbade any such thing. 

and having tried to deal with the problems in a world setting, I have had to express judgments on a very wide variety of human conditions.

e.g. be nice! It is wrong to let darkies starve! 

Although I have put labor into basing these judgments upon a more intensive realistic study than I can account for in this lecture, most of them remain tentative and anyhow far from being certain, exact and precise.

They were nonsense.  

This is not my fault but is due, first, to the fact that many of the conditions I have been speaking of are difficult already to define appropriately,

it is your fault if you, as an economist, chose to talk about stuff which is difficult to quantify 

and the further fact that the coefficients of interrelations between all changes of conditions within the system are very seldom known with quantitative precision.

Which is why, in these matters, we may as well consult a mystic rather than waste money hiring an economist 

The analyst is left to use whatever knowledge he can acquire, even if it is not in the precise form that economists have been trying to attain. When dealing with wider issues they often achieve it by limiting the scope of inquiry. This, of course, only makes the analysis less relevant, adequate and realistic, particularly in the present world tumult.

By contrast Hayek's analysis had become relevant. His lecture is titled '

The Pretence of Knowledge

An analysis which is 'less relevant, adequate and realistic' isn't knowledge. It is mere pretence.  

The particular occasion of this lecture, combined with the chief practical problem which economists have to face today, have made the choice of its topic almost inevitable. On the one hand the still recent establishment of the Nobel Memorial Prize in Economic Science marks a significant step in the process by which, in the opinion of the general public, economics has been conceded some of the dignity and prestige of the physical sciences. On the other hand, the economists are at this moment called upon to say how to extricate the free world from the serious threat of accelerating inflation which, it must be admitted, has been brought about by policies which the majority of economists recommended and even urged governments to pursue.

One could say the same of the sub-continent's food crisis. It was a 'supply side' not an 'institutional' problem. Supplying cheap inputs so high yielding strains could be cultivated was the solution. Sciencey guys & Accountants could get on with the job.  

We have indeed at the moment little cause for pride: as a profession we have made a mess of things.

Unless, they were in the private sector making millions. I'm kidding. Having a PhD in Econ made you stupid. Soros did have an MSc from the LSE. But it was in Philosophy. He got his start as a clerk in a Merchant Bank. 

Hayek ends his lecture on a positive note. There is no need for gloom- just a bit of humility. 

The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society

or to claim to understand it as the Institutionalists do. The fact is an 'evolutionary' process can't be understood as it unfolds because the fitness landscape features Knightian Uncertainty- and in any case there is hysteresis because of 'co-evolution'. Thus, the Institutionalist economist is engaging in a dismal type of  theology. He is not concerned with making the world a better place. He is scolding any Heaven we can envisage because maybe it won't be equal enough or diverse enough or offer sufficient opportunities for breast-beating. 

– a striving which makes him not only a tyrant over his fellows,

i.e. the fucking eggheads on the Planning Commission  

but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

Institutions, too, are the creation of such 'free efforts'. Sad. 

Myrdal too strikes a note of hope as he concludes his lecture. But what he hopes for is yet more doom and gloom and breast beating.  

Even though my world view must be gloomy, I am hopeful about the development of our science.

It can become shittier.  

We can by immanent criticism in logical terms challenge our own thinking and cleanse it from opportunistic conformism.

Gunnar had been well paid to visit India, talk to Nehru, address the Lok Sabha, and write a big fat book about it. It would have been 'conformism' for him to do have done something to help the country. Still, he took the opportunity presented by his Nobel lecture to suggest that 750 million Indians would starve to death unless something more than 'triage' was offered them. This is because Indians are shit. Fuck can Institutional Econ do about shit?  

And we can widen our perspective. Everything can be studied. We are free to expand and perfect our knowledge about the world, only restricted by the number of scientists working and, of course, the degree of their diligence, brightness and their openness to fresh approaches.

Hayek ends his lecture by talking about ordinary people. It is their actions which create the economy. Economists might be helpful if they are humble and find some useful correlation to improve mechanism design or forecasting or simply save money. Myrdal ends his lecture by talking about 'scientists' like himself. He hopes there will be more such shitheads. That way the entire world will be fucked up and so his gloomy worldview will have been shown to be justified.