Thursday 20 December 2007

Adam Smith: Proto-Austrian?

Peter Klein at Organizations and Markets raises the always controversial question of the relationship between Adam Smith and the Austrians. Klein points out the fact that "Austrian economists have mixed views on Adam Smith and classical economics. Mises and Hayek admired Smith as a social theorist and system builder while rejecting much of his technical apparatus, especially the labo[u]r theory of value. Menger taught Smithian political economy to his most famous pupil, Crown Prince Rudolf. Rothbard considered Smith grossly overrated."

But Klein also points to a new paper by Michael Bradley in which Bradley argues that the distinction between classical and Austrian analysis is overdone. "Bradley characterizes Smith's system of "perfect liberty" as an ancestor of the Austrian model of the competitive market process, not the neoclassical model of perfect competition. "[F]or the classical economists from Smith to Cairnes, the only explicit properties of 'perfect liberty' are resource mobility and freedom of entry and exit. The other assumed properties of perfect competition [perfectly elastic demand and supply curves, complete and perfect information, identical products, etc.] are either implicit in, or absent from the classical literature."."

No comments: