From: JP
Sent: Sunday, October 02, 2016 1:23 PM
To: wbarnett@loyno.edu; wblock@loyno.edu
Subject: On Hayekian Triangles
Dear Dr. Block and Dr. Barnett, My name is JP. I am 26. I became pretty deeply interested in Austrian Economics while in college about 4-6 years ago. Over the past 3-4 years, I’ve worked in commercial lending at a mid-sized commercial bank. My role is called a “credit portfolio manager”. It’s given me the benefit of understanding a wide variety of businesses that operate in various areas of the economy.
I’m writing because I recently reread your 2006 paper “On Hayekian Triangles,” and was again convinced of your position. When I read Murray Rothbard’s and Jesus Huerta de Soto’s explanation of the structure of production and ABCT, that was always the key area that didn’t quite click for me. If I correctly understood your paper, those explanations should at least be reconsidered if not rid of entirely. I was wondering if there were any published responses and/or subsequent development to this position? I have seen that you both have written much about ABCT, but I am specifically looking to understand how to (or whether it is possible to) think about the overall “structure of production” at all. Sincerely, JP
Dear JP: Thanks for your kind words about this 2006 paper of ours: Barnett, William II and Walter E. Block. 2006. “On Hayekian Triangles.” Procesos De Mercado: Revista Europea De Economia Politica; Vol. III, No. 2, Fall, pp. 39-141; http://mises.org/journals/scholar/block18.pdf; http://www.academia.edu/1359916/On_Hayekian_Triangles; http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1880543
No, to the best of my knowledge, no one, no one at all, has published anything, in a refereed journal or not, in reaction to this paper. It seems to have fallen down the memory hole. But Bill and I still think it made an important contribution to Austrian macro-economics.
Hi Dr. Block, Wow, it is very surprising to me that nothing has been written in reply to the paper. I had searched myself and did not see any responses, but it seemed to be such a fundamental objection to the way Austrians think about the economy. Do you think people were unconvinced or just not motivated enough to reply and/or develop the subject? (Maybe because it would be a huge undertaking to try to replace the traditional explanations?).
Dear JP: It is difficult for me to understand this. Bill and I had hoped for a response to this paper, any response. Either criticizing it, or building upon it. You are correct: if our paper undermines the triangle, a basic model for the Austrian Business Cycle Theory. If it is invalid as my co author and I claim, we Austrians need something to take its place. Bill and I are thinking in terms of interest rate elasticity: some investments, items, industries, are more or less responsive to changes in interest rates than others.
I did speak to one author, who’s name I will not mention to save him embarrassment (he had published several articles using and defending the triangle, as had I, by the way), and this was his reaction: “Triangles yesterday. Triangles today. Triangles tomorrow. Triangles FOREVER!” I thought this was charming, but, still, a bit unsatisfactory. I tell you, that if I published something and another author criticized it, I would either congratulate him for showing me the error of my ways (hey, we should always be open to criticism, and learn from it), or, I would write and publish a rejoinder. In this article of ours, we criticized dozens of Austrian economists for their analysis of the triangle (including me, including me), and yet not a single one of them has either congratulated us for our contribution, or, offered reasons why we are in error. Most unsatisfying. Thanks for your response to this paper. This is the first one we have ever had, ten years after its publication.
5:42 pm on October 3, 2016 Email Walter E. Block
